Market Missionaries

Lujiazui tried to attract foreign investment through online meetings in the three years of China’s zero-Covid policy, but it did not have the desired result. “No matter how many emails and videos you send, it’s not the same as meeting in person,” said Yuan Yefeng, the Lujiazui official who led the group. “In-person communication inspires confidence. Foreign companies and institutions can feel how passionate we are from facial expressions and the way we talk, which helps dispel their worries about investing [with us],” Yuan said. 　

Hu Xiaoyu, head of the investment promotion bureau of Taicang, a county-level city in Suzhou, Jiangsu Province and host to over 460 German companies, landed in Munich in December 2022 to hold their 14th Taicang Day, an important business forum started in 2008. They held the event online in 2020 and 2021. It was one of the 29 activities the Suzhou business delegation, which comprised 30 small investment promotion teams, held during their first visit to Europe in three years. 　

Lack of in-person exchanges took a toll on foreign investment during the pandemic. Ningbo, a manufacturing hub in Zhejiang Province, reported a year-on-year decrease of 29 percent of the value of foreign investment contracts over the first 11 months of 2022, because of restricted promotion activities both at home and abroad, and fewer visits from foreign companies to the city. 　

As China eased Covid restrictions and the government shifted focus to economic growth in December 2022, more and more provinces and cities sent delegations abroad. By February, at least 10 provinces and dozens of cities had followed suit, led by economically developed areas including Shanghai and Zhejiang, Jiangsu and Guangdong provinces. 

They signed contracts for two projects on their trip. One is with BMTS Technology, an auto parts manufacturer in Germany, that involves a 3 billion-yuan (US$435.3m) investment to set up its China headquarters, including factories, R&D laboratories and offices in Taicang Port. Zhang said they began talks with the company in early 2022. For a project of this size, they usually visit in person before signing the deal to better understand the company’s position and technological resources. However, the visit was postponed until December 2022. Zhang explained that the signing ceremony provided an opportunity for both sides to better communicate their positions on projects. 　

Wei Lin, another investment promotion official from Suzhou, told NewsChina that during the pandemic, even though their efforts to attract investment continued with the assistance of overseas offices and foreign agencies, this mainly resulted in expanding or updating existing projects, not new ones, because executives from foreign companies could not visit China. 　

An official from the Investment Promotion Office of Ningbo, established in September 2022, told financial news portal Yicai in January that travel restrictions forced foreign executives to rely on media reports and intermediaries for information about China, which could lead to misunderstandings. “By flying abroad and communicating with them face to face, we can push forward the projects in discussion while getting leads for new ones,” said the official who spoke on condition of anonymity. 　

Qian Lili, vice director of Taicang’s commercial bureau, told NewsChina that the visits to foreign companies hastened the landing of the two projects in China. “They said the construction of the factory needed to wait until they [representatives of foreign companies] could visit and send technical staff [to China],” said Qian. She added that many German companies postponed projects in the past three years despite online meetings and virtual tours of the factories. “Field visits are indispensable,” Qian said. 

“Some foreign companies required a high-level official to meet with their president or vice president,” Wei Lin said. 　

Zhejiang Province launched its “Invest Zhejiang” campaign on January 9. The next day, the province sent its first provincial-level investment delegation to Hong Kong. By the end of February, over 10 provinces including Zhejiang, Jiangsu, Guangdong, Anhui and Shandong sent provincial and city-level teams abroad to attract investment. Several people on these trips said they felt intense competition between provinces. Provincial leadership led many teams directly. 

Local governments are holding investment events at home and abroad. On December 9, 2022, Shenzhen launched a global conference to promote investment. Combining online and offline activities, the conference discussed 315 projects worth 879 billion yuan (US$127.7b). 　

At the end of February, Qingdao in Shandong Province announced the launch of its global investment promotion campaign, which includes more than 20 city-level business delegations to 16 countries and regions, such as Japan, South Korea, the US, Britain and Germany. 　

Overseas business exchange offices, first opened in the 1970s to boost investment and exports, are being expanded to inform foreign entrepreneurs about China. 　

On February 2, Huzhou, a city in Zhejiang Province, sent three groups led by provincial officials to Europe. Besides visiting customers and getting a clear picture of the market, they will also set up exchange offices. 　

Wu Jun, vice director of the commercial bureau of Changxing County, Huzhou, told Yicai that preparations for their overseas office began at the end of 2019, but the pandemic postponed those plans. “It’s urgent that we restart it,” Wu said. 　

Suzhou official Wei Lin, who visited German and French companies including Siemens and Schneider, said his team was well-received. “Headquarters executives adjusted their busy schedules to fit us in. After all, we haven’t met offline for three years. Some executives even had not seen their team in China for three years,” Wei said. 　

“As the first government delegation to visit their headquarters in three years, we could feel they valued us,” Qian of Taicang’s commercial bureau said. While visiting global automotive and industrial supplier Schaeffler Group, Qian said supervisory board chairman Georg F. W. Schaeffler met her delegation personally, the highest reception a similar Chinese delegation had received from the company in 10 years. 　

“They all said they will visit China soon,” said Zhang Han, who was impressed by the positive reception. According to a February survey of 390 foreign companies and business associations by the China Council for the Promotion of International Trade, 98.2 percent have a positive outlook for the Chinese economy in 2023. 

He thought it was because these small-and medium-sized enterprises (SMEs) had neither invested in nor visited China before, a situation worsened by the pandemic. Besides, their tech and funding gaps with bigger companies make them more cautious, Zhang said. 　

“But their hesitance shows their interest in China,” Zhang said, adding that some SMEs they visited were aware of China’s carbon emissions goals and support policies, and hoped to be granted more land. He believes that investment demand will rebound because Covid travel restrictions have almost entirely been lifted. 　

However, another official who went abroad to promote investment told NewsChina that some foreign enterprises have more concerns than before the pandemic. “They want to know if foreign-funded companies are still welcome in China and how welcome they are. Better services and support policies from local governments surely will help dispel such worries,” said the official who spoke on condition of anonymity. 　

Political factors are also at work. Wei Lin told NewsChina that a German company planned to build another factory in China but it shelved investment plans after the Russia-Ukraine war erupted. 　

Wei said that foreign investors are considering different sectors than in the past. In high-tech zone Suzhou New District, for example, some sectors that previously garnered little attention, like healthcare, are now targets for foreign investment. According to China’s Ministry of Commerce, foreign investment in China’s auto industry skyrocketed by 264 percent in 2022. 　

Meanwhile, some foreign companies withdrew from China or lost market presence. “Computer manufacturers like Asus used to produce tens of billions of US dollars in value a year and attracted hundreds of supporting companies along the industrial chain. But now some companies along the chain might leave the Chinese market due to their decreasing competitiveness,” Wei said. 　

Wei noted that foreign investors have more concerns about China’s business environment now. “In the past, foreign investors paid more attention to the existence of support policies like tax breaks. Now they put more emphasis on things like stable logistics, supply chain and talent.” 　

Wang Yiming, former vice director of the Development Research Center of the State Council, said at a financial forum in December 2022 that the government should treat foreign companies the same as domestic ones and enhance the protection of intellectual property and the legitimate rights of foreign investments, and address their concerns. 　

Data from the Ministry of Commerce of China (MOFCOM) shows that in 2022, China’s actual use of foreign capital totaled US$189.1 billion, an increase of 8 percent year-on-year. Dozens of multinational companies’ headquarters were in contact with MOFCOM to arrange business trips to China, said Shu Jueting, MOFCOM spokesperson at a press conference on February 23. 　

Wei Jianguo, former vice minister of MOFCOM, said in an interview with the China Daily that he expected direct investment to China to see double-digit growth this year, reaching between US$220-230 billion as China further opens up its economy.