Specialization key to economic transformation

Nation's shift to high-quality development requires greater focus on core businesses aligned with market trends

Editor's note: The Chinese government has adopted a series of measures to boost economic growth, including stimulating consumption, further opening up to foreign investment, supporting private enterprises and encouraging technological innovation. China Daily interviewed senior executives of well-known multinational companies to share their views on the country's economic development and their companies' business strategies in China.

Q1: China has rolled out a series of measures to stimulate consumer spending and boost economic growth. What opportunities are there for your business?

Q2: Overall Chinese economic growth has slowed, but the top-line numbers remain relatively robust. In what areas do you plan to increase investment or employment?

Q3: What business opportunities do you see as China continues to pursue higher-quality growth, which is increasingly driven by services and consumption?

Q4: What do you see as the most resilient part of the Chinese economy and how do you plan to align your business with it?

Q5: How has your company adjusted to the uncertainties brought by trade frictions between China and the United States?

Q6: China has adopted policies to further open the economy to foreign investment, to transform financial services and to promote private enterprises. How are you planning to take advantage of these policies?

Q7: How does your company plan to take advantage of the technology transformation opportunities in China over the next decade?

A1 We believe these measures will improve the domestic consumption environment and further promote the healthy and sustainable development of China's economy. It is important for China, as well as for the world, that the Chinese economy shows continued growth, by investment, export and domestic consumption, bringing more wealth for the Chinese people. As a global science-based company active in nutrition, health and sustainable living, DSM welcomes these new measures as they will also bring new business opportunities for Chinese and foreign companies in China. The opportunities for new green energy vehicles are a good example. Chinese automobile manufacturers are looking for greener and lighter solutions. This creates huge opportunities for companies like DSM, as we provide high-performance lightweight engineering solutions that replace metal parts so that vehicles will be more efficient, traveling further with lower battery consumption.

A2 China remains the fastest-growing large economy in the world registering more than 6 percent growth in the first half of 2019, and we are also optimistic about the economic prospects going forward. Over the years, DSM has continuously increased its investments in China to strengthen our capability in R&D and production in key areas across our nutrition and biomaterials businesses. For example, recently DSM has formed a new joint venture with Nenter in Hubei province to produce vitamin E, and this will increase employment in Jingzhou, Hubei province.

In addition, we are also increasing investment in industries in which we can deliver significant sustainable impact spanning our focus areas of nutrition and health, climate and energy, and resources and circularity. For example, we have introduced in the China market our high-performance plant-based resin Decovery, which can deliver as much as 34 percent in carbon footprint reduction.

A3 High-quality economic development requires greater specialization in core businesses aligned with market trends. DSM has over the years evolved to become a world leader in nutrition, health and sustainable living with a strong focus on science and innovation by constantly divesting from noncore business. Now, as China's economy shifts its focus from high-speed growth to higher quality, there is greater emphasis placed on supply chain, innovation and sustainability. Supply chains across a number of industries have begun working collaboratively to reduce their environmental footprint and meet new demands for innovative and sustainable solutions. As a result, we see huge market demand for products and solutions that are science-based, sustainable, and scalable for the transformation the country is undergoing today. We will invest more in our unique science competencies and local partnerships to fuel high-quality growth in China.

A4 China's pursuit of sustainable development and the green and circular economy is proving to be one of the most resilient cornerstones of its economy. While 2019 marks the 70th anniversary of the People's Republic of China, Royal DSM also celebrates 56 years of cooperation with China this year. Since our establishment in 1963, we have not only pursued business growth, but also ensured commitment and deep engagement in the sustainable development process. We believe we can only be successful and achieve our purpose if we make change happen through taking three key actions. First, we are proactive in improving our business operations to reduce our impact on the environment. Second, we enable our colleagues, customers and partners to deliver sustainable solutions for the planet and society.

A5 While the direct impact on DSM business is limited, we have observed a certain degree of impact on consumer confidence, which has a predominant influence on automotive and electronic industries, and to a lesser extent on nutrition and health. At DSM, we embrace globalization and advocate fair and open trade between companies and countries.

We believe that globalization builds on the core element of our economy: an exchange (trade) of specialization of competences. It has brought prosperity to many countries in the world and billions of people. However, perhaps not all countries or all people in all countries. We don't believe protectionism is the right answer. Instead we should make the benefits of globalization available to all people, like the Chinese government is trying to do.

We believe China and the United States are important markets for the development and growth of the global economy, which is why we are doing everything we can to participate in business development in both countries.

A6 These policies show that China is committed to further opening the nation's economy and connecting the country to the world while encouraging open collaboration and synergy through more inclusive and diversified relationships. DSM will take advantage of this opportunity to optimize our operations in China. We will keep up our investments to better provide high-quality, sustainable and innovative solutions. DSM recently invested to upgrade its Jiangshan vitamin C facility (in Jiangsu province) to improve quality, safety, sustainability and production efficiencies and we are always looking for opportunities to continue fulfilling our commitment to China.

A more open market also offers DSM the opportunity to jointly innovate with local partners to cope with increased market demand. Since China has become one of the largest markets in food enzymes, DSM has established joint ventures with Chinese partners to innovate and develop food enzymes to further meet market demand and enhance global leadership in the industry. Also the Belt and Road Initiative builds on a more open and collaborative economic growth model.

A7 China is leading the world in many technological aspects. Digitalization is a good example. DSM benefits from the digitalization process. For instance, riding on these technology trends, we have built online platforms that connect us closer to customers. But we are also enablers of this technology as we provide world-leading solutions for base stations to meet demand for fast transmission.

Another aspect in which China is leading the world is sustainability technology. As green composite materials gain more market recognition in China, new materials with their strong functionality and low carbon emissions will become the mainstream choice in the Chinese market. DSM is also paying close attention to other new technologies. DSM has invested heavily in photovoltaic power generation materials and regards them as important business areas in the future.

A1 Among the measures, the internet economy and credit system construction are being emphasized, and both are within Experian's business domain. As China emphasizes boosting domestic consumption through many measures, financial inclusion is constantly mentioned with a strong demand for development. With regard to this, Experian's PowerCurve plays an important role as an engine to help banks and financial institutions implement decision support and analytics and maintain ideal relationships with targeted customers. Precisely targeted decisions, consistently executed across the customer life cycle, not only drive profitability, but also help consumers gain access to quality credit.

Moreover, with the rise of the internet economy, there are risks such as e-commerce fraud. If your fraud systems challenge, block or deny too many good transactions, your good customers will get frustrated. Effective fraud monitoring and detection engines should be about making the customer journey easy and fraud hard. Experian's FraudNet and Hunter are ideal for any organization relying on online transactions and/or accepting applications through traditional or digital channels.

A2 China's economy has been transforming from a phase of rapid growth to a stage of high-quality development. Under the circumstances, the financial industry is experiencing a critical transition to open banking and financial inclusion with a focus on technology and service.

Experian - with a long-term commitment to providing financial institutions with sophisticated decision support systems and analytical services - has a wealth of experience. Experian's operations in China now cover four major areas - commercial credit services, decision support and analytics, identity and fraud, and data quality and audience targeting. Experian's existing clients include the top 10 banks in China as well as leading enterprises in a wide range of fields such as e-commerce, retail, technology, automotive, hospitality, media, telecommunications, finance, payment and the public sector.

A3 As open banking is gradually becoming a norm globally, most retail banks are expressing a willingness to embrace it. This change in attitude is attributed to the situations of different markets throughout the world. In China, it's initiated by financial technology innovation and driven by the market itself. Open banking has immense potential for banks and consumers alike, democraticizing financial data for the benefit of all.

Experian provides beneficial insights and professional services to open banking endeavors from four perspectives - strategy, data, insights and implementation. Experian aims to help traditional banking operations in China as they are in transition to open banking in a safer and more efficient manner.

Experian's extensive experience in strategy management for retail banking as well as its deep understanding of the Chinese market garnered over decades of operations will enable it to help banks analyze their existing situations and formulate appropriate open banking strategies along with specific implementation methods.

To be truly open, data must be freely accessible, and financial institutions have to consolidate internal data and output them for application in conjunction with external data. Experian possesses unparalleled advantages in the area of automatic multivariate data integration.

The process of translating data into insights has always been Experian Consulting's strength. Experian's innovative X Labs constantly develops products, technologies and applications that meet customers' needs. Leveraging new data from open banking, Experian upgrades its traditional risk assessment model to a more powerful one.

Implementation calls for combining strategies, data and insights, connecting all the dots in the customer's system environment.

A4 All aspects of the economy feature flexibilities, opportunities and possibilities. Experian always focuses on customer needs. With the development of open banking, there is greater freedom for consumers to compare and seamlessly switch financial service providers.

Through the continuous development of innovative products and services in keeping with the pace of technological advancement, Experian has been able to participate in and even take leadership in linking traditional closed systems of banks with the internet ecosystem, thereby creating a new frontier for banks. Banks and consumers are connected in a new manner such that in the internet ecosystem banks are empowered to come into direct contact with consumers, know more about consumers, and more accurately grasp and understand the real and even potential needs of the consumer.

A6 Taking advantage of a series of policies to open the economy to foreign investment, in September 2018, the operation management department of the People's Bank of China announced the completion of its review of an application filed by Experian Credit Service (Beijing) Co Ltd to provide commercial credit services. Thus, Experian became the only wholly British-owned enterprise in China to have successfully passed the PBOC's application review process for the provision of commercial credit services.

Experian actively provides enterprises in China with insights into foreign and local markets, focusing on helping Chinese enterprises expand into overseas markets. The above landmark approval provided new momentum to Experian's business. Experian has been able to help enterprises make business decisions more efficiently, while also contributing to the orderly and steady development of China's commercial credit service market.

In addition, Experian actively participates in the construction of industry standards. Take the recent draft of the Comprehensive Credit Evaluation Index System for Small And Medium-Sized Enterprises led by the China Association of Small and Medium Enterprises as an example, Experian assisted in constructing the overall framework of the evaluation index system, and refining the evaluation indexes and evaluation methods in the first, second and third classes.

All in all, Experian has a long-term commitment to the Chinese market. In a favorable policy environment, Experian will be wholeheartedly serving Chinese companies and institutions across a variety of industries with more suitable and localized products and services.

A7 Experian has assiduously made long-term investments in new technologies and applications, one of which is its innovative X Labs dedicated to constantly developing products, technologies and applications that meet local customers' needs.

Experian X Labs is working to discover and seed ideas or enhance existing solutions, building on Experian's core areas of expertise - financial inclusion, digital payments and consumer enablement, using the company's primary pillars - data analytics and modern technology.

(China Daily Global 11/20/2019 page9)