The Flanders-China Chamber of Commerce and Flanders Investment & Trade organized a webinar with the Flemish Economic Representatives in China on 9 July 2020. Marc Struyvelt in Beijing, Bart Boschmans in Shanghai and Eva Verstraelen, currently in quarantine in Xian before taking up her post in Guangzhou, explained how they experienced the past few months, described the situation in their locality, and discussed the consequences of the Covid-19 pandemic for our Flemish exporters.

Ms Gwenn Sonck welcomed the Flemish Economic Representatives to the webinar. Despite Covid-19 the Chinese market is still offering opportunities to our Flemish exporters. It is important that every company has a China strategy and determines the possibilities of their goods and services in China through exports, e-commerce, licensing, investment or through cooperation with Chinese companies in Flanders. China is a very innovative and competitive market. It is important that our companies can react quickly in this fast-evolving market. Ms Gwenn Sonck introduced the role and activities of the Flanders-China Chamber of Commerce.

Mr Bart Boschmans has been posted in Shanghai since April 2019. He joined FIT in 2013 following a career in the private sector. His first posting for FIT was in Stuttgart. FIT Shanghai evidently covers Shanghai and surrounding provinces including some important cities such as Suzhou, Hangzhou, Nanjing, Wuhan, Chengdu and Chongqing. Mr Boschmans explained that he read an article about the famous virus in December last year but gave it little thought. He returned to Belgium for Chinese New Year, stayed till mid-March, and returned to Shanghai just before the most stringent quarantine measures were implemented. Together with his family he stayed in quarantine for 14 days, luckily at home and not in a hotel as is currently the requirement. The number of cases in Shanghai was relatively limited at about 700 in such a giant metropolis. Shanghai never experienced a Wuhan-style lockdown, but an efficient testing and contact tracing system was set up to find suspected cases. Measures were strictly implemented and you could see the strong involvement of the people. We have been able to continue our services, Mr Boschmans explained, as FIT implemented digitalization early on and he could also resume traveling without much problems. Normal life has returned to Shanghai, but people are still wearing face masks in shops and on public transport. Restaurants are full again, but some businesses have disappeared and the retail sector is still suffering. Economically, China is expected to restart growth in the second quarter at 1.2 to 1.5%. But Chinese consumers are refraining from spending as they did before.

Mr Marc Struyvelt has been posted in Beijing since September 2019, his seventh consecutive posting. He covers North China and Mongolia. All Chinese New year festivities were canceled as of January 24 and quarantines were implemented. He also went to Belgium and returned to Beijing on March 14, spending 14 days in quarantine. Shops and restaurants reopened fairly quickly, thanks to the wearing of face masks, the use of alcohol gel, and the disciplined behavior of the Chinese. Important is also the huge number of people China is able to mobilize to control and coordinate everything. Until mid-April, there were only 594 corona cases and 8 deaths in Beijing, a city of more than 20 million. Since April 14, there were 56 days without any new cases, but still life had not been normalized. Business kept working on a rotating basis, no public activities were organized, and the bars remained closed. Mr Struyvelt could not resume traveling due to strict travel restrictions. In many hotels, foreigners were not allowed to check in. Following the 56 days of no new cases a relaxation was announced to commence on June 15, which was not carried out due to a new outbreak, which was actually worse than the first one in February-March. Everybody who wanted to leave Beijing needed to pass a nucleic acid test which was not required previously. Until the end of June there were 325 cases, and since July 6 there are again no new cases reported so the risk level may be lowered soon.

Ms Eva Verstraelen‘s flight to China was diverted to Xian due to the quarantine requirements. In Xian she was tested for Covid-19 and put in quarantine in a hotel without a fridge or airco. Ms Verstraelen started at FIT on May 1, following a 20-year career at the Ministry of Foreign Affairs as a diplomat and Consul, including in Beijing between 2006 and 2010. The quarantine in Xian is very strict and she is not allowed to leave her hotel room or have any outside contacts. Her meals are put outside her hotel room door three times a day. The hotel personnel is all wearing fully protective clothing. Also in Guangzhou there have been no new cases in the past weeks and life is returning back to normal.

Following the introductions, the economic representatives answered questions. Which sectors are considered a priority by the Chinese authorities? Mr Struyvelt: There are four large priority sectors. The first one is environment and cleantech under the slogan “blue skies, clean water and pure land”. In medicine and health, the focus is on disease prevention and treatment, and drugs and vaccine development. The greying of the population and care for the elderly is also important. Digitalization covers many things, including online video conferences, virtual trade fairs, and live-streaming, which is booming in China. The fourth priority sector is infrastructure, traditional ones such as high speed rail, but also what China calls “new infrastructure”, such as the development of the 5G network. By the end of 2020, there will be total 5G coverage in 300 Chinese cities. Also included in “new infrastructure” are new energy vehicles, artificial intelligence and industrial internet. What about the air quality? Air quality is constantly improving in Beijing thanks to the efforts of the authorities to close polluting industries.

Which sectors offer opportunities for Flemish SMEs as a result of Covid-19? Mr Boschmans: We need to be realistic, there are no miracle sectors where everything needs to come from abroad. Important is to continue focussing on your strong points as a company, while trying to make use of opportunities in the “new normal”. Mr Boschmans mentioned two trends: the low-touch economy, including online shopping, contactless delivery, the cashless society and tele-medicine. The trend towards autonomy in the semiconductor sector offers opportunities to suppliers. Mr Struyvelt mentioned sports and sport technology as a promising sector. FIT is planning to organize a sports mission to China next year as three big sports events are to be organized: the Universiad in Chengdu in 2021, the Asian Games in Guangzhou in 2022, and the Winter Olympics in Beijing in 2022. Due to Covid-19, Chinese consumers have become more interested in fitness and food supplements. Ms Verstraelen: There is an increasing interest in fresh food, such as fruits. Flemish pears are already a success story in China. Milk and dairy products also offer opportunities to Flemish companies. Investment in cold chain logistics is increasing.

What about opportunities in new regions? Mr Boschmans: Besides the Yangtze River Delta, Chengdu and Chongqing are also interesting areas as the entry points to Western China. A group business trip is planned to both cities in 2021 depending on the circumstances at that time. Ms Verstraelen: The Pearl River Delta is focussing on robotics and cleantech. We also need to keep an eye on the Hainan Free Port Zone. Mr Struyvelt: Through the I²PCC initiative, there are good relations between Flemish and Chinese provinces in the field of cleantech.

Which sectors are facing hard times due to Covid-19? Mr Boschmans: Anything related to hospitality and travel has been hit hard, including conferences and trade fairs. But as Chinese can’t currently travel abroad, they opt to spend their holidays in the country, leading to a hotel room occupancy of 60% to 70% in some tourist cities. Mr Struyvelt: The food sector has been hit recently as some imports have been halted. We also see a switch in sales channels from shops to online. Ms Verstraelen: The Chinese consumers are less inclined to spend money on luxury items.

Which are the most important challenges for our Flemish SMEs? Ms Verstraelen: As long as the borders remain closed, traveling is very difficult, certainly internationally, but currently travel to and from Beijing is also problematic. Companies which are now entering the Chinese market face challenges to build relations of trust and sign contracts. To the Chinese, personal contact is very important and this will be difficult in the coming weeks, but we are ready to assist Flemish companies. Mr Boschmans: In the current circumstances companies will be even more minding their expenditures and cash flow. Contacts will move further online. Through online fairs you can easily reach a huge audience. Some fairs are resuming, such as a beer fair in Wuhan. Mr Struyvelt: Flemish SMEs will need to reflect how to promote their new goods and services while the borders remain closed. They will need to present their products much more online such as through virtual stores on Tmall.

Is there a fast track for essential travel? Mr Struyvelt: Since March 28, foreigners are not allowed entry to China, with only a few exceptions such as diplomats. Also Belgian citizens with a valid residence permit are not allowed to return. People who are already living and working in China could apply to return, but recently only one in ten was successful. Business trips are still impossible. There is no information when there would be a relaxation. China is very strict domestically, I do not see them opening the borders to Europeans where in many countries there are still 80 or 100 new daily cases. I don’t expect business people to be able to travel to China before October or November.

How can a Flemish SME prepare its export story? Ms Verstraelen: Although the circumstances are difficult, the fundamental recommendations haven’t changed: make a detailed analysis of your strong and weak points, define which market you want to focus on, and which distribution channels you plan to use. Mr Boschmans: Remain in touch with your business partners and show your commitment even if you can’t travel. Mr Struyvelt: Don’t hesitate to use our services as an intermediary to remain in touch with your business partners.

Any golden tips to be successful in China? Mr Boschmans: Golden tips haven’t changed due to the pandemic, some of them you can find on the FIT website. WeChat is very important as communication medium in China. E-mail is used less frequently. A company needs to determine which area and market segment to focus on. Mr Struyvelt: Chinese are very good negotiators, so you need to be very well prepared. You need to be patient and determined. Contracts and regulations in China are rather vague so there is much room for interpretation. In Europe a contract is considered to be an end point, while in China it is much more a promise to cooperate. A contract can still be amended according to the requirements of the company. Personal relations are more important than the contract. Ms Verstraelen: It is important to be a good host. To the Chinese, hospitality is very important. Personally go to the airport to welcome your guests, don’t leave them alone, including after business hours. Exchanging gifts is also required.

What do you expect in the coming weeks and months and what will be your focus? Ms Verstraelen: After I – hopefully – arrive in Guangzhou on July 22, I will start visiting companies and building up contacts. Mr Boschmans: I will continue to build up my network, not only in Shanghai, but in other areas as well, and I will also be visiting fairs. In the fall FIT will start organizing virtual events and we advise businesses not to await the resumption of travel to be active. Mr Struyvelt: I hope the situation will return to normal soon, restrictions will be lifted and there will be no new outbreaks.