More MNCs eye China as regional headquarters

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By CGTN’s Yang Chengxi

Chinese Premier Li Keqiang encouraged more foreign companies to set up their regional headquarters in China, during his recent keynote speech at the World Economic Forum’s Summer Davos event in northeast Chinese city Dalian.

And that's exactly what many firms are doing. Multinational conglomerate Johnson Controls is an example. In June, it unveiled a 200-million-US-dollar Asia headquarters in Shanghai. Part of the company's businesses is to offer energy-efficient solutions for buildings. It's a market which possesses great growth potential in China, according to its CEO.

"Well if you look at our growth in the next five to 10 years, over half of it is probably going to come from China. Certainly it's going to come from Asia. It's the urbanization, it's the middle class that is happening specifically in China. It's just the growth rate. It's clearly going to be a big part of Johnson Controls in the future," said Alex Molinaroli, CEO and global president of Johnson Controls.

According to the World Economic Forum (WEF), by 2025, half of the world's Fortune 500 businesses will be headquartered in emerging economies like China.

"They've got a market in China that allows them to super-scale quickly, which a lot of the companies from more mature, stable Western markets simply don't have," said Steve Mullinjer, Asia-Pacific regional leader of executive search firm Heidrick and Struggles.

The 2017 "Super-accelerators" ranking of 500 companies /courtesy of Heidrick & Struggles

Premier Li said in his speech that China will continue to ease market restrictions for foreign firms interested in entering the Chinese market, a statement welcomed by WEF participants.

"Premier Li actually said they are more open for foreign investment, to create a leveled playing field for everybody. So that's a process obviously going to the right direction," said Benny Liu, chairman of KPMG China.

But many foreign firms are getting into a market with fierce challenges from local competitors.

Heidrick and Struggles recently conducted a study, ranking companies based on their organizational efficiency.

"We found that of the top 25 there were four major Chinese corporations. What is interesting about this is that China has come from nowhere all of a sudden into the mix," said Mullinjer.

As the market environment gradually matures under reforms, WEF participants say China will surely become one of the most intense battle arenas for global companies.