China strategy as a must

Many European companies are active internationally but often do not focus specifically on China. This is not a strategic choice, it is usually because they don’t really consider China as a relevant player in Europe or due to a complete lack of knowledge about the country. When I ask these companies: “What is your China strategy?”, I often get the answer: “Oh, but we are not active in China at all, and we have no plans to start anything there.” This answer shows a short-sighted perception and misses a crucial insight into the global economic dynamics.

“Like it or not, China should be a key consideration in any international business strategy.“

Even if China is not a potential export market for your products or services, the country can still play a role in several other areas that cannot be ignored. Even if your company has no direct links to China, the country can still have an impact on various levels of your business activities. This can range from supplier of raw materials or semi-finished products, to investments, partnerships and even potential competition.

China as an economic superpower

To start with, China is not just a major economic player, but a dominant force on the global stage. It is the world’s second largest economy and continues to grow, making it impossible to ignore. When European companies operate internationally, they will sooner or later be faced with the influence of China. Whether this is by Chinese competitors in other markets, or because the supply chains are connected with China. Even if you do not export to China, there may be parts of your products that come from China, or there may be Chinese players in your industry.

China as a partner and competitor

China offers opportunities but also challenges. On the one hand, it can be an interesting export market for companies that want to expand. The Chinese consumer is becoming increasingly affluent and wants quality products from Europe. But China can also be a partner in innovation and technology. Collaborations between European and Chinese companies can lead to new product developments or markets. The Chinese government also stimulates international investments, which means that Chinese investors are interested in European companies.

On the other hand, there is also competition from Chinese companies becoming increasingly strong internationally. Sectors such as technology, renewable energy and manufacturing are dominated by Chinese players. Even if you are not targeting China, it is important to consider the impact that Chinese companies can have on your markets.

Raw materials and production chains

Another important factor is that China plays a crucial role in the global supply chain. Many raw materials, semi-finished products and even finished products come from China. Whether you produce electronics, textiles or chemicals, it is largely possible that you are dependent on Chinese suppliers. Disruptions in production in China, as we noticed during the COVID-19 pandemic, can have consequences for companies all over the world.

Politics and regulations

Moreover, China is not only an economic player but also a political powerhouse that increasingly impacts international regulations and trade agreements. This means that decisions taken in Beijing can potentially impact companies worldwide. It is important that European companies are aware of these geopolitical aspects and how they can align their strategies accordingly.

Conclusion: China strategy as a must

In short, a ‘China strategy’ should be an indispensable part of any international business strategy, including for European companies that currently have no direct links to China. China has an impact on many areas, from raw materials to markets and from innovation to geopolitics. Companies that do not pay attention to this, risk missing opportunities or facing unexpected challenges. It is essential that companies recognize this reality and integrate China as a topic into their boardroom and strategic planning.

Horsten International not only has decades of experience in strategic and operational support of European companies in their China strategy, we also have our own office in China since the early 2000s, which makes us a perfect ‘go-between’ between European and Chinese companies. Do not hesitate to contact us for any questions.