Foreign firms have high expectations

Editor's Note: The world's attention is again focused on China as it convenes the annual full sessions of the National People's Congress and the National Committee of the Chinese People's Political Consultative Conference.

The full sessions of the top legislature and the top political advisory body are held to discuss and adopt policies to deliver the wide-ranging reform promises made during the Third Plenum of the 18th Central Committee of the Communist Party of China in November last year.

As a major economic force in the China market, multinational companies attach great importance to the annual "two sessions", where policy priorities and targets for the year are set. Over the years, the "two sessions" have successfully navigated the development of China, which is not only very important to the country itself but also matters to the world. China Daily interviewed executives from global businesses operating in China to get their opinions and ideas.

A1 China's economy has grown rapidly, with per capita GDP (at current prices) rising from about $1,300 in 2003 to $6,600 in 2013.

With accumulated wealth, problems like environmental pollution and waste of resources have also inevitably escalated. China is further deepening its reform and will continue to open up.

We are delighted to see that recently, the Chinese government has carried out further decentralization.

The State Council has canceled or decentralized more than 300 administrative approval items, thereby optimizing the business environment.

In addition, the market is set to play a "decisive" role in allocating resources in the economy, which will boost competition and economic efficiency.

These reforms are meant to promote a stronger orientation toward the market and to remodel the relationship between the government and industry.

These measures will have a profound influence on ensuring continued stable, sustainable economic development.

A2 At Bayer, we believe in the saying "Science for a Better Life". Our innovative solutions address some of China's core challenges, such as universal health care coverage, safe and healthy food for all, solutions for an efficient infrastructure and tackling the climate change.

With our knowledge and experience, we are in a position to help China accomplish some of its main long-term objectives to grow economically, in a profitable yet sustainable way, as well as to rebalance the economy.

Intellectual property protection is also often discussed, but it's a necessary condition to bring latest technology and innovation into the chain. Finding proper protection for the innovator is of most importance for developing an R&D-oriented culture.

A3 Bayer's roots in China go back 132 years, when the company provided textile dyes. Today, the greater China market is Bayer's third-largest single market globally and the first in the Asia-Pacific region.

We have successfully developed our business here, and we are committed to further invest in this market and to bring the most innovative technology and products to China, supporting the idea of turning "Made in China" into "Created in China".

By aligning the core competencies of our three subgroups Bayer HealthCare, Bayer CropScience and Bayer MaterialScience, as well as of the service company Bayer Technology Services, with some of China's most pressing demands, we have strategically positioned ourselves to capture further growth opportunities. We anticipate our business in this market will continue experiencing strong growth in the following years.

A4 China's environment problems have become increasingly prominent. We have seen the efforts made by the Chinese government to tackle this issue.

Recently, the government announced a catalog of measures to further safeguard the environment, such as the introduction of an action plan to strengthen emergency management of air pollution and measures to control haze.

It will also compile an action plan to prevent water pollution and gradually build a comprehensive system of environmental protection.

From these efforts, we can see that China aims to set up an integrated system to tackle its environmental issues in the long run.

In the local "two sessions" held earlier this year, 22 local governments lowered their GDP growth targets for 2014, which demonstrates their firm determination to transform the economy and put it on a more sustainable growth pattern.

A1 China faces the challenge of driving consumer consumption and making this the key component of GDP growth. The overcapacity in industries will need to be addressed, either through increasing utilization by driving up consumption or enforcing labor, environmental and health and safety laws to drive out the illegal products that are negatively affecting the environment and the health and safety of products sold in China. Finding employment for all the people moving to cities in an era when companies are turning to automation is another challenge.

A2 Leadership. We have the investment resources, we have the brands, we have the equipment, and we have enough people. The treasured resource we lack the most is qualified leaders who can operate in a fast-moving consumer goods market environment, can use best practices from around China or the world in their area of operation, and lead and coach their subordinates to be better leaders than they themselves are.

A3 Our business has rapidly expanded in the past 20 years and will do so for the foreseeable future. The reason is very simple. The consumer market will expand, and we have the superior products and consumer insights. This will enable us to not only continue to grow organically: Inorganic opportunities are often "knocking on our door" to work with us.

A4 I am very proud to say that Carlsberg gives environmental issues a priority as high as our consumer and customer priorities. We have invested heavily in ensuring that our operations strictly adhere to the EPA regulations, and we provide training at all levels of the organization on environmental and health and safety.

We continue to strive to be seen as the gold standard in our industry for environmental compliance and management. This is not easy in a country as large as China and with as large a footprint as our operations have in China, but we are committed to this priority.

A1 For our food industry, which is closely related to manufacturing and farming, the priority is land reform to free up the buying and selling of farmland in order to produce more and better food. That will be very difficult without true land reform.

Farmers must be empowered to become entrepreneurs.

I believe Chinese farmers can be small companies. There are too many farmers and small plots of land; they need to be able to consolidate for better productivity.

A2 Last year, we had another very good year. Although growth was slower than in 2012, we are still growing nicely. There is a clear difference between products having to do with private consumption - such as drinking beverages and cooking at home, which are still growing well and other things, such as gifting and restaurants, which are down. High-end catering and gifting probably will never return to their former high growth.

This year will be better than last year but still will have the same trend.

Overall, we are confident because we are focusing on the domestic economy. In 2014, in catering, we are changing to medium-priced restaurants rather than expensive restaurants and focusing on mainstream restaurants.

We also are focusing more on consumption and less on gifting.

A3 We have invested close to $500 million every year on new equipment and new machinery in China and will continue to do that in the foreseeable future. We are doing about $7 billion in business, but we still have a lot of room to grow.

One of the priorities for us is to understand the Chinese consumer and become a model company, which is different from what we have in other countries. China is competitive, fast and innovative. Working with Chinese partners, you cannot manage Chinese entrepreneurs as you can manage foreign ones because they are faster, more flexible and innovative. Nestle's model in China has to be different from anywhere else. We have to put on our Chinese glasses and leave our Western glasses at home.

A4 The biggest environmental problem has to do not so much with investment or business decisions but with recruitment. We are really struggling to convince people to work and live in Beijing, especially people with children. We certainly don't want to expand our office here. We'd rather expand to other places that are outside of Beijing.

A1

China has achieved remarkable growth in the past few decades. We have seen a clear trend that the country is focusing on shifting its economic structure to maintain sustainable growth. We have a high level of confidence that China's vigorous growth will be continued in the future. The country should do more to rebalance the economy while it strives to maintain economic growth alongside sustainable development. KUKA, as the manufacturer of industrial robots, expects that strong support from the Chinese government in the intelligent manufacturing equipment industry will facilitate the transformation and upgrading of the industrial structure in China.

A2 With the rapid development of the Chinese economy, China has entered a crucial stage of economic restructuring and industrial upgrading, which has brought not only opportunities but more challenges. It is clear China has become a key market for companies around the world and is one of the important markets for KUKA. China is the most rapidly growing market in the world. In 2013, China was the second-largest country for industrial robots (23,000 robots shipped in 2012 and around 25,000 in 2013). For this, we at KUKA firmly believe we are ready for fierce competition because of our state-of-the-art technology and solid experience. Our broad product portfolio and localized customer service will meet our clients' demands and match the trend of China's manufacturing industry to a very high degree.

A3 As we know, the dominant trend of sustainable development is bringing about significant changes to the global economy and countries across the world. Also, we remain convinced that China will continue to have the fastest-growing market in the world. KUKA will maintain future-oriented technical innovation and our long-term commitment to the China market.

KUKA was founded in 1898. With more than 40 years of professional manufacturing experience, advanced automation solutions and best-service systems, we are confident about expanding our business globally and in China over the next five years.

KUKA's new production site will start operations in March. That will be a further demonstration of our long-term commitment to serving local clients and the China market.

A4 Recently, serious environmental issues increasingly attracted the country's attention. We can see the government has been taking effective action to improve them. Also, the new leadership has stressed the necessity for sustainable development alongside environmental protection and harmonious development. We will firmly advocate and support the sustainable manner of China's future development.

A1

Broad healthcare reform and improving healthcare access should remain the top priorities of the Chinese government in 2014 and beyond. After the Chinese government initiated healthcare reforms in 2009, there have been tremendous achievements made in terms of improving healthcare accessibility and affordability. For example, 95 percent of the population is now covered by medical insurance. While there are still challenges to be addressed to drive healthcare reform forward, we are confident about the future of China's healthcare environment.

A2 China is one of the most important emerging markets for Pfizer globally. Pfizer is currently the No 1 international bio-pharmaceutical company in China.

China will present significant opportunities for pharmaceutical companies over the next five to 10 years. According to a number of sources, China's economy will continue on its strong trajectory of growth, with China healthcare spending projected to increase four times from 2010 to 2020. Meanwhile, the China pharmaceutical market will become the third-largest market globally by 2015. It is projected to grow by 4.4 times from 2010 to become a $250 billion market by 2020.

This rapid economic growth will fuel urbanization, a growing middle-class population, more stable credit markets and increased investments by people and the government in healthcare. Moreover, the Chinese government's commitment to healthcare reform, infrastructure development and continuous improvement of reimbursement coverage will further drive market growth.

We have also seen rising incidence rates of non-communicable diseases as a result of lifestyle changes brought about by increased economic wealth. For example, cardiovascular disease is the leading cause of death in China, and rates of stroke and cardiovascular disease are rising. Diagnosis and treatment rates are low, creating a considerable social and economic burden.

A3 We are confident about the future growth opportunities in China as mentioned. We will continue to drive the solid growth of our innovative and established products portfolio in the country. We will also actively pursue branded generics opportunities through our joint venture with Zhejiang Hisun Pharmaceutical Co Ltd. At the same time, we will continue our geographical expansion initiatives to meet the unmet healthcare needs in remote areas.

A4 Pfizer remains confident that China will continue to improve its foreign investment environment. We are also confident from what we've seen in recent developments that China will continue to make technological and environmental advancements that will be conducive to its future success in the global pharmaceutical market.

A1

We think the biggest challenge to China's economy in 2014 will be how China can effectively deleverage the economy and deal with the issue of overcapacity in certain sectors while, at the same time, maintaining the economy's vitality and stable growth.

We would like to see new policy breakthroughs in 2014 to fulfill the promise of building a fair, open and transparent market with unified rules and regulations that will provide equal market access and investment prospects for all participants, thus giving rise to new growth potential and creating new opportunities.

A2 The biggest challenge for us is that the Infiniti brand is still not widely known and recognized. That is why we set brand-building as our top priority to create a really exciting brand to attract young-minded premium customers and, in doing so, we also strive to elevate the Infiniti brand to the same level as the dominant German three (Audi, BMW and Mercedes-Benz).

In the meantime, the anticipated slowing of the economy means the end of hyper-growth for the golden age of China's premium auto market, giving rise to a more challenging sales environment and more fierce competition.

The rapidly rising costs of labor, land and utilities are posing challenges to our overall planning and business operations.

However, we believe China's premium segment still has very bright prospects for at least another five to 10 years and the country is on its way to becoming the world's largest luxury auto market, maybe overtaking the US this year.

A3 China is definitely at the core of Infiniti's global strategy and expansion. As we often say: "Who wins China wins the world." We will continue to develop the country as our second volume hub with the expectation that it will overtake the US as our largest global market sometime in the future.

We are implementing our China strategy to cover the key areas of brand-building, local production and customized product development for China.

By the end of 2014, Infiniti will start producing two models the tailor-made long wheelbase versions of the premium sports sedan Infiniti Q50 and the stylish sports SUV QX50mat the Xiangyang plant in Hubei province, complementing our global production network including Japan, the US and the UK.

This year, we will introduce six new models in China with even more products in the pipeline to enrich our offerings.

Leveraging our local production and portfolio expansion, we aim to increase our annual sales from last year's 17,108 to 100,000 by 2018.

A4 Infiniti has always regarded the environment as the utmost priority throughout our development agenda, and we make every endeavor to protect and improve it across the entire business chain from research and development, on to production and products and then to sales.

We only sign up with those who share our commitment to the environment and strictly comply with state environment rules and regulations as our partners.

A1 The biggest challenge for the Chinese economy in 2014 is probably to reduce risks to growth and build a solid foundation for the development of the economy.

Liberalization of the market in many industries is opening up new opportunities for companies, which will bring more competition. We support this move toward further liberalization, as it will be good for consumers, who can benefit from an increase of quality in services at competitive rates.

A2 The major opportunity for Air France and KLM in China is to benefit from the growth in international travel. With our nine destinations in greater China and our strong partnerships with China Southern Airlines Co Ltd and China Eastern Airlines Corp Ltd, Air France and KLM have a leading position for travel toward Europe and South America. The challenge will be to maintain and expand this leading position in this highly competitive market.

A3 Air France and KLM have opened many new routes in the past five years, such as Wuhan, Xiamen and Hangzhou.

Air France and KLM always look for new opportunities, and we will closely follow the development of many cities in China. However, at this point, we do not have any plans for new routes in the near future.

Our objective is to build on the strong network that we have and to optimize the existing routes in terms of aircraft type and frequency.

A recent example is the launch of operations of the Airbus A380 to Shanghai for Air France, adding almost 20 percent capacity on this route. Air France will also operate an A380 to Hong Kong this summer.

A4 The leadership in China shows a strong desire and drive to tackle environmental issues. This gives us strong confidence that these problems will be reduced in the years to come.

Air France and KLM do their utmost to develop sustainable growth in the airline industry.

This effort is rewarded by being the No 1 for nine years in a row in the Dow Jones Sustainability index for the airline industry.

New techniques and possibilities think of biofuel, for example will certainly help to reduce the overall carbon footprint.

(China Daily Africa Weekly 03/07/2014 page6)