China's emerging industries become new magnet for foreign investment

HEFEI -- In Hefei, capital of east China's Anhui Province, Volkswagen Anhui's MEB plant is buzzing with activity as more than 1,000 robots are engaged in the production of new energy vehicles (NEVs). Next to the production plant, two supplier parks have been set up, with 18 partners already moving in.

In just two and a half years, Volkswagen has built a new hub in Hefei, covering the complete value chain from R&D to manufacturing, sales and services of NEV.

"We are specifically utilizing new technologies and the outstanding infrastructure of Anhui," said Erwin Gabardi, CEO of Volkswagen Anhui. "We will also benefit from this innovative strength."

Volkswagen is among the global companies that have been consistently increasing investment in China's emerging industries. As China is promoting industrial innovation with technological innovation, more high-quality, high-end, and technologically innovative industries are becoming the new magnet for foreign investment.

Data from the Ministry of Commerce showed the actual use of foreign investment in manufacturing rose 1.9 percent year on year to 283.44 billion yuan (about 39.84 billion U.S. dollars) during the first 10 months of 2023, with that in high-tech manufacturing logging an increase of 9.5 percent.

"Take Anhui as an example, foreign enterprises here have expressed definite willingness to expand investment in industries including high-end equipment manufacturing, new energy and other related sectors," said Wang Yaping, deputy general manager of Deloitte Hefei Branch.

According to a market survey of the company, the upgrading of China's consumer market and the enhancement of sci-tech innovation have continuously strengthened foreign enterprises' willingness to seek new businesses in China, Wang added.

As one of the most representative emerging industries of China, the booming NEV industry has attracted global automakers to expand investment and build a complete industrial chain in recent years.

With an investment exceeding 7.5 billion yuan, Volkswagen is establishing the Volkswagen Group China Technology Company in 2023, which will become the largest development center outside Germany upon completion. Last month, the company announced plans to develop its first China-specific electric automobile platform.

"Over the years, we have consistently invested in facilities and platforms to support the NEV production, R&D, and sales and services. With our 'in China for China' strategy, we will develop much more technology here in the future. We will make better use of local innovative strength and respond more quickly to the needs of Chinese customers," Gabardi told Xinhua.

In May 2023, BMW Group's joint venture in China, BMW Brilliance Automotive Ltd., began the construction of a new battery production plant in Shenyang, capital of northeast China's Liaoning Province.

Besides the NEV industry, China's innovative development in fields including biological medicine and digital economy has also provided sustained impetus to foreign investment.

"We will continue to develop in China, actively promote sci-tech innovation, and constantly explore new opportunities in new fields," said Liu Zhifei, president and general manager of Corning Greater China.

In September 2023, Corning opened its Advanced Flow Pharmaceutical Technology (AFPT) facility in a biomedical industrial park in Suzhou City of Jiangsu Province. The AFPT services will provide faster methods for identifying effective compounds during early-stage research and will help shorten drug development timelines.

Industry insiders believe that besides the boom in emerging industries, one of the key factors that will encourage foreign enterprises to stay and develop well in China is the building of a world-class business environment.

The central and local governments have introduced a raft of measures to build a first-class business environment. Anhui Province, for example, has rolled out targeted policies and measures to support foreign enterprises in setting up R&D centers, said Zhang Rui, an official with the Anhui provincial department of commerce.

"The local government has provided us with a fertile market environment and unwavering support," Gabardi said. "They have rolled out preferential policies that can fuel the rapid progress of our project and have supported our recruitment and nurturing of talents."

According to a survey conducted by the China Council for the Promotion of International Trade during the third quarter this year, over 80 percent of the surveyed companies say they are satisfied with the business environment in China.