Philippe Snel
Welcome back to China, it really is good to see you again!
As we are about to welcome the first quarantine-free arrivals to China, this may be a good time to provide a few pointers to the business traveler returning to China after a long absence of 3 or more years.
First, if you were expecting to find the country exactly the same as when you left it last time you were here, you better think again. China did not stop while you were away. What’s more, three years of quasi self-isolation has forged some new angles to the character of the country and its people and – fair warning – you may not like all of them!
That said, let there be no doubt, all of us here in China are ecstatic about the “return to normal” when it comes to international travel. We are delighted to soon be able to welcome back our colleagues, business partners, clients, suppliers as much as we are really looking forward to meet again with trade delegations, foreign officials, academics and to see foreign students swarm to the country again. We’ve really missed you, don’t let anybody tell you to the contrary! On the other hand, we are equally excited about the prospect of being again able to travel overseas ourselves, not just for tourism (although we did miss that too admittedly) but first and foremost for business!
If the past three years (and in particular the past three months) have taught us anything it is that this country is not ready to return to be the self-reliant impregnable citadel it pretended to be 250 odd years ago. Even if such prospect may have crossed the mind of some people on both sides of the Great Wall, it simply is not a viable option anymore: China is integrally and irremediably part of the globalized world, and not just in economic terms.
As a matter of fact, this realization i.e. the world relies on China just as much as China needs the rest of the world, may be the most important lesson learned from the covid years and probably explains the change of hearth on the zero-Covid policy.
Foreign business executives and others travelling back to China for professional purposes would probably be well advised to keep it in mind and understand what it means to them and their business. Simply put: chances are you will experience that you are no longer dealing with a complicated adolescent but much rather with a full-grown adult who knows the rules and is fully accomplished at playing the game.
Businesses in China have operated in quasi-autonomy since spring 2020, that applies to foreign invested companies, but also to domestic businesses who were (and still are) relying on overseas clients or suppliers. They have managed to keep going and sometimes have done quite well for themselves and while they are eager to reconnect with overseas, they are not jumping to let go of their newly acquired independence. What that means is for instance that decision-making is now essentially localized. Gone are the days that headquarters could push through a decision on readjusting production schedules or adapting supply chains.
Decisions will be made taking in consideration the interests of the company as well as those of the group or the client, but in that order. Localization solutions have emerged which sometimes – not always- have proven effective in many ways. This applies to supply chain issues of course but also across business operations including for instance to human resources or professional services.
More than ever, as a foreign business professional, you will need to bring real arguments to the table to be taken seriously. Gone are the days that you could pan out a deal just by swinging foreign credentials to the face of your counterpart. For instance, simply because you are a registered supplier to the mother-ship in Europe does not mean that you will be welcome in the supply chain in China. The relationship is clearly one of interdependence, not dependence.
That said, China is still China and when the borders reopen on January 8th bets are that for many overseas businesses it will feel as if the doors to the biggest supermarket in the world were reopening! The Chinese consumer is back and many are hoping (and predicting) that he will be back with a vengeance. National consumption has been idling (at best) in the past year in particular, in large part due to the uncertainty linked to the policy decisions. Now that things are gearing up again the Chinese consumer has a lot of catching up to do, the more that, as you will soon notice, the war that is unfortunately raging in Ukraine is having no or only very limited effect on people and businesses here.
Interestingly, people returning to China for the first time since 2019 may experience that 3 years of Covid lock-downs, restrictions, closures and working-from-home has had similar effects on the general population as it has had in other parts of the world. While there is still great eagerness to advance to the next level of wealth at every corner of the business street, there’s also a new sense of realization that there’s more to life than only working hard and making more money. As elsewhere this trend is particularly perceptible with the younger generation but to some extend it has also gained ground amongst all age categories and classes of population.
Far from being a problem it is bringing new perspectives to certain industries and businesses who have yet to fully emerge in China e.g. the sports, leisure and entertainment industry.
While returning to China will probably not mean returning to the old ways, one thing remains however, the country is still rife with business opportunities, more so then any other place in the world. Hence it would be unwise to write off China just because you were able to ignore it for the past three years. The China market and its almost insatiable needs for goods, services and investment will again dominate the game in many businesses and across almost all industries. So welcome back to China, it really is good to see you again!
Philippe Snel
Managing Director
