Lingang Dishui Lake, Shanghai Pilot Free Trade Zone. Photo by Xu Congjun (People's Picture)

Recently, the news that "Tesla cars made in China are delivered to the public" has continued to flood the screen. It took only one year from factory construction to mass production and then to delivery. This super factory with an investment of about 50 billion yuan ran at an amazing "Chinese speed".

Not only Tesla, in the first 11 months of last year, China had 722 large foreign-funded projects with a total investment of more than 100 million US dollars, an increase of 15.5%, and more large foreign-funded projects were implemented at a faster pace. Relevant people pointed out that these large foreign-funded projects are not only large in scale, but also high in gold content. In the future, more and more similar projects will be settled in China.

Not only large in scale, but also high in grade

"The Zhanjiang integrated base is BASF's largest overseas investment project to date. After completion, it will become BASF's third largest production base in the world after Ludwigshafen, Germany and Antwerp, Belgium." said Bruderm¨¹ller, Chairman of the Executive Board of BASF Europe.

On November 23, 2019, the construction of BASF's integrated base in Zhanjiang, Germany, was officially launched on Donghai Island in Zhanjiang City, Guangdong Province. As China's first large-scale wholly foreign-owned petrochemical integrated project, the BASF Zhanjiang project has a planned area of about 9 square kilometers and a total investment of US$10 billion. It is BASF's first new integrated production base in the world that uses the latest intelligent technology. The first batch of production units will be put into production in 2022, and the entire base will be completed by 2030.

Yong Wanting, President of BASF's Performance Materials Division, said that the Zhanjiang project is a highly integrated "integrated" production base, and its production units include an ethylene steam cracking unit with a planned annual production capacity of 1 million tons. By 2022, the engineering plastics modification unit will contribute 60,000 tons of modified engineering plastics products to BASF in China each year, which will increase BASF's total production of modified engineering plastics products in the Asia-Pacific region to 290,000 tons.

In the same month that BASF's Zhanjiang project was launched, the construction of the third Asia-Pacific factory of SIG Combibloc with a total investment of 1.4 billion yuan started in Suzhou Industrial Park, Jiangsu Province. The project is expected to be completed and put into production in October 2020. This global food and beverage packaging giant not only has two Asia-Pacific factories in Suzhou, but also established its largest technology center outside its headquarters here.

"The new factory is built according to the standards of green smart factories. It has not only expanded its scale, but also improved its grade, focusing on high-end products. In the future, we will rely on China's huge market advantages to take the path of R&D-led." said Sha Haitao, director of operations and supply chain of Combibloc Suzhou Factory.

In Chuzhou, Anhui, the dryer and washing machine factory of BSH (Chuzhou) Home Appliance Industrial Park with a total investment of 1.69 billion yuan is under intensive construction. The initial scale of the new factory is 60,000 square meters. It is planned to be officially put into production in the first quarter of 2021, with a designed annual output of 3.6 million units. After completion, BSH (Chuzhou) Home Appliance Industrial Park will become the largest single intelligent manufacturing base in the production system of BSH Home Appliance Group.

Gerke, Chairman of BSH Home Appliance Investment (China) Co., Ltd., said that the construction of the new factory marks the further deepening of BSH Home Appliances' localization strategy, which will bring a new washing and drying experience to Chinese consumers.

From the perspective of China, large-scale foreign-funded projects continue to increase: Siemens diagnostics factory with an investment of 3 billion yuan, Beam Automotive project with an investment of 5.1 billion yuan, Invista adiponitrile project with an investment of more than 1 billion US dollars... It has become the choice of more and more foreign companies to settle large projects in China.

"It is becoming a trend for large foreign-funded projects to enter China at an accelerated pace, and these projects are not only large in scale, but also have high technological content and added value, which is in line with China's promotion of high-quality economic development." Zhang Jianping, deputy director of the Academic Committee of the Ministry of Commerce Research Institute and director of the Regional Economic Research Center, said.

Seeing the present and the future

Why choose China? Foreign companies gave the answer.

Bruderm¨¹ller said that by 2030, China will account for nearly 50% of the global chemical production value, and Guangdong is an important growth market for innovative chemical products. Zhanjiang has a well-equipped port and is vigorously building transportation networks such as high-speed rail and airports. All of this will benefit BASF.

In September 2019, after several rounds of difficult negotiations, Germany's BBSAutomation signed a cooperation agreement with Kunshan Development Zone, and the East China Intelligent Manufacturing Design, R&D and System Integration Center and China Investment Holding Headquarters with a total investment of US$300 million settled in Kunshan. "What prompted us to make the choice was the industrial accumulation, future planning and surging passion here, which made us see the present and the future," said Joseph Wildgrube, the company's founder and CEO.

"From the upgrading of traditional industries to the development of emerging industries, from promoting new energy industries and green development to accelerating the process of new urbanization, China's development has brought many new market opportunities to ABB, attracting us to expand our investment in China and expand our business layout." said Gu Chunyuan, president of Asia, Middle East and Africa of industrial giant ABB Group. At present, ABB Group's new robot factory and R&D base in Shanghai are under intensive construction, with a total investment of US$150 million, and is expected to be put into operation in 2021.

What attracts large foreign-funded projects to China is not only the market and potential, but also the good business environment.

At the scene where the first batch of Model 3 cars were delivered to the public in Shanghai, Tesla CEO Elon Musk danced happily. In his words, "It is the good business environment that allows the smooth construction and rapid delivery of Tesla's Shanghai factory." From process optimization to tax exemptions, from project subsidies to approval time compression, from tracking services to financing support... Tesla has fully experienced China's continuously optimized business environment and investment convenience in Shanghai. This has strengthened Tesla's confidence in further development in China. Musk said: "Tesla will continue to invest in China in the future to produce Model 3, Model Y and more future models, and develop and produce cars that truly belong to Chinese consumers."

SIG Combibloc has similar feelings. When it built the third Asia-Pacific plant, it had four candidate sites, including Thailand, Vietnam and Mexico in addition to China. The person in charge of the company pointed out that the reason why they finally chose Suzhou Industrial Park was because of its excellent business environment, including the hardware and software environment, government services, talent advantages, and tax incentives. Taking tax incentives as an example, according to the 2017 version of the "Guiding Catalogue of Foreign Investment Industries", the new plant project of Combibloc will not be able to enjoy the duty-free import of equipment in China, but the 2019 version of the "Catalogue of Encouraged Foreign Investment Industries" includes "the development and production of aseptic liquid food packaging materials". This major incentive policy has become a "timely rain" for the new plant of Combibloc to settle in China.

There will be more large foreign-funded projects

What is the prospect of large foreign-funded projects entering China? Meng Wei, deputy director of the Policy Research Office of the National Development and Reform Commission, said: "I believe that in the future, a number of large foreign-funded projects in the fields of new energy, new petrochemicals, electronic information, etc. will be implemented one after another."

Why can this judgment be made? Martin Jacques, a senior researcher at the University of Cambridge in the UK, believes that China has huge market space, broad development potential, and surging innovation vitality. Most importantly, China is determined to deepen reform and expand opening up and is pragmatic in its actions. "Really, if you are a large multinational company, how can you not come to China?"

In Zhang Jianping's view, as the world's manufacturing center, China has a complete industrial chain, and its manufacturing value added accounts for about 30% of the global share. It has strong agglomeration and scale effects, and is moving towards the middle and high end, which is very attractive to foreign investment. "Although some low value-added and labor-intensive industries are currently shifting to Southeast Asia, South Asia and other regions, China still has great advantages in the field of advanced manufacturing."

Wang Shouwen, Vice Minister of Commerce, pointed out recently that China's Chinese market will be the largest in the world in the future, and China has very strong industrial supporting capabilities, providing a solid cooperation foundation for foreign investment. In addition, the innovation capacity of the Chinese market is also constantly improving, especially in the fields of Internet, information technology, artificial intelligence, etc., the potential will continue to be released steadily. "Comprehensive evaluation shows that China still has comprehensive advantages in attracting foreign investment."

Meng Wei said that in the next step, he will continue to promote the optimization of the foreign investment environment with relevant parties and promote the positive progress of China's new round of opening up. The implementation of the Foreign Investment Law and supporting regulations will be done well. The new foreign investment legal system will provide investors with stronger protection, more efficient services and a fairer market. In addition, the negative list for foreign investment access will be revised again, allowing wholly foreign-owned enterprises in more fields, and no restrictions will be set outside the list to ensure national treatment for foreign-invested enterprises.

The meeting of directors of the National Intellectual Property Administration of China held recently pointed out that in 2020, intellectual property protection will be strengthened, the construction of a large-scale protection work pattern will be accelerated, the law enforcement and protection business guidance system will be improved, and protection capacity building will be strengthened. At the same time, we will continue to promote the improvement of the quality and efficiency of intellectual property review, continuously improve the quality and efficiency of patent and trademark review, enhance the public service capacity of intellectual property, strengthen international cooperation in intellectual property protection with greater efforts, and strengthen the comprehensive guarantee of intellectual property.

"In order to improve the efficiency of foreign investment, we should further improve the degree of facilitation of foreign investment and promote the accelerated implementation of relevant measures. At the same time, we will give the free trade pilot zones greater autonomy in reform and innovation, support the free trade pilot zones to take new steps in further independent opening, continuous opening and increasing opening, explore more replicable and popularizable experiences and practices, and provide support for more and more foreign investment projects to settle in China." Zhang Jianping said.

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