Article in Belgian magazine ‘VOKA Entrepreneurs’ – February 2024

China was once a country of unconstrained economic growth and the place to be for foreign companies, today it is often a dilemma for many entrepreneurs. While the visit to China early January by Prime Minister De Croo was planned with some discretion to not offend anyone and as there are still many negative stories about China in the media, European entrepreneurs are wondering what they should believe and what is really going on in China.

China’s post-Covid revival came later than expected: Chinese consumer confidence remained low in 2023 and negative media reporting continued. Nevertheless, the Chinese economy will still grow by more than 5% in 2023. A growth rate of 4.6% is also expected for 2024.

See China with your own eyes

Entrepreneurs who traveled to China again in 2023 usually returned with a more positive story: there are fewer foreigners in China and the country does indeed have its problems, but China has certainly not stood still in recent years and Chinese companies are still looking for cooperation with foreign companies in many areas, especially when it comes to innovative technologies, products or services. And fortunately, most European companies are not active in sectors that are of political strategic importance, so they are hardly affected by geopolitical risks or restrictions in China.

Reshoring remains first and foremost a theoretical model

China also remains by far the most important supplier of raw materials, accessories or finished products. It is important for companies to map the unpredictability of supply chains and reduce dependence on China. But it is not that easy: the largest suppliers are often in China and manufacturers in other countries such as Vietnam or Bangladesh are also dependent on the supply of raw materials from China and the infrastructure in those countries is less developed.

Looking for suppliers in Europe or even starting up a new factory in Europe (also called ‘reshoring’) is not an easy task at all. These plans often run into regulatory constraints and a lack of suitable or affordable staff. Moreover, many raw materials or components still come from China, which does not reduce dependence on China.

Partnering with Chinese companies for global expansion

How big the concerns may be, for many European companies China is too big to ignore. It remains the second largest economy in the world. Intelligent cooperation with Chinese companies can not only offer opportunities for European companies in China, but also in the rest of the world. Chinese companies no longer only look at their own market. More and more they have global ambitions, and we can be part of it too.

For your reference, you can find below the original article in Dutch.