Foreign firms dealing with post-pandemic China must replan, not "return" (video)
China may not pack the double-digit growth and enthusiasm for foreign money, ideas and brands it did before. But its size, dynamism and potential still dwarfs obvious alternatives, and for most foreign firms that is a good enough reason to stay engaged despite growing difficulties in the Chinese market. But I always twitch when I hear executives I coach mention a "return" to pre-pandemic strategies, practices and visions as they seek ways to re-engage with today's China. Dusting off the "2020 visions" crafted in a fundamentally different world will not help: the only place where Boards, leadership and Human Resource management teams must return to is the drawing board, often literally.
In this video, I itemise four major shifts in the world and in China that leaders of East-West businesses must bear in mind to survive and thrive in post-pandemic China.
The world is changing: The pandemic split the world into camps, including supply chains, talent supply and the technology each camp uses for business. If it seems hard to work across camps, it will get harder as a culturally agile generation of managers gives way to less mobile young successors.
China is changing: The pandemic lasted longer in China than in most major economies. It also resulted in dramatic shifts in income, politics, the corporate landscape and drove a wedge between technology used in China and the rest of the world.
The world's attitude to China is changing: China reopened for business but foreign firms and expats haven't started flowing back. Reasons include China's bad reputation in foreign media, new opportunities elsewhere, the ease of running China businesses remotely and the fact that people dislike moving back-and-forth.
China's attitude to the world is changing: China became resentful and suspicious, both of foreign expats and nations. It actually celebrated a selective departure of foreigners until it discovered its dangers. Recent measures to attract foreign talent (visa-free entry, easier company registration) may not be able to reverse the trend.
Practical suggestions: Business with post-pandemic China requires a 'replan' rather than a 'return'.
- Strategy tools like "China-for-China", and manager localisation have important limitations and become shorter-term than hoped.
- Foreign firms doing business in/with China must stay connected with global finance, talent, ideas and opportunities: that's their advantage over local competition.
- They must have the right technology and people to bridge widening gaps between China and the world.
Enjoy the video and let us know what you think.
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