MNCs prefer Chinese goods

Purchasing goods in China has been viewed as "a must choice" by most multinationals aiming to reduce their production costs and raise their competitive capability, Ding Junfa, executive vice director of China Federation of Logistics and Procurement, said.

CFLP statistics have revealed that China provides 3 per cent of the $2 trillion of goods annually purchased by retailing conglomerates of the 500 largest global companies across the world.

However, its sale of auto parts and components to world companies is slightly less than 1 per cent of the $1 trillion.

"There is still a lot of space in the Chinese market for multinationals to expand their procurement," Ding was quoted by the China News Service as saying. According to Ding, nearly half a million foreign-funded companies had been established in China by 2004, with a total contracted foreign investment of $1.1 trillion.

About $562.1 billion have been put to use so far. Attracted by the huge potential of the Chinese market, many chain store giants like Wal-Mart, Carrefour, Metro and Ikea have moved their global procurement centres to China.

In 2004, Wal-Mart purchased goods worth $18 billion from China while the procurement made by Carrefour, Metro and Ikea stood around $3.2 bn, $2.6 bn and $1 bn respectively, the report said.