OPINION: Even in areas where China is still in catch-up mode and foreign companies still have an advantage -- and hence continue to be welcome in China -- the window of opportunity in the market is likely to be short lived, writes Louis Brennan. https://lnkd.in/gR5ttEFy
Nikkei Asia’s Post
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KOL in China(1.73M followers on Weibo@奥特快啊). Connect emerging market with China resources. Used to work in Vietnam , now based at Dubai.
When I talking with my Chinese friends in China , the most common narrative about Chinese companies going overseas is "due to the product and operational capabilities generated by China's bloody competitve environment , Chinese companies can easily defeat their competitors in foreign market ." Even I am Chinese , I still think this is kinda terrible statement from the perspective of the host country. On the eve of China's accession to the WTO, there were many debates and concerns in China about the "wolf incoming", fearing that powerful foreign companies would come in and suppress Chinese local enterprises. Remember , that is 2001 , the peak of globalization. Not to mention the current era is the one of widespread resurgence of nationalism in countries around the world. If the Chinese companies who go abroad are just a channel transformation (the rise of Chinese cross-border ecommere platforms bypassing traditional trade intermediaries) and branding (not just for OEM), I feel it is completely inadequate to hype up as "new overseas expansion", as this is not fundamentally different from exports in the past few decades. If we are talking about "Chinese companies' new overseas expansion", I believe it must involve "building production factors overseas", including but not limited to setting up local facilities, hiring local workers, local investment, and necessary technology transfer - if not helping solve local employment and industrial upgrading, why would the "host country" welcome you to make a pot of money and then wipe out its local enterprises? Of course, another way to bind interests or at least mitigate conflicts is to increase imports, but that's another stroy which is even harder than Chinese companies go oversea.
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KOL in China(1.73M followers on Weibo@奥特快啊). Connect emerging market with China resources. Used to work in Vietnam , now based at Dubai.
When I talking with my Chinese friends in China , the most common narrative about Chinese companies going overseas is "due to the product and operational capabilities generated by China's bloody competitve environment , Chinese companies can easily defeat their competitors in foreign market ." Even I am Chinese , I still think this is kinda terrible statement from the perspective of the host country. On the eve of China's accession to the WTO, there were many debates and concerns in China about the "wolf incoming", fearing that powerful foreign companies would come in and suppress Chinese local enterprises. Remember , that is 2001 , the peak of globalization. Not to mention the current era is the one of widespread resurgence of nationalism in countries around the world. If the Chinese companies who go abroad are just a channel transformation (the rise of Chinese cross-border ecommere platforms bypassing traditional trade intermediaries) and branding (not just for OEM), I feel it is completely inadequate to hype up as "new overseas expansion", as this is not fundamentally different from exports in the past few decades. If we are talking about "Chinese companies' new overseas expansion", I believe it must involve "building production factors overseas", including but not limited to setting up local facilities, hiring local workers, local investment, and necessary technology transfer - if not helping solve local employment and industrial upgrading, why would the "host country" welcome you to make a pot of money and then wipe out its local enterprises? Of course, another way to bind interests or at least mitigate conflicts is to increase imports, but that's another stroy which is even harder than Chinese companies go oversea.
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"A misperception is that the market is automatically rigged against foreign companies... But by and large, what we are seeing is that many Chinese companies are simply just very, very good, and that oftentimes it's a matter of European companies recognizing the nature of the competition and bringing their best game to China to succeed. In the EU Chamber of Commerce, we have characterized China as a fitness club for European companies." Follow the link to a conversation with Jens Eskelund on the challenges, misperceptions, and changing conditions for foreign companies in China: https://ow.ly/Qs3150QXrY5
Shifting Dynamics of Business in China
salzburgglobal.org
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“China is the world’s largest importer of oil. For decades, countries in the Middle East, especially Saudi Arabia, have prioritised relations with China in order to safeguard a key customer. There has been less urgency on China’s side to reciprocate: its exports to the region have paled in comparison to its imports. That could now change. A string of Chinese tech groups have started moving into Saudi Arabia as part of aggressive global expansion plans. The latest is food delivery giant Meituan, which is seeking to hire staff based in Riyadh. This is significant: Meituan would be choosing the Middle East as its first overseas expansion outside China. Meanwhile, Chinese ecommerce giant Alibaba is working on partnering with local companies in Saudi Arabia and the United Arab Emirates for expansion in the region.” “Tencent is planning to expand its cloud business there and investing in data storage. Fast fashion and ecommerce giant Shein has been increase its presence by launching fashion shows and its first-ever reality show in Saudi Arabia. While Chinese technology in areas such as cloud services and AI has been advancing rapidly, demand for its apps and technology in large markets like the US has been threatened by rising geopolitical tensions. The companies would face less political scrutiny in the Middle East, where ties are mainly centred around economic interests. China is the largest trading partner for most Middle Eastern nations. Economic slowdown at home has added urgency for expansion overseas. Alibaba’s revenue in the December quarter missed expectations.” “Tencent’s sales in its core gaming business were hit by an unexpectedly sharp slowdown. Meituan’s core local-commerce margin has been falling; its stock is down a fifth in the past year. The timing is good. As Saudi Arabia looks for growth beyond fossil fuels, it is getting serious about investing in emerging industries such as AI. It this year created a $100bn fund to invest in new technologies. It has a relatively nascent tech scene, with the local market for cloud services for example at just around $4bn, compared with more than $200bn in the US and around $100bn in China. There is incentive for Saudi Arabia as well. Last year, Russia surpassed Saudi Arabia to become China’s largest oil supplier. Chinese exports to Saudi Arabia are just half that of imports for now. Getting into the good books of Beijing would help deepen ties and improve trade relations.”
China tech is seeking growth in the Middle East
ft.com
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The study, conducted by the China Council for the Promotion of International Trade and involving 700 foreign companies, found that over 80 percent of respondents were satisfied with China's #business environment in the third quarter of 2023, and about 80 percent anticipate that their profits will remain stable or improve in 2023. Foreign firms have consistently believed that technological innovations are the most significant growth opportunities in the Chinese market for three consecutive quarters.
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Amid rapidly evolving global dynamics, it's evident that China's unique approach in the manufacturing landscape continues to influence international trade strategies. The enduring resilience of Chinese manufacturers faced with various challenges is a testament to their adaptability and innovation. Navigating the intricacies of China's zero-Covid policy, manufacturers have devised creative solutions to sustain operations and meet the demands of global markets. From implementing stringent health protocols to leveraging technology for remote collaboration, Chinese businesses have demonstrated remarkable agility in the face of adversity. As the regional powerhouse reshapes its trade dynamics, understanding these adaptations is crucial for foreign businesses looking to engage with Chinese suppliers. By staying informed and proactive, companies can forge resilient partnerships and capitalize on emerging opportunities in the ever-evolving market landscape. At Connect China Trade, we stand committed to empowering international businesses in their journey to import products from China. Our expertise and comprehensive network allow us to provide tailored guidance and support, ensuring a seamless and successful importing experience for our clients. Join us in unlocking the potential of the Chinese market and expanding your global footprint. Let's navigate the complexities together and pave the way for mutual growth and prosperity. #connectchinatrade #cctrade Arrange your free consultation with us today: https://lnkd.in/e6x58d6X
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It's not always easy to go against popular opinion, but sometimes it's necessary to see things from a different perspective. This is especially true when it comes to China's industrial base. Despite some controversies, China's sheer size and diverse range of industries give it a unique level of flexibility and resilience that few other countries can match. It's important to keep an open mind and recognize the strengths that China brings to the table.
China's Dominance in Low-Cost Manufacturing: 5-Year Outlook
https://baysourceglobal.com
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