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Foreign retailers buoyant on Chinese market

By Yan Xingzhou | | Updated: 2024-03-13 16:25
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Pedestrians walk past an Ikea center in Shanghai. [Photo provided to China Daily]

Foreign retail enterprises have recently begun accelerating their layout of business in China, denoting the firm confidence of foreign investors in the retail sector in the sustained and sound development of China's economy, China Youth Daily reported on Wednesday.

US retail giant Costco opened a new store in Shenzhen of Guangdong province in January; Japan's Lawson Convenience Store set up its headquarters in Shandong province in February; the Swedish leading global house ware retailer IKEA expanded its investment to further meet the diversified customer demands from China.

The Chinese market has become a touchstone to enhance core competitiveness for many foreign retail enterprises.

With the steady improvement of the income level of Chinese people, consumer demand now leans toward a more personalized, higher-end path, and consumers have put forward higher requirements for market supply.

For a company that has been investing in the Chinese market for over two decades, the global sports goods retailer Decathlon has been continuously increasing its investment in the Chinese market.

Furthermore, the company has its own industrial chain through building its intelligent manufacturing, purchasing center and logistics park to better meet the consumers' demand in China.

Both the industrial and supply chain are more completed in China's retail industry; this means becoming more competitive in this environment requires retail enterprises from both domestic and foreign enterprises to keep up with the demand in upgrading consumption, and by providing products and services with better quality.

Ingka Group, the parent group of the Swedish leading global house ware retailer IKEA, has invested 492 million yuan ($68.45 million) on its Beijing-Tianjin consumer distribution center in Baodi district of Tianjin opened last year, a demonstration of the company's determination of long-term development in the Chinese market.

The urbanization rate of China's permanent residents reached 66.2 percent in 2023, and there is still potential for new-type urbanization, said the report.

The steady growth of new-type urbanization is going to generate more demand on consumption and investment, and both Chinese and foreign enterprises can expect more opportunities.

Some 400 new shopping centers were opened in China in 2023, according to the Chain Store & Franchise Association.

The return on direct investment is about 9 percent for foreign investors in China over the years, maintaining a relatively high level internationally.

In January 2024, 4,588 foreign-invested enterprises were newly established nationwide, up 74.4 percent year-on-year.

In terms of the financial performance, the foreground of China's development and intention to invest in China have all improved in 2023 for most of the surveyed American companies located in China. This also manifests that they will maintain their presence in China, according to a research report via the American Chamber of Commerce in China.

Multinational enterprises are bullish on China's economic recovery potential and development prospects. The country is promoting opening-up and committed to upholding global trade and investment liberalization and facilitation, encouraging multinational enterprises to invest in China.

"China has continued to advance the reform of foreign investment measures and stepped up efforts to promote investment, protecting the legitimate rights and interests of foreign investment, and continuously improving the utilization of foreign investment," said Cui Fan, a professor at the University of International Business and Economics in Beijing.

He added that the key area of accelerating construction of a new development pattern is by making China's ultra-large market more attractive and improving business environment for foreign investment.

China is devoted to granting easier access for foreign investment, after reductions on the negative list of foreign investment access had been shortened from the original 190 items down to 31 nationwide, and 27 in the pilot free trade zone.

All restrictions on foreign investment in the manufacturing sector are projected to be lifted this year, and China will ease the access for telecommunications and medical care sectors.

China will continue to push for a higher level of opening-up to the world more thoroughly and in a wider range of fields at a deeper level, and continue to provide new opportunities, the report said.

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