China market remains big draw for most MNCs

Editor's Note: These interviews with CEOs of major foreign firms gauge their outlook for the Chinese economy, their operations in China and their business plans for 2024 and beyond, in the wake of the momentous resolution adopted at the third plenary session of the 20th Communist Party of China Central Committee in mid-July.

Q1 The third plenary session of the 20th Communist Party of China Central Committee in mid-July has rolled out the reform and opening-up roadmap for the Chinese economy in the coming years. What are your major takeaways from the plenum? What are the biggest opportunities you spot in China's new measures to deepen reform and further open up its economy? How do you plan to capitalize on these opportunities in your specific industry?

YOOVIDHYA: The recently concluded plenum showcased China's strong commitment to high-quality economic growth through continuous reforms and further opening-up. The session unveiled forward-looking and strategic policies, particularly in areas such as technological innovation, a unified national market, relaxed foreign investment access and enhanced legal frameworks. These measures inject new vitality into the business environment and create abundant opportunities for international investors operating in China. For TCP Group, these reforms present an excellent opportunity for transformation and upgrading within the energy drink industry. TCP Group has always been confident in the Chinese market.

ZHU: First, I have observed the ambitious goals of China's economic reform and opening-up, as well as the confidence in the rapid development of the Chinese economy. Among the various measures, building a high-standard socialist market economy provides a friendly, fair and secure development environment for foreign enterprises. As a foreign enterprise, seeing China's support and friendliness toward foreign companies present significant opportunities for our business development. Currently, our business focus is on first-tier, new first-tier and second-tier cities. With the continued opening-up of the Chinese economy and the ongoing improvement of the market environment, we have the opportunity to expand our market coverage into more cities and regions. The reform and opening-up measures have created a favorable environment for the development of digital marketing, accelerating the application of digital marketing technologies and strategies, enabling us to more effectively reach target consumers and enhance our market competitiveness.

TSAO: From the plenary session, we note the Chinese government's firm commitment to advancing reform and opening-up. The high-standard open economy and technology innovation policies will stimulate enterprises' demand for innovative technologies, presenting a tremendous opportunity for Red Hat. Over its 20 years in China, Red Hat has provided enterprise-level open-source technology and services to thousands of companies. Open Red Hat, for China and in China, is dedicated to becoming a catalyst for IT innovation and a bridge for internal and external communication, accelerating the digital transformation and technological upgrading of Chinese enterprises. By leveraging cloud computing, containerization, edge computing and AI, we aim to enhance the independent innovation capabilities and international competitiveness of Chinese enterprises.

CHEN: The plenary session underscored the importance of further deepening comprehensive reforms and broadening openness, as well as bolstering technological innovation, which will significantly enhance the global competitiveness of Chinese enterprises. Benefiting from China's open policies, Singapore Exchange stands as a pioneer and ardent supporter of cross-market connectivity, fostering a robust link between China and Singapore. As Asia's leading financial infrastructure and the gateway for global investors to Asia, SGX aspires to deepen its strategic collaboration with China. SGX seeks to fortify ties with Chinese partners across pivotal sectors, including fixed income securities, currencies, commodity futures and equities.

Q2 In your view, how will the reform and opening-up measures rolled out at the plenum help strengthen the Chinese economy and bolster its prospects of achieving modernization? Do you think China's new reform and opening-up blueprint will make fresh contributions to the global economy? If yes, how?

YOOVIDHYA: The reform and opening-up measures introduced at the plenum are comprehensive and significant. They aim to comprehensively promote industrial upgrades, boost innovation and improve market mechanisms, thus providing a solid foundation for long-term stable growth of the Chinese economy. These measures are clear and targeted, effectively enhancing China's overall efficiency and international competitiveness, steering the economy toward higher quality, fairness and sustainability.

From a global perspective, China's further opening-up will create more extensive cooperation opportunities and strong growth momentum for the global economy. As the Chinese market continues to expand and deepen, global companies can more thoroughly participate in China's economic development, fully sharing the benefits of China's reforms and achieving mutual gains. Additionally, China's reforms and openness will provide new ideas and effective models for global economic governance, contributing unique Chinese insights and practical solutions to complex global issues. China now serves not only as the "world's factory", but also as a "global market" and "R&D hub".

ZHU: The reform and opening-up measures introduced at the plenary session will strengthen the Chinese economy and enhance its modernization prospects through a variety of initiatives. By continuing to uphold open policies and align with high international economic and trade standards, these measures will undoubtedly contribute to the global economy.

As a foreign enterprise, we have experienced the numerous conveniences brought by these reform and opening-up measures, which have not only improved our business environment, but also increased our confidence in the Chinese market. Particularly, the simplification and acceleration of license application processes have greatly enhanced our business efficiency, allowing our products to reach the market more quickly and providing us with greater confidence and motivation in the research and development of new innovations.

TSAO: The reform and opening-up measures introduced at the plenary session will further stimulate market vitality and innovation, driving high-quality economic development. This will not only contribute to the modernization of China's economy, but also inject new momentum into the global economy. China's blueprint for reform and opening-up, through optimizing its market environment, enhancing technological innovation capabilities and expanding openness, is certain to bring about more high-quality products and services. Additionally, these measures will promote international cooperation and technological exchanges, providing strong support for the stability and development of global industrial and supply chains.

CHEN: The plenary session has stressed the importance of advancing comprehensive reform measures, which are set to significantly improve the operational efficiency of the economy and infuse it with new energy for growth. Furthering high-level openness will create more international collaboration opportunities for China's economy, favorably positioning it to attract foreign investment, technology and skilled personnel, thus facilitating industrial upgrading. These initiatives are expected to enhance the innovative capacity and international competitiveness of Chinese enterprises, propelling an economic shift toward higher-quality development.

Q3 How do you view China's new reform initiatives aimed at fostering new quality productive forces, such as those to encourage industrial upgrade and technological innovation? Do you see these as opportunities or challenges for foreign enterprises, and why?

YOOVIDHYA: I believe China's new reform initiatives aimed at fostering new quality productive forces and encouraging industrial upgrades and technological innovation are significant and positively impactful.

For foreign enterprises, these initiatives present more opportunities than challenges. First, these reforms create a more dynamic and innovative market environment. Foreign enterprises can leverage their technological and managerial strengths to collaborate with Chinese companies, driving industrial upgrades and technological innovation for mutual benefit. Second, China's vast market size and growing consumer demand offer broad development space for foreign enterprises. The new reform initiatives will further enhance the attractiveness and potential of the Chinese market. Third, the reforms promote technological exchange and integration, allowing foreign enterprises to introduce advanced technologies and ideas while gaining new inspiration and innovation insights from the Chinese market.

ZHU: These measures bring both opportunities and challenges for foreign enterprises. With the advances of China's technological and industrial capabilities, foreign companies may face increasing competition from local enterprises. In recent years, we have also seen a lot of new domestic pet food brands and technologies in the Chinese market. However, overall, the opportunities outweigh the challenges. The current generation of pet owners, nurtured in China's advanced digital environment, is younger, more progressive in their pet-keeping philosophies, and continuously demands higher quality innovative products. Ziwi's product philosophy, quality, and technology align closely with these demands, making this market environment an opportunity for Ziwi.

TSAO: The Chinese government's initiatives to encourage industrial upgrading and technological innovation have presented significant opportunities for foreign enterprises. These policies not only provide companies with a vast market space, but also create a fair, transparent, and predictable business environment. As a global leader in enterprise-level open-source solutions, Red Hat sees these measures as a way to drive local enterprises' demand for advanced technologies, enhancing the market's acceptance and recognition of open-source solutions.

CHEN: Innovation is at the heart of new quality productive forces, which includes innovation across various dimensions such as technology, industry, management and systems. For businesses, leveraging these new quality productive forces can lead to ongoing refinement and profound transformation of the industrial structure, thereby enhancing industrial competitiveness and elevating the international competitiveness and position within the global value chain for Chinese enterprises.

Foreign enterprises face a dual landscape of challenges and opportunities with the advent of new quality productive forces. The challenge is to step up their innovation to offer products and services that align with the trends, ensuring sustained market competitiveness. As China actively advances to a higher degree of openness and refines its business environment, foreign enterprises that capitalize on opportunities to build a modern industrial system will enjoy vast potential for growth and development.

Q4 While China is expanding opening-up, some are concerned that geopolitical tensions, rising protectionism and global supply chain adjustments may weaken China's attractiveness to foreign companies. What's your take? How important will China be for your global business in the coming decade? What more opening-up measures can China take to offset the impact of the complex external environment?

YOOVIDHYA: In the next decade, China will remain a critical landing zone for our global business, being one of the world's largest consumer markets. As an investor in China, we believe to further enhance its attractiveness to foreign enterprises and effectively counteract the impact of the complex external environment, China can implement several practical opening-up measures.

First, to strengthen intellectual property protections and improve enforcement levels, allowing foreign companies to invest in innovation with confidence is key. Second, to further relax restrictions on foreign investment at the product entry level, creating a fairer and more transparent competitive environment to stimulate market vitality is necessary. Third, to promote open cooperation in emerging industries and cutting-edge technologies, fostering joint progress and development among domestic and international enterprises is advisable.

ZHU: The reform and opening-up measures introduced at the plenary session demonstrate China's proactive stance and methods for mitigating external environmental impacts. These measures, including enhancing market openness, reducing market entry barriers, promoting international cooperation and optimizing the business environment, reflect China's commitment and sincerity toward openness. The Chinese market is one of Ziwi's most important markets and is crucial to our global strategy. As our CEO Stuart Irvine has stated, "Deeply rooted in the Chinese market, we are dedicated to serving Chinese pet owners." In the next decade, we will continue to invest in the Chinese market, get closer to Chinese consumers and channels, and respond more flexibly and rapidly to market demand.

TSAO: The immense potential of the Chinese market and its continuously open policies remain opportunities that foreign enterprises cannot overlook. China's position and influence in the global supply chain remain highly significant. The Chinese market has always been very important to Red Hat. We have continuously increased our investment in the Chinese market. We believe that through further deepening reform and opening-up, and optimizing the business environment, China will continue to attract more foreign enterprises.

CHEN: Geopolitical dynamics are a crucial factor for businesses in the global operational landscape. China and Singapore, as traditional friendly nations, elevated their bilateral relationship to a "Comprehensive, High-Quality and Forward-Looking Partnership" in 2023. In the first half of 2024, Singapore's actual investment in China saw a 10.5 percent increase. The Singapore Exchange is very optimistic about the vast potential and opportunities within the Chinese market and continues to play a significant role in China-Singapore interconnectivity. Looking ahead, SGX aims to introduce more products linked to the Chinese market, enhancing its suite of Chinese financial products.

Q5 The plenary session has stressed that reform tasks laid out at the meeting shall be completed by the time the People's Republic of China celebrates its 80th anniversary in 2029. How do you expect the new reform and opening-up measures to transform the Chinese economy in the coming five years? What strategies will your company adopt to align with the expected transformation? Looking ahead, in the second half of 2024, what are your expectations for the Chinese economy? How do you think your company will fare in this evolving landscape?

YOOVIDHYA: I am highly optimistic about the transformation of the Chinese economy under the new reform and opening-up measures over the next five years. These initiatives will enhance industrial innovation, competitiveness and consumer market expansion, driving high-quality development and fostering balanced, coordinated and sustainable growth.

To align with these changes, our company plans to increase R&D investments to introduce innovative products tailored to Chinese consumers. Strengthening partnerships with local companies will be key to jointly exploring the market and leveraging shared resources. Looking ahead to the second half, I expect the consumer market to remain dynamic, offering broader opportunities for our products.

ZHU: Over the next five years, the new reform and opening-up measures are expected to significantly transform China's economy by fostering a high-standard socialist market economy, promoting high-quality development and enhancing technological innovation. The focus on market-oriented reforms, combined with robust government regulation, will create a fairer and more dynamic market environment. In the second half, China's economy will continue its steady recovery and growth, driven by the ongoing implementation of reform and opening-up measures.

TSAO: In the next five years, new reform and opening-up measures will drive China's economy toward high-quality development and accelerate technological innovation. Red Hat will maintain consistency through the following strategies: First, continuously provide technologically advanced enterprise-level open-source solutions; second, align with national strategies to accelerate the intelligent manufacturing upgrades of enterprises; and finally, empower and integrate with the domestic AI ecosystem to accelerate AI application across all industries, truly bringing AI into enterprises with an open-source way. Looking ahead to the second half, I am full of confidence in the Chinese economy. Red Hat will seize opportunities in this environment and drive business development.

CHEN: We are delighted by the high-level prospect that China's economy, through key measures such as high-quality development, technological innovation, deepening reforms across various sectors, expanding openness to the outside world and building a modern industrial system, is on track to a future that is more prosperous, equitable, sustainable and secure. The risks and challenges have been acknowledged during the plenum, and we anticipate that the economy and investment will continue to exhibit growth, demonstrating resilience in fundamentals. SGX will continue to leverage its strengths in multi-asset coverage, efficient accessibility to Asia and solid risk management capabilities to expand mutual-market connectivity, support healthy flow of capital, and meet the needs of Chinese and international clients.