China still a top destination for foreign companies

Updated: 2012-09-05 03:20

(China Daily)

  Print Mail Large Medium  Small 0

"Huge new opportunities will present themselves as the economy becomes more sophisticated. At Dow we remain very excited and we believe China will continue to serve as an important engine of growth for Dow and others — but a different kind of engine. "

Although some foreign companies are delaying their investment plans in China, Dow is beefing up its operations in the nation.

In June, Dow said it would invest in a world-class manufacturing facility on water treatment technologies in Huzhou, Zhejiang province. The new facility will become operational in 2013.

The company is also planning to expand its electronics manufacturing facility in Zhangjiagang, Jiangsu province.

Sykes said that Dow will continue to invest to further expand its manufacturing, innovation and operational networks in China over the next few years.

For Dow, the Chinese market is certainly a good bet. "If China continues its impressive track record of economic success, it will eventually become Dow’s largest global market, most likely sometime in the 2020-30 period," said Sykes.

After the figure expanded by more than 10 percent for years, China’s GDP growth slowed to 7.6 percent from April to June, the slowest pace in three years, but some economists say it has yet to bottom out.

Bank of America, Deutsche Bank and HSBC recently reduced their forecasts for full-year economic expansion. Premier Wen Jiabao in March set a target of 7.5 percent for this year.

But many foreign companies are taking a long-term view. China’s economic growth will probably recover late this year or early next year, as the Chinese government continues to stimulate growth, said Thieneman from Caterpillar.

Wang Zhile, a senior expert with the multinational company research institute under the Ministry of Commerce, said "it’s unnecessary to be that concerned about the drop in the nation’s FDI", as "the real estate sector is probably a key factor behind this".

As the realty sector grew speedily in China, the nation witnessed a huge influx of foreign funds into the sector over the past few years. But, with the central government’s tightening measures in the property sector, China saw a sharp decline in the amount of foreign capital flowing into the industry.

Of the 5.08 trillion yuan ($800 billion) invested in property development in China between January and July, only 22.8 billion yuan was made by foreign investors, a 54.3 percent decrease year-on-year, according to the National Bureau of Statistics.

"We actually have not felt any big change with foreign companies and manufacturers in sectors excluding realty," Wang said.

"The confidence is there."

After years of double-digit annual growth, China's FDI reached a record high of $116 billion in 2011. "The annual figure is expected to surpass $100 billion in the future, and annual growth could remain around 10 percent on average in the next decade."

8.03K