In March, Apple opened its largest retail store on the Chinese mainland in Shanghai – the company’s second-largest flagship store after its Fifth Avenue outlet in New York. The new addition brings Apple’s store tally in Shanghai and the Chinese market to eight and 57, respectively, a significant milestone for the company, which opened its first store in China in 2008.
During his high-profile China visit, Apple CEO Tim Cook, who opened the doors to the new store in Shanghai and welcomed the first Chinese customers at the opening ceremony, reiterated the company’s steadfast commitment to the Chinese market, saying, “We are continuing to invest in China, in the supply chain, in research and development, and in our stores.”
Interestingly, Apple is just one of the many foreign companies currently operating in the Chinese market that have demonstrated long-term commitment to the Asian giant in recent times.
A report released in February this year by the American Chamber of Commerce in South China, representing nearly 1,000 companies operating across the region, showed that 62 percent of foreign companies remained committed to the Chinese market. Among these, 66 percent of US companies indicated they had no plans to shift their investments out of China. A whopping 90 percent of the polled US companies achieved profitability in 2023, and 88 percent of all foreign companies surveyed have already made a profit in the Chinese market, with 76 percent planning to reinvest in the country.
Up and coming
Against the backdrop of daunting challenges facing the global economy, foreign firms’ strong confidence in the Chinese market undoubtedly attests to the country’s resilient economic development that delivers growth, accompanied by enormous market potential and high-level opening up. Ever since China started to reform and open up its economy in 1978, the Asian country, known for its colossal market with lucrative opportunities across various industries, has increasingly attracted foreign investment, becoming the preferred destination for global investors.
Recent data from China’s Ministry of Commerce showed that the number of newly established foreign-invested enterprises in China in 2023 had reached 53,766, up more than 39 percent over the previous year. According to the data, foreign direct investment originating from France, Britain, the Netherlands, Switzerland and Australia, expanded by 84.1 percent, 81 percent, 31.5 percent, 21.4 percent, and 17.1 percent, respectively.
China’s high-tech industry, poised to remain a focal point for foreign investors, witnessed the establishment of 1,865 new foreign-invested companies in the first two months, up 32 percent year on year. Strides in science and technology innovation, China’s new growth engine and a core driver of the country’s high-quality development and modernisation, are contributing to unlocking new opportunities for growth in key sectors, including agriculture, energy and manufacturing.
This makes China increasingly attractive and competitive. In a recent example, on 11 April, German car giant Volkswagen (VW) announced it would invest 2.5 billion euros ($2.7 billion) to expand its production and innovation hub in Hefei, capital of Anhui Province.
Interestingly, the day after VW’s announcement, top US aircraft manufacturer Boeing, with a partnership with China spanning 50 years, also put into operation its first joint venture in China. The expansion is expected to double production capacity at its plant in Tianjin.
Structural change
These recent commitments made by German and American industry giants to the Chinese market add to the list of major foreign manufacturing firms, including US chip-maker Micron and electric vehicle manufacturer Tesla, that have dedicated substantial resources to expand production capacities in China over the last year. The reality in China sharply contrasts with the overblown negative reports about the country’s supposed economic decline. Data released by the National Bureau of Statistics of China showed that high-tech manufacturing registered a 7.5-percent year-on-year growth in industrial output during the first two months of 2024, up 1.1 percentage points from December 2023. For the same period, value-added industrial output increased by 7 percent year on year, and retail sales of consumer goods reached $1.14 trillion, a 5.5-percent increase on an annual basis.
China’s current economic indicators tell the story of a vibrant and diverse economy in transition.
The country is moving away from an economy that relies heavily on investment and low-cost manufacturing to one that prioritises high-quality growth. This new approach emphasises domestic consumption, high-tech innovation, digitalisation, and greener growth.
This transition is largely underpinned by science and technology innovation.
In just over a decade, China has made remarkable progress in innovation, rising from the 43rd place in 2010 to the 11th in 2022 on the United Nations Global Innovation Index, an annual ranking of innovation capacities worldwide. China, a leading global investor in research and development, second only to the US, has made substantial inroads over the last decade in leveraging innovation to fast-track the development of emerging industries and modern infrastructure
Currently, the world’s second-largest economy is the fastest growing and most dynamic market for emerging industries. China is dedicating additional resources to unlock the full potential of strategic emerging industries and is also focusing on developing new quality productive forces.
This initiative will continue to open up new growth opportunities in the world’s second largest consumer market, now and in the future, making China increasingly attractive for domestic and international brands alike. The “next China” is still China.
The author is Ghanaian Economist. African Times published this article in partnership with ChinAfrica Magazine
