中小型外国公司涌入中国

Foreign direct investment has been one of the major drivers of China's economy, since reforms began in 1978. Now in the world's second largest economy, the investment environment and market conditions have changed greatly. More small and medium-sized enterprises are coming to China, especially those in the service sector.

A touch of French culinary arts...Le Restaurant Ecole Institut Paul Bocuse was supposed to provide a short-term dining experience in French Pavilion during Shanghai Expo in 2010, but decided to stay.

"To have a branch here in Shanghai is quite a good foreign image. It gives a wider range of action. And so we have a lot of partners in France or in Europe. It's cool here to try the Chinese market,"  said Raphael Vetri, Exec. Chef of Le Restaurant Ecole Institut Paul Bocuse.

Pronic is a leading French firm in sheet metal working. It entered the Chinese market in 1990s using Chinese dealers. But it decided to open its own branch in Shanghai last year to meet increasing market demand.

As a small company, recent government actions gave a positive signal to Pronic to operate here: such as relaxed requirements for registered capital; and low taxation at Hong Kong levels according to an agreement between China and France.

For three decades, China has been one of the most popular destinations for foreign direct investment. As the economy develops, its investment environment has changed. And so have the types of the investors.

China is not just the world's factory any more. It's also a market that companies can't afford to stay out of.

In the early days of opening up, many regional governments attracted investment by offering foreign firms preferential polices, such as tax reduce and cheap land use. The central government has now withdrawn this so-called "super-national treatment" to create a more fair market for domestic firms.

China is transforming its patterns of economic growth, aiming for more sustainable development. There are many opportunities and challenges for foreign companies during this process. The government needs to tailor its investment polices to keep smaller companies coming.