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Original Title: Global Companies Increase China’s Supply Chain Layout, Seizing “Double Cycle” Opportunity
At the beginning of the year, the outbreak of the new corona pneumonia epidemic, increased trade frictions and the disruption of the supply chain, the “decoupling theory” became popular for a time, but facts have continuously falsified.
During the 3rd China International Import Expo (hereinafter “CIIE”), HSBC released the survey report “HSBC Business Pilot: China Growth World Opportunities”, designed for CIIE around the world. The report is open to 11 companies around the world. 1,100 companies in foreign markets were surveyed. The results show that the development of the world economy and trade has stagnated due to the impact of the epidemic and geopolitical tensions. However, global companies are focusing on China, the fastest growing major economy, as the hope for business growth in the coming years. China will also continue to play a key role in the global supply chain.
International companies scale up China’s supply chain layout
Although many companies have been forced to reduce their international business and focus on local development in the last year, international companies remain optimistic about the growth prospects of the Chinese market. Three-quarters of the companies surveyed expect their exports or sales to China to increase in the next two years, and a fifth of companies expect growth to exceed 20%. Among companies that have exported or sold to China, more than two-thirds said China is among the top three key markets for business expansion in the next two years.
It is worth mentioning that although during the epidemic, some foreign markets had concerns about excessive concentration of production facilities and tried to promote restructuring of the value chain, but the survey showed that they not only had no obvious signs that Global companies were preparing to withdraw their supply chains from China, and many companies interviewed also plan to increase the design of their supply chain in China.
Three-quarters of the companies surveyed expect to increase the proportion of their supply chains in China in the next two years, and more than 40% plan to increase the proportion of China supply chains by 10% or more. Taking the US market as an example, 70% of surveyed US companies plan to increase China’s supply chain, and one fifth of US companies plan to increase China’s supply chain by 20% or more in the next two years.
In Europe, Brexit has no real impact on the design of the supply chain of British companies in China. 71% of British companies surveyed said they plan to increase the share of Chinese supply chains, which lags behind French companies (79%), in German companies (67%).
Companies interviewed indicated that there are many reasons to increase the proportion of the supply chain in China, including China’s digital opportunities, accelerating the launch of new products, continued growth in consumer demand, reducing costs. general supply chain and supply chain stability. Promotion, etc.
Take advantage of the “double cycle” and digital opportunities
Under the new development pattern of China’s economic “dual cycle”, domestic demand will be further released. According to the survey, foreign companies expect the top fastest growing areas in China in the next two years to be high-tech products and services, consumer electronics and home appliances, and medical equipment and health care products.
The growth potential of the service industry is particularly favored by foreign companies. More than half of the companies interviewed expect the service industry (especially the high-tech service industry) to be the fastest growing field in China in the next two years. In addition to being driven by the growth in demand, the development of digital technology has enabled service companies to more conveniently provide remote services to Chinese consumers. This is also an important reason why foreign companies are optimistic about China’s service industry.
To better seize the opportunities in the Chinese market in the post-epidemic period, foreign companies recognize that they need to adjust their business strategies. Most of the companies indicated that they will continue to invest to improve business efficiency and stability, especially to improve supply chain stability, improve ordering and delivery process, and accelerate the launch of new products in the Chinese market. In addition, many companies are formulating strategies around sustainable development or producing more products that meet the needs of a healthy life.
After experiencing the epidemic, the digital economy has become a protagonist in more areas of consumption. The survey shows that global companies have realized that if they want to remain competitive in the Chinese market, they must accelerate the application of digital technology.
More than 40% of the companies interviewed indicated that they are strengthening their digital business design in China by updating technology and e-commerce platforms. More than 60% of them plan to adopt the dual model of building their own digital platforms and cooperating with local digital platforms. This enables them to accelerate the expansion of their business while effectively coping with the challenges of being unfamiliar with the local Chinese market and business culture.
It should be mentioned that the construction of digital channels does not mean that foreign companies are going to abandon the construction of points of sale and physical channels, two thirds of the companies surveyed continue to agree on the importance of having physical points of sale and plan to invest in this area. .
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