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97% of foreign firms say they will keep investing in China

by Joe Cash
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Ninety-seven per cent of foreign firms intend to keep investing in China, according to a survey of over 2,000 companies either doing business in China, or who intend to do so in the future

Speaking to the results of the survey, Sir Sherard Cowper-Coles, Chair of the China-Britain Business Council and Group Head of Public Affairs at HSBC, said: “Companies from the UK and around the world clearly continue to see the China market as a significant driver for the growth of their business and the global economy; for UK firms in particular, no other market is growing as quickly.”

launchpad CBBC

The survey was conducted by HSBC and confirms that China remains at the forefront of investors’ minds owing to its sizeable market, expectations of continued economic growth, and well-developed supply chains. A total of 2,174 foreign firms participated. Of those, 19% plan to invest 25% or more of their operating profit in China, while 42% reported intended investment of between 11% and 25% of their profits. The bank also discovered that while there is a perception that manufacturing firms are leaving China in favour of lower-cost markets such as India and Vietnam, six in 10 respondents are either currently expanding their supply chains in China or plan to do so over the next year.

Research conducted by CBBC has uncovered that British firms held foreign direct investment (FDI) positions worth £10.7 billion in China at the end of 2019; the stock of Chinese FDI in the UK stood at £35.2 billion.

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British firms are by no means alone in their positive outlook towards China. HSBC’s survey considers the views of respondents across 10 markets, including the UK, the US, Singapore, and Australia, with an average of 87% of companies reporting that they expect an increase in their sales or exports to China in the next 12 months. The report did not include responses from Japanese, South Korean or Taiwanese firms, all of which are also significant investors in the Mainland China market.

China’s commitment to achieving carbon neutrality by 2060 was also flagged as an attractive proposition to foreign firms looking to grow their presence in the market, who see increasing business opportunities stemming from the net-zero agenda, according to the report.

With businesses turning their attention to the calendar year’s end, it’s worth considering that the value of actually utilised foreign capital in China is also on track to exceed the record set in 2020, with the continued growth in inbound investment being reflected in official data, too.

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