High expectations abound for 'two sessions'

Editor's Note: The world's attention is again focused on China as it convenes the annual full sessions of the National People's Congress and the National Committee of the Chinese People's Political Consultative Conference.

The full sessions of the top legislature and the top political advisory body are held to discuss and adopt policies to deliver the wide-ranging reform promises made during the Third Plenum of the 18th Central Committee of the Communist Party of China in November last year.

As a major economic force, multinational companies attach great importance to the annual "two sessions", where policy priorities and targets for the year are set. Over the years, the "two sessions" have successfully navigated the development of China, which is not only very important to the country itself but also matters to the world.

China Daily interviewed executives from global businesses operating in China to get their opinions and ideas.

High expectations abound for 'two sessions'

High expectations abound for 'two sessions'

High expectations abound for 'two sessions'

For our food industry, which is closely related to manufacturing and farming, the priority is land reform — to free up the buying and selling of farmland in order to produce more and better food. That will be very difficult without true land reform.

Farmers must be empowered to become entrepreneurs.

I believe Chinese farmers can be small companies. There are too many farmers and small plots of land; they need to be able to consolidate for better productivity.

High expectations abound for 'two sessions'

Lat year, we had another very good year. Although growth was slower than in 2012, we are still growing nicely. There is a clear difference between products having to do with private consumption — such as drinking beverages and cooking at home, which are still growing well — and other things, such as gifting and restaurants, which are down. High-end catering and gifting probably will never return to their former high growth.

This year will be better than last year but still will have the same trend.

Overall, we are confident because we are focusing on the domestic economy. In 2014, in catering, we are changing to medium-priced restaurants rather than expensive restaurants and focusing on mainstream restaurants.

We also are focusing more on consumption and less on gifting.

High expectations abound for 'two sessions'

We have invested close to $500 million every year on new equipment and new machinery in China and will continue to do that in the foreseeable future. We are doing about $7 billion in business, but we still have a lot of room to grow.

One of the priorities for us is to understand the Chinese consumer and become a model company, which is different from what we have in other countries. China is competitive, fast and innovative. Working with Chinese partners, you cannot manage Chinese entrepreneurs as you can manage foreign ones because they are faster, more flexible and innovative. Nestle's model in China has to be different from anywhere else. We have to put on our Chinese glasses and leave our Western glasses at home.

High expectations abound for 'two sessions'

The biggest environmental problem has to do not so much with investment or business decisions but with recruitment. We are really struggling to convince people to work and live in Beijing, especially people with children. We certainly don't want to expand our office here. We'd rather expand to other places outside of Beijing.

----- Roland Decorvet
Greater China chairman and CEO, Nestle

High expectations abound for 'two sessions'

High expectations abound for 'two sessions'

China has achieved remarkable growth in the past few decades. We have seen a clear trend that the country is focusing on shifting its economic structure to maintain sustainable growth. We have a high level of confidence that China's vigorous growth will be continued in the future.

The country should do more to rebalance the economy while it strives to maintain economic growth alongside sustainable development. KUKA, as the manufacturer of industrial robots, expects that strong support from the Chinese government in the intelligent manufacturing equipment industry will facilitate the transformation and upgrading of the industrial structure in China.

High expectations abound for 'two sessions'

With the rapid development of the Chinese economy, China has entered a crucial stage of economic restructuring and industrial upgrading, which has brought not only opportunities but more challenges. It is clear China has become a key market for companies around the world and is one of the important markets for KUKA. China is the most rapidly growing market in the world.

In 2013, China was the second-largest country for industrial robots (23,000 robots shipments in 2012 and around 25,000 in 2013). For this, we at KUKA firmly believe we are ready for fierce competition because of our state-of-the-art technology and solid experience. Our broad product portfolio and localized customer service will meet client's demands and match the trend of China's manufacturing industry to a very high degree. KUKA is well-positioned to facilitate the development of China's automation and manufacturing. With our customer-oriented service, future innovation and safe technology, we are confident about our future in China.

High expectations abound for 'two sessions'

As we know, the dominant trend of sustainable development is bringing about significant changes to the global economy and countries across the world. Also, we remain convinced that China will continue to have the fastest growing market in the world. KUKA will maintain future-oriented technical innovation and our long-term commitment to the China market. KUKA was founded in 1898. With more than 40 years of professional manufacturing experience, advanced automation solutions and best-service systems, we are confident about expanding our business globally and in China over the next five years. KUKA's new production site will start operations in March. That will be a further demonstration of our long-term commitment to serving local clients and the China market.

High expectations abound for 'two sessions'

Recently, serious environmental issues increasingly attracted the country's attention. We can see the government has been taking the effective action to improve them. Also, the new leadership has stressed the necessity for sustainable development alongside environmental protection and harmonious development. We will firmly advocate and support the sustainable manner of China's future development.

----- Bing Kong
Chief executive officer, KUKA Robotics China Co Ltd

High expectations abound for 'two sessions'

High expectations abound for 'two sessions'

We have a high level of confidence that China's vigorous growth will continue in the long term, albeit at a more sustainable rate. China's remarkable growth in recent decades can be attributed to the application of capital and basic technology to its vast pool of labor. As a result, China is now a manufacturing powerhouse with an infrastructure in places that is on par with or better than that of a developed country.

China is now at a crucial point in its development path. It has to avoid falling into what economists call the "middle income trap."

To avoid this trap, China needs to attract both capital and technological innovation that will raise its labor productivity, wages and domestic consumption. Raising domestic consumption will also insulate China's economy from global economic shocks, since it will be less dependent on exports.

China's leadership has always been committed to the nation's economic development.

The urbanization strategy adopted by the new leadership is a good transitional step. By raising the wages and living standards of the rural population, the strategy will ultimately help with rebalancing the overall growth strategy toward domestic consumption-led growth.

The next step should be to make the economic environment more attractive to capital and technological innovation, which will set China on a path to continually increasing labor productivity, wages and standards of living.

High expectations abound for 'two sessions'

With the rapid development of the Chinese economy, it has clearly become a key market for companies around the world.

The softness of the general economic situation over the past two years brought increasing challenges to many multinational corporations. But managing through periods of economic turmoil is easier for Eaton, due to the diversification of our business over the past decade.

Our broad mix of businesses allows the company to perform in the early, middle and late stages of the economic cycle.

Our strategy seeks balance in a mix of business segments, in geographic footprints and throughout the economic cycle.

High expectations abound for 'two sessions'

We remain convinced that China will continue to be counted in the select set of fastest-growing, premier global economies far into the future. China remains a bright spot for Eaton, and we will maintain our commitment to, and investment in, China.

China has developed sufficiently and grown to a large enough scale that further sustained economic growth can come only by raising labor productivity, rather than just tapping more low-cost labor. Labor productivity can be raised by innovation and the use of more advanced technology.

High expectations abound for 'two sessions'

Environmental pollution is one of the most pressing challenges China faces today. The new leadership has stressed the need for sustainable development with a focus on innovation and environmental protection. We are very confident about China's future development in a sustainable manner.

Eaton has a wide range of innovative technologies, partnerships and investments that are helping China to meet its sustainability goals, as we have highlighted in Eaton's China Sustainability Report, published since 2008.

----- Joe-Tao Zhou
China president, Eaton Corp

High expectations abound for 'two sessions'

High expectations abound for 'two sessions'

China's economy has grown rapidly, with per capita GDP (at current prices) rising from about $1,300 in 2003 to $6,600 in 2013.

With accumulated wealth, problems like environmental pollution and waste of resources have also inevitably escalated. We expect that the government report will touch on welfare, education, medical reform and environmental protection. China is further deepening its reform and will continue to open up.

We are delighted to see that recently, the Chinese government has carried out further decentralization.

The State Council has canceled or decentralized more than 300 administrative approval items, thereby optimizing the business environment.

In addition, the market is set to play a "decisive" role in allocating resources in the economy, which will boost competition and economic efficiency.

These reforms are meant to promote a stronger orientation toward the market and to remodel the relationship between the government and industry.

These measures will have a profound influence on ensuring continued stable, sustainable economic development.

High expectations abound for 'two sessions'

At Bayer, we believe in the saying "Science for a Better Life". Our innovative solutions address some of China's core challenges, such as universal health care coverage, safe and healthy food for all, solutions for an efficient infrastructure and tackling climate change.

With our knowledge and experience, we are in a position to help China accomplish some of its main long-term objectives — to grow economically, in a profitable yet sustainable way, as well as to rebalance the economy.

Intellectual property protection is also often discussed, but it's a necessary condition to bring latest technology and innovation into the chain. Finding proper protection for the innovator is of outmost importance for developing an R&D-oriented culture.

High expectations abound for 'two sessions'

Bayer's roots in China go back 132 years, when it provided textile dyes. Today, the greater China market is Bayer's third-largest single market globally and the first in the Asia-Pacific region.

We have successfully developed our business here and we are committed to further invest in this market and to bring the most innovative technology and products to China, supporting the idea of turning "Made in China" into "Created in China".

High expectations abound for 'two sessions'

China's environment problems have become increasingly prominent. We have seen the efforts made by the Chinese government to tackle this issue.

Recently, the government announced a catalogue of measures to further safeguard the environment, such as the introduction of an action plan to strengthen emergency management of air pollution and measures to control haze.

It will also compile an action plan to prevent water pollution and gradually build a comprehensive system of environmental protection.

From these efforts, we can see that China aims to set up an integrated system to tackle its environmental issues in the long run.

In the local "two sessions" held earlier this year, 22 local governments lowered their GDP growth targets for 2014, which demonstrates their firm determination to transform the economy and put it on a more sustainable growth pattern.

----- Johannes M. Dietsch
President of Bayer Greater China Group

High expectations abound for 'two sessions'

High expectations abound for 'two sessions'

China faces the challenge of driving consumer consumption and making this the key component of GDP growth. The overcapacity in industries will need to be addressed, either through increasing utilization by driving up consumption or enforcing labor, environmental and health and safety laws to drive out the illegal or compliant products that are negatively affecting the environment and the health and safety of products sold in China. Finding employment for all the people moving to cities in an era where companies are turning to automation is another challenge.

High expectations abound for 'two sessions'

Leadership. We have the investment resources, we have the brands, we have the equipment and we have enough people. The treasured resource we lack the most is qualified leaders who can operate in a fast-moving consumer goods market environment, can use best practices from around China or the world in their area of operation and lead and coach their subordinates to be better leaders than they themselves are.

High expectations abound for 'two sessions'

Our business has rapidly expanded in the past 20 years and will do so for the foreseeable future. The reason is very simple. The consumer market will expand and we have the superior products and consumer insights. This will enable us to not only continue to grow organically: inorganic opportunities are often "knocking on our door" to work with us.

High expectations abound for 'two sessions'

I am very proud to say that Carlsberg gives environmental issues a priority as high as our consumer and customer priorities. We have invested heavily in ensuring that our operations strictly adhere to the EPA regulations, and we provide training at all levels of the organization on environmental and health and safety.

We continue to strive to be seen as the gold standard in our industry for environmental compliance and management. This is not easy in a country as large as China and with as large a footprint as our operations have in China, but we are committed to this priority.

----- Stephen Maher
CEO of Carlsberg China

High expectations abound for 'two sessions'

High expectations abound for 'two sessions'
The biggest challenges to the Chinese economy are overcapacity, effective wealth distribution and a social welfare system, cleaner air with planned investment as well as "shadow banking" and local loans.

China therefore needs to take calculated steps in an expeditious manner in its handling of overcapacity to avoid a hard economic landing and to build a sustainable economic growth model. China also lacks a solid wealth distribution system because of the fast increase of wealth in an uneven manner.

Furthermore, the nation needs a strong and solid social welfare system to provide basic coverage to the majority of people. To that end, starting this year, China is undergoing a redesign and restructure of the wealth distribution system and building a basic social welfare foundation.

It also requires cleaner fuels for sustainable growth which involve a huge investment in purifying the use of traditional fuel and the economical use of new fuel.

An innovative way of handling shadow banks to make the banking system more pro-business and devoted to sustainable growth, controlling local loans effectively, is essential.

Another aspect of vital reform involves starting the process of building a sustainable growth model and creating a healthy wealth distribution system. The Chinese government needs to spend more time continuously growing the economy while at the same time paying special attention to preventing new pollution. It is important everyone knows China needs continuous growth and the creation of wealth to solve many social problems that are the leftovers of the country's history. For people to concentrate more on economic growth, the Chinese government needs to redesign and restructure its wealth distribution system. The country needs to maintain a free flow and interaction among various groups of people. People need to feel that opportunities are open equally and fairly to them.

High expectations abound for 'two sessions'

Because China is in a process of actively containing then eliminating the deleterious effects of pollution to improve the environment, China needs to put more effort into value-added manufacturing instead of highly polluting industry, the high consumption of resources and energy and the low return on mining and preliminary production. Aluminum helps reduce the weight of mobile equipment which in turn reduces emission and energy consumption. Our role is to promote extensive use of aluminum to replace heavier metals for a better environment and less consumption of energy. Alcoa is in the right country doing the right thing at the right time.

High expectations abound for 'two sessions'

Of course we will see significant growth in aluminum use in China. As a world multi-metal utilization leader, Alcoa has every reason to expand its presence in China. Because China is in the process of forming a new growth model, a more sustainable and more environmentally friendly economic growth pattern is going to be adopted. Aluminum is part of the solution. Like other developed countries, we are going to see aluminum more extensively applied in various industries to improve our living standards. We will see more vehicles weigh less by using more aluminum in place of heavier metals. More people will be using lighter electronic devices that use aluminum in their construction.

High expectations abound for 'two sessions'

Environmental concerns are always a critical part of our decision-making process. China is still the main user of coal, which causes many environmental concerns. The aluminum industry in China is one of the largest users of coal fire. Everyone needs to take action to reduce coal use before coal fire can be converted into an environmentally friendly, truly clean fuel.

More clean energy should be considered for use in the aluminum industry, especially when it comes to the smelting business. Of course, extensive use of aluminum in mid- and downstream enterprises will significantly reduce the weight of mobile equipment that, in turn, will help reduce emissions and the consumption of energy. That is one of the reasons Alcoa chose to work in China in mid- and downstream businesses.

----- Jinya Chen
Vice-president of Alcoa Inc, president of Alcoa Asia Pacific

High expectations abound for 'two sessions'

High expectations abound for 'two sessions'

We think the biggest challenge to China's economy in 2014 will be how China can effectively de-leverage the economy and deal with the issue of overcapacity in certain sectors, while at the same time maintaining the economy's vitality and stable growth.

We would like to see new policy breakthroughs in 2014 to fulfill the promise of building a fair, open and transparent market with unified rules and regulations that will provide equal market access and investment prospects for all participants, thus giving rise to new growth potential and creating new opportunities.

High expectations abound for 'two sessions'

The biggest challenge for us is that the Infiniti brand is still not widely known and recognized. That is why we set brand-building as our top priority to create a really exciting brand to attract young-minded premium customers and, in doing so, we also strive to elevate the Infiniti brand to the same level as the dominant German three (usually referred to as Audi, BMW and Mercedes-Benz).

In the meantime, the anticipated slowing of the economy means the end of hyper-growth for the golden age of China's premium auto market, giving rise to a more challenging sales environment and more fierce competition.

The rapidly rising costs of labor, land and utilities are posing challenges to our overall planning and business operations.

However, we believe China's premium segment still has very bright prospects for at least another five to 10 years and the country is on its way to becoming the world's largest luxury auto market, maybe overtaking the US this year.

A new round of reforms and urbanization will create new demand, while the pace of people upgrading vehicles will also pick up as the result of rising incomes and changing lifestyles.

We've found that people in mature markets are more likely to diversify their choice of brands. For example in the US, the three German auto brands take up a combined market share of 49 percent, while for China it is 78 percent.

So, as the market matures, we will see the Chinese diversifying their choices, creating great opportunities for Infiniti ahead.

High expectations abound for 'two sessions'

China is definitely at the core of Infiniti's global strategy and expansion. As we often say: "Who wins China wins the world." We will continue to develop the country as our second volume hub with the expectation that it will overtake the US as our largest global market sometime in the future.

We are implementing our China strategy to cover the key areas of brand-building, local production and customized product development for China.

By the end of 2014, Infiniti will start producing two models — the tailor-made long wheelbase versions of the premium sports sedan Infiniti Q50 and the stylish sports SUV QX50 — at the Xiangyang plant in Hubei province, complementing our global production network including Japan, the US and the UK.

This year we will introduce six new models in China with even more products in the pipeline to enrich our offerings.

Leveraging our local production and portfolio expansion, we aim to increase our annual sales from last year's 17,108 to 100,000 by 2018.

Our long-term objective is to develop Infiniti into a mainstream premium auto brand that enjoys the same recognition and prestige as the dominant German three.

High expectations abound for 'two sessions'

Infiniti has always regarded the environment as the utmost priority throughout our development agenda and we make every endeavor to protect and improve it across the entire business chain from research and development, on to production and products and then to sales.

We only sign up with those who share our commitment to the environment and strictly comply with State environment rules and regulations as our partners.

Infiniti's local production in China will be conducted according to our global practices, which implement the highest environmental standards.

----- Daniel Kirchert
Managing director of Infiniti China

High expectations abound for 'two sessions'

High expectations abound for 'two sessions'

Broad healthcare reform and improving healthcare access should remain as the top priorities of the Chinese government in 2014 and beyond. After the Chinese government initiated healthcare reforms in 2009, there have been tremendous achievements made in terms of improving healthcare accessibility and afford ability. For example, 95 percent of the population is now covered by medical insurance. While there are still challenges to be addressed to drive healthcare reform forward, we are confident about the future of China's healthcare environment.

High expectations abound for 'two sessions'

China is one of the most important emerging markets for Pfizer globally. Pfizer is currently the No 1 international bio-pharmaceutical company in China.

China will present significant opportunities for pharmaceutical companies over the next five to 10 years. According to a number of sources, China's economy will continue on its strong trajectory of growth, with China healthcare spending projected to increase four times from 2010 to 2020. Meanwhile, the China pharmaceutical market will become the third-largest market globally by 2015. It is projected to grow by 4.4 times from 2010 to become a $250 billion market by 2020.

This rapid economic growth will fuel urbanization, a growing middle-class population, more stable credit markets and increased investments by people and the government in healthcare. Moreover, the Chinese government's commitment to healthcare reform, infrastructure development and continuous improvement of reimbursement coverage will further drive market growth.

We have also seen rising incidence rates of non-communicable diseases as a result of lifestyle changes brought about by increased economic wealth. For example, cardiovascular disease is the leading cause of death in China, and rates of stroke and cardiovascular disease are rising. Diagnosis and treatment rates are low, creating a considerable social and economic burden

All these factors fuel demand for high-quality and affordable medicines and create opportunities for Pfizer and the pharmaceutical industry to provide healthcare solutions for the Chinese market.

Pfizer will continue to bring innovative medicines to China to address the country's unmet health needs and will also continue to provide off-patent medicines, including branded generics, to address the medical needs of China.

We will also work with the entire industry and support the Chinese government to further improve drug accessibility and affordability, improve the quality of China's drug sector so that it is on a par with international standards, encourage drug innovation and improve drug pricing mechanisms.

High expectations abound for 'two sessions'

We are confident about the future growth opportunities in China as mentioned. We will continue to drive the solid growth of our innovative and established products portfolio in the country. We will also actively pursue branded generics opportunities through our joint venture with Zhejiang Hisun Pharmaceutical Co Ltd. At the same time, we will continue our geographical expansion initiatives to meet the unmet healthcare needs in remote areas.

High expectations abound for 'two sessions'

Pfizer remains confident that China will continue to improve its foreign investment environment. We are also confident from what we've seen in recent developments that China will continue to make technological and environmental advancements that will be conducive to its future success in the global pharmaceutical market.

----- Wu Xiaobin
Regional president, Pfizer China

High expectations abound for 'two sessions'

High expectations abound for 'two sessions'

The biggest challenge for the Chinese economy in 2014 is probably to reduce risks to growth and build a solid foundation for the development of the economy.

Liberalization of the market in many industries is opening up new opportunities for companies, which will bring more competition. We support this move toward further liberalization, as it will be good for consumers, who can benefit from an increase of quality in services at competitive rates.

High expectations abound for 'two sessions'

The major opportunity for Air France and KLM in China is to benefit from the growth in international travel. With our nine destinations in greater China and our strong partnerships with China Southern Airlines Co Ltd and China Eastern Airlines Corp Ltd, Air France and KLM have a leading position for travel toward Europe and South America. The challenge will be to maintain and expand this leading position in this highly competitive market.

High expectations abound for 'two sessions'

Air France and KLM have opened many new routes in the past five years, such as Wuhan, Xiamen and Hangzhou.

Air France and KLM always look for new opportunities, and we will closely follow the development of many cities in China. However, at this point, we do not have any plans for new routes in the near future.

Our objective is to build on the strong network that we have and to optimize the existing routes in terms of aircraft type and frequency.

A recent example is the launch of operations of the Airbus A380 to Shanghai for Air France, adding almost 20 percent capacity on this route. Air France will also operate an A380 to Hong Kong this summer.

High expectations abound for 'two sessions'

The leadership in China shows a strong desire and drive to tackle environmental issues. This gives us strong confidence that these problems will be reduced in the years to come.

Air France and KLM do their utmost to develop sustainable growth in the airline industry.

This effort is rewarded by being the number one for nine years in a row in the Dow Jones Sustainability index for the airline industry.

New techniques and possibilities — think of biofuel, for example — will certainly help to reduce the overall carbon footprint.

----- Bas Gerressen
Air France and KLM Group's general manager for Greater China