High-end French companies are increasing investment to expand their industrial chains in China.
In 2023, France was one of the fastest-growing sources of direct investment in China, with direct investment rising 77 percent year on year to 1.34 billion U.S. dollars, according to China's Ministry of Commerce.
Investors include the world's leading technology companies, such as mechanical giant Schneider Electric and medical giant Sanofi.
They have developed in China because of its strong industrial system and rapidly improving innovations. Executives from both companies said their businesses are growing rapidly in the country.
"With automation and digitalization, every year, our production efficiency of the China supply chain is seeing a more than 10 percent [increase]. [The factory in Shanghai] will not only become Schneider Electric's most advanced factory in terms of digitalization and decarbonization, it also will become company's biggest factory making frame circuit breakers in the world," said Zhang Kaipeng, senior vice president of the Schneider Electric Global Supply Chain in China.
"We have been present in China for 42 years. Today, we have three factories, one doing vaccines in Shenzhen, one doing injectable products in Beijing and one doing solid products in Hangzhou. We keep investing on these plants, " said Charles Billard, CFO of Sanofi in Greater China
Managers said that large companies like them prefer the independent and complete industrial ecosystem formed in China to reduce costs and increase competitiveness. Zhang said the energy management and automation giant has more than 1,600 suppliers related to its production in the country.
"Resilience means we have to accelerate localization, to make our supply chain shorter with faster reaction. And we have to increase strategic backups, which means things we have arranged abroad should also be here in China. The supply chain in China has formed a relatively independent and extremely strong system," said Zhang.
As China's industry upgrades, these high-end companies are benefiting. The French companies have invested in research and development in their branches in China, complementing the local technology and innovation power.
And so far, the investments have started to pay off. Their China bases, serving as one of the intellectual centers, are playing a more important role in their global strategies, benefiting other parts of the world.
"In the past, China was mostly a destination market for drugs. With the growth of the local biotech, the local R and D ecosystem, China has very much become an innovation center. And now we see a lot more of very advanced companies in several technologies like mRNA, like antibody drug conjugate. And for us, and for all the pharma companies, let's be honest, it's an opportunity. There will be, in the next few years, some European or American patients benefiting from innovation from China. That's started happening already, but it will happen more and more because China is taking more, bigger role in the innovation ecosystem. If you look at the number of out-licensing deal from China to the rest of the world, for the first time last year, there were more out-licensing deal from China to the rest of the world," said Billard.
"In the past, our R and D in China mainly serves the China market. But now, with the growing R and D capacity in China, and the increasing significance of the Chinese supply chain, more projects are for the global market, which we called China for Global. We have a local supplier. But now, it's also expanded its business into North America and East Europe. It's now become a strategic supplier or our global business," said Zhang.
French high-end companies expand investment in China
French high-end companies expand investment in China
