Mars, Ferrero to invest further in China despite virus blow

By Xie Jun Source:Global Times Published: 2020/3/8 20:13:40

A view of Mars' M&M's chocolate factory in Huairou district of Beijing Photo: Zhang Hongpei/GT

Some overseas companies like US food giant Mars, vows to continue investment in China despite the negative impact of the coronavirus, partly as they look to take advantage of pent-up demand as the virus recedes in the country. 

Early signs of a rebound have already emerged, as consumers are lining up at shops in downtown Shanghai and online sales are picking up around Women's Day, which fell on Sunday. The developments are helping restore confidence among foreign companies.

"We believe China will have a new wave of consumption in the business we are in. We will adjust our production to meet the huge market demand in China," Clarence Mak, president of Mars Wrigley China, told the Global Times. 

"We don't focus on short-term gains or losses. Instead, we are confident about the Chinese market's resilience and will continue to invest in China," he said.  

Mars, like numerous foreign companies in China, has been caught in the coronavirus outbreak. Apart from halted production, sales were also dampened as deliveries were restricted and shops were closed. 

"We are still working with local governments to carefully assess the impact of coronavirus on our business in China," Mak told the Global Times. 

Currently, Mars' seven factories in China have resumed work and about 90 percent of the employees are back to their posts. The factories can't resume work 100 percent because there remain difficulties getting items like face masks, and raw material supplies and shipping have been affected by the virus, Mak said. 

Italian chocolate maker Ferrero also told the Global Times that the company will continue to increase investment in China. Like Mars, it anticipates demand will recover with "stronger momentum" after the coronavirus. 

"We expect the epidemic will give rise to new opportunities and business models in China, especially in e-commerce and consumption," the company noted, adding that it has sourced face masks from eight countries including Mexico, India and Saudi Arabia. 

However, some Chinese experts are cautious about a consumption rebound, because buying habits might fundamentally change after people were forced to spend recent festivals in a thrifty manner because of the virus. 

"There's a 50/50 chance," Li Xiaogang, director of the Foreign Investment Research Center at the Shanghai Academy of Social Sciences, told the Global Times on Sunday. 

According to Li, if a rebound occurs, it would spur foreign companies to increase investment in China, especially those businesses that focus on local markets. 

"However, for some overseas companies in processed trade, chances are great that they may cut investment in China to avoid risks from unexpected occurrences (like the coronavirus) on global supply chains," Li said. 

Overall, he anticipated that China's foreign direct investment (FDI) in 2020 will be a on par with last year, which means the growth will be around zero. 

"This is actually not too bad considering that global FDI will plunge this year because of the epidemic, and China's appeal as a mature, large-scale market will still hold up for overseas companies," he said. 

China used overseas capital of $138.1 billion in 2019, up 2.4 percent on a yearly basis, the Ministry of Commerce said in January. 

Posted in: COMPANIES

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