Editor's Note: The 20th National Congress of the Communist Party of China is to start a new chapter in the saga of reform and opening-up that energized the Chinese economy over the last four decades and made it the world's second-largest. It also sets the tone for improving the business environment for global firms, big and small, operating in the country. China Daily publishes a series of Q&As with business executives from leading MNCs featuring their outlook for the Chinese economy as well as their hopes for the future prospects of their businesses in China.
From left: R Mukund founder and CEO of Benchmark Digital; Wu Dongming CEO of DHL Express China; Marc Burrage managing director of Hays Asia; Denis Depoux managing director of Roland Berger; Yann Bozec president of Tapestry Asia-Pacific, president and CEO of Coach China. (PHOTOS PROVIDED TO CHINA DAILY)
Q1 Against the backdrop of a much-troubled global economy, how will China's economy likely perform going forward, given that it has already made immense contributions to the tasks of stabilizing both the global supply chain and the world economy?
MUKUND: We all know that Mother Earth has gone through many challenges over the past few years. As the world's second-largest economy, China has shown an amazing ability to actively face external disturbances and quickly adapt to the new normal. Its government organization is strong and orderly, its people united and optimistic, and its business environment vigorous and dynamic — this is the observation and experience of Benchmark ESG in its over 10 years of operation in China. In the future, China's economy will undoubtedly continue to maintain steady development and release more energy on the world stage.
WU: China remains one of the vital engines for global economic recovery. China's economic stability and sustainable growth are the biggest contributions to the stability of the world economy and global supply chain.
Despite challenges and pressures, the Chinese economy remains robust with strong resilience and ample potential. Economic performance will continue to improve along with a package of pro-growth policies put into practice.
DHL Express firmly supports trade liberalization and has been active in contributing to stabilizing supply chain logistics by making investments to expand service infrastructure and adding air capacity in China.
BURRAGE: China is the world's second-largest economy and plays a very important role in the global supply chain. China's economy has shown great resilience during and after the peak of the COVID-19 pandemic and it is expected to continue growing. For now and in the future, with China transitioning to a more innovative and sustainable development model, we expect to see many opportunities arise from the upgrading of the economy. That provides foreign investors and companies such as Hays with opportunities to develop together with China's economy. From our perspective as a global expert in recruitment, China is a massive market and there are a great number of jobs out there for us to locate and consult on.
DEPOUX: The Chinese production system has shown quite extraordinary resilience in the second half of 2020 and 2021. This has continued to 2022, even though it was disturbed by COVID-19 resurgences. The Chinese supply chain has modernized in 2021 thanks to accelerated investment in automation and digitalization, financed by the surge in demand. Yet, the situation going forward in 2023 is going to be different because the global economy is slowing down due to inflation, tightening monetary policies and the impact of high energy prices. International demand may weaken Chinese exports, but there is also a scenario by which energy shortages cause disruptions in industrial chains such as chemicals and commodities in Europe. China's production system may, again, be able to stabilize the global supply chain by picking up the demand that cannot be met in Europe.
BOZEC: We remain confident in China's economy, as China continues to be an important driving force for global development and prosperity. We have forged strong ties with our Chinese partners over our two decades in the market. We look forward to meeting and working with new partners as well as our existing network, and creating more value while contributing to China's economic growth.
Q2 China has been deepening its reform and opening-up policy, particularly at the institutional level, so as to ensure equal treatment and an optimized business environment for foreign companies operating in China, and to persuade more of them to invest in China and benefit from the country's thrust on tech and innovation. How do you view China's efforts? How can China intensify such efforts, particularly in the context of any potential external or internal barriers?
MUKUND: The achievements of China's 40 years of reform and opening-up have attracted worldwide attention. And Benchmark ESG is honored to be a part of this legendary development. As a leading provider of cloud-based ESG software solutions, we have been firmly optimistic about the market prospects since entering China in 2009. Benchmark ESG's investment in China has been growing alongside the country's growing emphasis on safety in production and ongoing digital transformation. At the beginning of a new stage, we hope China will continue to pursue greater opening-up at a higher level, to give MNCs more opportunities for development and achieve win-win results.
WU: We have greatly benefited from the continuously improving business environment in China. As an international logistics provider, the efficiency of Customs clearance is critically important for us. In recent years, Chinese Customs has introduced a series of measures and digitalized approaches to streamline and accelerate the Customs clearance process, which significantly improves efficiency. Going forward, China's continuous opening-up will ultimately lead to an improved business environment, and we are confident that the focus on sustainable development of the Chinese economy will greatly benefit international trade. DHL Express will continue the solid partnership with Sinotrans and invest to keep our business in China growing.
BURRAGE: Hays has benefited from China's opening-up from the perspective of equal market entrance. In the past decades, we have established offices in Beijing, Shanghai, Guangzhou, Shenzhen and Suzhou, providing our services to both multinational and domestic companies. The most recent China International Fair for Trade in Services, along with many other major trade events, such as the China International Import Expo, are very good examples of China's efforts to create opportunities. Its ongoing efforts to optimize the business environment and its drive for fair competition have been providing more convenience for the operations of foreign investors and companies. As China continues to provide more stability and certainty for businesses, it will attract more foreign investors with its huge market potential.
DEPOUX: China has been emphasizing fostering a new development paradigm through high-level opening-up, and foreign business will continue to play an important role in China's future economy. Senior decision-makers from headquarters overseas need to understand and engage more with the Chinese market, and entrust further investment into it. This will not go without human exchanges, with short business travel as well as expatriates, experts and decision-makers in the country.
BOZEC: The expansion of China's high-level opening-up and reform of the business environment further enhances the attractiveness and resilience of the Chinese economy, making the Chinese market one of the most dynamic and influential in the world. The optimized business environment has spurred the vitality of companies and brands like ours, while the increasingly open market has created an excellent business environment for investment and growth of foreign enterprises.
We strongly believe that the promotion of a series of favorable policies for enterprises has fueled great momentum in the market. This has provided us with more opportunities to participate in the market's development and enhance communication with partners.
Q3 Innovation has been the bedrock of China's modernization. What new opportunities can you foresee for the world in China's pursuit of innovation-powered high-quality development?
MUKUND: In the past, China was often dubbed a big manufacturing power, but in recent years, we have seen more and more innovative icons in China: aerospace, artificial intelligence, new energy vehicles and more, and in many subsectors it has achieved curve overtaking and become a leader. It is not hard to imagine that China's existing huge manufacturing base, with policies and guidelines for innovation-driven high-quality development, will stimulate more vigorous modern market demands and foster broad employment opportunities while promoting the connectivity of a globalized economy, culture and technology, and create more possibilities for the sustainable development of human society.
WU: Technological innovation is a major driving force for cross-border e-commerce to achieve high-level development in the future. Currently, the emerging sector as a new form of foreign trade has huge development potential that not only stabilizes foreign trade amid global economic uncertainties, but also drives consumption growth and provides marketing opportunities, which further brings an increased demand for international logistics. With its worldwide network and breadth of industries served, DHL Express is able to accommodate fast-changing trade flows and facilitate the surge in cross-border e-commerce.
BURRAGE: China is now leading in many high-tech innovations, from information technology, the internet and artificial intelligence to smart manufacturing and biotech. With the innovation-driven development strategy, China is striving to become more independent in scientific research and R&D of cutting-edge technology. The core of innovation is talent. At Hays, we have seen a substantial increase in talent in China's high-tech sectors. From the perspective of talent, sectors such as IT, AI, biotech, sustainability and smart manufacturing will continue to maintain enormous growth potential. Both employers and candidates will benefit from these opportunities.
DEPOUX: Looking forward, many opportunities are revolving around modernization and decarbonization in the Chinese economy. Since 2021, an increasing emphasis has been put on China's industrial modernization. The effort to peak and neutralize greenhouse gas emissions by 2030 and 2060 is the key to maintaining competitiveness, and it will drive further acceleration of modernization. China has demonstrated its innovation capability and is leapfrogging and gaining leadership globally in areas such as the electric vehicle chain from batteries to charging infrastructure, solar photovoltaic cells, wind turbines and nuclear and telecommunications equipment. We anticipate that in the near future, global competitiveness will be more and more driven by Chinese technological innovation.
BOZEC: China has bred many cutting-edge innovations, and its innovation capability in the digital economy is world-leading. Especially in the new retail environment, digital transformation is accelerating at an unprecedented speed across the industry, and online and offline integrated development has been dedicated to satisfying the public need for an enhanced experience and a better lifestyle.
For Tapestry, China is not only a vital market but also a source of inspiration for brands to seek innovation. We have built a strong local team for digital innovation, which we will continue to strengthen while working closely with local digital partners here.
Q4 What's your take on China's dual carbon goals, which have received a thumbs-up globally? Do you see big business opportunities arising from the country's carbon goals?
MUKUND: China's carbon peaking and neutrality goals demonstrate the courage of a responsible country, and have brought about a series of gratifying changes in the past few years. Take Benchmark ESG's field as an example: potential investors and regulators have higher requirements for corporate ESG performance, corporate leadership and asset managers are moving faster toward ESG, while both upstream and downstream supply chains are actively seeking industry upgrades. Benchmark ESG is both a beneficiary of the dual carbon goals and a supporter of China to achieve it.
WU: In the logistics industry, DHL Express and its parent company Deutsche Post DHL Group have been pioneering green transition with a total of 7 billion euros ($6.88 billion) investment by 2030, dedicated to using clean energy, deploying technologies and building climate-neutral facilities to reduce carbon emissions. In China, we have followed the same path and have achieved some noticeable results. We're committed to achieving 60 percent electrification of pickup and delivery vehicles by 2030. The current rate has been over 20 percent. We've also been striving to greet 30 percent green fuel-using long-haul trucks. The test of the first pilot hydrogen fuel cell truck was launched this month in Shanghai.
BURRAGE: Hays recognizes and supports China's emissions goals. It is a difficult yet responsible action taken by the largest developing country to protect the planet and our future generations. The push to rapidly reduce carbon emissions is creating more business opportunities. On the one hand, peaking and net-zero goals are generating new sectors, for example, electric vehicles and the carbon trade mechanism. On the other hand, we see that the carbon emissions goals are creating more job opportunities in the market, and creating new types of jobs. At Hays, we are seeing companies across sectors either being proactive or required to establish sustainability departments.
DEPOUX: We believe that China's dual carbon goals are critical to the world, and innovation is key to meeting the objectives. It will push State-owned, private companies and multinationals to set more audacious objectives — not only abide by the zero-emissions target, but also claim leadership in emissions reduction technologies and services through innovation. Achieving this goal will take systematic efforts, such as accelerating the evolution of China's energy mix toward greener energy, electrification of industrial facilities, and massive energy savings through changes in behaviors and new technologies.
BOZEC: China has pledged low-carbon development to establish a sound economic and technological mechanism for green development. This is significant for all of the humanity and a sustainable future.
Chinese consumers are raising expectations and demand for green consumption, as well as sustainable development. In line with the expectations, we aspire to balance true fashion authority with meaningful, positive changes. Our efforts include reducing emissions, water usage and waste; increasing traceability; boosting efforts on regenerative agriculture and environmentally preferred materials; and preserving and restoring biodiversity in the ecosystem.
Q5 What's your view on modernization in China that has spawned common prosperity? What does this pursuit mean for foreign businesses?
MUKUND: The continuous improvement of the lives of ordinary people in China means higher spiritual and material pursuits, which is an incremental source of market space for foreign companies with advanced technologies and services, while a harmonious social order further helps ensure a stable business environment.
WU: DHL Express and its parent company Deutsche Post DHL Group share the same vision and commitment. Everything we do serves our corporate purpose: connecting people, improving lives. In recent decades, we have seen how increased trade and interaction have raised prosperity and choices, reduced poverty and cultivated diversity around the world. As a logistics provider, we are committed to bringing our purpose to life through global trade. Building those ties is our business and our mission. When more people have access to goods, services and information, the quality of their life improves.
BURRAGE: China has made remarkable progress in poverty alleviation, with the nation announcing the elimination of absolute poverty in 2021, which is an amazing feat. With the pursuit of common prosperity as the current goal, it will mean further positive changes in the lives of one-fifth of the global population living in China. It is based on China following a practical path that will see a great increase in the size of its middle-income population. This will naturally trigger greater demand in the market. That increased demand will undoubtedly lead to more opportunities for foreign businesses.
DEPOUX: Foreign businesses are and will remain important to the Chinese economy. According to the Hurun report, in 2021, the top 100 foreign companies in China generated $900 billion, accounting for 6 percent of China's GDP, and creating 2.5 million jobs domestically. The concept of common prosperity has become one of the most important guidelines and long-term goals leading China's development till 2050.Foreign businesses have to be more careful to seize opportunities in industries that are synergizing with the goal of common prosperity.
BOZEC: China is now heading into a new journey toward the realization of its second centenary goal, from high-quality economic and social development to people's wellbeing and the enhancement of people's sense of prosperity, happiness and security. Every step forward is encouraging foreign companies like Tapestry to strengthen our confidence and determination to deepen our roots in the Chinese market.
China's high-quality development in modernization is highly inclusive, bringing tangible benefits and providing incremental certainty and confidence to the market. The new development pattern encourages us to keep upholding the concept of innovation, enhance the localization potential of our brands, and create more value for Chinese consumers.