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Building an innovation-powered economy

Updated: Mar 21,2019 9:02 AM     China Daily

Editor’s Note: The Government Work Report released on March 5 has charted a course for China’s economic development for this year. By setting fairly robust growth targets, the country is set to be the locomotive pulling the world economy amid global economic headwinds. A number of pro-growth efforts have been unveiled to spur innovation and continue opening-up. The country has also released the Foreign Investment Law to better protect the rights of foreign businesses in China. China Daily polled senior executives from multinational corporations to understand their positioning, perception and predictions of the Chinese market.

Q1: The year 2019 marks the 70th anniversary of the founding of the People’s Republic of China. What in your opinion are China’s biggest achievements to date? What are the biggest achievements made by your company so far?

Q2: China’s economic growth moderated to 6.6 percent last year as it shifted its focus to high-quality growth. How does your “China strategy” fit into the new trend?

Q3: What are your views on the Foreign Investment Law? How will China’s ongoing efforts to further open up the economy and protect the legitimate interests of foreign companies help your business in China?

Q4: China is committed to high-quality manufacturing and the government has stressed the importance of technological innovation. What do Chinese companies need to move up the value chain?

Q5: What are your views on the government’s ongoing efforts to cut red tape and enhance work efficiency?

Visal Leng, president of Johnson Controls, Asia-Pacific

A1 China has become the second-largest economy in the world and a key influencer of global economic development. Over the past 40 years of reform and opening-up and economic development, the Chinese government has successfully lifted more than 700 million Chinese people out of poverty. This is a remarkable achievement in human history and has been highly recognized and applauded.

Johnson Controls first came to China in 1916, introducing a temperature control product in Beijing, and returned to the Chinese mainland in the 1990s. Since then, we have built a strong footprint here with 7,000 employees, 11 manufacturing plants, three R&D centers, more than 60 branches, and 100 remote commercial offices.

A2 China will pursue both high-quality development and environmental protection as the government places more emphasis on a more open and green economy.

China is Johnson Controls’ key strategic market. We are helping to make high-rise buildings, airports, railways, hospitals, hotels and industrial zones safer and smarter. We also support the urban renewal initiative to green the huge number of existing buildings.

A3 It proves that China’s business environment is improving at an accelerated speed. It will undoubtedly create a fairer, more transparent and favorable market environment for foreign companies. We will be entitled to equal rules, rights and opportunities. In addition, it will deliver better protection, reassuring us about doing business within and on behalf of China.

A4 Innovative manufacturing is among the key elements of the Chinese economy’s high-quality development. It not only means “Made in China” but also “Innovated in China”. Smart and highly efficient manufacturing through emerging information technologies, continuous investment in R&D, talent development and industry collaboration will be vital to moving up the value chain.

In China, Johnson Controls and our joint venture partners are continuously investing in R&D capabilities. This includes establishing the Asia Engineering Center in Wuxi, Jiangsu province, which represents our global best-in-class manufacturing standard. Together with another two manufacturing plants, our Wuxi base has grown from a small factory into a modern large-scale R&D and production center since its founding in 1996.

A5 The Chinese government’s efforts to cut red tape are an encouraging reflection of a desire to provide a favorable business environment for all market players to do business in a more efficient way. It helps us lower barriers, simplify and optimize the processes, and improve productivity.

We actively reduce internal complexity to improve organizational efficiency and make it easy for our customers to do business with us externally. We are committed to creating efficiency and value.

Norbert Behrens, senior vice-president for Eurasian operation of Sasol

A1 China’s development particularly over the past 40 years has been unprecedented. Its consistently high growth rates have enabled it to substantially improve the quality of life of its people. This is reflected across a range of development indicators such as life expectancy, infant mortality, GDP per capita and its overarching achievement.

There are a number of achievements that we in Sasol can be truly proud of, most notably the beneficiation of coal and gas to liquid fuels and chemicals.

Sasol has been present on the Chinese mainland for almost 30 years through sales offices and as a producer in Nanjing Chemical Park in Jiangsu province. We are now building on this foundation with a new alkoxylation plant, also in Nanjing Chemical Park, which will be starting up in the coming months.

A2 Although the growth rate may be trending down, the economy itself is growing at a rate of more than 6 percent. Given the size of the Chinese economy, this means that the increment of growth in economic activity, year-on-year, remains significant.

The slowdown in growth we are seeing is of no major concern to our long-term China strategy. Short-term movements need to be taken into account, but Sasol’s China strategy still foresees strong growth and opportunity.

A3 Sasol believes that the Foreign Investment Law will provide greater investment certainty and will promote further investment in China. This protection of intellectual property, removal of restrictions on how companies are structured and greater freedom in repatriating profits creates a more conducive investment environment.

A4 Chinese companies are already heavily invested in continuously increasing the quality of their products and driving innovation. Quality control and improvement can be seen everywhere in the chemicals industry and some innovative commercial chemical pathways have been developed in China.

Furthermore, the Foreign Investment Law will create an environment in which companies will compete locally. China has done exceptionally well in continuously enhancing the level of technical skill of its people and we anticipate that this will continue, leading to higher levels of innovation in the new economic environment.

A5 Reducing unnecessary bureaucracy is a key step in enhancing growth. Often this stands in the way of innovation. At the same time, at Sasol we appreciate and support the Chinese government’s significant efforts to continuously enhance safety, health and environmental standards, especially in the chemicals sector. Safety has the highest priority in our operations.

Our experience on the ground has been that matters are dealt with in a timely manner and we welcome ongoing efforts to simplify the approval processes that will enhance work efficiency.

Howard Ozawa, president and CEO of Canon (China) Co Ltd

A1 Great changes have taken place in China since I first came here. Especially since the launch of the reform and opening-up, China has made remarkable achievements in infrastructure construction, people’s living standards and scientific and technological strengths.

This year marks the 22nd anniversary of Canon China. Over the past 22 years, Canon China has grown into a company with nearly 2,000 employees. Last year, Canon China officially announced it entered the second phase of its business-to-business operations. While maintaining the growth of business-to-consumer business, we are intensifying efforts to expand B2B business. In recent years, Canon China has actively participated in major industry and national-level exhibitions, and achieved outstanding results in various businesses.

A2 In accordance with China’s economic development strategy, we are synchronously adjusting the management strategy of Canon China, namely, we will consolidate our leading position in consumer imaging products such as digital cameras and inkjet printers. Meanwhile, we will vigorously develop B2B business in China, aspiring to make a breakthrough in office solutions, digital printing, security monitoring, medical equipment and other areas.

A3 The positive effects of China’s reform and opening-up, prudent fiscal policies and favorable investment environment have brought about huge business opportunities and development space for Canon in China. In recent years, China has rapidly become one of the most important markets for Canon in the world.

Canon has been in the Chinese market for more than 30 years, and has achieved a comprehensive layout in all aspects of production, R&D and sales on the Chinese mainland. Canon’s development and achievements in China depend on the rapid development of the Chinese economy.

A4 Canon China’s corporate philosophy is “kyosei”, which means all people, regardless of culture, customs, language or race, harmoniously living and working together in happiness into the future. It provides customers with high-quality image input and output solutions. As people’s disposable incomes increase, Canon will create more business opportunities in the following areas.

In the field of personal imaging products, Canon will stick to the strategy of “Closer to Customer” and strengthen contact and communication with Chinese consumers in various channels. At the same time, it will further expand commercial imaging products in China, and strive to make new breakthroughs in B2B business areas such as office solutions, digital printing, security monitoring and medical equipment.

Peter Huang, president of Corteva Agriscience™ China

A1 China currently provides abundant nutrition for around one-fifth of the world’s population, which is a massive achievement. However, by 2050, the world’s population is projected to grow to over 10 billion people, while the amount of arable land will decline by almost 10 percent. Corteva Agriscience™ believes China is going to play a bigger role in addressing global food problems, and we are ready to empower China’s ambition.

Corteva was conceived to be the only major agriscience company completely dedicated to agriculture. Thus, being a company with the ability to enrich the lives of millions of people will be our crowning achievement.

A2 China is making powerful efforts to change the focus of its growth, and is making great progress in modernizing its agriculture sector. This is especially evident in the rise of digital and smart agriculture. Corteva will be the partner of choice for China.

We have three areas of focus in China to achieve this: localization, sustainable agriculture and technological innovation, aimed at solving specific challenges that Chinese farmers from different regions are facing, and helping to connect the dots of the food supply chain and build a more productive and inclusive agricultural ecology in China.

A3 We believe the Foreign Investment Law will have a positive impact on China’s foreign investment environment and is strong proof of China’s commitment to further opening-up. We also expect more protection of foreign investors’ rights and a better environment for cross-boundary collaborations.

China remains a core business location for Corteva. We have already created two joint ventures and established industry-leading R&D capabilities here. The law will help us continue to build local partnerships and deepen our collaboration with our Chinese partners to address the fast-changing market needs in China.

A4 Technological development in the agricultural sector requires continuous and intensive investment of capital and professional expertise. Corteva’s increased synergy and efficiency that have come around as a result of the company’s creation offer a sound reference for moving toward higher-quality research and innovation. The leading business and R&D capabilities from our heritage companies have resulted in greatly expanded products and services, offering a robust near-term pipeline across seed germ plasm, biotech traits, crop protection, seed-applied technologies and digital agriculture.

A5 We welcome these changes in China’s government institutions, which are aimed at creating integrated, effective organizations that will be better positioned to serve Chinese people and also foreign businesses including Corteva, enabling us to deliver the best portfolio of innovative solutions, greater choice, and competitive price for value to China’s agriculture market.

Yin Xudong, president of Novartis Group (China)

A1 China has made remarkable achievements with 40 years of reform and opening-up. Now it is the world’s second-largest economy, with the world’s manufacturing powerhouse and the second-largest healthcare market.

Novartis is proud of being a major partner of China’s journey of reform and opening-up by expanding our footprint, fostering local talent, driving innovation and sustainable development in the past 32 years since our entry to the Chinese mainland. China is one of the most strategically important markets for Novartis. With four core businesses, three major manufacturing sites, and two R&D centers here, we are now even better positioned in this dynamic market.

A2 China’s shift from “Made in China” to “Created in China” is set to benefit many companies, especially those in the pharmaceutical sector with innovation as their lifeblood. Novartis is one of today’s most innovative companies with total R&D expenditure amounting to $9.1 billion last year, and we are committed to being a major partner of China’s new journey to build an innovation-powered economy.

And we are proud of playing a part in accelerating the digital transformation of China’s healthcare sector by embracing digital technologies including big data and artificial intelligence, and combining our pharmaceutical expertise.

A3 China’s business environment has been continuously improving while the Foreign Investment Law marks a new and bold step by China to provide pre-establishment national treatment to foreign investors, and create a more open, transparent and predictable environment for investors. Abolition of case-by-case approval management and wider market access, as part of country’s broader efforts in reform and opening-up, will surely bolster foreign investors’ confidence.

A4 From the point of view of the pharmaceutical sector, countries that establish regulatory environments supporting innovation are best positioned to improve patient outcomes while speeding up access to new treatment. We are glad to see China is boosting its efforts to create such an environment. While exploring new technologies in gene editing, cell and gene therapies and other innovations, patient needs and safety must be considered first. Ethics must be held to the highest standards in these realms.

A5 The Chinese government has made great efforts to streamline approval procedures, especially the approval of new drugs, which has greatly benefited Chinese patients. For sure, this has also bolstered pharmaceutical companies’ determination to further increase spending on research of new and innovative drugs. We are proud that we have got nine new medicines approved by China in the past two years. With the mission of improving the quality of life of Chinese patients, we are committed to bringing the newest and best therapies to China.

Will Song, chairman of Johnson & Johnson China

A1 China’s most significant achievement has been the profound development in people’s health and livelihoods. China is becoming a leader in global healthcare and the government is reforming pharmaceutical innovation to allow patients greater access to cutting-edge treatments.

Johnson & Johnson entered the Chinese mainland in 1985 with the opening of Xi’an Janssen-one of the first joint venture pharmaceutical companies in China. We now have 16 legal entities in China, eight production bases across all our three business sectors-pharmaceutics, medical devices and consumer with more than 10,000 people in 90 cities.

A2 As a leading healthcare company, we are delighted to see the Chinese government promote high-quality growth. Driving high-quality growth is also the strategy that Johnson & Johnson has fostered in China. We are continuously introducing innovative products and technologies as well as strengthening our own R&D capabilities in China.

A3 The legislation on foreign investment demonstrates China’s determination to expand its opening to the outside world and create a more open, fair and transparent investment environment. We are glad to see that the law clearly states that multinational corporations will be treated equally and we hope that mandatory standards will be reduced to encourage product innovation. The law will allow us to protect our latest treatments, and we warmly welcome the government’s efforts to open the economy and give Chinese patients new ways of receiving vital care.

A4 We strongly support the government’s “Healthy China 2030” plan to deliver accessible and comprehensive care and are continuing to introduce the most advanced treatments as well as grow the healthcare ecosystem to reinforce these aims.

In 2018, all our business sectors yielded extraordinary results in China. These won’t be possible without the favorable government policies to speed up the approval process for drugs and medical devices, the fast-changing consumption upgrade landscape, and most importantly, our dedication and commitment to addressing the unmet needs of our patients and consumers in China.

A5 The government’s strong efforts to enhance efficiency in the healthcare sector over the last two years have been transformative. We applaud the numerous positive steps to exclude cancer medicines from tariffs; reduce the price of cancer treatments; incorporate innovative imported drugs, especially much-needed cancer treatments, into the catalog of medical insurance reimbursement; and accelerate national reimbursement drug list approval for innovative therapies.