What will your challenges be in 2022 as a Western company in a fast changing Chinese Environment ?
Aldo Salvador and his team from X-PM China, as well as myself would like to thank Joerg Wuttke for his straightforward presentation, December 8th, as to how western companies might contemplate China 2022 and adapt to its new realities and challenges.
We also thank you all for your questions that led to a passionate and fruitful debate. You are invited to download the European Chamber of Commerce in China’s latest papers at here Opens in a new window -in particular Decoupling and Business Confidence survey- which highlight some of Joerg’s statements.
In summary :
1. Business in China is becoming significantly more difficult for western companies
► Even though trade between China and the West remains high, decoupling, control and self reliance are underway and investments slowing down
► Engaging in global ESG strategies may be handicapped by the existing supply chain and lack of access to renewable energies
► New state standards emerge meaning extra burden to existing businesses
► Rising taxes on schools and rents as well as the Covid Zero Tolerance travel ban are demoralizing.
China seems to have lost half of its western expats population over the last 18 months.
2. In spite of a more politicized environment, business goes on
► China needs to import raw material and resources and continues to welcome investments that help the country grow green
► Decoupling also means that western companies can be fully owned by western investors (e.g. Tesla)
► Western consumers remain addicted to Chinese products
► Western companies have in many cases localized their activities in China (i.e. operate under Chinese Management)
► While some high tech companies may consider other investment locations in Asia, most western companies are not ready to get out of the country
Actually the number of members ot the European Chamber who envisage moving out of China is less than it was in 2019.
3. Overall it is crucial to be and stay in China
► Succeeding on the largest and most competitive world market is key to achieving world class excellence
► Western headquarters need to understand that value created in China means value and jobs created back home
► To get the value back home it is also necessary to keep a flow of expats being trained on the Chinese market
► The expat’s situation could improve in 2023 when China is likely to reopen its borders
The Covid zero tolerance policy can not coexist with a reopening of the borders prior to the national party’s congress in the fall of 2022.
At X-PM we hope that you enjoyed the session, wish you happy holidays and look forward to see you at our next event of the Cercle International in the first quarter of 2022.