Multinational firms in China move up the global value chain

"In this sense, manufacturing of low-tech and low value-added products will be moved out of China at a faster pace in the short term. But for high-end manufacturing and high value-added products, there is no sign of transfer to Southeast Asia at this moment," she added.

Since 2015, the central government has promoted the country's manufacturing transformation and upgrading, aiming at a higher production level not only for the consumer goods sector, but also large equipment.

Statistics from the National Bureau of Statistics showed that the added value of the high-tech manufacturing sector increased 9 percent year-on-year during the first half last year. The growth rate for emerging and strategic industries was 7.7 percent. Both sectors have registered faster growth than the 6 percent industry average.

Meanwhile, China has never stopped its efforts to attract foreign investment and multinational companies. The negative list mechanism, which was promoted from the China (Shanghai) Pilot Free Trade Zone to the whole country in 2018, the Foreign Investment Law, which took effect on the first day of this year, and the ongoing financial opening-up have all facilitated multinational companies' deeper reach into the country.

According to the Ministry of Commerce, the actual utilized foreign capital was more than 683.2 billion yuan ($98.1 billion) for the first three quarters of last year, up 6.5 percent from a year earlier. Of the registered foreign capital, 29.8 percent was invested in high-end technologies.

As the frontier for many of the country's first reform and opening-up attempts, Shanghai has always attracted many multinational companies. Shanghai rolled out the first batch of favorable policies to attract the regional headquarters of multinational companies 17 years ago. So far, a total of 710 multinational companies have set up their regional headquarters in Shanghai while another 453 firms have built their R&D centers in the city, according to the Shanghai Municipal Commission of Commerce.

The Shanghai facility of German heating and sun roof solutions provider Webasto now works as the company's regional management headquarters and R&D center. Zhang Lihua, deputy president of Webasto Roof Systems China Ltd, said the company's China R&D team is working together with its clients for the development of luminous glass, the first time that China will lead in the development of a product.

"Shanghai working as a hub for both management and technology talents is one of the major reasons for establishing regional headquarters here," he said.

French industrial group TLD chose to build its regional headquarters in Shanghai in early August. Shanghai's good transport connections to other parts of the Asia-Pacific region, the large scale of the Chinese market, and the sufficient supply of manufacturing talents in Shanghai, have made the city the perfect choice for the regional headquarters for TLD, said Thomas Dorn, the company's Asia chief executive officer.

"Multinational companies have shown their confidence in China's human resources supply and investment environment by setting up R&D centers in the country. China's world-leading position in mobile internet and emerging technologies such as artificial intelligence is a major attraction to multinational companies," said economist Song Qinghui.