The Flanders-China Chamber of Commerce organized a webinar on the China 2026 Business Forecast on 20 January 2026.
Ms Gwenn Sonck, Executive Director of the Flanders-China Chamber of Commerce (FCCC) welcomed the participants and introduced the subject and the speaker of the webinar. The central theme is “Compete in China and Win Globally”. The business forecast is prepared by InterChina, which provides a forward-looking perspective on how international companies can successfully compete in China while strengthening their global positioning. The report is based on insights from more than 400 senior executives of MNCs active in China, combined with InterChina's experience from nearly 50 M&A transactions completed in 2025, as well as its broader strategy and advisory work throughout the year. The guest speaker, Mr Jan Borgonjon, is an old China hand who lives in China since 1983. He is the Founding Partner and President of InterChina. He founded InterChina 32 years ago. He is primarily involved in advisory work for industrial projects in China, including strategy, JV negotiations, and acquisitions, and has been instrumental in closing transactions and investment exceeding USD1 billion. According to a recent survey of the business sentiment of European business in China, European companies cited that doing business has become more difficult, and this is not unique to European or foreign business in China. It is a very difficult business environment right now, also for Chinese companies. The report also mentioned that EU companies in China used to have higher EBIT margins in China than elsewhere, but now it is the other way around. For almost two-thirds of EU companies this really depends on the sectors in which the companies are in. However, 70% of European companies still claim that they are profitable in China. The issue is that they are just not growing as they used to be. But still, China remains a very important market for our companies, considering the size and dynamism of the market, and an increasing number of companies are in China for China and for its innovation capacity. Many companies call China a fitness center, where they constantly need to innovate in a very challenging market with Chinese competition being very fierce.
Mr Jan Borgonjon, Founding Partner and President of InterChina, introduced his company, founded in 1994 with currently eight partners and its headquarters in Shanghai. The source of InterChina's analysis is a yearly survey, this year with about 400 people and some smaller surveys focused on larger American and European companies with a large proportion of their global sales in China. Information from the company's acquisitions is also included. InterChina sells Chinese assets or China-based assets to Chinese and foreign companies and the other way around. InterChina also does a lot of work about China as a market and the global influence of China, which is the focus of this webinar.
The importance of China has increased over the last two or three years, but in the short term there are concerns: relatively slower growth, inflation close to zero, and the renminbi maybe weakening and slightly increased labor costs. On the drivers, we do see stability and predictability and at least we know where China is going and we know what it wants. Innovation has become very important and consolidation is increasing. But we do have negatives, deflation, overcapacity, and margin pressure. The big issue which comes up – rather than sales growth – is profitability. There are two issues which are important for companies. One is geopolitics, not so much tariffs, but more the way the world is dividing and the role of the U.S., China and Europe. China is aligning itself more and more with Southeast Asia and the global South in general, maybe with the exception of India. The image of China as the preferred world power has shifted up within one year. The world is dividing in two large blocks, with Europe somewhere in between. The other issue is domestic policy, which is a big concern for Western companies. The 15th five-year plan is now being finalized and will be approved in March. We see some slightly positive shifts on the consumption side, private enterprise support and foreign direct investment. Although there are restrictions and there is a self-sufficiency policy, support for foreign direct investment has become quite aggressive. The new productive forces will open opportunities for Western companies. Close to 30% of survey respondents see the new five-year plan as positive.
There are two big shifts. China has become globally relevant for most companies. To be globally competitive, it is going to become more and more important to be competitive in China. Until a few years ago, the focus was really on China for China. Companies made lots of money, having a local production and R&D for China, being cost competitive, and just scaling up. Now that strategy doesn't work anymore. It's still important to be competitive in China, but it's about deep localization, which is a totally different type of localization, kind of building a kind of second headquarters in China. The second part is high tech at low cost. China is fast becoming a source of innovation at low cost. There is also the globalization of Chinese companies, which opens lots of opportunities and threats, because they might be competitors. So the other part in the change of perception is that companies are moving from fear to decision. With Covid, many Western companies didn't really understand what was happening in China and didn't make any decisions. Now companies are making decisions, they understand that what we have now is the new normal.
There is the traditional China where margins are under pressure and then you have the new China, which is about growth and innovation in sectors like robotics, IoT, biotech, advanced materials, and energy storage. The strategies are quite different. In traditional China, it's about scale, efficiency, maybe joint ventures to share risks. In the high velocity China, it's about innovation and partnerships for technology access. In traditional China, the big novelty is the end of premium. Most companies expect to have lost their competitive advantage by 2028. You need to look at localization, but a very different localization than over the last 10 years, where it's basically bringing a Western product to China, adapte a little bit, maybe reduce the cost a little bit, and then scale it up. That doesn't work anymore. Deep localization is about local supply chains, local innovation cycles, achieving China speed, and achieving real China costs.
In the new China, we're talking about different strategies to drive sales growth into new areas. It is about new applications, new products, and new channels. It is about the demographics, the digitalization, and the decarbonization, which is a big priority in China and actually brings lots of opportunities. The innovative China requires a different way of working. It's about partnerships, local innovation, co-innovation, working with others. It's about minority investments and horizontal integration, working across different sectors, and fast growth clusters. Some companies consider the innovation coming from China as an existential threat. It's about speed. The speed in China is astonishing. We're talking about three or four times as fast in terms of getting projects done. It's about working time, but it's also about commitment and the ecosystem. The cost advantage of China is unbeatable. It's about scale, raw materials, low cost deflation, energy, labor, environment, and supply clusters. The way China is automating is astonishing. China is now in terms of robots, number one. They're developing cheaper robots and they're using them much more aggressively. The implications for multinationals are, first of all, that a dual tech platform might be required, two parallel standards for different regions. Companies understand that there's no alternative to China in terms of cost and speed.
China is moving very, very quickly outside. Profit margins in China are lower than they are in the rest of the world. We see many companies actually aggressively moving outside China, including through production outside China. Chinese companies moving outside are a business opportunity. They buy from China. Chinese globalizers make their purchasing decisions for Capex and for components in China. And they prefer to buy from China or from companies they know in China. The Chinese globalization is a big market which has to be addressed from China. Being competitive is through being strong in China and using China as a export basis for high tech at low cost. But it could also be about cooperation. We see more and more companies looking at how to work with Chinese globalizers as there are complementarities in terms of sharing risks, access to technology and markets. The key disadvantage of Western companies is that they have a headquarter. The headquarters has to coordinate with China and China with headquarters. Chinese companies don't have that problem. More complicated and sensitive decisions have to be made, and that requires a much closer alignment with China than one used to have before.
What can companies do about the threat from China? One thing which can be done is competitive sourcing and Capex savings by relocating plants to China or using China equipment and supplies from China. It's quite astonishing what kind of savings can be made by sourcing from China. Chinese companies can offer technology, supply chains, and bargaining power, and they often have access to low cost financing. Many Western companies – 71% of the companies we interviewed – are looking at China as a potential partner. If a Western company wants to be competitive globally, it needs to have something in China for certain products. Interest in acquisitions is increasing. Double brands could be part of that.
What should be a key priority for any board in any industrial sector is to have a really clear view and strategy related to China. There's a lack of urgency and there's no time to really discuss China in detail. There's no action, information, and there's a lot of confusion. There's a need to bring the information together to benchmark and to bring in China experience. We are at an inflection point with China. The China strategy of the last 15 years is no longer valid. A fundamental change is required, both in terms of strategy and in terms of resources, the people, coordination, and the relation between headquarters and China. It's important to look at certain issues, but bring them down to what's important. So geopolitical issues is about data and standard divergence, not so much about Taiwan. Domestic policy priorities is about self-sufficiency, consolidation and innovation. It's about new pockets of growth, high tech at low cost. The globalization of Chinese companies is a very strong trend, and they are there as clients, competitors and possibly partners. China is becoming a responsibility of the global CEO, China is at the back door. It's about competing in China and different aspects such as localization, innovation and partnerships.
A Q&A session concluded the webinar. Q: There was a time that joint ventures were the way to go forward. Then there was a time to go wholly foreign owned. What do you see as the most successful or the most used? A: Five or 10 years ago, it was all about wholly foreign owned companies. That exclusivity is finished. In some cases it makes sense if you're a big company and you buy a second brand in China, which is much smaller, you might want to enter at 60, 70% and then you slowly integrate over three or four years or five years, you integrate the people also, and it becomes a hundred percent. Now we see also companies which don't want to sell their company, but might want to have a partner for global expansion, for technology, for new ideas. So they would accept a minority investment.
Q.: How do you suggest that we use China's capabilities for our competitiveness? A.: Using the China innovation and low cost basis to decrease capex and costs in Europe. That's an obvious one. Then using innovations coming from China for Europe. Using Chinese practices in Europe. Build up a strong innovation capability in China, and then bring people from Europe to China and make them work very closely together. That helps to bring this Chinese innovation mentality to Europe to a certain degree. You can never achieve the China speed in Europe, and not the China cost either. You can only achieve the China cost if you're in China, because you have the ecosystem which supports you to achieve that cost. You can only achieve it to a certain degree back in Europe.
Q.: What about China in AI, can it overtake U.S.? China is very much focused on applications and not so much on artificial general intelligence (AGI). In AI applications probably China will be ahead.
