Doubts on whether China is still the place to be for foreign companies are on the rise in media reports, especially now GlaxoSmithKline is on the chop board. Economic analyst Arthur Kroeber believes those headlines are deceiving and he explains in ChinaFile that foreign firm are profitable and want to expand.
But the headlines are deceiving. Data and company surveys both show that China continues to be a magnet for foreign firms. Greenfield foreign direct investment, according to the Ministry of Commerce, has held steady at US$105-115 billion a year since 2010, well above the pre-crisis level. Inflows in June exceeded $14 billion, the highest monthly total since 1997. Broader data from the central bank, which include reinvested earnings, show that foreign companies committed a quarter of a trillion dollars to China in 2012.
Member surveys by foreign chambers of commerce consistently reveal that despite their discontent, foreign companies in China are still quite profitable and generally want to increase their investments. A walk down any Chinese high street will quickly confirm these numbers: foreign brands occupy a far larger and more visible slice of the market in China than in most other Asian countries, including Japan, Korea and India. And big cities are filled with tens of thousands of young foreign entrepreneurs who find it easier to start a new business in China than in their home countries.
Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.
Foreign firms might be complaining about working in China, Chinese firms have their own complaints about going abroad. David Wolf, author of Making the Connection, a book about China’s telecom giant Huawei, and Andrew Hupert, specialist in international conflict resolution discussed on the China Weekly Hangout on October 18, 2012, the future of Huwei, moderated by Fons Tuinstra, president of the China Speakers Bureau.
The China Weekly Hangout is taking a summer break and will be back into action in the second half of August.