“China will give Belgian companies and investors a warm welcome.”

With the Belgian-Luxembourg Chambers of Commerce abroad, the chambers in Belgium have a strong foreign network that can help their members in their international activities. This time, we want to put the spotlight on China. We interviewed Ian Bennink, General Manager of the Benelux Chamber of Commerce in Shanghai, about the current situation in Shanghai and the relations between Belgian companies and China.

Does China of 2023 feel like a different world?

Ian Bennink: The zero-COVID policy (including travel restrictions, both within China and internationally) has now been structurally abandoned by the government. There is still some administrative aftermath, but Covid has officially been given a lower classification as an infectious disease, which is China’s way of indicating that restrictions will not return for the current form of the virus.

The Central Government was forced to do this because it became unfeasible to maintain the policy in secondary cities, and therefore also in important cities. Local governments felt compelled to either implement even stricter measures than required by the Central Government or to inaccurately report actual infection rates.Under public pressure the Central Government unexpectedly opened the gates fully and early. No one saw this coming and unfortunately they had no plan in place.

So it is indeed a “new China” compared to the past three years. We do not expect a return to new sanitary measures

What has changed after Covid in China?

IB: The economic costs for China in the short term have been very high, especially for the Jiangxi River Delta: including Shanghai which relies on foreign companies for 30% of its tax revenue (according to the Chinese People’s Political Consultative Conference).

Another important change is how the Central Government is perceived by highly educated, internationally oriented residents in the large cities of China. In particular in Shanghai, the lockdown was an even bigger shock for local residents than for foreigners. Many people realized that the relatively free and internationally oriented life in Shanghai is in stark contrast to the majority of China, and to how the Central Government thinks. This has led to a certain loss of trust among this group towards the Central Government.

For foreigners (especially those with young children), the lockdowns in various cities were also particularly difficult, but ultimately something that many considered a “business risk” of working and living in China. The biggest problem for foreign companies and families in China was the travel restrictions. Not being able to visit family, not being able to visit local branches, and having to speak to distributors and investors via video links becomes unsustainable over time.

We notice that the Chinese government is currently doing everything possible to become attractive again to (foreign) investors. As a Chamber of Commerce, we have had extensive contact with the government in Shanghai over the past year to help Belgian, Luxembourgish, and Dutch companies with specific issues regarding sanitary measures.

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During the health crisis, the role of foreign companies was reduced to a minimum. Some even spoke of a certain hostility towards foreign investors. Is this changing?

IB: We do not see a certain hostility towards foreign investors, but we rather see the opposite. Over the years, China has changed its priorities regarding investments. They do not want investments in sectors that yield little added value or taxes, but are very interested in new investments in the industries mentioned in the government’s five-year plan. This document is the most important guide for businesses and investors in China, both locally and internationally.

The lack of access to China and reciprocally, the lack of Chinese visitors in Europe has not done any good to the mutual understanding. This has led to a hardening of positions and public opinions on both sides. By this I mean that signals have been sent by the Chinese government that reinforce a negative image of China from a European perspective – and from a Chinese perspective, the European political stance towards China is unduly hurtful and hypocritical. This is particularly at the political level. On the economic front, a different wind is blowing – although the two are obviously linked.

Does this mean that China is once again opening its doors to foreign investment?

IB: We notice that the Chinese government is currently doing everything possible to become attractive again to (foreign) investors. As a Chamber of Commerce, we have had extensive contact with the government in Shanghai over the past year to help Belgian, Luxembourgish, and Dutch companies with specific issues regarding sanitary measures. We have often been asked what the government can do to help foreign companies and attract new investments. A few months ago, I was also asked by the Shanghai government for the first time (after working in China for 25 years) how the city can be made more attractive to foreign ‘talents’ (highly educated people).

The goals of local governments are now again primarily focused on economic well-being, just like three years ago. To a certain extent, the crisis in China has also shown how important foreign companies are for the Chinese economy and also how important exports are for the Chinese economy. Our expectation is therefore that – despite what the political messages from the Central Government are – practically speaking, China will give Belgian companies and investors a warm welcome. It will, of course, take some time to rebuild trust in Belgium. But where we as a Chamber of Commerce were very cautious in recent years, we now see a big difference. China is now different, but fully open for business again.

Can you explain what to keep in mind when working with the Chinese government.

When working in China or with the Chinese government, it is important to understand the relationships between the various levels of government and how their “performance” is measured. Each unit has these “performance indicators”, and this strongly determines the career of officials. It is a way in which the Central Government can steer very powerfully and quickly. There is a relatively large degree of freedom for officials in actions to achieve the goals.

What about the impact on government’s guiding policies after President Xi’s re-election?

The re-election of President Xi was not a surprise, but the way he consolidated his power within the Party was. This has implications for the political climate within China and towards the outside world, and many multinational companies are responding with a “China for China” strategy for the long term: a less internationally integrated role for the Chinese subsidiary and, as much as possible, a reduced dependency on China in the logistics chain. However, there is reinvestment in Chinese companies, and in recent months, there have been many visits by boards and executive teams to become familiar with the market and their operations in the “new China.”

How do you see the consequences of the geopolitical tensions between the US and China?

The rivalry between China and the US, has a favorable influence on the opportunities for European companies doing business in and with China. Of course, the tides political relationships are felt by European companies and also by Chinese companies in Europe, for whom the Benelux is one of the most important entry points to the European market. China is aware that from an economic point of view, Europe is the most important alternative to the US.

As a large country, China has many internal challenges (such as an aging population and a lack of raw materials), and if Covid has shown anything, it is that sticking to a political agenda also has harsh economic consequences. This is crucial because economic well-being is widely seen as the basis of the population’s support for the Party, and throughout Chinese history, this is how dynasties have always fallen. The Party is always aware of this.

So, in the short and long term, I expect China to be very open to economic cooperation with Belgian companies. As the Benelux Chamber of Commerce in China, we can help with this, and as a non-profit network organization for the business community in China, we work closely with organizations such as FIT, AWEX, and Hub.Brussels to provide services.

For more information about the “Benelux Chamber of Commerce in China” and its network of 350 Benelux companies in China, please contact us via info@bencham.org

Ian Bennink

Ian leads the Benelux Chamber in Shanghai, a non-profit business platform that aims to help Benelux companies in China through networking and information events, direct contact with the government in Shanghai, and sector-specific working groups, in close cooperation with the government (in China and the Netherlands). The Benelux Chamber also aims to help entrepreneurs start in China and with trade with China through matchmaking and introductions.

A Beijing internship in 1995 was the start of a long association with China. Ian has worked in China, Singapore, London, and the Netherlands in various Project Management, Marketing, and General Management roles for Nokia and Philips. He was then the founding CEO of four start-ups (since 2006). In total, Ian’s work experience in China spans 16 years. He is a mechanical engineer (TU Delft, 1996) and holds an MBA from INSEAD (2004). He is also a certified Project Management Professional (PMP) and an ICF-accredited Executive Coach (ACP level). Since the sale of his last startup in May 2021, Ian has been working full-time for the Benelux Chamber in Shanghai.

The Benelux Chamber of Commerce in Shanghai is one of the 37 Belgian-Luxembourg Chambers of Commerce (BLCCA) accredited by the Federation of Belgian Chambers of Commerce. They help promote bilateral trade between Belgium, Luxembourg and the country in which they are established. The Chambers are made up of entrepreneurs who know what it is like to run a business abroad. They provide a sounding board and support and help entrepreneurs with practical matters to explore new markets abroad.

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