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China is rolling out the red carpet to attract foreign executives

Pictured here’s a Foxconn manufacturing unit in Zhengzhou metropolis on Sept. 4, 2021.

Vcg | Visible China Group | Getty Pictures

BEIJING — China is pulling out all of the stops to maintain multinationals like Apple and its provider Foxconn within the nation.

Such efforts to draw international funding come because the pandemic and geopolitical tensions push corporations to diversify their provide chains away from China.

For the primary time in 25 years, the American Chamber of Commerce in China discovered that lower than half the respondents to its annual survey ranked China as a high three funding precedence. The variety of corporations that are contemplating or beginning to relocate their manufacturing and sourcing outdoors of China rose by 10 share factors from a yr in the past, the survey discovered.

Nearly all of respondents do not plan to relocate their provide chains, the AmCham report mentioned.

The survey was performed final fall, and outcomes hadn’t modified considerably since China ended its stringent Covid controls, AmCham mentioned. China’s Commerce Ministry did not reply to a request for remark.

After such a drop in sentiment, China is working exhausting to maintain international companies investing — and supporting home progress. The Commerce Ministry mentioned Thursday that for the primary time, it could launch occasions for an “Put money into China Yr.”

In an indication of how exhausting native governments are attempting to draw international {dollars}, high officers from Henan province in central China personally welcomed Foxconn Chairman Younger Liu final week throughout his go to to his firm’s manufacturing unit there, the province introduced.

Foxconn operates the world’s largest iPhone manufacturing facility in Henan’s capital, Zhengzhou.

The occasion secretaries of each Zhengzhou metropolis and Henan province met with Foxconn — together with the mayor and governor, state media mentioned. In China, the ruling Chinese language Communist Get together takes the lead in resolution making, and such high-level participation within the assembly with Foxconn signifies any issues mentioned will be applied extra shortly.

Throughout a Covid outbreak and subsequent lockdown final yr, Foxconn’s manufacturing unit in Zhengzhou turned a hotspot of consideration when a few of its roughly 200,000 employees determined to go away and stroll residence.

Apple later mentioned the Zhengzhou manufacturing unit disruptions would delay deliveries of some iPhone 14 fashions.

China ended its stringent Covid controls in December. By February, Foxconn’s Zhengzhou manufacturing unit was producing at full capability, with employees working two shifts to satisfy excessive shopper demand, manufacturing unit supervisor Wang Xue instructed native media.

Foxconn confirmed its chairman visited Henan and deliberate to collaborate with the native authorities on tasks. However the firm didn’t share particulars on these funding plans, or whether or not they have any intention to shift manufacturing out of China.

China says different corporations are coming

China is keen to play up how different multinationals are keen on native enterprise alternatives, particularly now that worldwide borders have reopened.

Senior executives from Apple, Pfizer and Mercedes-Benz are amongst these wanting to go to China to debate enterprise, the Ministry of Commerce spokesperson mentioned at a press convention final week.

The spokesperson famous there are dozens of multinational corporates speaking to the ministry about such high-level visits.

Mercedes-Benz confirmed to CNBC its CEO Ola Kallenius is planning to go to China. Pfizer had no remark. Apple didn’t reply to a request for remark.

Abroad advertising tour

China can also be visiting potential buyers of their residence nations.

After a high authorities assembly in December known as for higher efforts to draw international capital, many government-led teams have traveled overseas to make gross sales pitches for China.

Wang Jinxia, deputy director of Qianhai — an financial growth zone in Shenzhen — led a gaggle to Dubai, Singapore and London in February to drum up funding curiosity.

He described the visits as attaining “outstanding outcomes” — however didn’t elaborate. He additionally famous “severe challenges” to attracting international funding. These embrace unfair competitors with native gamers in China because of industrial insurance policies, lack of authorized safety for international enterprise in China and geopolitical dangers, Wang mentioned.

The Biden administration has elevated restrictions on U.S. enterprise with China, comparable to curbs introduced final yr on U.S. companies and people working with Chinese language companions on probably the most superior semiconductors.

It isn’t clear to what extent different restrictions can be introduced.

Learn extra about China from CNBC Professional

To be clear, worldwide funding remains to be coming into China at a gradual clip.

Overseas direct funding rose by 14.5% in January from a yr in the past to 127.69 billion yuan ($18.39 billion), in accordance with China’s Ministry of Commerce. That is quicker than the 6.3% improve for all of 2022.

South Korea, Germany and the U.Ok. had been the most important sources of such international funding in 2022, the ministry mentioned, with out mentioning the U.S.

For a Chinese language area comparable to Henan, protecting or rising funding from international companies is a lifeline. Official knowledge confirmed that in 2019, Foxconn’s iPhone manufacturing unit accounted for 84% of all the province’s exports.

China’s Commerce Minister Wang Wentao on Thursday made a comparatively uncommon public acknowledgement of international companies’ longstanding complaints about authorities procurement insurance policies that favor native Chinese language companies.

Addressing these points are “priorities for our work,” he mentioned in Mandarin, translated by CNBC. “We are going to research and introduce insurance policies and measures along with related departments to make sure international companies’ equal participation.”