US companies still keen to manufacture in China

By XU WEI in Wulian, Shandong| (China Daily)| Updated : 2024-02-21

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In a factory complex covering about 6.5 hectares in Shandong province, workers were busy assembling log splitters, excavators and chipper shredders for export to markets in Europe and the United States.

Built with an investment of $50 million by US company Yardmax Holdings Inc last year, the factory's prowess in manufacturing forestry machinery has paved the way for its expansion into markets across 69 countries and regions.

The TIYA Construction Equipment Co factory in the bustling industrial heart of Wulian county is expected to have annual sales of 200 million to 250 million yuan ($27.7 million to $34.7 million) once it reaches full production capacity.

Li Zonghui, an executive with the company, said the key factors that led the US firm to boost its investment in China were robust market demand, strong supply chains and the abundance of skilled technical workers.

"The prospects for this year are even better as we still have lots of orders to catch up with," he said.

That optimism is shared by many other US firms in China, with the latest survey conducted by the American Chamber of Commerce in China finding a growing proportion of respondents were optimistic about their profit potential in China over the next two years.

According to the Ministry of Commerce, the number of newly established foreign-invested enterprises in China reached 53,766 last year, up 39.7 percent year-on-year. Actual foreign direct investment dropped by 8 percent year-on-year to 1.13 trillion yuan.

Li said the company is planning to move its research and development arm to Wulian in the near future.

He said a key reason for the surge in orders is that the company is able to design and produce machinery products that are compact and highly versatile, making them ideal for use in homes, small farms and municipal projects.

Wang Yushi, chief executive of Rizhao Bei An Wood Industry Co, a producer of cribs and cradles for the US market, said the strength of supply chains, skilled labor and sound infrastructure in China remained key factors that will keep his company from relocating or outsourcing to other countries in the longer term.

Wang's company, a joint venture with US firm Dream On Me Inc, began production in March last year. Orders started to surge in the second half, with its baby products among the bestsellers at Walmart and Amazon.

He said it has decided to scale up its presence in the domestic market, as its new manufacturing complex starts to take shape next door.

"We are full of confidence for 2024 because our orders have been fully packed," he said.

Another key factor encouraging foreign and joint ventures to build up their presence is local authorities' commitment to improving the business climate.

Zhao Erhao, Party chief of the subdistrict office in Gaoze, where TIYA Construction is located, said the government streamlined approvals and provided one-stop services to help the US company solve its problems, including access to natural gas, telecommunications and electricity.

He added that it only took about 270 days for the company to start production after breaking ground on the factory.

"We are trying to provide services to businesses like they are our clients, responding promptly to their needs," he said.

At the national level, the government has also ratcheted up steps to garner opinions from foreign businesses to help them better meet their challenges.

Zhu Bing, head of the Commerce Ministry's foreign investment administration department, said the ministry has held 15 roundtable meetings, with participation from over 400 foreign-funded enterprises and foreign business associations, to hear feedback from foreign businesses.

Through the exchanges, the government has improved and refined a number of regulations — something highly valued by foreign enterprises — promoted openness in key areas, addressed sensitive issues of concern and continuously optimized the business environment, he added.