China attracts multinationals not because of large markets

Many executives of global multinational companies have recently started a succession of visits to China, triggering close attention, which reflects the confidence of multinational companies in China’s economic outlook is very firm. In addition to the mega market, China’s manufacturing strength and innovation capability are also powerful attractions for multinational companies.

  At the end of 2019, Tesla’s Shanghai Super Factory was put into operation, with the “Shanghai speed” of starting construction, putting into operation and delivering in the same year, pulling Tesla out of the “capacity hell” at that time, which was in internal and external difficulties. Today, Tesla has grown into the world’s largest car company by market capitalization. Musk, the CEO of Tesla, who recently visited China, said that Tesla’s Shanghai factory is one of the most productive factories in the world, and the cars it makes are among the best quality cars in the world.

  Musk’s praise for the Shanghai factory has a deep basis in reality, and the significance of the Chinese market, Chinese manufacturing and Chinese innovation for Tesla is typical. China is the second largest economy in the world and an important center of consumption, manufacturing and innovation in the world. The closeness of cooperation between multinational companies and the Chinese market largely determines the speed and quality of their development.

At a time when developed economies are at risk of recession, the huge potential of the Chinese market is crucial for multinational companies to achieve stable performance. China’s large population and growing middle-income group make it an ideal market for multinationals, and many U.S. companies, including Procter & Gamble, Starbucks and Yum, are benefiting from China’s economic recovery, according to a recent article on the Consumer News & Business Channel website.

  China’s unique advantages in the supply chain are also attractive to multinational companies. PwC recently released a report showing that most multinational companies in China highly recognize the unique advantages of China’s supply chain, saying that China still has a strong advantage in the global manufacturing system due to factors such as higher labor efficiency, logistics levels and lower tariff levels.