(Yicai) Sept. 21 -- Foreign trade and investment in China is shifting to a deeper two-way relationship with greater industrial chain integration, Scott Wang, vice president of the World Trade Centers Association and chief representative of the Asia-Pacific Office, told Yicai in a recent interview.

According to the latest data from the Ministry of Commerce, 42,582 new foreign-invested enterprises were established in China in the first eight months of this year, a year-on-year increase of 0.3 percent.

There is also a shift underway from traditional to advanced industries. The actual utilized foreign investment in high-tech industries reached CNY200.2 billion (USD29.9 billion), a year-on-year increase of 35.1 percent, accounting for 41.7 percent of the total actual utilized foreign investment, up 12.4 percentage points compared to the same period last year.

Vice Minister of Commerce Ling Ji said a recent press conference that multinational companies are no longer solely focused on traditional factors in China such as labor and land costs. Instead, they are increasingly paying attention to efficient industrial ecosystems and better infrastructure -- particularly new production factors such as green electricity and computing power -- as well as efficient supply chain systems and high-quality talent.

Wang observed that multinational corporations' investment strategy in China has shifted alongside the evolution of the global division of labor and trade patterns. European and American companies used to see China as a base for global manufacturing and assembly, or they came to secure a foothold in the huge consumer market. Now this has shifted to "investing in China, selling in China, and deeply integrating with the local industrial chain."

Multinational companies are also learning from the Chinese market, and the best way to do this is by increasing their investment and fully integrating into the country's innovation ecosystem, Wang noted. Taking the automotive industry as an example, foreign firms are hoping to tap into the strong position local new energy vehicle companies have built, and they hope to bridge the cost gap by accessing the local supply chain system.

There has also been a change in global strategy for Chinese enterprises. Historically, outbound investments were primarily concentrated in four sectors: leasing and business services, wholesale and retail, manufacturing, and finance. In recent years, there has been a gradual expansion into areas such as green and low-carbon industries, the digital economy, and green minerals. Also, China's outbound investment flow reached CNY213.6 billion last year, a year-on-year increase of 11.1 percent.

Chinese enterprises seeking to expand overseas are no longer traditional labor-intensive firms chasing low-cost labor, Wang said. Instead, they are export-oriented enterprises that possess advanced manufacturing capabilities and higher technological added value. These firms are facing increasing trade barriers abroad and need to engage in proactive foreign direct investment to gain access to local markets, which is pushing the transition from exports to multinational investment.

Also, instead of just establishing factories abroad, the firms are now targeting "overall industrial chain collaboration for overseas expansion," Wang said. Supply chain enterprises need to establish a presence in overseas markets, so the logic behind their expansion is shifting from merely "going global" to achieving "deep localization and comprehensive compliance."

The core issue that enterprises need to consider is no longer relocating China's capital, technology, and products abroad, but rather how to establish a compliant and sustainable operational framework overseas, Wang noted.

Editor: Tom Litting