Editor's Note: With strong policy support, unremitting technological innovation and industrial upgrading, China's economic recovery continued to gather steam in the third quarter, with its GDP expanding by 4.9 percent from a year earlier, leading to a 5.2-percent year-on-year growth in the first nine months. China Daily presents a series of Q&As with top multinational corporation executives, discussing their perspectives on the Chinese economy and how they will position future business in China.
Q1 Given the complex current global economic and geopolitical situations, how do you position the Chinese market in your overall global business radar? What's your outlook for China's economy and your company's operations in the country for this year and next?
TAN: China's position and influence in the global business community have become increasingly important. With the development of the economy and improvement of national strength, China has taken a leading role in many areas, such as its achievements in scientific and technological innovation.
Skechers is full of confidence about the Chinese market as its people pay more attention to healthy lifestyles. National policies have also shown support for sports. The Chinese market has hatched numerous new consumption scenarios, products and services regarding the sports industry, allowing the segment to rise rapidly. The market's demand for sports and leisure products is increasing, signifying huge potential for our growth.
SUN: China is one of our strategic markets. As China is expected to become the world's largest luxury goods market by 2025, Hugo Boss sees a lot of growth opportunities. Additionally, Hugo Boss refreshed the brand in 2022, which is very successful in China, and Chinese consumers have been responding well to the new strategy.
We will continue to invest in retail, including exploring store locations in high-end districts and trendy malls. With 200 points of sale in 65 cities, we aim to increase that number. This year, we have introduced a new Boss concept store in Guangzhou, Guangdong province, which just opened on Sunday.
BOZEC: For Tapestry, China is not only a market, but a source of inspiration for breakthroughs and innovation. Our growth prioritizes China as a key market, powering our global growth.
Favorable policies to benefit enterprises are being implemented and promoted, which has also injected kinetic energy into China's economy. According to our financial report for the 2023 fiscal year, our business saw a 5 percent increase in China, achieving 50 percent growth in the fourth quarter. We see significant potential across our brands in the years to come, and we remain confident in China's economy.
MACHADO: China is our top export market (40-50 percent) for our pulp products and has presented itself as our fastest-growing market, which poses a significant opportunity for Suzano to increase its presence and further support the industry. We are planning to expand our activities in China not only with our current businesses, but also by tapping new markets, mainly bio-businesses.
To enhance its long-term commitment to China, Suzano further expanded its team in Shanghai in 2022 to better serve the country's strategic call for its low-carbon economy transition and local customers' corresponding needs.
ZHAI: The Chinese market has always been important in our global business landscape. I'm optimistic that the next two years will trend toward positive and proactive developments. This year is the first for economic recovery following the pandemic and a breakthrough year for the 14th Five-Year Plan (2021-25). The Chinese market has a huge market size and room for growth. Additionally, the government announced various policies, a positive signal of continual high-standard opening-up. Therefore, we will remain focused on our business in China.
Q2 Are you confident about the Chinese economy over the long run? How would you rate your confidence in the Chinese economy?
TAN: I see the country's economy has gradually recovered day by day, giving me full confidence in the Chinese market. The Chinese government's positive actions have played a crucial role in the country's economic development.
The huge domestic demand market in China and the implementation of the dual-cycle policy provide Skechers with great opportunities. In China, enterprises develop by increasing investment in scientific and technological research, optimizing intellectual property protections and more. Innovation has promoted the industrial upgrading of China's economy, driving its transformation from low-cost manufacturing to intelligent manufacturing and achieving sustainable development.
SUN: China has promising long-term opportunities as it continues to focus on high-quality growth, balanced development, deepening reform and opening-up. China's leading position in the digital economy, in e-commerce particularly, is a big opportunity for Hugo Boss. We are confident that our products and brands will continue to attract a wide range of Chinese customers across geographical locations, ages and genders. Coming from a retail standpoint, our digital business will be a strong growth area in the future.
BOZEC: Tapestry and our three sub-brands have more than 380 stores in over 90 cities in China. In Tapestry's over 20 years in this market, we continue to see significant long-term opportunities. With the introduction of various policies to boost the economy and promote consumption, we have seen positive signals and consumption momentum. We know that China is intensifying its efforts to attract foreign investment, which further encourages companies like ours to continue to expand. We're confident in the Chinese economy and long-term development as we move forward with an ambitious plan to open 30 new stores in 2023 and open 100 new stores by 2025.
MACHADO: Suzano is confident about China's economic development. The key economic indicators released by China's National Bureau of Statistics show that there's been continuous recovery and commendable progress in high-quality development. China's 14th Five-Year Plan (2021-25) focuses on innovation-driven growth, low-carbon development, the integration of urban and rural areas with greater social inclusion and population aging. It highlights high-quality green development and emphasizes innovation as the core of modern development. Because of these factors, Suzano has confidence in China's economy.
ZHAI: Looking at the driving factors, there is great market potential and consumption demand, which shows a trend of both quantity and quality growth. The domestic market demand is gradually released for quality of consumption, providing a new development space in driving economic growth. There is also sufficient productivity — strong scientific and technological capabilities are important driving forces for high-quality economic development with talent at the core. In the future, China can effectively promote the accelerated development of the manufacturing and industrial economy and become a new internal driving force for economic growth.
Q3 China's economic policymakers have assured greater efforts to attract foreign capital, widen market access and ensure a level playing field for both domestic and foreign companies. In this context, what new policy measures do you expect from Chinese authorities in the near future?
TAN: China has made great achievements in economic development, but is also facing many challenges — an aging population, environmental pollution, high-tech bottlenecks and income imbalances need to be addressed.
The newly introduced policies to attract foreign environment and optimize the business environment propose 24 policy measures in several aspects — the protection of intellectual property rights, the improvement of investment and operation facilitation, and the improvement of foreign investment promotion methods. These measures have played a significant role in inspiring us and giving us more confidence in investing in China.
SUN: China's State Council issued a guideline this year, regarding further optimizing the foreign investment environment and intensifying efforts to attract foreign investment. The guidelines to improve the overall balance between domestic and international investments and foster a world-class business environment that is market-oriented, law-based and internationalized are good moves and a step in the right direction. Hugo Boss will continue to actively pursue its development in China and maintain its relationship with various Chinese stakeholders.
BOZEC: We look forward to collaborating with more local partners and investing in the Chinese market to bring new innovations to China's fashion industry, promote high-quality products and new experiences, and inspire better lifestyles for our Chinese consumers.
MACHADO: China has made efforts to continue its high-standard opening-up and create a better business environment for foreign companies. In August, China issued a 24-point guideline to improve the environment for foreign investment and attract more capital. From this, Suzano sees China's commitment to expanding foreign investment and promoting its economy. We believe that Suzano will continue stable development in China in the long term.
Like other big economies in the world, China faces challenges and we cannot deny or underestimate them. But this is not the first time that China has experienced challenges. However, China's ability to overcome is excellent. China has the tools and means to continue to thrive. Our commitment to investing in China, improving customer service, and fostering local partnerships underscore our confidence in the country's economic strength.
ZHAI: As of now, China's economic development does face some challenges — economic growth is still recovering. As the economy returns to normal, there are still challenges facing the rapid recovery following COVID-19. From the international market, China's economy is moving from high-speed growth to high-quality development. Thus, seeking a new driving force becomes increasingly important.
We have received support from local governments in market access and project construction. From the full effect of the RCEP(Regional Comprehensive Economic Partnership), the group's factories have not only obtained the RCEP certificate, but also effectively saved operating costs and achieved operational efficiency through policy facilitation this year.
In the future, we hope that relevant policies and measures can be more detailed and implemented, benefiting more regions and industries to provide a better business environment for multinational enterprises and provide more convenience for our investment in China.
Q4 As China continues to pursue high-quality development through a homegrown path to modernization, what is the vision for your company's business in the country over the long run? What business opportunities do you foresee emerging as part of the process of Chinese modernization?
TAN: Skechers will continue to increase its investment in China, strengthen cooperation with strategic partners, provide Chinese consumers with more high-quality products, co-create innovative consumption scenarios, and achieve win-win results for the future.
With the increasing attention to environmental protection and sustainable development, the demand for environmentally friendly and sustainable sports products has also increased. Consumers are more concerned about environmental performance, material sources and the sustainability of products during the production process. Therefore, we are using environmentally friendly materials, and promoting recycling and renewable resources to target more opportunities in the market.
SUN: China has experienced unprecedented economic development since it adopted the reform and opening-up policy over 40 years ago. The market is not only huge, but unique, as Chinese consumers are tech and digitally savvy and quick adopters of new trends. They care about all aspects of products, from aesthetics and materials to packaging and pricing. This requires companies to be innovative not just to meet market demand, but to create ever-new products that remain relevant and exceed expectations.
BOZEC: China is bound to enter a stage of sustainable development. With the implementation and promotion of related laws and regulations on optimizing the business environment in China, we have seen the business environment continue to be optimized, which strengthens our confidence and determination to deepen our roots in the Chinese market. Tapestry will deepen our localization strategy and increase investment to create more value for Chinese consumers and the market.
MACHADO: We are impressed by and respect the modernization process in China. The country has been undergoing amazing growth and development over the past four decades. After a high-speed development phase, China is in a high-quality development phase, which we believe will bring more fairness and happiness to the people.
China counts today on top universities, very well-trained local professionals, high-end R&D and innovation hubs, as well as policies that promote such activities. The combination of these factors makes China an innovation power with a huge ecosystem. We are confident that China will continue to be a key engine for growth and development not only in Asia, but also the world.
ZHAI: China's commitment to high-quality development will provide more opportunities for companies in China. We will continue our commitment to tapping into the strengths of multinational enterprises, and drive the high-quality transformation of the industry while realizing our development to help the development of China's economy.
Bolstering the digital economy and hastening green initiatives are two critical moves for China's modernization journey. As an enterprise, it is necessary to actively approach green and digital transformation in advance to achieve faster and more efficient results to effectively promote the development of industrial upgrading and intelligent manufacturing.
Q5 Could you share with us one or two of your successful business or personal stories in the process of growing with China?
TAN: By the end of September, Skechers had nearly 3,000 stores in China. Over 400 stores have been opened in lower-tier markets, with the number expected to double to 850 by the end of 2023. Skechers invested 3 billion yuan ($410 million) to build the China Logistics Center in Taicang, Jiangsu province. Last year, CLC phase I began operations. Skechers entered a new phase of development by upgrading its omni-channel and digitalization, which is a big milestone. In recent years, we began focusing on expanding lower-tier markets. With the development of the national economy, consumers in offline cities have higher income levels and product demand.
SUN: Attending the China International Consumer Products Expo for the first time this year was a very memorable experience for Hugo Boss and me. I got to meet many of our loyal customers and had the opportunity to engage with a variety of important partners. I also spoke on a panel for global consumption innovation and cut the ribbon to officially mark our cooperation with the Hainan government in biodiversity conservation. We announced a partnership with the Hainan (provincial) government to donate 1 million yuan, contributing to the restoration of local rainforests to protect Hainan's rich biodiversity and natural habitat.
BOZEC: Over our 20 years in China, we've seen China's business environment evolve and have adapted our growth strategies and investments in response.
We are a long-time supporter of both the CIIE (China International Import Expo) and the China International Consumer Products Expo and are focused on bringing the most innovative, high-quality products and experiences to Chinese consumers, as demonstrated by our debut collaboration with White Rabbit candies. In response to the dynamic market trends in China, we are accelerating our business and sharpening our focus on Chinese consumers. We're confident in the long-term opportunities for China as a growth vehicle for our brands as we move forward.
MACHADO: One key milestone of Suzano is the inauguration in March of our China Innovability Hub — the first of its kind in Asia — which represents Suzano's long-term strategic efforts to create an open and transformative innovation platform in China with significant investments in R&D and innovation. In May this year, a CSR program was launched in our hub, aiming to enhance sustainability among China's younger generation. Looking ahead, we will continue working with our key stakeholders to support China towards reaching its green goals.
ZHAI: We are actively participating in the country's high-quality development. This year, we will participate in the CIIE for the sixth time. At the past five CIIEs, APP displayed and promoted its advanced green technology products. This year, in addition to product technology and quality standards, a set of higher standard APP green value systems will be launched, with a comprehensive focus on sustainable development. We not only exhibited at the CIIE, but also helped lead more multinational enterprises to go abroad and enter China based on our own successful experiences.
If you have any problems with this article, please contact us at app@chinadaily.com.cn and we'll immediately get back to you.
