Foreign companies in China in the early days of reform and opening up

chinadaily.com.cnUpdated: 2019-01-24

In 1978, Panasonic of Japan was the first foreign company to settle in China. In the past 40 years, the development of foreign companies in China has reflected the historical changes of China's reform and opening up and been affected by the great changes of China's integration into the world as it became the world's second largest economy.

This article gives an inventory of the well-known foreign companies that have come to China since the reform and opening up. Time and tide change. Some of them are still brilliant, but others are gradually declining.

Panasonic, the first foreign household appliance brand in China

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In 1978, Panasonic became the first foreign company to enter China. In October 1978, Deng Xiaoping, then vice premier of the State Council, visited three factories in Japan. Known as the pride of Japan, they included the Panasonic plant in Osaka prefecture. [Photo/Xinhua] 

In June 1979, Konosuke Matsushita, founder of Panasonic, visited China. During the visit, Panasonic and the Chinese government signed the Technical Cooperation No. 1 Agreement to provide the Shanghai light bulb factory with complete black and white picture tube equipment.

In 1987, Panasonic established a joint venture company with four enterprises affiliated to the Beijing government and the Ministry of Electronics to produce color picture tubes, which was the largest Sino-Japanese joint venture at that time with an investment of 24.8 billion yen.

Since then, the Japanese electronics enterprises that Panasonic represents sprang up in the Chinese home appliance market. As of the 1990s, Japanese home appliance products became very popular in the Chinese market, but in recent years, with the rise of Chinese and Korean brands, Panasonic has faced a downward trend.

In 2013, Panasonic closed its plasma TV factory in Shanghai.

Panasonic China in 2015 announced the shutdown of its company in Shandong that was founded in 1995 and has been producing cathode-ray tube televisions for 19 years since 1996. Its closure meant the end of Panasonic's TV production in China. 

Coca Cola, the first foreign fast-moving consumer goods brand to enter China

In 1927, a new drink appeared on the streets of Shanghai. It was Coca-Cola.

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Coca Cola came back to China at the beginning of reform and opening up. [Photo/Xinhua] 

Coca-Cola withdrew from the Chinese mainland in 1949, following the withdrawal of the U.S. embassy. For the next 30 years the drink, which tastes a bit like traditional Chinese medicine, did not appear on the mainland market.

In December 1978, Li Lisheng, the first President of Coca-Cola in China, received a long letter from China Oil & Foodstuffs Corporation (COFCO), inviting him to Beijing.

On December 13, 1978, Coca Cola and COFCO signed an agreement allowing Coca Cola to provide major cities and tourist areas in China with its products by means of compensation trade and other payment methods, and to set up a beverage plant in China. COFCO arranged consignment sales of Coca Cola before the plant was opened.

Thirty years after leaving China, Coca-Cola finally returned to the mainland market as its first fast retailing brand.

When it first entered the Chinese mainland in 1979, Coca Cola was a single product. For more than 30 years, Coca Cola has brought nearly 20 brands and 50 flavors of beverage choices to Chinese consumers. The Chinese market has rapidly climbed from the 21st place in 1994 to the third largest market and one of the most important in Coca Cola’s world system.

IBM, the first foreign computer brand in China

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[Photo/Xinhua] 

After nearly 30 years of disconnection, IBM came to China again in 1979 with the reform and opening up. In the same year, IBM installed its first medium-sized computer in North China’s Shenyang city, the first such installation since the founding of the People’s Republic of China.

In the mid to late 1980s, IBM set up offices in Beijing and Shanghai.

In 1992, International business machines (China) co., LTD was established in Beijing, which is the sole proprietorship of IBM in China.

At present, IBM is continuing to deepen the cooperation with Chinese enterprises, taking it to new levels in form, depth and breadth.

In the past, IBM aimed more at tailoring technology products and solutions for China; now it is cooperating with its Chinese partners in an open manner. This is a big step taken by IBM at a critical moment in China's economic transformation.

GE, the first foreign multinational corporation to enter China

In 1906, GE began to develop trade with China and was one of the most active and influential foreign companies in China at that time.

In 1908, GE established its first bulb factory in Shenyang.

In 1934, GE bought a company in Shanghai and began providing installation and maintenance services for imported electrical equipment in China.

GE rebuilt its trade relations with the People's Republic of China in 1979.

In 1991, GE’s first joint venture with a Chinese company was established in Beijing.

At present, the eight industrial divisions of GE, which are aviation, medical care, oil and gas, power generation equipment and water treatment, energy management, transportation, finance and lighting, are all active in China. GE group has recruited more than 18,000 employees and established over 50 operating entities including sole proprietorships, joint ventures and an R&D center.

Now, GE is undergoing a transformation and is determined to adapt to the “new normal” phase of China's economy and dock with China's Belt and Road Initiative, seeking to share resources and experience with Chinese companies in various markets and achieve win-win cooperation.

Pierre Cardin, China’s first foreign garment brand

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Pierre Cardin, the famous fashion designer, walks on a street in China.[Photo/Xinhua] 

After the reform and opening up, Pierre Cardin entered China in 1978, the first foreign garment brand to do so. It gave Chinese people the first impression of luxury goods. At that time, Pierre Cardin represented high-end, luxury, social status, fashion and internationalization.

Nowadays, however, the brand is less influential. As more and more European luxury brands swarmed into China, Pierre Cardin became a smaller focus for people who desire luxury goods.

Perhaps the brand has never changed, but times have changed. In the same way having a mobile phone 20 years ago was something to boast about, but now it’s very common.

Motorola, the first wholly owned foreign enterprise in China

Motorola entered China in 1987, opening an office in Beijing and selling analog mobile phones throughout the country.

In 1992, Motorola registered its company in Tianjin as China's first wholly owned foreign enterprise. Since then the factory in Tianjin has been producing most of Motorola’s mobile products, from pagers to mobiles, to feature phones, to smart phones, and to tablets. At one point 90% of the world's Motorola smart phones were produced in the Tianjin factory, which was then the company’s largest, most advanced manufacturing base with the highest production in the world. Its smart products were sold around the globe.

With the rise of smart phone manufacturers represented by Apple Inc. and Samsung, Motorola's global marketing strategy has undergone a dramatic change, withdrawing from various markets but returning to and contracting in the American market.

In this process, the Chinese market has been marginalized, and the mobile phone business of Motorola in China has shrunk almost to zero. Instead, the company's most important electronic product in China has become the cordless phone.

In 2014, Motorola was sold to Lenovo Group for $2.9 billion. The fortunes of Motorola, an established mobile phone maker, are shifting from place to place.

There is an old saying in the business world, "there is no permanent king, only constant competition.” Throughout the rise and fall of foreign enterprises in China since the reform and opening up, we found that foreign enterprises can only sustain competitive advantages in the Chinese market by carefully examining their Chinese development strategy from a global perspective and actively adapting to the new normal of China's economy. Only in this way can foreign companies seize new opportunities in China.

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