China is rolling out the red carpet to attract foreign executives


Pictured here is a Foxconn factory in the city of Zhengzhou on September 4, 2021.

vcg | Visual China Group | Getty Images

BEIJING — China is pulling out all the stops to retain multinationals Apple and its suppliers Foxconn in the country.

Such efforts to attract foreign investment come as the pandemic and geopolitical tensions are urging companies to diversify their supply chains away from China.

For the first time in 25 years, the American Chamber of Commerce in China found that less than half of respondents in its annual survey ranked China as one of the top three investment priorities. The number of companies considering or beginning to shift manufacturing and sourcing outside of China rose 10 percentage points from a year earlier, according to the survey.

The majority of respondents are not planning to relocate their supply chains, the AmCham report said.

The survey was conducted last fall and the results have not changed significantly since China ended its strict Covid controls, AmCham said. The Chinese Ministry of Commerce did not respond to a request for comment.

After such a drop in sentiment, China is working hard to keep foreign companies investing — and supporting domestic growth. The Commerce Ministry said on Thursday that it will launch events for an “Invest in China Year” for the first time.

In a sign of how hard local governments are trying to attract foreign dollars, top officials from central China’s Henan province personally welcomed Foxconn chairman Young Liu during his visit to his company’s factory there last week, the province said.

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

The party secretaries of Zhengzhou city and Henan province met with Foxconn – along with the mayor and the governor, state media said. In China, the ruling Chinese Communist Party is taking the lead in decision-making, and such high-level attendance at the meeting with Foxconn shows that all the issues discussed can be implemented more quickly.

During a Covid outbreak and subsequent lockdown last year, Foxconn’s Zhengzhou factory became a hotspot of attention when some of its roughly 200,000 workers decided to leave the company and walk home.

Apple later said that the disruptions at the Zhengzhou factory would delay shipments of some iPhone 14 models.

China ended its strict Covid controls in December. In February, Foxconn’s Zhengzhou factory was producing at full capacity, with workers working two shifts to meet high customer demand, factory manager Wang Xue told local media.

Foxconn confirmed its chairman’s visit to Henan and plans to work with the local government on projects. However, the company did not share any details on those investment plans or whether it intends to shift production out of China.

China says other companies are coming

China is keen to highlight the interest of other multinationals in local business opportunities, especially now that international borders have reopened.

executives out Apple, Pfizer And Mercedes Benz are among those planning to visit China to discuss business, the Commerce Ministry spokesman said at a news conference last week.

The spokesman noted that dozens of multinational companies are in talks with the ministry about such high-level visits.

Mercedes-Benz confirmed to CNBC that its CEO Ola Kallenius plans to visit China. Pfizer had no comment. Apple did not respond to a request for comment.

Marketing tour abroad

China also visits potential investors in their home countries.

After a high-level government meeting in December called for greater efforts to attract foreign capital, many government-led groups have traveled abroad to hold China sales talks.

Wang Jinxia, ​​deputy director of Qianhai — an economic development zone in Shenzhen — led a group to Dubai, Singapore and London in February to spark investment interest.

He described the visits as “remarkable results” – but didn’t elaborate. He also pointed to “serious challenges” in attracting foreign investment. These include unfair competition from local players in China due to industrial policies, lack of legal protection for overseas business in China, and geopolitical risks, Wang said.

The Biden administration has tightened restrictions on US doing business with China, such as restrictions announced last year on US companies and individuals working with Chinese partners on the most advanced semiconductors.

It is not clear to what extent further restrictions will be announced.

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To be clear, international investment is still coming to China at a steady pace.

Foreign direct investment rose 14.5% year on year to 127.69 billion yuan ($18.39 billion) in January, according to China’s Ministry of Commerce. That’s faster than the 6.3% increase for all of 2022.

South Korea, Germany and the UK are the biggest sources of such foreign investment in 2022, the ministry said, without mentioning the US

For a Chinese region like Henan, retaining or growing investment from foreign companies is a lifeline. Official data showed that Foxconn’s iPhone factory accounted for 84% of the entire province’s exports in 2019.

China’s Commerce Minister Wang Wentao on Thursday made a relatively rare public acknowledgment of long-standing grievances from foreign companies about the government’s procurement policies favoring local Chinese companies.

Addressing these issues is “a priority of our work,” he said in Mandarin, translated by CNBC. “We will examine and implement policies and measures together with the relevant departments to ensure the equal participation of foreign companies.”