China tests 4939 km/h jet ✈️ Amazon became Chinese 🛍️ Intel expands Chengdu plant 💻

2024-11-04 | subscribe | homepage

Welcome back to this week’s edition of the China Insights Weekly Newsletter!

With the China International Import Expo starting tomorrow in Shanghai, here’s a snapshot of some major moves shaping China’s business landscape:

• Intel’s $300 Million Chengdu Expansion: New facilities boost chip packaging and accelerate supply chains in China.

• EU Investment Hits $4 Billion: Germany leads a record EU greenfield investment surge, focused on China’s automotive and tech sectors.

• Renault’s China R&D for Europe: Shanghai-based EV team targets new model launch for Europe by 2025, slashing development timelines.

• Adidas’ $1 Billion China Sales: Expands with 300 stores to build on Q3 growth, aiming to outpace competitors with local designs.

Dive deeper into these stories and more by clicking the headlines below. We value your feedback—let us know your thoughts or suggestions on LinkedIn, X or Facebook.

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🚀 Headlines

EU greenfield investment in China continues to increase reaching a record high of USD 4 billion in the second quarter of 2024 (link)

In 2024, European foreign direct investment (FDI) in China reached a record high of €3.6 billion (USD 3.91 billion) in the second quarter, with Germany leading the pack. German FDI accounted for 57% of total EU investments in the first half of 2024, focusing primarily on the automotive sector, representing about half of all EU investments in China since 2022. Other major industries include consumer products, basic materials, and healthcare. Leading European investors in 2024 include Volkswagen, BMW, and BASF from Germany, Ingka Group of Netherlands, and STM Microelectronics of Switzerland. Despite geopolitical and economic challenges, several multi-billion-euro investments were announced, suggesting EU FDI levels will remain high through 2024 and into 2025.

Intel Invests USD 300 million to expand Chengdu facility for server chip packaging (link)

Intel has announced a USD 300 million expansion of its packaging and testing facility in Chengdu, China, to enhance server chip packaging capacity. The expansion will establish a Customer Solutions Center aimed at improving local supply chain efficiency and response times for Chinese clients. The Chengdu facility, one of Intel's largest globally, will now offer services for server chips, in addition to client products. This move is expected to bolster high-efficiency, customized packaging solutions to meet the demands of the Chinese market. The facility, which began operations in 2005, is also one of Intel's three major wafer preprocessing sites worldwide, supplying half of Intel's mobile device microprocessors.

France’s Renault building R&D team in China to develop EVs for Europe (link)

French automaker Renault Group is establishing an electric vehicle (EV) research and development (R&D) team in Shanghai, aiming for mass production of a new model by the end of 2025. This marks Renault's first instance of developing a new car in China, to manufacture and selling the vehicle exclusively in Europe. The move is part of Renault's strategy to optimize its supply chain in China and leverage the country's EV sector resources. The R&D team operates under Renault China's Shanghai branch but reports directly to Renault's headquarters in France. The company aims to potentially build a comprehensive EV R&D system in China, including both software and hardware development.

Renault has also partnered with Contemporary Amperex Technology (CATL) for battery supplies and outsourced vehicle design to Shanghai Launch Automotive Technology. This move is part of a trend where Chinese car firms collaborate with foreign companies, leveraging faster production times and lower costs. In China, developing an EV takes 24 months, 1 year less than in Europe.

China’s Xpeng breaks ground on the world's first flying car factory (link)

Xpeng Aeroht, a subsidiary of Chinese electric vehicle company Xpeng, has begun construction on the world's first flying car factory in Guangzhou, Guangdong province. The facility will be operational by Q1 2026 and will have an annual production capacity of 10,000 roadable aircraft. The modular flying car, which completed its first manned test flight earlier this month, is priced at CNY2 million (USD280,500) and will be available for pre-sale by year-end, with deliveries starting in 2026. The factory will integrate precise manufacturing traceability systems, assigning a unique 'ID' to each component. Xpeng Aeroht, which became part of Xpeng's ecosystem in 2020, aims to revolutionize personal transportation with its flying car that transitions seamlessly from driving to flying.

China tests supersonic passenger jet prototype at Mach 4, twice the speed of Concorde (link)

Beijing-based firm Space Transportation has successfully tested a prototype of a supersonic commercial transport plane, the Yunxing, capable of speeds up to Mach 4, or approximately 4939 km per hour (3069 miles per hour) — nearly double the speed of the Concorde. The test flight evaluated the aircraft's aerodynamics, thermal protection, and control systems, with all composite structures enduring extreme conditions. The company plans a follow-up engine test and aims to have a full-sized jet ready for its first flight in 2027. This development could significantly reduce travel times, with the potential to complete a Beijing to New York trip in about two hours.

Germany’s Adidas will open 300 stores in China in 2024 in its China localization and expansion drive (link)

Adidas reported a 9% increase in currency-neutral quarterly sales to €946 million (USD 1 billion) in Greater China, marking its strongest three-month sales since the start of 2022. The German brand opened over 200 stores in smaller Chinese cities by the third quarter, with a goal to reach 300 by year-end to compete directly with local players. Adidas' performance in China has been boosted by designing products specifically for the market, allowing it to gain market share from rivals like Nike. Samba and other "terrace" shoes - retro models inspired by soccer fans' footwear in the 1970s and 1980s - have boosted sales. CEO Bjorn Gulden expects sales to grow by 10% or more in the fourth quarter.

Chinese cities lead Amazon’s seller network, with mainland China home to top four merchant bases (link)

China hosts Amazon’s largest merchant hubs, with 13 of the top 20 based in the country. Shenzhen ranks first, with 102,588 registered sellers generating an estimated $35.3 billion annually. Other major bases include Guangzhou, Putian (a shoemaking hub in Fujian Province), and Dongguan in Guangdong. In 2023, China’s cross-border e-commerce industry reached an import and export value of 2.38 trillion yuan ($333 billion), marking a 15.6% increase from the previous year. In contrast, only three U.S. cities—Brooklyn, Miami, and Los Angeles—appear in Amazon’s top 10, with Brooklyn sellers managing an average of 5.9 brands compared to 11.2 brands per seller in China.

China to achieve full traceability of drugs, and medical consumables by year-end using billions of unique 20-digit medical codes (link)

China is set to achieve full traceability of drugs and medical consumables by year-end, ensuring safety and preventing counterfeit distribution. By the end of 2024, medical products will be tracked using unique 20-digit medical codes on packaging, with all codes to be scanned into government databases for omnichannel traceability. As of October 28, 3.1 billion traceable codes had been collected, involving 296,800 medical institutions and 497,200 drug stores across 32 provincial-level platforms. Over 60% of medical institutions and 99% of drug stores have initiated this process. The National Healthcare Security Administration is building a unified interface for uploading traceability codes, simplifying the process and reducing the administrative burden.

🎁 Bonus Stories

China takes the lead in art spending, high-net-worth individuals spend USD 100,000 per year (link)

Mainland China has emerged as the leading spender in art, with high-net-worth individuals (HNWIs) recording the highest median expenditure on art and antiques at $97,000 in 2023 and the first half of 2024, according to the "Art Basel and UBS Survey of Global Collecting 2024 by Arts Economics." This figure significantly exceeds the global median expenditure of USD 25,555. France followed with a median expenditure of $38,000, while Italy, the UK, and Hong Kong trailed behind. Looking ahead to 2025, 43 percent of respondents across all markets plan to purchase more artworks, a decrease from the previous years. However, mainland China stands out with 70 percent of HNWIs intending to buy art in the coming year, followed by Singapore at 52 percent. The survey included responses from over 3,660 HNWIs across 14 global markets.

China has expanded its Visa-free policy to citizens of 9 more countries bringing the total to 18 of 27 EU members (link)

China has expanded its visa-exemption policy for citizens of Finland, Slovakia, Norway, Denmark, Iceland, Andorra, Monaco, Liechtenstein, and South Korea. From November 8, 2024, to December 31, 2025, these citizens holding ordinary passports traveling to China for business, tourism, family visits, or transit with a stay not exceeding 15 days are eligible for visa-free entry. This policy aims to facilitate cross-border travel. Less than a month earlier from October 15, China expanded visa exemption for citizens from Slovenia, Portugal, Greece, and Cyprus. The latest changes bring the total number of European countries with the Visa exemption to 27 and 18 out of 27 European Union member states.

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