Succeeding in China 2021

The only major economy to expand in 2020 and forecast to grow by 8.3% in 2021 – significantly higher than G7 economies – China continues to appeal to international companies and investors. Contrary to some media reporting, our latest findings indicate deepening confidence and further investment in China among international firms.

Our survey of 2,174 companies across 10 major economies shows that on average nearly 9 in 10 (87%) of international companies expect an increase in their sales or exports to China in the next 12 months, and more than half (52%) are planning M&A activity in China either now or in the next 12 months. 6 in 10 (59%) are either currently expanding their supply chains in China, or planning to do so in the next 12 months.

Sustainability also stands out in this year’s survey – not surprising given climate change sits high on the agenda of governments and corporations worldwide. It is clear that China’s march towards carbon neutrality is having a real and positive impact. Our survey finds that over three quarters (76%) of foreign companies feel that China’s desire to transition to a net-zero economy makes expanding there more attractive. They also believe business opportunities will arise from the net-zero agenda, with 52% planning to offer greener and more sustainable products for the China market.

At the same time, firms are taking steps to improve the sustainability of their operations and processes in China: 42% report plan to make their operations more sustainable; a further 41% are planning to invest to make their manufacturing facilities or office buildings in the country more energy efficient or emit less carbon.

In addition, the fast-changing digital economy – already a growth engine of the Chinese economy – has been further boosted by the pandemic. E-commerce and digital payments in particular have surged. Combined with technologies such as artificial intelligence and the Internet of Things, digitalisation has given foreign companies the opportunity to reach and interact with more customers. As a result, some 92% of foreign companies state that China’s rapid digitalisation has improved the growth prospects of their business there.

They are now making investments in their digital capabilities to match. 42% of international companies say they have enhanced or are enhancing their digital channels and platforms. More broadly, 41% say that they have increased their investment in information technology in order to take advantage of China’s flourishing digital economy.