Year-on-year growth underlines resolute commitment to market opportunities

French companies remain adamant about ramping up investment in China, motivated by the country's intensified efforts to boost economic growth and expand market openness and consumer potential, according to business leaders and experts.

Insiders describe China's market as exceptionally attractive, highlighted by its extensive industrial clusters, demand for high-end and green technology solutions, and a growing middle-income population. These elements combine to offer substantial opportunities for businesses in the manufacturing, service trade and consumer goods sectors.

French companies in many sectors are keen to continue investment in expanding their presence across China, such as opening new factories and innovation centers, as well as participating in the annual China International Import Expo in Shanghai.

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Lyu Yue, a professor of the Academy of China Open Economy Studies, which is part of the University of International Business and Economics in Beijing, said the Chinese economy continues to show signs of improvement and recovery, and there is an intensified focus on accelerating the emergence of new economic growth drivers and persistently exploring new development areas.

Lyu said this factor presents multinational companies with expanded market opportunities.

That sentiment is in line with the latest data. Actual foreign direct investment in China amounted to 301.67 billion yuan ($42.46 billion) in the first quarter of 2024, remaining at a high level, according to data from the Ministry of Commerce.

China's high-tech manufacturing sector attracted 12.5 percent of the FDI inflow in the first quarter, up 2.2 percentage points compared to the same period of 2023. Rui Coelho, CEO for China at Air Liquide Group, a French industrial and medical gas supplier that runs more than 120 plants in China, said China is the world's second-largest economy and largest consumer market, with vast potential.

"China is also one of Air Liquide's largest markets, and business development in the country can provide immense support for the group's business globally," said Coelho. China's economic development model and market environment are constantly upgrading, "which can provide opportunities, as well as useful experience and reference for the company's business expansion".

Air Liquide invested 60 million euros ($63.95 million) to upgrade two air separation units in Tianjin in 2023, which are to begin operation in the second half of this year. Under the company's plan, the units will be changed from steam-driven to electric-driven, which will cut 370,000 metric tons of carbon dioxide emissions on an annual basis, equivalent to more than 1 million electricity-related carbon emissions per household in China.

To promote decarbonization of China's transportation sector, the French company has also established a joint venture with Shanghai-based energy company Shenergy Group and the Shanghai Chemical Industry Park to build a large-scale hydrogen filling center in Shanghai to accelerate deployment of hydrogen energy in Shanghai and the Yangtze River Delta region. The filling center will be operational in the second half of this year.

With China creating more favorable conditions to drive opening-up in its Hainan Free Trade Port, DFS Group, part of French multinational LVMH Group, and Shanghai-based Shenya Group will jointly build a luxury retail complex within Yalong Bay, Sanya, Hainan province. The 128,000-sq-m property will consist of the world's largest DFS beauty store and the largest indoor children's playground in Yalong Bay. The project is expected to attract between 16 million and 18 million visitors annually by 2030 and create lucrative commercial opportunities for Sanya.

Scheduled for completion in 2026, the project is expected to generate more than 1,000 jobs and spur development of related businesses, including infrastructure, logistics, and hotel and catering services, in the Yalong Bay area, said Nancy Liu, president of DFS China.

Liu said this will be DFS's largest investment project on the Chinese mainland to date, although the total amount was not disclosed.

The Yalong Bay project demonstrates the confidence of DFS and LVMH Group in the future development of the Hainan FTP and China's luxury retail and tourism market, she added.

As the Hainan FTP is scheduled to initiate independent customs operations throughout the island by the end of 2025, luxury consumption is expected to grow rapidly in Hainan, according to a research report of Guotai Junan Securities. For example, Louis Vuitton launched its new boutique during the second phase of the duty-free shopping complex in Haitang Bay, Sanya, in 2023.

Also upbeat about the Chinese market, Antoine de Saint-Affrique, CEO of Danone, a French multinational food products corporation, said China is "a vast and highly sophisticated market filled with opportunities, where Danone innovates locally to cater to both the Chinese and global markets".

Zhu Bing, director of the department of foreign investment administration at the Ministry of Commerce, said China will reinforce support for innovation and encourage foreign companies to engage in new development tracks to gain greater impetus for growth this year.

"Relevant measures include encouraging foreign investors to set up research and development centers in China, and cultivating emerging sectors like digital trade and the green economy," said Zhu.

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Meanwhile, the number of newly established foreign-invested firms in China hit 12,000 between January and March, up 20.7 percent year-on-year, statistics from the Ministry of Commerce show. Propelled by tangible development of the Belt and Road Initiative and France's latest policy measures to boost its economy, China and France will likely scale up trade and investment in fields like digital and sport economies, "new infrastructure", clean energy, food safety and high technology, said Wang Xiaohong, deputy head of the information department at the China Center for International Economic Exchanges in Beijing.

Unlike traditional infrastructure such as railways, roads and water conservancy, the concept of "new infrastructure" refers to critical facilities based on information technologies like 5G, artificial intelligence, the industrial internet and the internet of things, which describes networks of devices that can connect and exchange data.

With this year marking the 60th anniversary of the establishment of diplomatic ties between the two countries, Wang said strengthened economic and trade relations between the countries will contribute to the sustainable growth of global supply chains.

Thanks to China's massive market, sophisticated industrial system, strong supply chain competitiveness and the improving business environment, FDI from France soared 586 percent year-on-year in China in the first two months of 2024, according to the Ministry of Commerce.