China remains attractive market for most multinationals: Roland Berger

Editor's note: The Third Multinationals Qingdao Summit will take place in Qingdao, Shandong province, from June 20 to 21, as part of the country's efforts to accelerate high-level opening-up and boost global economic recovery. Participants' expectations for this year's summit and their insights into China's endeavors to promote a higher level of opening-up and encourage high-quality growth under the new "dual-circulation" development pattern are being featured in a series of reports by China Daily.

Q1: What are your hopes for the summit this year?

A: In recent years, global economic risks have risen considerably amidst growing geopolitical conflicts, spreading inflation and supply chain disruptions. This is even more true in these first few months of 2022, seeing a tragic conflict unfold in Europe – building consensus between China and the world on development and cooperation is crucial. Dialogue, open exchanges, a forward-looking perspective, particularly focusing on more international cooperation at institutional and corporate levels, can help solve our challenges – accelerating the progress of industrial modernization, fighting climate change and making it a growth opportunity, mitigating risks, upholding the values of peace, harmony and a rule-based world order require engagement.

On behalf of Roland Berger, I would like to thank the Organizing Committee for hosting the Third Qingdao Multinationals Summit, and I look forward to this inspiring and intense moment of exchanges and openness.

Q2: Regardless of the impact of COVID-19, the fundamentals of China's long-term sound economic growth will remain unaltered, as will its commitment to progressively open up. The Chinese market is becoming increasingly important for the growth of global corporations. What are your thoughts on the prospects for multinational firms' development in China in this context?

A: Since 2020, the Chinese production system has been critical to the world's economies in meeting the post-COVID crisis surge in demand, showing quite extraordinary resilience. It further helped finance more investment to make China an even more powerful and modernized manufacturing powerhouse. Foreign business remains deep and broad in China. Last year, the Top 100 Foreign companies in China generated $900 billion, accounting for 6 percent of China's GDP, and created 2.5 million jobs domestically.

Despite that China is faced with short-term challenges, Roland Berger believes that China remains for most multinational companies as an attractive market, a superior industrial cluster, and an increasingly efficient innovation hub.

The Chinese market increasingly demonstrates features of its own in consumption patterns, domestic technology and business model evolution, which is growingly different from other markets, calling for business model localization. Therefore, engagement and business models of multinational companies need to evolve accordingly so as to better participate in China's future development.

Q3: China aims to peak its carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060. What new opportunities do you think China's carbon goals will bring to foreign-invested companies?

A: China is quickly building up new economic engines for the future that are fueled by industrial modernization and lower carbon development. The double pledge to peak and to neutralize greenhouse gases emissions by 2030 and 2060 is key to maintain China's new competitiveness, and it will drive further acceleration of the modernization progress. This will accelerate innovation, and the size of the change will drive down the marginal cost, compared to the rest of the world. This is not a new pattern. We have seen it with solar PV modules and batteries.

Multinational companies will also play an important role in China's decarbonization transformation. It is estimated that more than 100 trillion yuan ($14.93 trillion) would be invested in accumulatively through the progress to achieve carbon neutrality in 2060. Massive capital will be invested in many areas such as industrial upgrading (eg, equipment, process), renewables, hydrogen, energy storage and CCUS. Going forward, there are still plenty of opportunities in different areas for international collaboration, investment, and joint development.

Q4: Could you introduce your company's business in Shandong or in China? Do you have any plans to boost investment?

A: Roland Berger has deeply participated in the development of Shandong province building up long-term strategic partnerships with many important clients and gaining an in-depth understanding of the fundamentals of Shandong. Also, as a member of the Qingdao International Marine Industry and Capital Advisory Committee, we have been continuously promoting the high-quality development of the maritime economy in Qingdao and the West Coast New Area.

At this critical stage of China's transition and further sustainable growth in the long term, we believe that as management consultants, there will be many themes and topics where we can bring brilliant ideas and solutions to create great value and impact for Shandong's transformation and development.

We as Roland Berger will continue to work closely with our clients in Shandong to tackle the opportunities around the new business models, value and supply chains, and technologies, to support building a strong, modernized, innovative and green Shandong.

Q5: Now Shandong is building a new development pattern and intends to become a highland for opening-up. How do you evaluate Shandong's economic, social, and business environment?

A: In recent years, Shandong has made continuous efforts in deepening reforms and opening-up in key areas that improve the business environment. Recently, the 12th Shandong Provincial Congress of the Communist Party of China was held and it was emphasized that Shandong would unswervingly deepen reform and opening-up to remove all institutional obstacles that restrict development, as well as strive to create a new highland for opening-up, and enhance the vitality of high-quality development. I think these efforts are very meaningful for business development in Shandong.

In the near future, we are looking forward to seeing more pragmatic measures that improve the business environment and address key aspects such as market access barriers, IP protection and equal treatment, to create a stable and more of a level playing field by empowering the vitality and development of Shandong province.