China remains a magnet for foreign investment

CHENGDU - Wearing staff badges, workers are grabbing a bite to eat at a McDonald's restaurant in the center of Tianfu Software Park in Chengdu, provincial capital of Southwest China's Sichuan province.

They are a small portion of the 40,000 people working in the industrial park, home to more than 400 Chinese and overseas companies.

"Many companies followed the footsteps of Intel and came to Chengdu. But ten years have passed. We no longer attach such great importance to one single company's relocation," said Yuan Xin, secretary general of Chengdu Association of Enterprises with Foreign Investment.

To help further boost local development, the Fortune Global Forum will be held from June 6 to 8 in Chengdu. "The forum can mark the start of a new decade," Yuan said.

Yuan said Chengdu's municipal government hosts the forum four times a year with top executives of foreign-funded firms in the city, in order to answer their needs and fix any problems. The forum has been held 52 times.

"It has proved to be a good invention of the local government for serving investors," said Yuan.

Official data showed that western and central China used 19.21 billion U.S. dollars of foreign investment in 2012, accounting for 17.2 percent of the country's total. Chengdu alone had $8.59 billion of foreign investment paid in, up 31.1 percent year on year.

According to Yuan, companies in information technology, automobile, engineering machinery and aviation now have a strong presence in his 204-member association.

Companies are already seeing the benefits of being located in Chengdu.

"Many Chinese cities can generate huge demand but we selected Chengdu because of its business environment, helpful to the shop's daily operation and good for long-term development," said Zhang Lianlian, local market manager at IKEA's Chengdu outlet, the Swedish furniture giant's only shop in west China.

According to Zhang, the outlet topped 300 IKEA stores worldwide with a 135-percent growth rate in the fiscal year 2010. Its robust growth has prompted the retailer to consider opening a shop in Chongqing, the municipality bordering Sichuan Province.

Local and central government are taking active steps to keep attracting investment in a sustainable way.

Amit Midha, president of Dell Asia Pacific and Japan Region, said the local government is committed to establishing a world-class supply chain ecosystem.

Midha said Dell's Chengdu global operations site will help attract worldwide suppliers and help local suppliers grow and expand. As part of its overall layout in west China, the IT giant's own manufacturing line will be put into operation in Chengdu on June 7.

Jens Eskelund, Maersk China Ltd. senior director, said the logistics industry is comparatively open in China and foreign companies have benefited since the country's accession to the World Trade Organization (WTO).

"The Chinese government is recognizing the value foreign logistics companies can bring to the development in China and that is a great basis for discussing collaboration to mutual benefit," said Eskelund, whose company opened a global service center in Chengdu three years ago.

The central government has revised an industry catalogue to encourage foreign firms investing in labor-intensive industries in central and western China while conforming to requirements of environmental protection.

That may bring new opportunities for the local government and foreign firms to deepen cooperation and achieve win-win results.

China's economic growth slowed to 7.8 percent in 2012, the lowest level since 1999. But a latest AmCham China business climate report showed that over two-thirds of its respondents still listed China as at least a top-three destination for global investment.

Cui Wei, director and CEO of Sino-Singapore (Chengdu) Innovation Park Development Co., Ltd. said political stability and a steady Chinese currency appeal to global investors, as well as an improved rule of law and civil servants with an increasingly global vision.

Midha said Dell has not witnessed bias or obstacles in China's market, especially after the country's WTO entry. Industrial regulations are being completed and the government is using good practices from developed industries, he said.

"Trade barriers and discrimination against foreign companies -- whether in China, the U.S. or in Europe -- is poison for trade," said Eskelund, who also urged China to continue focusing on creating transparency, eliminating barriers and remaining cost competitive.