Executives share expectations for 2023 market

Editor's Note: China Daily is publishing interviews with senior executives of major foreign enterprises to gauge their outlook for the Chinese economy, their operations in China and their business plans for 2023.

Q1 Given the backdrop of a feared global economic recession, threats to global supply chains and the deep impact of the COVID-19 pandemic, what's your outlook for China's economy and your company's operations in China in 2023?

CRAPS: China's economy has shown strong resilience and vitality with a recovery trend stronger than market expectations despite challenges and difficulties. We are very optimistic about the future of China, and we see great potential in the Chinese market because we believe in continued high-quality growth in China. As a leading brewer, we have made solid progress in China despite the complex environment in 2022. In the first half of last year, our revenue grew 2.7 percent. We'll continue the growth momentum driven mainly by premiumization, digitalization and expansion, which will be further boosted by favorable government measures.

WU: Despite the challenges and uncertainties, we believe China's economy will further recover and grow in 2023. Meanwhile, we remain confident in the development of China's cross-border logistics sector thanks to the Chinese government's rollout of favorable policies and measures to stabilize and promote foreign trade. This year, we will continue to invest to strengthen our logistics infrastructure in China and launch intercontinental cargo routes and add flights to further improve our logistics network resilience and service capability. In January, our DHL Wuxi gateway was put into operation and the DHL Shenzhen gateway is also under expansion, as well as other new facilities in the pipeline. All aim to provide faster possible transit times and easier access to international markets for local businesses.

MOHAN: COVID-19 has indeed brought uncertainties and challenges to the world's economy and the business operations of various organizations. However, with China's outstanding capability in controlling the spread of the pandemic and stabilizing economic and social development, we are very confident that 2023 will be a year of accelerating growth with booming opportunities. China continues to be a key region of strategic significance for LIXIL globally, as well as an important engine to achieve sustainable growth. It is expected to become one of LIXIL's largest markets in the next decade. With our strategy and a strong commitment to China, we are confident that we will achieve our goals and deliver on our corporate purpose of making better homes a reality for everyone, everywhere.

HAMAGUCHI: With China's continued efforts to boost its economy and expand high-level opening-up, I believe that China will see more vitality in its economy in 2023, which will also make contributions to global economic recovery despite headwinds. With regard to the pharmaceutical industry, China presents us with great market potential with tremendous unmet medical needs for high-quality innovative solutions, particularly in our areas of focus — oncology, innovative drugs and therapies.

WAN: Aveva remains confident in the Chinese market and growth potential in 2023, as the country has been committed to high-standard opening-up and high-quality development. From the Belt and Road Initiative to the signing of the RCEP trade pact, China is actively pursuing a mutually beneficial strategy of economic development. Digital innovation remains at the core of China's modernization drive. As an industrial software company operating in China for nearly 30 years, Aveva has witnessed the great achievements made by China's industries in digital transformation. We will continue to work closely with our ecosystem in China to inspire industrial innovation and ingenuity.

Q2 Which business segment (s) of your company do you expect to see high growth in China this year? What are the new trends and interesting business opportunities in the Chinese market that your company might be keen to tap? How will you align your business strategies with such trends?

CRAPS: More than 80 percent of our profit pool growth in the next 10 years will come from premium and super premium segments, among which more than 50 percent will come from the super premium segment. There are many new trends that we've been looking at and laying out early on. First, growing consumer demand for health and well-being is an unstoppable trend that we are paying strong attention to. We are piloting brands like Michelob Ultra and Hoegaarden 0.0 to meet this need. Second, we've launched many innovations — line extensions loved by female consumers, such as the Corona sea salt fruity series and various fruity flavors of wheat beer under the Hoegaarden brand. Across the Asia-Pacific, we will continue to focus on our strategic priorities: (1) lead and grow the category through premiumization and expansion; (2) accelerate our existing business growth and unlock new business opportunities with digitalization; (3) continue to optimize our business by combining top-line growth and margin expansion, as well as leading ESG initiatives.

WU: We expect the cross-border e-commerce segment to grow continuously this year. It has been on a fast track in recent years, especially since the onset of COVID-19. The implementation of RCEP has ushered in a new wave of growth for the sector. It has enabled Chinese cross-border e-commerce businesses to expand their presence in regional markets, which generates more demand for international logistics. To tap the opportunities, this year, according to market demand, we have new facilities to be built and cargo routes to be launched to ensure ample air capacity and efficiency of cross-border logistics to assist local businesses going global.

MOHAN: China has a large-scale home furnishing and renovation market with great vitality, and we have seen many trends and opportunities emerging in recent years. One significant trend is that young consumers are focusing on human and personalized designs and experiences — and they are willing to pay for such products and services. In response to this trend, LIXIL leverages its rich product matrix to create diversified and personalized kitchen and bathroom solutions. On the other hand, as the concept of environmental protection and sustainable consumption grows stronger in China, sustainability is gradually being taken into consideration by consumers, and we can observe an increasing demand for green and healthy home solutions.

HAMAGUCHI: At Astellas, we are committed to turning innovative science into value for patients. In China, we have a determined goal — to become a leader in oncology and specialty care as we see huge potential in this regard. Demand for high-value and patient-centric healthcare solutions in these areas is on the rise, mostly driven by the large population, more spending on healthcare, as well as increasing public awareness of health issues. We have been dedicating ourselves to addressing evolving patient needs over the last couple of years and will continue our efforts into 2023 and beyond.

WAN: The transformation of the energy system should be a core element in any agenda for ESG strategies that are aimed at improving living standards of people and achieving sustainable economic development. That is why Aveva is now increasing R&D investment to support the development of hydrogen energy and lithium batteries. This also aligns with our vision to drive responsible use of the planet's resources. Aveva has deepened its commitment to supporting industrial customers on decarbonization and promised to reduce greenhouse gases across operations by 90 percent.

Q3 China's top policymakers have pledged greater efforts to attract foreign capital, widen market access, promote further opening-up of modern service industries and ensure a level playing field for both domestic and foreign companies. In this context, what measures do you expect this year? Will you draw up new plans for investment, hiring and business expansion in China?

CRAPS: After the 20th CPC National Congress, a series of signals were given for developing the real economy and stabilizing foreign investment, in particular, the 2022 edition of the Catalogue of Industries to Encourage Foreign Investment, which took effect on Jan 1. It includes foreign investment in beer manufacturing for the first time in six provinces, marking a fast track for industrial investment in those areas. Budweiser APAC quickly responded to the national policy call and concluded a cooperation agreement with local governments. China is a strategic market for Budweiser APAC and we'll continue to invest in this market.

WU: We have benefited greatly from the continuously improving business environment in China. This has further strengthened our confidence and determination for long-term development in China. We have been increasing our investment in China in recent years, especially last year, having not only put into operation new gateways in hub cities, but also opened new service centers in lower-tier cities, as well as launching direct cargo routes between China and cities worldwide. We will continue to do so this year.

MOHAN: Multinationals undoubtedly benefit from China's expanding reform and opening-up policy. With years of dedication in China, LIXIL has witnessed China's increasingly prosperous development, as well as China's practical achievements in creating a fair, transparent, predictable market-oriented and world-class business environment. At present, China has a huge consumer market, and the consumption pattern is shifting from physical to service-centered. Therefore, while continuing to open up, in-depth institutional and policy innovations, such as the improvement of legal systems including intellectual property rights, will further attract more high-quality services into the Chinese market and expand the effective supply of the entire service industry.

HAMAGUCHI: We appreciate China's high-level opening-up policy as well as great efforts in improving the business environment for multinational companies, which further boosts our confidence. We have completed our strategic layout upgrade in China to operate with high efficiency and agility with a patient-centric mindset in this dynamic market. This year marks the mid-year of Astellas' Corporate Strategic Plan 2021, and we are on the right track. We will continue to accelerate our innovative drug introduction to China and make contributions to realizing the Healthy China 2030 initiative.

WAN: China is always a key market for Aveva, as the Chinese economy has shown strong resilience and vitality. We will further expand and deepen our business in China and embrace new opportunities in the digital economic era. We will continue to enhance the ecosystem, invest in local solutions, and expand into new applications and markets.

Additionally, Aveva will further join forces with universities and institutions in China to help bridge the gap between theory and practice, enable students to master the tools they will use in the future in advance, gain differentiated skill advantages, and drive the improvement of industrial efficiency and performance, energy saving and emission reductions faster.

Q4 This year marks the 45th anniversary of China's famed reform and opening-up policy. In this context, in which areas do you expect more progress? How is your business likely to benefit?

CRAPS: China's reform and opening-up has made remarkable achievements that amaze the world. We expect future policies to exempt or reduce excise taxes on nonalcoholic beer. According to statistics, non-alcoholic beer only accounts for about 1 percent of beer consumed in the Chinese market, lower than international levels, which means great potential opportunities. Reducing or exempting excise taxes on alcohol-free beer has little impact on our overall tax revenue, but it has positive significance to encourage the beer industry to promote the initiative of innovation and alleviate international competition pressure.

WU: DHL Express was among the first major international logistics business to enter the Chinese market. We have witnessed, participated in and benefited from the course of opening-up and reform in China. From initiating the Belt and Road Initiative to signing the RCEP pact and the unwavering efforts to join CPTPP and DEPA, China has intensified its commitment to opening its market to and working together with the rest of the world for more open and free trade. We expect the measures to unleash more potential in boosting regional and global trade and logistics demand. We will seize market opportunities and continue to play an active role in promoting trade flows to and from China and the rest of the world.

MOHAN: As a beneficiary of China's business environment, LIXIL has deeply felt China's determination over the years to deepen reforms to streamline the government, delegate power, and improve government services, thus providing a conducive environment for investment and building an open world economy. LIXIL is fully confident in the prospects of China's future economic growth. China will continue to be a strategic market with great significance for LIXIL, and we will continue to fulfill our long-term commitment to China. Meanwhile, we also look forward to the wider opening-up of China's win-win cooperation.

HAMAGUCHI: State policy has fostered a favorable business climate for multinational companies like Astellas. As a global pharmaceutical company that entered China in 1994, Astellas has been a witness and beneficiary of significant changes brought by China's reform and opening-up. China has now risen to the top tier of Astellas' global strategic markets due to its strong performance and increasing strategic significance. Moving forward, we expect more efforts to expand patient access to innovative drugs and a continuously improved business environment, which will give us stronger confidence to turn innovation into value for patients in China at a faster pace.

WAN: Since the reform and opening-up that began in 1978, China has reshaped its relations with the outside world. China has become a major trading partner in the world and plays a critical role in leading global actions to tackle environmental challenges. China has set clear goals to achieve green development after the country proposed the dual carbon goals. Companies should leverage digital tools such as AI, big data and digital twin technologies to improve efficiency and boost risk resistance capabilities as well as reduce carbon emissions. Aveva is very confident in its ability to help Chinese companies with high-quality digital transformation and low-carbon development.

Q5 As China continues to pursue high-quality development along a Chinese path to modernization, what is your vision for your company's business in the country? What business opportunities do you foresee emerging as part of this process?

CRAPS: The concept of Environmental, Social and Governance is a top priority for us and is ingrained in our business. We focus on creating value for our business, for our partners and for a measurable positive impact on society. To this extent, we share the agenda of high-quality development. We will continue to leverage technological innovation, industry insights and localized partnerships to create a sustainable and inclusive future punctuated with more cheers. In the context of high-quality development, relevant carbon reduction technologies or solutions, innovative products in line with consumption upgrading and projects to drive common prosperity such as rural revitalization where we have our strengths — all represent very promising opportunities for us and the market.

WU: China remains one of the most important markets for DHL Express. Our commitment to long-term growth and development in China never wavers. To pursue high-quality development, in addition to the commitment to high-standard opening-up, China's intensified efforts to establish a modern industrial system are also key to sustainable quality growth. In this process, we expect the transformation and upgrading of traditional industries, the development of strategic emerging industries and the deep integration of the digital and real economies to create new business opportunities for the global logistics industry.

MOHAN: China's modernization has great significance in terms of achieving common prosperity. LIXIL has always been a firm supporter in seeking ways to contribute to China and the industry's high-quality development. LIXIL is undergoing a transformative journey that is centered on our strategic pillars. The first is transforming our business model based on a changing market. In China, we have chosen to actively transform ourselves from a traditional "product" supplier to a "product & service" integrated solutions service provider. The second pillar is digital transformation. We have established a consumer data center that captures the needs of consumers and provides more targeted product information based on purchase patterns.

HAMAGUCHI: For the healthcare industry, high-quality development is vital as it's about the health of people — the essence of people's well-being. In my opinion, innovation will boost the high-quality development of this industry and push forward industry upgrades, and ultimately improve Chinese people's health. Astellas is on a mission to be an innovator and to bring high-quality innovative drugs to patients in China and globally. In this dynamic market with huge potential, we aim to be a leader in oncology and specialty care, and continue making contributions to the fulfillment of the Healthy China 2030 blueprint.

WAN: The business environment in China is constantly improving. Aveva has been serving Chinese customers mainly in 16 pillar industries of the national economy and we are building a sustainable future with ecosystem partners in China. The way to modernization is inseparable from the innovation of digital technology. We are seeing emerging technical demands for AI, big data, industrial internet of things and edge computing. We will seize the opportunities and take a win-win approach to develop relevant solutions to drive the high-quality development of the industry.