Foreign firms continue to expand in China, making it remaining 'next China' for investment

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By Chi Jingyi, Zhang Yiyi (Global Times) 10:41, February 11, 2025

The meeting also approved an action plan for stabilizing foreign investment in 2025. The plan vows to expand support for reinvestment by foreign companies in China. Foreign companies will also be supported in engaging in equity investment in the country, according to Xinhua.

Riding on a fresh wave of foreign companies' expansion plans in China, Tesla is scheduled on Tuesday to hold a commissioning ceremonyfor its Shanghai Megapack energy storage plant - which completed construction in seven months, the Shanghai Securities News reported last week. The factory's production capacity is expected to ramp up in the first quarter of 2025, according to the report.

In addition to the latest development with Tesla, German optics giant Zeiss announced on Thursday that it will purchase land in China (Shanghai) Pilot Free Trade Zone to build an integrated campus for Zeiss Greater China headquarters in 2025, with a total infrastructure investment of over 600 million yuan ($82.8 million), according to a corporate release sent to the Global Times.

On Wednesday, Toyota Motor Corp announced that it will establish a new wholly owned company in Jinshan district in Shanghaito develop and produce battery electric vehicles and batteries.

Walmart-owned Sam's Club is also expanding in China. The 52nd Sam's Club store in China opened on December 18, 2024, in Wenzhou, East China's Zhejiang Province, while new Sam's Club stores broke ground in Foshan, South China's Guangdong Province, on December 16 and in Jinan, East China's Shandong Province on December 19.

These actions fully demonstrate the confidence and long-term commitment of foreign enterprises to the Chinese market, Wang Peng, an associate research fellow at the Beijing Academy of Social Sciences, told the Global Times on Monday.

Walmart witnessed 17 percent annual growth of net sales in China in the third quarter of 2024, with 25 percent growth in e-commerce net sales, faster than the 12.4 percent growth rate in international markets, according to Walmart's financial results.

"China's annual inflow of foreign investment still exceeds $100 billion, while foreign investments are expanding, showing that China is still the 'next China' for many foreign enterprises," Tian Yun, a veteran economist, told the Global Times on Monday.

The investment deals announced recently confirm that the Chinese market is not short of consumption potential, but there is a shift in demand. Companies like Sam's Club have seized this opportunity and succeeded in the high-end services sector, Tian said.

"It also reflects that those foreign enterprises that quickly respond to and keep up with the changes in the Chinese market and China's economic transformation can succeed," said Tian, adding that foreign companies are also changing their focus in the Chinese market to adapt to the economic transformation of the country and grasp the growth potential brought by the transformation.

According to statistics from the Ministry of Commerce (MOFCOM), China's actual use of foreign capital in the high-tech manufacturing sector accounted for 11.7 percent of the total in 2024, amounting to 96.29 billion yuan.

The actual use of foreign investment in the manufacturing of medical equipment and instrumentation increased by 98.7 percent year-on-year, while professional and technical services grew by 40.8 percent. The manufacturing of computers and office equipment grew by 21.9 percent, according to the MOFCOM data.

Wang pointed out that foreign investment remains important in China's new economic development pattern of "dual circulation," which takes the domestic market as the mainstay while allowing the domestic and foreign markets to reinforce each other.

In recent years, China has consistently opened up, with various supporting measures, such as holding international expos and reducing negative lists for foreign capital. This can explain why the number of newly established foreign enterprises in China continued to increase.

According to MOFCOM data, the number of newly established foreign-funded enterprises in China increased by 9.9 percent year-on-year to reach 59,080 in 2024.