This episode covers the Shanghai International Automotive Industry Exhibition, with comments from Mr Zhang Hongzhuo, chair of the Automotive Working Group; China’s foreign direct investment in the first quarter of 2023; a high-level meeting between the European Union and China; and measures aimed at stabilising foreign trade. From the Chamber side, a new report and a new issue of EURObiz magazine on research and development in China are introduced.
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20th Shanghai International Automobile Industry Exhibition
Ministry of Commerce press conference – Q1 FDI (in Chinese)
EVP Dombrovskis meeting Minister Wang Wentao
Measures to stabilise foreign trade
EURObiz magazine in PDF format download
European Chamber/MERICS joint report – China’s Innovation Ecosystem: The localisation dilemma
RUI: Hello and welcome to China Shortcuts,
MARIANN: the European Chamber’s weekly catchup on China’s business landscape.
RUI: The 20th Shanghai International Automobile Industry Exhibition officially opened after a two-year gap due to the coronavirus pandemic.
MARIANN: Featuring over 1,000 exhibitors and more than 100 new cars, the Shanghai motor show is showcasing the cutting edge of car manufacturing from leading domestic and international brands. For European firms operating in the sector, China is offering a highly competitive market, with consumer demands increasingly focussing on digital and new energy solutions.
RUI: Commenting on the motor show’s comeback is Mr Zhang Hongzhuo, chair of the Automotive working group.
ZHANG HONGZHUO: 2023 Shanghai international auto show takes place from April 18th. The latest model and concept cars are displayed in this ten- day gala. Apparently, Chinese automakers are speeding up their electrification from the strategy to products. This is encouraged by new energy vehicle sales booming last year and a great expectation for the following years. In their views, the market trend is irreversible, the imperative is to scramble for a great share of the market as soon as possible, even if profits are not immediately seen. With a stark contrast, European automobile makers are more careful to introduce their full spectrum of electric cars because their battery electric vehicles entered China market before are not as successful as internal combustion engines. Conventional vehicles could still be a cash cow for them today, even in the short-term. How to attract Chinese customers to their battery electric vehicles seems to be a hard nut to crack. The race of battery electric vehicles and internal combustion engine is becoming more intense than ever before to the segment where European cars are dominant. Whether or not they are able to hold their ground remains to be seen.
RUI: According to official data released by China’s Ministry of Commerce on 20th April, the country’s actual use of foreign direct investment or FDI grew at the slowest pace in more than two years in the first quarter of 2023.
MARIANN: FDI inflows expanded 4.9 per cent compared to the same period last year, which was the lowest rate of growth recorded since February 2021. At the same time, the ministry highlighted that the number of newly established foreign-invested enterprises increased by more than 25 per cent year-on-year in the first three months of 2023, as over ten thousand new foreign-invested firms set up operations in China. Furthermore, in the first quarter, almost 40 per cent of FDI into China was directed towards high-tech supply chains.
RUI: While leaders of the European Union are preparing to discuss the bloc’s ties with China during their next summit coming up in June, another high-level meeting took place in Brussels between the two sides.
MARIANN: On 24th April, the European Commission’s executive vice president and commissioner for trade Valdis Dombrovskis met Chinese Minister of Commerce Wang Wentao. According to the European Commission’s readout of the meeting, EVP Dombrovskis said it was necessary to rebalance the EU-China trade and investment relationship, and raised concerns about the lack of a level playing field for European companies in China. He highlighted that market access barriers are impacting the agriculture and food, medical devices and cosmetics industries, among others. The two sides also discussed the next High-Level Dialogue for Economy and Trade, after Commission President Ursula von der Leyen and Chinese President Xi Jinping had agreed to hold it when they met in early April. The Chinese side have announced that Vice Premier He Lifeng will co-chair the meeting.
RUI: On 23rd April, China’s vice minister of commerce Wang Shouwen announced measures aimed at stabilising foreign trade.
MARIANN: The minister said that China would take action to create more trade opportunities. He mentioned resuming offline trade fairs and facilitating the resumption of more international passenger flights and improving the efficiency of customs clearance among the planned steps. Wang added that foreign trade financing services available to medium, small and micro enterprises would also be improved, and that the authorities would guide companies to benefit more from cross-border e-commerce retail export-related tax policies.
RUI: The European Chamber recently launched a new joint report with the Mercator Institute for China Studies, highlighting the complexity of engaging in research and development in China. The report, China’s Innovation Ecosystem: The Localisation dilemma,found that while there are many benefits to conducting R&D in China, such as the speed of commercialising new projects or the size of the market, long-lasting challenges deter many European companies from engaging in cutting-edge innovation activities within China’s borders.
MARIANN: The March/April issue of the Chamber’s bimonthly magazine EURObiz delves into the topic of research and development through articles on the speed of commercialising R&D results in China, the intellectual property rights issues that companies need to consider before starting innovation projects, or the tax incentives that China offers for promoting innovation.
RUI: You can find these articles and many more by following the link provided in the show notes or by downloading the EURObiz in pdf format.
MARIANN: Thanks for listening. Tune in again next week.
RUI: In the meantime, find useful links in the episode notes.