3M China executive says nation to remain global manufacturing hub
The sluggishness affecting China's exports will pass, and the nation will remain a global manufacturing hub in the next decade, said Donald Chang, president of 3M China, in a conference in Shanghai on Wednesday.
3M, one of the world's largest industrial materials manufacturers and suppliers, aims for net profit growth in the next three years, Chang said. He said the company has also set a target of up to $5.5 billion in sales by 2015 in China.
Chang was appointed president of 3M China in May. He said a major reason for the slowdown in China's economic growth is that the current base for the world's second-largest economy is already enormous.
Despite lower expansion rates than in the past, China's economic growth is stable and healthy, said Chang.
"3M is going to take a strategy that is appropriate to the economic transformation and development in China, and we'll go on to focus on innovations that meet the demands of China's market," said Chang.
Chang said many regions in China are shifting from export-driven economic structures to domestic-demand-driven ones, and 3M is going to develop products that specifically meet Chinese consumers' demands.
Though some foreign companies have moved out of the country to other countries in East Asia for lower labor costs, 3M remains in China and sees it as a smart choice, as China provides a better infrastructure, research environment and talent base than other locations, and the strategy goes together with 3M's focus on localization, said Chang.
The economy expanded by only 7.5 percent in the second quarter, down from 7.7 percent in the first, which was a far cry from the double-digit growth rates some two years ago. But China's economic situation remains stable and healthy, said Chang.
Exports may pick up in the third quarter, as it is usually the peak season for manufacturing before Christmas, and new products from many companies may boost consumption during the period, said Chang.
Wayne Xue, director of corporate strategy and communications for 3M in China and Hong Kong, said 3M is going to attach more importance to markets in China's northern and southwestern regions in the next few years.
"We see many growth opportunities in those regions, given rising average incomes and growing consumption demand," said Xue.
3M's healthcare, industrial and infrastructure sectors may specifically benefit from China's economic transformation, said Xue.
In 2012, 3M spent about $1.634 billion on research and development, about 5.46 percent of its worldwide sales in the year. Xue said 3M is going to invest more intensely in R&D and push the rate to some 6 percent in the near future.
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