In a report titled "Risk, Resilience and Rebalancing in Global Value Chains", McKinsey pointed out: "More production is moving closer to key consumer markets, while China's growing middle-income group will continue to attract global multinationals. In-depth layout in China."
A specific case is that foreign-funded enterprises have remained enthusiastic about the China International Import Expo, which has been held for four consecutive years.
The fifth China International Import Expo will be held this year. More than 270 Fortune 500 companies and leading companies in the industry have signed contracts, with a return rate of nearly 90%.
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"China's R&D center has become an important part of the company's global R&D system." Shi Dongmei, head of Merck's China R&D center, told reporters recently that with the upgrading and development of China's medical and health industry in the past decade, many of Merck's global early clinical development The projects are all carried out research and development exploration in China, which ensures that China becomes the first echelon country for Merck's global new drug launch.
Like Merck, there are not a few multinational companies that regard China as the most important production base, sales market and R&D center.
Take Shanghai, where foreign companies “get together” as an example. As of the end of May 2022, a total of 848 regional headquarters of multinational companies and 512 foreign-funded R&D centers have settled in Shanghai.
In the reshaping of the global industrial chain, multinational companies always have the most sensitive sense of smell. They deploy a complete industrial chain in different regions of the world in order to obtain the most benefits.
Twenty or thirty years ago, many foreign companies moved their production lines to China because of the cost advantages of raw materials, labor and other factors; Leading technologies or products are looking for China's huge market, rich technology and talent accumulation, and confidence in "world factory + world market + world laboratory".
From factory to laboratory
More than 100 years of multinational companies have a long-standing password.
For Merck, which has a history of more than 350 years, this code may be its ability to allocate resources around the world and take advantage of the comparative advantages of various countries.
In 1897, Merck came to China to sell chemical reagents, and then opened its first Chinese branch in 1933 to promote the drugs and chemical products it developed.
At that time, China was still struggling with poverty, disease and war.
After the reform and opening up, Merck saw the hope of the rise of a new "world factory", and established a sales network and pharmaceutical factory in China.
This is Merck's largest pharmaceutical base outside Europe, and Merck has invested 217 million euros in it as of 2022.
According to Shi Dongmei, this pharmaceutical base can shorten Merck's service radius, simplify the supply chain, and be closer to Chinese patients.
At the same time, the multinational company is increasingly relying on China's research and development capabilities.
In 2009, Merck established an R&D center in China, initially positioning it as a support role for the headquarters' R&D system.
However, after the implementation of the new drug review and approval policy in China in 2015, the "China speed" in the biopharmaceutical field made Merck decide to continue to advance the research and development phase in China and fully incorporate China into the company's global early clinical development projects.
Today, Merck's China R&D team has about 200 scientists in "Beijing, Shanghai, Guangzhou" and Chengdu. They are responsible for translational medicine, clinical development and operation, registration, data science, biostatistics, etc. Innovative drugs in the field of neurology, assisted reproductive technology solutions, and more.
Leading companies in different fields have their own ways of success, but one thing is similar, that is, they must not only manufacture in the "world's factory", but also innovate by leveraging China's R&D strength.
Chip giant Qualcomm has set up R&D centers in Beijing and Shanghai, and the world's first innovation center in Shenzhen; Tesla has not only built a super factory in Shanghai, but also set up an R&D innovation center based on vehicle development; Schneider Electric has Four R&D centers have been established in Beijing, Shanghai, Shenzhen and Xi'an; Dassault, a French industrial software provider, simply moved its Asia-Pacific headquarters from Tokyo to Shanghai; Siemens upgraded the Siemens Electrical Products China headquarters in Suzhou to China and East Asia headquarters, covering Its business in South Korea, Japan and other countries; L'Oreal set up the first investment limited company in China, and listed China as one of the three major beauty technology centers in the world...
Flow data on R&D investment also bears witness to this trend.
According to data from the Ministry of Commerce, from January to August 2022, the actual use of foreign capital nationwide was 892.74 billion yuan, a year-on-year increase of 16.4% on a comparable basis.
In terms of industries, the actual use of foreign capital in the high-tech industry increased by 33.6%, of which the high-tech manufacturing industry increased by 43.1% and the high-tech service industry increased by 31%.
In terms of source, the actual investment in China by South Korea, Germany, Japan and the UK increased by 58.9%, 30.3%, 26.8% and 17.2% respectively (including investment data through free ports).
in China for China
The choice of multinational corporations is no accident.
In a report titled "Risk, Resilience and Rebalancing in Global Value Chains", McKinsey pointed out: "More production is moving closer to key consumer markets, while China's growing middle-income group will continue to attract global multinationals. In-depth layout in China."
A specific case is that foreign-funded enterprises have remained enthusiastic about the China International Import Expo, which has been held for four consecutive years.
The fifth China International Import Expo will be held this year. More than 270 Fortune 500 companies and leading companies in the industry have signed contracts, with a return rate of nearly 90%.
In July 2020, Danone Group's Open Research Center was inaugurated in Shanghai. The center is mainly engaged in research on breast milk, intestinal health, professional special nutrition and food safety.
Coincidentally, international dairy giants such as Nestlé and Fonterra have also established R&D centers or product application centers in China to further increase China's mid-to-high-end milk powder and dairy product markets.
The rapidly growing market and more refined, personalized and high-end consumer demands are the main factors that attract these dairy giants.
In 2020, the total demand for dairy products in China will reach 54.31 million tons, a year-on-year increase of 8%.
With the release of the new national standard for milk powder in recent years, high-end milk powder has become more popular among Chinese consumers.
Guosen Securities data shows that from 2014 to 2018, the compound annual growth rate of ordinary, high-end, and ultra-high-end infant formula milk powder in China was 5%, 20.5%, and 39.5% (in terms of retail value). China's infant formula will account for 26.4%.
Xu Qiyuan, a researcher at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, wrote in an article that from the perspective of spatial layout, the strategy of foreign-funded enterprises in China has shifted from in China for the world (in China for the world, emphasizing the role of China's "world factory") to a more More in China for China (in China for China, emphasizing that China's production is more for the Chinese market), more and more foreign-funded enterprises have begun to focus on the Chinese market business.
This new situation has also put forward new requirements for China's opening-up policy.
Openness and cooperation and international integration are the characteristics of a series of reform policies in recent years.
Take the field of pharmaceutical research and development as an example: in 2015, the State Council issued the "Opinions on Reforming the Review and Approval System for Drugs and Medical Devices", allowing new drugs that have not been marketed overseas to be approved for simultaneous clinical trials in China, and the experimental data that meet the requirements "can be found in used when applying for registration".
This has brought profound changes to the R&D pattern of the pharmaceutical industry.
In 2017, China joined the International Council for Harmonization of Pharmaceuticals for Human Use (ICH), which further accelerated the pace of simultaneous research and development in China and the world, enabling Chinese patients to benefit from the latest achievements in global drug innovation in a timely manner.
"For Merck, this means huge innovation potential and broad development prospects, and it also increases our confidence in long-term development in China." Shi Dongmei said that Merck is promoting the transformation of the "China-led" clinical model, and cooperates with local Innovative pharmaceutical companies cooperate in research and development to further accelerate the launch of transformative innovative drugs in China.
Talent returns, branches and leaves are scattered
As an investor, Zhao Chen, China Managing Partner of Plug and Play China, recently noticed an interesting phenomenon: more and more foreign companies are focusing on Asia, especially China's cutting-edge technology companies, and even hope to develop in China Some project investments.
"Many of our foreign companies' clients also set up their own CVC (Corporate Venture Capital Department) in China." Zhao Chen analyzed that there are two factors that foreign companies value most in CVC investment in China: "The first is the market, and the second may be the talent."
The huge and continuous supply of talents is a key factor in attracting foreign companies to invest more and set up R&D and innovation institutions.
The continuous return of top young talents has further strengthened the confidence of foreign companies to set up more R&D institutions in China.
According to the report "University Alumni Observation: Research and Prospects for Career Development of Chinese and Foreign College Graduates 2021" jointly released by Globalization Think Tank (CCG), International Association of Talent Organizations (AGTO) and LinkedIn China (LinkedIn), more than 70% of U10 (Ten "double first-class" colleges and universities) graduates choose to return to China for development after completing their studies.
Compared with other developing countries, China is gradually getting rid of the situation of brain drain, and the international talent circulation trend of "study abroad - return to China for development" will be more obvious.
These returnees are often "targeted" by multinational foreign companies. They expect these returning returnees to produce a series of technological innovations with fairly generous salaries and a relaxed R&D environment.
Microsoft Research Asia (MSRA), established by Microsoft in Beijing in 1998, is a case in point.
This is Microsoft's largest research institution outside the United States. In cooperation with major universities and research institutions in China, more than 300 innovative technologies have been born from Microsoft Research Asia and applied to Microsoft products, including Office Office software, Windows operating system, Bing search, etc.
With the rapid development of China's digital economy, a large number of young scientific and technological talents have also come out of this research institute and entered various fields. Some have established entrepreneurial incubators, some have joined universities as professors, and some have joined other digital economy enterprises to show their strength. .
In September of this year, Microsoft announced that it will further increase investment in four aspects: talent acquisition, park expansion, education investment and local ecology, and will continue to expand recruitment in China in the coming year, and the total number of employees is expected to exceed 10,000.
The relevant person in charge of Microsoft said that in the face of China's opportunities for the accelerated development of the digital economy and digital technology, Microsoft has deepened cooperation with all parties, actively promoted the education and training of new technologies and new skills, and widely expanded the development prospects of talents.
China Youth Daily and China Youth Daily reporter Wang Lin, trainee reporter Zhao Anqi (Source: China Youth Daily)