Urbanization to offer more chances for foreign firms

China's urbanization will further stimulate the country's consumer potential, and offers opportunities for multinationals, officials and executives said at the Fortune Global Forum in Chengdu, capital of Southwest China's Sichuan Province, on Thursday.

The urban population in China will rise to 1 billion by 2030, which will bring huge consumption power and help boost the country's economic growth, Andrew Serwer, managing editor of Fortune Magazine, said at the opening of the forum Thursday.

Serwer said he has been impressed by the huge consumption power in China, as seen with the robust online retail sales 0n China's Singles' Day, a holiday on November 11, during which merchants launch campaigns to promote sales. It is quickly becoming one of the biggest e-commerce sales days in the world.

China's economy has been driven mainly by investment and exports in the past 30 years, Yang Yuanqing, president of Lenovo Group, the world's second largest personal computer vendor by shipments, said at a seminar during the forum.

If the country can release its consumption potential, the economy will continue to grow strongly, he said.

"Urbanization will be the main growth engine," Yang noted. "If more Chinese people move from rural areas to cities, their consumption power will get a significant boost."

To increase domestic consumption, China should also improve its social security system, and conduct tax reform to lower the value-added tax, which is set at 17 percent currently, Yang told the seminar.

China had only 10 companies listed among the Fortune Global 500 in 1999, but the number surged to 79 last year, Serwer said, noting that the number of Chinese companies will increase on the next Fortune Global

500 list, to be released next month.

Two decades after multinationals first gained a foothold in China in the 1990s, they are seeing growing opportunities in China's underdeveloped western market.

Sichuan is the most valuable investment destination in Southwest China, and so far more than half of the Fortune Global 500 companies have launched businesses in the province, Wang Dongming, Party chief of Sichuan Province, said at the opening session of the forum.

Wang said Sichuan aims to further develop seven key industries including information technology, equipment manufacturing and electric power, and welcomes foreign investors to join in.

"We will improve our market and legal environment to attract investment," he said.

Serwer urged multinationals to treat Chinese consumers the same as consumers in other parts of the world.

Some foreign companies are making money by selling cheap and low-quality products in China, but such a move will not be sustainable, Serwer said.

"Although different companies have different quality standards for their products, they should have their own standards and rules, and that is always putting the interests of consumers first," he said.