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As China's manufacturing industry recovers, foreign investment opportunities are coming?

Due to large-scale factory shutdowns and limited transportation, China's manufacturing output hit the largest decline in history in February. However, with the domestic epidemic situation under control, some restrictive measures have been relaxed. On April 1, the China National Bureau of Statistics newly announced the March Purchasing Manager Index (PMI) of 52.0%, a sharp rebound of 16.3 percentage points from February, exceeding market expectations. .

In the context of the spread of the global epidemic, the recovery of the manufacturing industry has made China a safe haven for many foreign-funded enterprises to continue production, and also brought many new opportunities.

On March 19, the Ministry of Commerce publicly solicited opinions on revising the Catalogue for Encouraging Foreign Investment in Industries (2019 Edition). On April 1, Wang Daoshu, the chief auditor of the State Administration of Taxation, said that he would cooperate with relevant departments to revise the Catalogue of Encouraging Foreign Investment Industries to promote foreign investment in more fields to enjoy preferential policies such as taxation. In addition, the new version of the Negative List of Foreign Investment Admissions is also being stepped up.

1 New opportunities for Chinese manufacturing

With the spread of the global epidemic, many countries have experienced large-scale work stoppages, and China has become the safest area for production capacity and a safe haven for manufacturing in the world.

Ma Weifeng, chief representative of the Shanghai Representative Office of the China-Britain Business Council, said: "British-owned industrial enterprises have fully resumed their work. A survey of British member companies at the end of February showed that the vast majority of British companies have made economic developments in China Friendly relations are generally optimistic. "

Huang Qifan, chairman of the Industrial Transformation Advisory Committee of the Tsinghua Internet Industry Research Institute, believes that with the development of the epidemic, more foreign investors will see the development prospects of the Chinese industrial chain market and are willing to invest funds in enterprises that are preparing to join the Chinese industrial chain cluster. This trend will bring to China a historic opportunity that has not been encountered for a hundred years in the development of capital markets and the establishment of industrial chain clusters.


Foreign trade and foreign investment has always been an important force in China's economic growth. This time, more than 80% of the items in the encouraged catalog are in the category of manufacturing and support more foreign investment in high-end manufacturing, smart manufacturing, green manufacturing and other fields.


Tan Qi, a partner in charge of tax compliance and consulting at Ernst & Young Greater China, told reporters at the International Finance News that this revision of the catalogue is in line with the development direction of the national industrial planning in the context of China's transition from traditional manufacturing to high-end manufacturing. And can accurately hit the current foreign investment needs. With the gradual increase in the cost of human resources in mainland China, in the global industrial division of labor, the traditional labor-intensive manufacturing industry is gradually being transferred to low-cost areas. In this process of industrial transfer, China, which has higher quality labor resources, will become a hot spot for foreign investment in high-end manufacturing sites.

However, due to the impact of the recent global epidemic, Tan Qi said that investors tend to be conservative in the new foreign investment arrangement in the short term. Considering that the plan to fully resume production and production may also be postponed to the second or third quarter of this year, short-term investors May be more inclined to postpone or even reconsider the global investment plan. Zhang Ting, the founder and CEO of Crayfish.io, a British company, also told the International Finance News that some foreign companies also need to wait for the epidemic in their country or region to pass before considering foreign investment.


However, Zhang Ting believes that the current time is very good. Now I am seeking revision opinions and amending the catalog to let more foreign-funded enterprises understand China's new policies. In the future, it is possible to attract more foreign investors to settle in. Tan Qi also said that in the long run, the strong cohesion and efficient execution of the Chinese society in controlling this epidemic will enable investors to see the greater potential of China as an investment destination. In the future, more high-quality foreign capital will be ready to enter the market.

2 Foreign investors enjoy policy dividends

Under the impact of the global epidemic, China's manufacturing industry has ushered in new opportunities. While developing, China also hopes to bring more policy dividends to foreign companies.

Zong Changqing, director of the Department of Foreign Investment of the Ministry of Commerce, pointed out that by expanding and expanding the encouragement catalog and increasing the encouragement areas, not only can more foreign-invested enterprises enjoy preferential policies, thereby reducing costs, adversely affecting the impact of the epidemic, but also enhancing the industry as a whole Competitiveness, further stabilizing and enhancing the capabilities and level of important industrial chains and supply chains.

In order to attract foreign investment, many incentives are clearly mentioned in this encouragement catalog, including the exemption of tariffs on imported self-use equipment within the total investment, priority is given to land for intensive land projects, and it can be no less than industrial land 70% of the minimum transfer price standard determines the land transfer floor price, etc.

Tan Qi believes that the series of preferential policies given by the state is based on the actual needs of foreign investors and aims to create a friendly investment environment for more high-quality investments. "When investors choose investment destinations, they will make comprehensive decisions based on the needs of their own supply chain layout and the position of the target region in the division of labor in the regional industrial chain. Among them, the business environment of the investment destination and the policy preferences provided by the government, etc. It is also an element of consideration in the investment location decision. The supporting preferential policies that the Chinese government can provide are conducive to increasing the attractiveness of our country to foreign investment in the overall evaluation process, and will play a positive role in attracting investment to station. "

At present, relevant departments are speeding up the preparation of the new version of the negative list of foreign investment access. The state has also made it a top priority to promote the full-scale resumption of production and production of foreign-funded enterprises, so that the bail-out policy can take effect and enhance the sense of foreign-funded enterprises.

Zhang Ting said that in addition to tax cuts and preferential policies, the relaxation of market access by the government is a good thing for many foreign investors. "For example, one of our customers is a British baby products brand that has been produced in China for more than ten years, but because of market access issues, it has not been able to sell its products in China. Therefore, if market access can be relaxed, So while foreign businessmen are producing in China, they can also sell in China, which will be a good thing for foreign businessmen. "

Some analysis pointed out that multi-faceted welfare policies can effectively help enterprises reduce institutional transaction costs. The continuous optimization of the business environment, the restrictions on the access of foreign-funded enterprises and the continuous reduction of invisible barriers to operations have allowed foreign investors to enjoy professional manufacturing in China, compete fairly with domestic-funded enterprises, share the Chinese market, and enjoy the dividends of China's development.

CONTACT US

Contact: David Song

Phone: 8615376198599

Tel: 053187101088

Email: hxl@huachen.cc

Add: Room 603,Xinsheng building 2#, Xinluo Road, Gaoxin district, Jinan, Shandong province, China

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