German optical giant Zeiss breaks ground on US$25 million plant in Suzhou in vote of confidence in China
- The Suzhou facility will be for R&D and manufacturing of ophthalmic equipment, and comes after a US$60 million investment in Shanghai
- In the first eight months of the year, foreign direct investment in China increased 16.4 per cent year on year, reaching 892.7 billion yuan
Carl Zeiss AG, the German optical systems giant, has broken ground on a new plant in the eastern Chinese city of Suzhou, bucking a trend of multinationals reducing their dependence on “the world’s factory floor” amid rigid coronavirus controls and rising geopolitical tensions.
Work on the new factory, in the Suzhou Industrial Park, kicked off on Tuesday, the company said in a statement. With a US$25 million investment, the facility will be used for R&D and manufacturing of ophthalmic equipment.
Zeiss China president Maximilian Josef Helmut Foerst said the company has always been confident in China’s growth and that the new facility reflects its commitment to “deepening its roots in the market”, according to the statement.
Zeiss China has achieved a nearly 20 per cent compound annual growth rate over the past few years, and China is the German firm’s largest single market globally, Foerst told local media last month.
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The new Suzhou facility comes 10 months after Zeiss announced a US$60 million investment in Shanghai in January.
Zeiss’ new investments in China come at a time when Beijing’s draconian Covid-19 controls have made most foreign investors wary. The European Union Chamber of Commerce in China said in a report last month that China’s Covid-19 policy was inflexible and threatens economic growth.
China and Germany are each other’s most important trading partner in their respective continents. Last year they traded 246.1 billion euros (US$241 billion) worth of goods with each other, with China being Germany’s largest trade partner for six consecutive years, according to the Federal Statistical Office of Germany.
But the close partnership is not without challenges. Germany’s economy minister said his country had been looking for ways to reduce its reliance on China for raw materials, batteries, and semiconductors.
According to data released by China’s Ministry of Commerce, in the first eight months of the year, foreign direct investment in China increased 16.4 per cent year on year, reaching 892.7 billion yuan, or US$138.4 billion in dollar terms.
Germany, South Korea, Japan and the UK are the fastest growing foreign investors in China. Germany’s investment rate grew 30.3 per cent in the same eight-month period over the previous year, trailing only South Korea with a 60 per cent investment growth rate for the period.
