环球讯息：Multinationals on China｜Wilson Peng: China has become a highly favored investment destination

南方财经全媒体记者李振 广州报道

How is the development of foreign-invested enterprises in China? And how do foreign enterprises think of China's current policy of continue opening-up? Dr. Wilson Peng, Head of ZEISS Vision China shared his view with Southern Finance Omnimedia reporter in an exclusive interview.

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China has become a highly favored investment destination

SFC Markets and Finance: We know that you have a deep connection with Guangzhou. You were one of the cofounders when ZEISS built its first factory in China in 1996, and you have been witnessing its development in the Chinese market ever since. Especially when the company was discussing whether to locate this new factory in Guangzhou, or a "basket" as they described, you insisted that Guangzhou was not a basket, but a safe for this new factory. Now that we look back, why would you think that Guangzhou was not a basket, but a safe? And how did your judgment turn out?

Wilson Peng: The story you just said was called safe theory by some entrepreneurs and government officials. It was actually a long story. On Monday, November 11th, 1996, I joined Carl Zeiss. Interestingly, this date later became Double Eleven, an online sales event. In fact, it was the first company to be established in China as a cooperative, but wholly owned by ZEISS in China. Before that, we had a joint venture in Xi'an which we closed down later. But it was actually ZEISS's first wholly-owned enterprise in China. There was no safe theory at that time.

Why did we choose Guangzhou? We had visited many places. Guangzhou, as the frontier of China's reform and opening up, was a so-called pioneering and pilot zone. We saw something different from the past here. A land of opportunities for the reform and opening up. That was how we called it. That was why we entered Guangzhou to set up our factory and office.

Some of our ideas and demands under the context of China's general policies were not included or were even forbidden by some of the regulations at that time. But Guangzhou dared to be the first. The government officials would act in the interests of the enterprises to help them enter the market and develop. They would say, "Hey, let's think of a way to make it happen." It's called can-do attitude in English. Well, in Chinese we say, "wo xing" (I can pull it off). We were inspired by this kind of spirit.

We entered Guangzhou at the end of 1996, and quickly carried out design and construction, equipment installation, and commissioning production. Then, in March 1998, we produced the first lens.

It was still the early stage of China's reform and opening up. Everyone was trying to find ways to support foreign companies to develop smoothly in China. So until 2005, our development in Guangzhou went smoothly all the way.

In this process, we also learned how to continuously understand the local customs and conditions, so as to combine our development philosophy with the government's pursuit of economic development and technological development.

This process was accompanied by the formulation, innovation, implementation and execution of our government policies and systems. We were the witness of such changes. And we have developed very well, which proves that these policies were good.

The whole delivery, production, and product quality have yielded good results. So, we gradually switched our position from production for the Chinese market to for the global market. So our manufacturing was defined as a part of the global production system.

We began to further explore and develop in China since 2005 which led to several other factories later. At that time, there were a lot of discussions about this decision. One of them was that in everything we do, we have to pay attention to risk. Do not put all your eggs in one basket. However, I proposed that we had a lot of data to support some basic points.

The first thing to understand is why you can't put all your eggs in one basket. It's because it's a basket, which is not protected in any way, right? But what if it's a safe? For example, when people have something valuable, they won't store this piece in this bank and that one in another safe in another bank. They will just put all the stuff in one safe, because it's, as the name suggests, insurance itself.

So, what are the characteristics of this safe? Whether it can help the enterprise's business to develop continuously, whether it is able to help it solve the problem, and whether it acts in the best interests of this enterprise. In many places in the mainland, the government would think, this enterprise is under my control. But many government officials in Guangzhou, including some officials of the Customs will say, what can I do to help you? This is where I can be of help and support the enterprises.

So (Guangzhou) was one of the leaders among Chinese cities in terms of their sense and concept of providing administrative services. So this is the first thing, the concept of people.

Second, the quality of people. In Guangzhou, especially in the development zones, there are many high-caliber government personnel. Many of them once studied abroad and even have received a doctorate. So, there is a team like this, coupled with their continuous learning to develop policies. No matter where you want to set up plants or offices, the local culture and teams are important. If they can solve problems when we encounter. This is the basic characteristics of a "safe".

So, there is no reason not to set up the plants here. Besides, if we put all the plants in Guangzhou, we'll need just one president instead of two, right? With the many services that can be shared, we can improve our efficiency which will make our production costs more controllable, so that we can become very competitive in that market.

Stay in China or out of the world

SFC Markets and Finance: "Stay in China or out of the world." This assertion you made at the time makes a lot of sense to me now that I look back. But how did you come up with such an assertion at that time? Now that you look at it again, do you have some new interpretation?

Wilson Peng: I think there are several aspects we need to look into. Firstly, after 40 years of reform and opening-up, enterprises in mainland China have been developing rapidly. They're world-leading from their scale, technology content and innovation. Many industries, especially in the application are at the forefront of the world. So this is the first point. I think in various industries, Chinese enterprises have become a very strong, not rival, but partner of their global peers.

The second point is that after years of development, foreign enterprises do have their core competitiveness, something innovative. But over time, they will kind of rest on their laurels. Because they have always been ahead of others, they may think they will also be ahead in the future. So I personally think that to varying degrees, the foreign companies are easy to be complacent.

Thirdly, there's clear division of labor in foreign companies. It is like gears, one engaging with the next. As long as one does not move, the machine may not function and this car cannot move. So, I personally think that this mechanism and system may affect the efficiency to a certain extent.

I even dare to say that in five years from now, maybe some of the foreign companies in China will become a synonym for a backward and inefficient enterprise. Because after long-term success and a very fine division of labor, they will be slower to respond to many things. Not every employee starts from the consumer demand. They see things more from a personal point of view (to see) whether this is risky? How will it affect my personal interests? So the companies will lack a sense of urgency to trump all other competitors.

The relative inefficiency of many foreign companies nowadays may affect our development in China. But China is such a large market. China has now become part of the world economy. If we do not develop well in China, maybe we won't develop well in the world. If we couldn't undergo contiunous development in China, we wouldn't find a place in this industry of the world. So we said, "Stay in China or out of the world."

We wanted to use this quote to keep our employees, especially those in Guangzhou, on their toes. We should always remind ourselves that our efficiency is already very low. So we have to make efforts to make continuous improvement.

Innovation in China, for world 

SFC Markets and Finance: How can the foreign-funded enterprises better attract and utilize foreign capital? If we look at it from the perspective of foreign enterprises how do you think to seize such an opportunity for development?Do you have some suggestions?

Wilson Peng: I think it's a very good question. There are always a lot of favorable policies to attract foreign investment. So we need to accelerate investment in China because this is the most efficient time for us to invest (with the policies). The government has some incentive policies, right? Then, I think this should be a good opportunity.

Secondly, this is an open market. I think we should seize such a good opportunity.

Thirdly, we have just mentioned the rapid development of Chinese enterprises. Foreign enterprises should not just come into the Chinese market. We need to integrate more. To integrate with other Chinese companies and create (values) together. The premise of sharing (values) is creating (values) together. So it's also a very good opportunity for all the foreign enterprises.

Therefore, we say that all the innovation we make in China, we can replicate and spread it to the world.

策划：陈晨星 于晓娜

监制：施诗

责任编辑：和佳 李依农

剪辑：李群

新媒体统筹：丁青云 曾婷芳 赖禧 黄达迅

海外运营监制: 黄燕淑

海外运营内容统筹: 张然 

海外运营编辑：唐双艳 吴婉婕

海外项目经理：庄欢

海外商务合作: 黄子豪

出品：南方财经全媒体集团

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