Geobrugg Chengdu sees breakthroughs in China's new FIL

Geobrugg ChengduCo., Ltd. which mainly produces safety nets made of high-tensile steel wire,sees many breakthroughs in China’s new foreign investment law (FIL), which willtake effect on January 1, 2020.

The wholly-owned subsidiary of the Swiss Brugg Group said it is specifically interested in the items on investment promotion, as well as investment and protection.

Yuan Zhenhua, General Manager of Geobrugg Chengdu highlighted article number 17 which states that foreign companies will now have a broader financing channel, critical for foreign investment.

"We're most concerned about the cultivation of a fair competition environment. [But] with the new law, as a foreign company, we can now also turn to domestic capital to raise funds, via public issuance of stocks, corporate bonds and other securities," Yuan told CGTN.

Geobrugg Chengdu has been in China since 1995. Over the years, it has completed 3,000 projects ranging from the ThreeGorgesDam (its early days) to highways and railways.

Yuan recalls the time when the company entered the Chinese market and garnered almost all of the nation's market share. But as the market expanded, it now only accounts for about five percent of China's share.

"That said, the entire market is big enough to support many players as the market grows especially fast. Such that, our turnover has still been growing steadily in the past 20 years," Yuan said.

What are the two biggest challenges for Geobrugg Chengdu? The still-weak-but-improving copyrights infringement landscape and the price war.

"China's competition is much more severe than that of Western countries because its customers have more choices. As China develops rapidly, it has paid more attention to cost performance. And domestic enterprises have slowly been catching up with foreign technology."

Geobrugg Chengdu sources all of its raw materials locally now - be it from domestic or foreign enterprises. This is a far cry from previously, when Yuan said it was difficult for the company that could find materials that are able to match European standards in China.

"We develop jointly develop our requirements with suppliers, and this has promoted their production and manufacturing process. Since our entry into China, we have helped drive the development of related industries from scratch – from low-end to middle and higher-end," Yuan said.

"Our products are now exported to Europe, America, and Australia – all using completely localized materials." Exports account for 20 percent of the group's revenue and have been steady since.

Yuan said Geobrugg Chengdu will benefit from the country's cuts in value-added taxes, from 16 to 13 percent. “Our overall tax costs can be reduced by more than 10 percent every year. This is good for the entire industry chain.”

When asked if the new FIL is sufficient to address any concerns, Yuan takes comfort in the important signal that the new law sends to local authorities.

"The new law serves as a guiding opinion for central and local governments such that when they cooperate with foreign investors in the future, I think officials will be more open-minded. What they could, but did not dare do previously, they now can," he said.

Yuan added that Geobrugg Chengdu will increase its investments in China.

"Going forward, we plan to strengthen cooperation with local governments at all levels, from county to maybe municipal and provincial level. We can consider setting up subsidiaries and joint ventures to expand all over the country."

(CGTN)