MNCs keen to grow amid further opening-up

Editor's Note: During the two sessions, the annual sittings of China's top legislature and political advisory body, which are being held from March 4 to 13, China Daily is publishing interviews with executives of major foreign enterprises operating in the country. Their views below give a glimpse of both their outlooks for the Chinese economy and their business plans for this year.

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?

XU: I have a positive outlook for China's economy in 2023 as I see recovery gathering great momentum, which will contribute to global economic performance as well. For the aviation industry, the turning point has arrived with a strong rebound in both domestic and international markets. Although challenges such as mounting energy costs, geopolitical disruptions, fragile supply chains and global warming still remain, China's reopening will surely improve our capability to resist these risks.

Moreover, the orders Airbus received from China in 2022 have shown that farsighted Chinese airlines are optimistic enough to make investments for a post-COVID-19 air traffic recovery and growth with long-term vision. Therefore, I believe 2023 is a year of opportunities for Airbus to continue developing business and cooperation in China and maintaining a strong impetus in the China market.

WU: The Chinese market has presented strong resilience and potential in the past few years. Despite facing a multitude of challenges, the government remains committed to consolidating and expanding the ongoing economic recovery. China will remain a key growth driver for the global economy. China's vast market and ongoing economic reforms provide ample opportunities for foreign and domestic companies alike.

JUANG: HP has been in China for 40 years. We were one of the first US-based companies to establish a high-tech joint venture here. And over the past four decades, we have grown in China, with China and for China.

As we look forward, we see many opportunities to build on our success and serve the needs of our customers and communities. China's growing market, rapid technological development and advanced industry are paving the way for long-term, sustainable growth. We will continue to support the digital transformation of enterprises and SMEs to innovate for our customers and enhance the way they work, live and play.

CHUNG: The slowdown of global economic growth has brought all sorts of uncertainties, but the long-term positive outlook for China's economy remains unchanged. With the adjustment of China's contagion prevention measures, we see that the consumer market has begun to revive, social and economic vitality has been further released, and China's economy has been showing its strong resilience and great potential.

After 30 years of deep cultivation and development, China has become the most important strategic market for Nippon Paint. We will work together with our local partners to provide more innovative products and solutions tailored to China in 2023, and help promote the construction of high-quality economic development in the Chinese market.

LECLERC: As the third-largest market for The Coca-Cola Company, China continues to be a strategically important market that we highly value and at the same time, offers long-term opportunities for us. Over the past three years, we have witnessed and benefited from this market's strong resilience and potential, allowing us to sail through and achieve steady business performance. I'm confident that the Chinese market will regain its economic vitality and unleash more consumption potential in the future.

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?

XU: First, demand for cargo has been boosted by e-commerce and global trade growth, and it is expected that over the next 20 years, there will be a need for some 2,440 freighters, of which 880 will be newly built. Airbus is confident in providing Chinese customers with new and more competitive choices such as A350F and creating relevant industrial cooperation opportunities with Chinese partners.

Second, the aviation industry represents approximately 2.5 percent of global human-induced CO2 emissions, while China's fleet size is expected to grow steadily. At Airbus, we are committed to reaching net-zero carbon emissions by 2050. To fulfill these ambitions, Airbus will continue to facilitate the use of sustainable aviation fuel in China to promote the high-quality development of China's aviation industry.

WU: China is shifting its growth model from "speed" to "quality". New opportunities are emerging as China's economy becomes more innovative, talent-intensive, consumption-driven and green. The country's industrial sectors will have strong demand for green technologies to achieve sustainability. This is the right time to be in the strategic consulting business.

Business leaders of almost every industry now need outside help to address complex issues seen today, such as digital transformation, supply disruption and sustainable development. These are all our priorities and growth opportunities — we bring together advanced tech knowledge and ambitious entrepreneurship to help clients launch their next big bets and seize the opportunities in the China market.

JUANG: HP is innovating with a growing portfolio of devices, peripherals, services and subscriptions tailor-made for the hybrid world. SMEs are critical to China's economic growth and they recognize the importance of digitalized business models where intelligent, manageable and secure PCs and printers are essential. HP is focused on delivering the reliable and cost-effective solutions users require and working with industry partners to nurture an ecosystem that empowers SMEs' growth and aspirations.

The younger generation in China wants unique, enhanced experiences in what they use and do, and they seek the tools to express themselves better and pursue their dreams. HP will enable them to do that with technology that keeps them creating, learning, communicating and gaming.

CHUNG: Through consumer surveys conducted in recent years, we found that the pursuit of decorative elements is important for young consumers. Meanwhile, with the accelerated implementation of China's dual carbon goals, and the advocacy of environmentally friendly housewares consumption, people are more concerned about the health and safety of indoor environments.

In 2022, we launched new products that showcased visual and tactile effects comparable to wall materials while maintaining paint safety, stain resistance, abrasion resistance, high flexibility and easy maintenance. This is also the new achievement of Nippon Paint's continuous research for products and services, providing consumers with a beautiful home experience within their reach and bringing new growth opportunities to the coatings industry.

LECLERC: China's high-quality development will put forward the segmentation of consumers' needs and consumption occasions. These trends have brought opportunities to our business as we've been strengthening the "Total Beverage" strategy, providing an enriched portfolio of consumer-centric beverage offerings to meet diversified needs.

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?

XU: During the past three years, despite the COVID-19 pandemic, Airbus has continued to enhance and expand its cooperation with Chinese partners while upholding a "local for local" strategy to build a vertical integration supply chain in China. In response to Airbus' latest plan of recruiting more than 13,000 people globally in 2023, we will continue to welcome professionals as well as new graduates to join Airbus China.

As for the next steps this year, with booming demand for air transport globally, Airbus will focus on its industrial ramping up. With China's COVID-19 policy changes, it will no doubt become an indispensable contributor to this process.

WU: We believe that the government will take more effective measures to further open up the domestic market, remove access barriers and level the playing field for foreign businesses and investors this year. What's more, we launched BCG X last year, a hybrid tech build & design unit that brings together nearly 3,000 technicians, builders and designers.

In 2023, we will promote BCG X in China to a wider audience to offer our Chinese clients a unique toolbox for accelerating digital transformation as well as tech and business innovation. We will keep working closely with companies, ecosystem players as well as research institutes in China. We look forward to building a more sustainable future in China and across the region by working together with our clients and partners.

JUANG: The government initiatives of high-level opening-up, promoting green development and boosting global cooperation have reflected China's commitment to keeping pace with the global economy and benefiting its citizens. We expect more policies to be announced this year to foster an even more robust and conducive business environment. Our China operations remain critical to HP and we will continue to strengthen our business here by driving innovation for our customers, developing a strong pool of local talent, as well as forging new partnerships with local enterprises and communities.

CHUNG: Nippon Paint will start construction on its new headquarters and Asia-Pacific R&D center in Shanghai in 2023. In the next few years, Nippon Paint plans to build a production base in Shanghai Pudong New Area featuring a product packaging production line and storage facilities, inspection center, R&D center, innovation center, customer experience center and product display center to achieve breakthroughs in green product development and innovative technologies. The integration of intelligent manufacturing will accelerate the digitalization and the process of new industrialization of Nippon Paint, and greatly promote the innovation of coatings technology and new product launches.

LECLERC: The positive signs of market recovery and opening-up have given us more confidence to continue investing and further grow our business. Over the past 44 years, the Coca-Cola China System has invested over $13 billion and established a total of 46 plants in China.

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?

XU: The aviation industry, with its explosive growth, is both a witness and a beneficiary of China's 45 years of reform and opening-up. Before the pandemic, China had already become the world's second-largest aviation market after the United States. As of today, China is the largest single-country market for Airbus commercial aircraft and represents over 20 percent of Airbus' total deliveries in recent years. With a fleet size reaching over 3,900 at present, China is forecast to increase its air traffic by 5.3 percent annually over the next 20 years, significantly faster than the global average of 3.6 percent, and is expected to become the world's largest aviation market in 2030.

The supply chain in China has shown great industrial resilience and competitiveness during the past three years as there have been no major disruptions in operations even in harsh situations, which demonstrates its strong capability to grasp future opportunities in Airbus' ramp-up plans.

WU: China's four decades of reform and opening-up have created huge opportunities for companies of various sizes, yet China is facing new challenges. To succeed in China over the next decade, and to effectively manage risks, foreign companies will need to craft more sophisticated strategies. And BCG can help them understand the structural shifts underway in China and adapt their strategies accordingly.

JUANG: Having been a participant and beneficiary of China's economic development, HP has earned the trust of millions of Chinese customers not only by providing reliable and high-quality products and services, but also by ensuring we make an impact in local communities. Climate change, for example, is one of the most urgent issues demanding our collective attention and action.

HP fully supports China's efforts to peak carbon emissions by 2030 and reach carbon neutrality by 2060. We have introduced in China a comprehensive set of energy-efficient products with sustainable materials that help our customers to decarbonize in their own business operations.

CHUNG: China's reform and opening-up have brought the Chinese economy into a whole new phase of development. For 30 years, Nippon Paint has grown and developed together with the Chinese market, sharing the huge dividends brought about by China's reform and market opening, and has achieved tangible development. Nippon Paint China is headquartered in Shanghai, with over 70 production and supply chain bases and over 10,000 employees nationwide. Due to reform and opening-up, Nippon Paint has not only gained market capacity, but also attracted a lot of talent and promising opportunities for future development.

LECLERC: As the first international consumption brand that re-entered the Chinese mainland in 1979, we have greatly benefited from this market. In 1979, we had only one Coca-Cola product. Today we have brought a total beverage portfolio with more than 20 brands offering around 100 beverage choices to Chinese consumers. The Chinese market has now become our third-largest in the world. We expect to see a more prosperous and vigorous business environment. Our determination and commitment to growing together with the Chinese market are unwavering.

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?

XU: Since green growth is an essential part of high-quality development, Airbus, which pioneers sustainable aerospace practices and technology, aspires to promote the sustainable development of China's aviation industry. These ambitions on green growth are taken by Airbus not only as challenges, but also as obligations and opportunities.

In support of the green aviation strategy proposed by China, a major country with a strong sense of responsibility, Airbus will continue to facilitate the use of sustainable aviation fuels for testing, delivery and commercial flights along with our Chinese partners. Airbus aims to cooperate with stakeholders from the authorities, industries and academies to develop an SAF ecosystem covering production, distribution as well as regulation.

WU: China's structural changes pose both short-term risks and long-term aspirations. Nevertheless, its commitment to innovation and openness creates a conducive environment for companies to expand and form partnerships with local businesses, leading to a more dynamic market.

To help clients address challenges amid their digital transformation, we want to leverage our expertise to help our clients innovate at scale and deliver successful end-to-end digital transformations. China is a global lighthouse for digital capabilities. We believe that the most ambitious companies in China, whether local or multinational, will still have significant opportunities to participate in international competition by tapping into the latest digital capabilities.

JUANG: HP's 40-year journey in China has been one of progress, cooperation and inspiration. Our business is very well positioned to capitalize on long-term trends reshaping our industry, and China will play an important role in our long-term growth strategy. We are committed to empowering people and businesses going forward — from redefining the way people work, live and play in a more digitalized world, to nurturing a vibrant pool of local talent, and enabling businesses to thrive with a strong technology ecosystem.

CHUNG: Guided by our sustainable development strategy, Nippon Paint adheres to our corporate mission of "Refreshing wonderful living spaces" and "Building a technology-enabled ecosystem with sustainable value creation, and becoming a market leader as an integrated coatings solution provider".

We will support the construction of urbanization, rural revitalization, low-carbon architecture and green building materials, vocational skills training and digital upgrading, and grow along with our partners to contribute to the realization of better lives for the people and the rapid development of China.

LECLERC: China's high-quality development strategy demands stronger insights into the needs of Chinese consumers, especially regarding future generations and local market trends. We have launched a wide range of innovative products that combine local consumer insights and scalability potential, aiming to bring refreshing and diverse beverages to our consumers. At the same time, we have been refreshing our flagship brands and products to better provide the next generations with timeless and timely experiences.