French companies shift to high-tech in China

New technology-loaded factories replace conventional plants as foreign enterprises use domestic resources to expand commerce globally

With China's economy entering a new era of consumption-and innovation-led growth, more French companies have shifted their investment focus from building conventional plants to establishing high-tech factories, innovation and service facilities in China, as the country holds a strong stance in coping with protectionism.

"Pushed by rising labor costs and weak global market demand, China is planning to make its growth depend more on domestic consumption and less on exports," said Ma Yu, a researcher at the Beijing-based Chinese Academy of International Trade and Economic Cooperation.

Ma said companies from France, Germany, Japan and the United States have discovered that it is time to invest more in China's research and development, design, science and technology businesses. He added that new growth areas will present themselves as the economy becomes more sophisticated.

Under China's government policies, foreign companies are encouraged to invest in high-end, smart and green manufacturing, set up R&D centers and strengthen cooperation with domestic peers. They will also be allowed to join China's national science and technology programs.

Yin Zheng, executive vice-president of Schneider Electric and president of Schneider Electric China, said the company will focus on investing in infrastructure, industries, buildings and data centers in the future. Yin said the company has found a growing number of clients who are keen on conducting digital transformation to improve their work efficiency and earning ability.

"Driven by demand, we will invest more in innovation and new technologies, to strengthen our own business and provide more value to our customers," he said. Yin added the French company will increase its investment in R&D in China by 50 percent over the next three years.

The French industrial conglomerate in September was launched in two major global design centers: the global low-voltage equipment design center and the global green-energy conservation design center in Xi'an, the provincial capital of Shaanxi. The two centers will provide consulting and technical support regarding the environmental performance of the company's products and projects across the world.

"New technologies such as the internet of things, artificial intelligence and 5G have replaced traditional information technologies as the key to seizing new opportunities. Major multinational companies should spend more on innovation and new technologies, to reinforce themselves and maximize the value for their customers," he said.

Yin believes that globalization is a positive trend of the global economy and it brings new opportunities everywhere in the world and improves international partnerships.

Schneider Electric is not alone. Fives Group, another French company specializing in industrial engineering, also partnered with China Building Materials International Engineering Group to open a joint engineering center in Shanghai earlier this year.

"The joint engineering center will give full play to their complementary advantages, support the two companies to jointly develop the third-party market, and promote the implementation of the Paris Agreement on climate change with the aim of energy conservation and consumption reduction in economies participating in the Belt and Road Initiative," said Michelle Shan, Fives' country director for China.

She said this cooperation demonstrates the preference of China's building material businesses for solutions and expertise in energy efficiency, low carbon emissions and high-quality finished products, and shows the high trust of both sides in technical cooperation and intellectual property rights.

The Paris-headquartered company designs and supplies machines, processing equipment and production lines for industries like aluminum, steel, glass, automotive, aerospace, logistics, cement and energy. It has more than 8,700 employees in more than 30 countries and regions.

Chen Wenling, chief economist at the China Center for International Economic Exchanges in Beijing, said many investment and cooperation opportunities also come from the government's new measures such as adding more pilot free trade zones in provinces including Yunnan and Heilongjiang in late August, opening up more sectors and allowing more overseas companies to build wholly owned units in China since 2017.

China's stable domestic market and firm support for multilateralism, surging trade activities with partners related to the BRI and fastgrowing 5G technology have all raised French companies' appetite to invest in China and avoid the impact caused by the global trade turmoil, she said.

zhongnan@chinadaily.com.cn

(China Daily 11/05/2019 page6)