Trade in services, sustainability and shift to digital era set to attract huge investments

What is it that global companies need to do for robust growth in China, as the old formula of setting up manufacturing facilities and global distribution systems would no longer suffice? That key question is fast creating consensus among both experts and industry leaders that what is required is alignment with China's emphasis on expanding its openness in the fields of trade in services, green sustainability and digital transformation.

In recent times, global companies such as France's Schneider Electric SE, Finland-based Wartsila Corp and Saudi Arabia's Ajlan & Bros Group have already increased their investments in the sector of trade in services. That is in keeping with the second-largest economy's evolving role in the international industrial chain. From being the world's key factory, China has transitioned to being a pivotal "global office".

In contrast to trade in goods, trade in services refers to the sale and delivery of intangible services such as transportation, finance, tourism, telecommunications, construction, advertising, computing and accounting.

To pursue high-quality development, the country has been promoting import of technologies and services geared toward energy efficiency and reduction of carbon emissions, while simultaneously expanding its export of green and low-carbon technologies, said Huang Dongmei, vice-president of the Shanghai University of Electric Power.

Executives of multinational corporations and market watchers said that for various countries, the vibrancy of China's trade in services will open up significant opportunities for export-driven growth, increase foreign investment inflows and deepen integration into global value chains.

Schneider Electric said it believes China's digital and green transitions have provided crucial support for trade in services and opened up new space for MNCs. In response, Schneider Electric introduced a number of software solutions during the 2023 China International Fair for Trade in Services held in Beijing in early September, to help domestic manufacturers cut carbon emissions and boost production efficiency.

"In the era of the digital economy, we witness a profound integration of technology into the modern services sector, which is instrumental in driving China's real economy toward a more rapid transformation and upgrade," said Xiong Yi, senior vice-president and head of strategy and business development of Schneider Electric's China arm.

This convergence of the digital and physical realms represents a pivotal opportunity for the growth of a range of industries. To further promote this convergence, technologies, particularly software technology and services, play critical roles, he said.

Expressing similar views, Hakan Agnevall, CEO and president of Wartsila Corp, one of the world's largest life cycle and power solutions providers for marine and energy markets by sales revenue, said that apart from running four plants in China, the Finnish company will deploy more resources to boost its service-related businesses such as engine performance improvement, voyage planning, training and decarbonization services in the country.