We interviewed Bart Horsten, Board Member of the BCECC and China consultant and entrepreneur for more than 20 years. We asked Bart about his advice to Belgian companies which have decided to put their China plans on hold or even abandon them entirely.
Due to the pandemic and the ongoing geopolitical and supply chain challenges during the past 2,5 years, Belgian importers and exporters are looking for alternatives for their China business. Companies sourcing products or raw materials from China are currently searching for other sources in Asia or Eastern Europe. On the other hand, companies interested in exporting their products or services to China, are deciding to ignore that market due to the travel restrictions.
Bart acknowledges that it this decision is understandable. However, there are good reasons why putting China on hold may not be the right strategic decision for your company. Bart highlights 5 reasons:
1. China is the second biggest economy of the world.
With the pandemic already dominating the global economy since the beginning of 2020, companies active in the international market cannot continue to ignore the 2nd biggest world market and need to move forward. Although there have been some major setbacks in China during the past 2 years, it has been largely ‘business as usual’ in China. Most exhibitions were still being held and traveling within China’s borders was still possible. Many multinational companies, as well as SMEs, generate a large share of their revenue and profit in China. Hence, Belgian companies cannot stay behind and should act proactively to find solutions for their China activities.
2. China continues to develop at breakneck speed.
In many aspects China is ahead of the West, for example in terms of digitization, e-commerce and social media, as well as technology development. Chinese companies have also continued to innovate during the past 2 years. Consequently, postponing your China plans for 2 years or more may close the window of opportunity completely. How much longer will you postpone your China plans? It may take a few more years before traveling to China will be possible again without restrictions. Do you plan to wait until then? Staying away from China for such a long time may give chances to your foreign or Chinese competitors to take a market share instead of you.
3. Covid will not be there forever.
During the past decades, China has shown quite some resilience in managing and overcoming major crises, such as the Asian crisis in the late nineties, SARS in 2003, the global financial crisis in 2008, various stock market crashes and other challenging times. Today, the country is still struggling with tackling the virus, but gradually things are getting under control. Furthermore, the flexibility and ‘can-do spirit’ of most Chinese companies and people will help China to recover from the Covid-pandemic fast. Now it is time to start preparing your post-Covid action plan.
4. What is the alternative?
Not sourcing from China may only just shift the problem, as many raw materials and other resources are coming from China anyway and this supply chain cannot simply be replaced overnight. Alternatively, not exporting to China may take away a major part of your potential future revenue, which cannot be substituted by any other export market and may not be the preferred by your shareholders. Ignoring China in your strategy is a valid option, but are you willing to take the risk of losing your main source or market share?
5. Out of sight, out of love
Building relationships and trust is a major part of doing business in China. Although meeting with your Chinese customers or partners in person remains difficult, it is important to keep in touch with them through videocalls or WeChat. It is not an ideal situation, but even in China, where personal relations are such an important part of doing business, people are getting used to working from home and communicating with their stakeholders through online methods. Keeping China on your radar will help you to gain respect from your Chinese customers and partners, which will benefit your future China business.
Obviously, before you engage with your China plans, Bart recommends taking the necessary precautions and preparing yourself well. For example, it is important to screen your Chinese suppliers or partners, investigate whether there is a market for your products in China in the first place, register your trademark in China, and so on.
The Belgian-Chinese Chamber of Commerce (BCECC) is available to help you with your China plans and organizes workshops and seminars to assist companies on a regular basis.