The Flanders-China Chamber of Commerce and Flanders Investment & Trade organized a webinar with the Flemish Economic Representatives in China on 10 March 2023. The webinar was conducted in the Dutch language.
During this webinar, the Flemish Economic Representatives, Koen De Ridder in Beijing, Frank Van Eynde in Shanghai, Eva Verstraelen in Guangzhou and Siegfried Verheijke in the Hong Kong S.A.R. talked about the current business climate in their region and the opportunities for companies from Flanders.
Ms Gwenn Sonck, Executive Director of the Flanders-China Chamber of Commerce, welcomed the speakers and the participants to the webinar. She also welcomed the new Area Manager East Asia of Flanders Investment & Trade, Ms Annalin Vanbiesen, based in Brussels. Travel to China is free again, although a PCR test is still required. The number of available flights has increased. There are now daily flights by Hainan Airlines to Beijing, which even in pre-Covid times was not the case. The Chinese government considers stabilizing the Chinese economy as one of its top priorities this year. The Chinese economy has reopened with an expected growth rate of 5% compared to 3% last year. The reopening means there are new opportunities for our members, more exports, and deferred investments now continuing.
China is a very competitive and innovative market. Flanders' exports to China in the January-November 2022 period decreased by 6%, a result of the atypical increase of pharmaceutical products exports in 2020. Flanders exported €6.13 billion to China, mainly chemicals and pharmaceuticals; machinery and electric equipment and plastics. Flanders' imports from China reached €30 billion, up almost 50%, mainly due to the import of electric and hybrid vehicles, which are gaining in popularity in Belgium. The main import products are machinery, electrical equipment, transport equipment, chemicals and pharmaceutical products.
What is the situation in your area following the scrapping of Covid restrictions? Dr Koen De Ridder (Beijing): It is back to business as usual, but the face masks haven't disappeared yet. During business meetings face masks are used until the host suggests to take them off. On public transport and in taxis face masks are still required.
Frank Van Eynde (Shanghai): Shanghai was a very quiet city in December and January, but this changed completely after the Chinese New Year and the bustle has returned. But the number of flights is still only at 30%. Flemish companies are still waiting but we expect a wave of new requests in May and June. Consumer confidence has not yet returned. Now all districts in Shanghai and also other cities are competing to attract investments.
Eva Verstraelen (Guangzhou): Nobody had expected the change to be so fast and total. Everybody is again full of energy looking at the future as if Covid has never existed. Face masks are being used less. The optimism and drive have suddenly returned 100%. Events and expos are again being held, and everybody is traveling again. There is a charm offensive to attract the attention of foreign investors. China is back in business.
Siegfried Verheijke (Hong Kong): People are happy that after three years all Covid restrictions are gone. You can normally travel to Hong Kong and there are more and more flights. Face masks are not mandatory anymore and you don't need to be vaccinated to enter Hong Kong. Before boarding the plane in Europe, take a quick RAT test, because this may still be checked on arrival. If you do test positive, you don't need to go to a quarantine center but need to wear a mask when meeting people. Businesspeople are coming back to Hong Kong, but it will still take some time to return to the level of 2019.
Eva Verstraelen (Guangzhou): There are no tests on arrival in Guangzhou so nobody knows whether you are Covid positive or not. There are no quarantine centers or hotels anymore.
What are the economic prospects in your area? Koen De Ridder (Beijing): The North of China is the center of heavy industry and state-owned enterprises (SOEs), and of mixed-ownership reforms to create super-companies. The Belt and Road Initiative (BRI) is still important due to the border crossings in Heilongjiang, Inner Mongolia and Xinjiang. There is also the Jing-Jin-Ji (Beijing-Tianjin-Hebei) mega-area and demand for fiber networks, 5G, big date, AI and computer services. Beijing alone expects an output of €338 billion in 2025 in IT; €135 billion in healthcare and €67 billion in green energy.
Frank Van Eynde (Shanghai): It is advisable to consult the five-year plan, also for Shanghai, which emphasizes digital transformation, an innovative center, and priority sectors such as electronics; IT; automotive; chemicals and fine steel; and the biomedical sector. There is also a five-year plan for the Yangtze River Delta (YRD) integrating the economic development of several cities. One important sector is the management of construction waste.
Eva Verstraelen (Guangzhou): Guangdong is economically China's most important province and the 13th biggest global economy. Further integration of the Greater Bay Area (GBA) has priority. Shenzhen is the prime innovation hub. Other cities are also booming, including Xiamen (logistics and e-commerce) in Fujian province; Changsha (heavy machinery) in Hunan province; and Hainan (medical tourism, aquaculture, luxury products and hospitality).
Siegfried Verheijke (Hong Kong): Hong Kong's strategic importance will increase due to the integration of the Greater Bay Area of Hong Kong, Macao and Guangdong, an area of 85 million people. Hong Kong partners are interesting for Flemish companies, not only to explore the Hong Kong market, but also the mainland market. In 2023, tourists will return to Hong Kong, the border with the mainland is open again. Hong Kong wants to remain a regional hub for fintech. The healthcare sector is also important following the Covid pandemic.
Why does a company choses the Chinese market and is there a difference with the pre-Covid period? Koen De Ridder (Beijing): There are two scenarios. The first one is pro-actively choosing China because there is demand for a company's products or services, in which case China will become a part of the company strategy. The second one is a Flemish company being approached by a Chinese customer starting a commercial relationship. In both scenarios FIT can play an important role. The Flemish representatives can look for suitable partners in the first case and in due diligence in the second. Siegfried Verheijke (Hong Kong): Hong Kong has its own market but is also the gateway to mainland China and Southeast Asia.
What are the four most important tips? Koen De Ridder (Beijing): Don't bring anything to the Chinese market for which there is no demand. China is transparent concerning market needs. The five-year plan indicates the direction. Frank Van Eynde (Shanghai): Besides FIT there are also other organizations that can help such as “Vlamingen in Shanghai” (VLIS), that answer questions in their Wechat group. Gather as much market information as possible before acting and choosing the right channel. Moreover, learn to know your potential partner through several channels. Either you do it seriously or it can turn out badly. Eva Verstraelen (Guangzhou): Choosing the right partner is the most important and adapt your business plan if needed. Avoid exclusivity, nobody can be good in the whole of China. Spend sufficient time to build up trust in the relationship. Siegfried Verheijke (Hong Kong): Hong Kong is a good test market and a first and safe first step to mainland China. Local importers expect good back-up as the market is very competitive. The Hong Kong market may be relatively small but is strategically important.
How digital is China and what is the importance of social media and e-commerce? Frank Van Eynde (Shanghai): China is very digital. Cross-border e-commerce offers opportunities for those who want to sell directly in China. Everybody should read FIT's e-commerce study. The focus is on B2C. Marketing and branding are mostly done digitally through Chinese channels such as Weibo and Wechat, and through live-streaming. B2B remains physical and customer visits are essential. Siegfried Verheijke (Hong Kong): Whatsapp is used more than Wechat. Locals still like to shop offline, as shops are easily accessible through public transport. They also like to try-out the products. Sometimes they buy online because it is cheaper and there are more options. Social media marketing in Hong Kong is less popular than in mainland China. Flemish companies selling online use a local partner and such sales are only about 10% of the total.
What is crucial in preparing a business trip to China? Eva Verstraelen (Guangzhou): Be well prepared and don't try to cover the whole of China. Choose one area or one or two cities. Have realistic expectations. Be patient, build up trust, establish personal contact, and be open to the Chinese business culture. Wining and dining is part of the deal. Be quick in answering a question. There is no weekend in China. After the business trip, immediately continue with the follow-up and don't wait two weeks. Forget e-mails and use Wechat to keep contact with your business partner. Payments are digital. Taxi drivers will reluctantly accept cash but won't give back change. Visa or Mastercards issued in Europe are useless in supermarkets, but can be used in big hotels. Only Chinese bank cards can be linked to Wechat Pay or Alipay. Siegfried Verheijke (Hong Kong): Wining and dining is not really part of Hong Kong culture, where meetings are business-like. Use of credit cards is no problem in Hong Kong. Cash is used to pay taxi drivers. My tips are: have a good pitch; a good product; be well-prepared, and do follow-up.
Which actions is FIT planning in the coming months? Koen De Ridder (Beijing): Voka is organizing a “Start to export” multi-sectoral mission to North China in the fall. Frank Van Eynde (Shanghai): FIT will have a stand at China Food & Hospitality from 8 till 10 November. Eva Verstraelen (Guangzhou): There are several fairs and expos: a food expo in May, Food2China in September, and our own food and beverage event in November. There is also an agricultural industry fair, the China International Logistics Fair in Shenzhen in September, and China High-Tech in November also in Shenzhen. Siegfried Verheijke (Hong Kong): There is the Hybrid Food Fair in October and in March 2024 there will be the largest tech gathering in Asia.
Annalin Vanbiesen (Brussels): It is possible to request financial assistance from FIT. There are subsidies to participate in fairs, and travel and accommodation expenses for business trips outside the EU. There are also subsidies for updating your website or investing in Wechat. For companies who never received FIT-subsidies, there is a Starter's pack of €9,000 for all costs involving internationalization. It is easy to apply for subsidies. A minimum of seven days is required between applying for subsidies and departure.
Final key take-aways: Koen De Ridder (Beijing): Flexibility is typical of the successful entrepreneur. Be flexible like water, said Bruce Lee. Flowing river water also finds a way past obstacles. FIT is clearing this imaginary river bed to increase the speed of your trade flows. Frank Van Eyde (Shanghai): If something seems to good to be true, it is probably too good to be true. Don't be naive. Double-check through several sources. Eva Verstraelen (Guangzhou): Continuity: exporting to China is not a sprint but a marathon. Prepare well, and only start when you are ready to invest time and money. Keep an eye on the target and if it gets difficult on the way, the reward at the end will be worth the effort. Siegfried Verheijke (Hong Kong): Focus. Give sufficient attention and support to this market. Local importers immediately feel it if you don't have the right focus.
How to obtain a visa? Gwenn Sonck: Apply digitally, make an appointment, and your business visa will be delivered after three days. You need to go personally due to the required fingerprints.
