Doing business in post-Covid China: an interview with Laurie Ann Underwood
06/27/2023
4 min
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According to the French Chamber of Commerce in China (CCI France Chine) France had more than 2,100 subsidiary companies employing close to 445,000 people in 2022, making it the ‘first European investor in China’ in terms of the number of companies. The pandemic and China’s zero-Covid policy had a strong impact on international companies working in (or with companies based in) China. We spoke to Laurie Ann Underwood, a faculty member at IÉSEG and an author of several books on doing business in China, about how the business environment has changed since the zero Covid policy ended. She also gives some tips for companies looking to expand or move into China and how European-based companies can work effectively with their counterparts when travel can be difficult.
How has the business environment in China changed for international companies since the Chinese government ended its Zero Covid policy last December?
After three years of very strict restrictions, business travel into China reopened this spring. As of spring 2023, covid test requirements have eased greatly but travelers still do need either a business or tourist visa to visit China. Still, overall, the new mood is one of reopening and easier travel.
For many companies, the biggest hindrance to business travel to China now are the still-high cost of air tickets (still far above pre-Covid levels in many cases) or new post-covid company policies against international business travel. Even though China is reopening to international travelers, these two factors are still keeping many would-be travelers from visiting.
What advice would you give to companies looking to move into or expand operations in the Chinese market?
One of the key pieces of advice that I and my co-author (Prof. Juan A. Fernandez) gave in our latest book, China CEO II (Wiley, 2020), continues to hold true since the book came out: cracking into or expanding in the China market really requires the right China-based partners and teams.
One reason for this is that managing government relations remains one of the absolute ‘must have’ abilities of any foreign company operating in China, and building and maintaining good relations with the government really requires a live presence in China.
The ‘guanxi’ concept (importance of relationships) has evolved a lot in recent years, and rule of law has become much more respected in many cases, but positive human relations with the right government agencies still helps significantly in China. Because China’s socio-economic structure is so unique – summed up by the famous description “socialism with Chinese characteristics” – the Chinese government is still more actively involved in many business decisions in China than is the case in many Western countries. For companies lacking strong Chinese partners to help to establish positive government relations, working through the foreign chambers of commerce or other business associations is a smart strategy.
How can Europe-based managers operate effectively in China if visiting in person is still difficult?
This is a big challenge now for many companies, but I do have a few suggestions. First, China is extremely digital and nearly all Chinese professionals have an “always on” work ethic. This means that it is quite possible and accepted to ask Chinese partners and team members to virtually join meetings held during working hours in Europe even if it is late in China.
Here are a few tips for successful online meetings with Chinese partners: Keep the meetings short, clear, limited to only the necessary contributors, and require all participants to keep screens on. Also: write down and send by text any decisions made or any ‘next steps’ to be sure your Chinese team was able to fully follow or respond to the meeting outcomes.
Another way to connect: definitely use wechat (the #1 social media / ecommerce app in China) with your Chinese contacts. You can send text, video, voice message, or have live calls anytime, and you and your partner can instantly translate text sent in Chinese into French or English, or vice versa. Chinese are used to responding to wechat instantly and constantly. In fact, most Chinese don’t use email since it is much less efficient.
Another idea to consider: this could be a good time to bring your Chinese partners to Europe since many Chinese businesspeople were unable to travel abroad for the past 3 or 4 years. Europe is a key destination for Chinese right now — not only due to ‘pent up’ travel demand due to Covid but also because trade relations with the US are quite poor. This makes Europe, for the moment, an even more attractive destination for leisure, study and business.
Laurie Ann Underwood has co-authored 3 books on doing business in China, including: “China CEO II” (Wiley & Co, 2020). She also contributed a case study on change management to “The China Business Casebook” (Ethics International Press, 2023), is a researcher for the annual “ESG Whitepaper” (China Europe International Business School – CEIBS), and volunteers at Asian University for Women. Her research focuses on cross-cultural management and sustainable marketing.
