It is high time for a more pragmatic European approach towards China

Bart Horsten – 04.12.2023

On 7 December 2023 the EU-China summit was held, the first in-person summit in 4 years. In this respect, something has to get off my mind. I have stood on the sidelines for too long, so as not to offend anyone and not to be scolded as a ‘naive communist’. Because that is apparently a new trend: if you are not anti-China, you are pro-China. But it’s not that simple.

In recent years, China has regularly been in the news in a negative way, often rightly, but just as often unjustly. And the more controversial the titles, the better. There are so many people who have an opinion about China: China watchers, macroeconomic experts, academics, geopolitics experts, politicians, and so on. A striking similarity among all these so-called ‘China experts’ is that almost all of them have not been to China for years, some have never even been there at all.

Nevertheless, it is these experts who are most often in the news and are asked for their opinion about China, in the media or at all kinds of events that are not necessarily about China.

There is one more similarity: almost none of these so-called China experts have any experience in doing business with China. I’m sure most experts are really convinced of their opinions and don’t necessarily have bad intentions. Moreover, I have no doubt that they are all experts in their field. The problem, however, is that they are often not (or no longer) well informed about what is happening in China.

The most common mistakes made are the following:

1. All experts look at China through a European lens. Or better: a Western lens, because much of how we form our opinion about China is largely inspired by how the United States thinks about China. We Europeans still allow ourselves to be lectured too much by the American view of the world order. Everyone now knows that a new world order is emerging and that we should not expect the entire world to blindly follow our democratic values and norms. And most people in the West don’t bother to look at the world from a different perspective.
2. Generalization: Whenever something happens in China, no matter what, it is all judged from the same (negative) viewpoint. Of course, there are many things in China that are insupportable. But that doesn’t mean everything is bad. What’s more, there are often events or measures taken by the Chinese government that are interpreted negatively, but – when looking closer – are not only reasonable measures, but also happen here in the West.
3. Jumping to conclusions: I often read articles about China that are generally hard to challenge. Or in other words: almost everything in the article is correct. However, part of the story or the context is missing (purposefully or not, I will leave that open), so that conclusions are often drawn at the end of the article that are completely taken out of context.
4. Total lack of knowledge about China and a general underestimation of the capabilities and resilience of the Chinese people and companies. For example, look at what happened with electric cars from China. For years we laughed at Chinese cars being imported into Europe, no one took it seriously. But suddenly Europe wakes up and we have to take protectionist measures. It would have been better to take these types of threats seriously from the start and to see how Europe can proactively deal with them in an intelligent way. It is probably already too late for electric cars, but there are still opportunities in other areas. Therefore, let us look at these developments in a positive way and not bury our heads in the sand in advance and look away.

The political world is probably the farthest from reality. For example, I get very angry when I hear Flemish Minister of Energy Demir speak in the Flemish parliament about ‘Chinese trash’ (her words) when she talks about inverters and solar panels. It is those Chinese products that have taken Belgium and Europe a big step further in the field of green energy. Thanks to China, our roofs are not only full of solar panels, but they have also become significantly cheaper and more efficient over the past 15 years. Something we failed to do in Europe.

By the way, those products are not rubbish at all, they are state-of-the-art. In many areas, China is already ahead of us in terms of technology and quality. Yet another proof that politicians are unworldly and completely misjudging what is happening in China. Another example is the general hysteria when it comes to TikTok, while no one is surprised if they are in a shoe store and suddenly receive advertising about shoes via Facebook.

I have been doing business with China for 25 years and have travelled to China 100 times. This year I was in China for 2 months. During those 2.5 decades, on average every year I read an article predicting the downfall of China. But so far, those doomsday scenarios have still not come true. And as described above, the negative messages in recent years have become countless, but are almost always based on a typical Western tunnel vision and without any knowledge of what is going on in China itself.

There are few people in Belgium who have more experience in guiding Belgian companies doing business in China or having plans to do business in China, both small, medium and large companies. All have challenges in doing business with China. And it doesn’t get any easier, that’s true. But the reasons for those greater challenges – contrary to what most observers think – have little or nothing to do with stricter regulations in China, or the Chinese government forcing foreigners or foreign companies to leave the country. No, the biggest reason why successful business in China has become more difficult in recent years, is mainly the increased local competition in China. China has not stood still during the Covid years. And unlike in recent decades, China is no longer waiting for us unless we come up with innovative products or technologies.

As China advisors and entrepreneurs, we see this changing economic reality happening before our own eyes. As a result, in recent years we have been guiding total newcomers to China less than before, but we are increasingly advising foreign companies that have been active in China for some time. Some of these companies have even been active in China for years, often successfully. They also usually continue to invest in China, even during the pandemic. Those investors are also starting to realize that they need to revise their China strategy. Their established markets are coming under pressure and their traditional advantage over Chinese competition is beginning to fade, forcing them to proactively evaluate how to revise their China strategy.

Instead of seeing China’s economic and technological development only as a threat and looking away in panic, Belgian and European companies and governments should proactively look for Chinese partners for joint development and commercialization. Intelligent cooperation with Chinese companies can provide opportunities not only for European companies in China, but also in the rest of the world. The Chinese no longer only look at their own market, they increasingly have global ambitions, and we can also be part of that.