Foreign firms banking on CIIE for growth

Global companies see mega trade expo as chance to expand footprint in China

The third China International Import Expo, which runs from Wednesday to Tuesday in Shanghai, is creating a great deal of interest.

It is being called a "platform of engagement", a "signal" representing a "vote of confidence" and a "bridge" connecting China to the outside world.

Beyond these descriptions, foreign companies see the event as means to tap into the latest industry trends in China, and a way to initiate new practices that might set the tone for development in the coming year.

Public health takes on greater prominence at this year's CIIE as a result of the lingering COVID-19 situation. In light of the pandemic, pharmaceutical company MSD is unveiling a series of ongoing projects at the CIIE, including its two COVID-19 vaccines that are under development and an oral antiviral drug.

"What we are doing is to try to improve healthcare, not just around COVID-19, but healthcare generally," said Joseph Romanelli, China unit president of United States-based MSD, which is heading the newly established Public Health and Epidemic Prevention section at the CIIE.

AstraZeneca is using the event to highlight a cooperation framework agreement with Chinese counterpart Biokangtai for the exclusive authorization for research and development, production, supply and commercialization of a COVID-19 vaccine, which is being jointly developed by AstraZeneca and the University of Oxford, in China.

"The agreement is expected to keep China's vaccines on pace with the world's leading technology to benefit Chinese people as soon as possible," said Michael Lai, general manager for AstraZeneca China.

AstraZeneca has five parallel regional headquarters across China, in addition to its country headquarters in Shanghai. Each of the regional facilities has a unique characteristic, such as the site of Chengdu, Sichuan province being designed to create innovative solutions that combine Chinese and Western medicine. Such a setup is a real testament to "the long-term commitment of the company's 'in China for China' strategy", Lai said.

In the eyes of Allan Gabor, president of Merck China, the scheduled holding of the CIIE suggests that "China is back, and we are more or less back to business as usual".

Gabor said: "We have this opportunity to convey, what we did during COVID-19, but also what our big investment and partnership plans are for the future."

His company's three-pronged business structure of life science, healthcare and performance materials helped weather headwinds and recorded double-digit growth in China so far this year.

During the CIIE, the company is on course to make two major announcements－unveiling the official Chinese name of the Merck label and launching a white paper it produced in coordination with government authorities in the Guangdong-Hong Kong-Macao Greater Bay Area.

"The GBA is a strategic development area in South China, and we did a thorough look at the dynamics of what they are doing, how they are doing it and how our innovation hubs, in particular in Guangzhou, could contribute," he said.

Some companies are using the occasion for market education. In the case of cosmetics giant L'Oreal Group, this means activating the category of fragrances in China by debuting four perfume products during this year's CIIE.

"There are some categories that are very well developed in China like skin care and makeup, which are also accelerating fast. But when it comes to fragrances, it's still underrepresented in China," said Fabrice Megarbane, president and CEO of L'Oreal China.

To meet Chinese customers' keenness for high technology, L'Oreal is debuting an artificial intelligence-powered smart makeup gadget that gives advice on beauty recommendations for personal use.

"Through the CIIE, companies like us can mobilize ourselves to see how we can serve Chinese customers better. It will not only generate positive impact for China, but a positive impact outside of China," he said.

South Korean cosmetics house Amorepacific is relocating the R&D functions of some of its brands and certain product lines to China, where consumer insights coupled with technologies serve to guide new product development. These items would then be exported overseas, including its home market.

According to Charles Kao, president of Amorepacific in China, choosing catchy names and selecting packaging patterns are being factored into the decision-making process for new product debuts－a clear sign that "China is shaping up to be the pivot for innovation".

The robust digital marketplace has helped Amorepacific fend off losses, even during the height of the pandemic. Sales in China managed to level off with numbers comparable to last year, with some brands even bucking the trend and achieving double-digit growth.

"We see the 'dual circulation' strategy as a natural spillover of domestic circulation, where the vast Chinese market serves as the launchpad for some of the most advanced retail practices, such as omnichannel operations," Kao said.

For Dirk Van de Put, chairman and CEO of confectionery company Mondelez International, the CIIE gives the company a "firsthand touch and feel" opportunity to witness changing trends in the Chinese market.

In an effort to both cater to and lead consumer trends for healthier eating, Mondelez is introducing new products like chocolates with less sugar and low-sodium cookies at the expo.

"We try to get new ideas and new context that gives us new business opportunities and… eventually lead to new products," Van de Put said.

"For example, in China, as the consumers stay at home more, we realized that Oreos (a cookie brand) are more used for cooking purposes than normal. So we need to start exploring how to use them in cooking situations. Those are the types of things we want to get a feeling for at the expo," he added.

Teh-hen Chow, China CEO of Fonterra, a New Zealand dairy company, sees more of a commercial benefit in the CIIE as it not only stands to generate potential business leads for the company but also better empower its local partners.

"This year we support more of a direct transaction, i.e. not just put up our corporate image but also be able to sell products," Chow said.

"When consumers have more choices, they will consume more. So as an organization, we need to always think about how to provide localized innovation and products that meet consumer needs," he said.