Foreign firms turn to high-end manufacturing services

Foreign companies used to invest billions of dollars into China's fast-growing manufacturing sector in the hopes of tapping into the world's most-populous market in the past three decades. Now manufacturing in the country is no longer as central to them as it used to be.

Global companies, instead of concentrating their investment overwhelmingly on manufacturing, including the machinery, steel and automobile businesses, are investing a growing proportion of their cash in China's high-end manufacturing and service sectors, which are already the largest market for many of them.

German engineering and electronics conglomerate Siemens AG opened its first innovation center for intelligent manufacturing in Qingdao, Shandong province, on Friday to enhance innovation in the fields of robotics, modern logistics, big data, information security and smart city.

"The innovation center will bring advanced digitalization and automation technologies to China's intelligent manufacturing and create innovation platforms integrating both the virtual and real worlds and transforming concepts into solutions through complementary partnerships with various partners in China," said Zhu Xiaoxun, head of Siemens corporate technology China.

Roland Busch, a member of Siemens' management board, said China's surging wealth and ongoing urbanization process have put traditional labor-intensive industries under huge pressure in terms of technological upgrading, recruitment and high employee turnover.

Siemens will increase investment in research and development by 300 million euros ($326 million) to a total of 4.8 billion euros globally this year, and will deploy more resources and technologies in the Pearl River Delta region in southern Guangdong province, one of China's traditional manufacturing bases.

Its expansion plan will include building a rail equipment manufacturing base in Jiangmen, as well as introducing more advanced factory equipment and traffic control systems, green building construction and management processes, and smart grid and electric vehicle manufacturing equipment at its facilities in the Hengqin New Area of Zhuhai.

Eager to grab more market share, the US aircraft maker Boeing Co also plans to build a completion center for the B737 in China after breaking a record in the China market in 2015, with the delivery of 200 aircraft, accounting for 55 percent of the market's new aircraft deliveries during the year.

Airbus SAS, Boeing's European rival, delivered 160 aircraft to China last year and it is the sixth year in a row for the European aircraft builder's deliveries to China to exceed 100. The firm operates its only aircraft final assembly line outside Europe in Tianjin, a port city in northern China.

With the service sector accounting for 50.5 percent of China's GDP in 2015, it is also another hot category for foreign companies to make investments in the past five years.

Home Credit Group, a consumer finance provider from the Czech Republic which entered China in 2007, currently has registered capital of 3.3 billion yuan ($567 million) in the country. It has built a presence in more than 260 cities in 24 provinces and municipalities, and had more than 33,000 employees in China as of last year.

"I have full confidence in China's economy. Compared with the rest of the world, for example, Europe, China has achieved significant economic growth," said Jiri Smejc, chairman and CEO of Home Credit.

"China's economy is restructuring from one driven by investment to a consumption-driven approach."

Smejc said Home Credit will increase the number of products available for Home Credit loans and accelerate the development of online business in China to further diversify its operations.