The Flanders-China Chamber of Commerce and Flanders Investment & Trade organized a webinar with the Flemish Economic Representatives in China on 28 October 2020. During the webinar, the three Flemish Economic Representatives – Marc Struyvelt in Beijing, Bart Boschmans in Shanghai and Eva Verstraelen in Guangzhou – talked about how exporting companies could be supported in times of Corona.

Ms. Gwenn Sonck, Executive Director of the Flanders-China Chamber of Commerce, introduced the three Flemish Economic Representatives. They will offer more information on the actual situation in China concerning economy and trade, and daily life. You will also get more information on the export support they are able to provide in times of corona. It is remarkable that life in China has returned to normal. The speed and efficiency of China’s response to Covid-19 is impressive. The Chinese economy has almost recovered and China is the only country that will record positive growth this year. According to the IMF, China’s economic growth will be 8.2% in 2021, which would be the highest growth rate in 10 years. Many international brands consider China to be their most important growth market in 2020. China has become world leader in certain sectors such as the internet industry and artificial intelligence. The Chinese market still offers many opportunities for our Flemish entrepreneurs. Flanders’ export to China has increased in the first half of 2020 by 27.5% compared to 2019 to €3,82 billion, and is thereby number eight in the list of export markets. Especially remarkable was the increase in chemicals and pharmaceuticals at 45% and non-ferrous metals at 80%. Flanders’ imports from China amounted to €7.65 billion, a small increase of almost 5%. The 33rd negotiating round of the EU-China investment agreement has now concluded and the aim is to have it signed by the end of the year. It will offer Flemish companies better access to the Chinese market.

What is the new normal in China and how is daily life? Bart Boschmans, Flemish Economic Representative in Shanghai, said that in Shanghai the situation has been further stabilized since our last webinar in July. The use of face masks is decreasing except on public transport. At events health QR codes are still being scanned. Travel in China has also been relaxed except to certain risk areas. Meetings and events are taking place as usual. Restaurants are busy and street markets are taking place to further stimulate the economy. In the coming days Shanghai will be a bit more nervous due to the 3rd China International Import Expo (CIIE) being held. During the two previous expos, schools were closed as President Xi Jinping himself attended the Expo, although this will not be the case this year. National pavilions have been scrapped because there will be no international delegations coming to Shanghai. Life after the pandemic is not really different, people travel again and hotels have again doubled their prices. People want to enjoy events live again instead of online. As long as the virus has not been totally eradicated and a vaccine is available, alertness will remain high. There will remain strict controls at the border and in case of new outbreaks there will be lockdowns and mass testing.

Eva Verstraelen, Flemish Economic Representative in Guangzhou, explained that the situation in South China was similar to the one in Shanghai. Only one in two people still wear a face mask on the street, but it is still required on public transport. Business and social life has returned to normal. At expos the wearing of face masks and scanning of the health QR code is still required, but at social events the virus seems to be far away. She added that she saw almost no signs of decoupling, or less orders being processed from Europe or the U.S. China’s economy will continue to grow in the coming years. The only relocations seem to be of Chinese companies to countries like Vietnam and Cambodia, where labor costs are lower. In Guangzhou, Covid seems to be something in the past.

Marc Struyvelt, Flemish Economic Representative in Beijing, explained that the situation in Beijing is also back to normal although a little later compared to Shanghai and Guangzhou. Many events have restarted since the beginning of October. Measures are still a bit more strict in Beijing, where about 80% of the people are still wearing face masks and the health code is checked more frequently compared to the south of China. Foreign investments in China have also increased in the first nine months of the year by 5.2%, and a significant increase in the services sector by 15% and in the high-tech sector by 25%. This year, e-commerce has become very important, especially in second-, third- and fourth-tier cities. Flemish companies should perhaps pay more attention to e-commerce.

What kind of export support can you provide in times of corona, now that it is very difficult for representatives of Flemish companies to travel to China? Bart Boschmans explained that Flanders Investment and Trade has a Covid exit plan consisting of three pillars: a one-time subsidy for experienced exporters and a subsidy for starting exporters, which have both now ended. A third pillar is the “reboot your export packet” to participate in FIT group booths. Flemish SMEs can thereby participate in international trade shows at reduced costs, although at present there are almost no trade shows.

Eva Verstraelen said that FIT is setting up info booths at trade shows where companies can exhibit their materials. At a logistics show in Shenzhen in September we received exhibits from Flemish harbors and logistics companies and did networking and looked for contacts. She also participated, together with two Flemish provinces, in the China Environment Expo in September, where Flemish cleantech companies were presented. At the high-tech fair in Shenzhen in November there will be both an online and off-line version, but registrations for this event have already been concluded.

Marc Struyvelt explained the concept of virtual meeting days, bringing Flemish products to the Belgian embassy where we invited Chinese buyers. In a second phase the Chinese buyers will be linked to the Flemish companies. It is very important to keep up the contacts with Chinese importers for whom its is now much more difficult to travel abroad. Bart Boschmans said there has also been an event at the Belgian Consulate-General in Shanghai with more than 30 importers and follow-up B2B meetings. In September we also had an info booth at an environmental technology fair where FIT represented some companies. At the upcoming Food and Hotel Fair, FIT will not have a booth this time, but VLAM will have a booth and FIT will provide practical support.

Which sectors offer the most opportunities for Flemish SMEs? Marc Struyvelt is looking out to the publication of the next Five Year Plan for the years 2021 to 2025, for which details will only become available in March 2021. However, there will be two important pillars: firstly, technological innovation in China. China wants to become less reliant on the U.S. for technological products. Secondly, they want to have more domestic consumption to become less dependent on exports. In the near future investments will be made in several sectors, including cleantech and the environment. President Xi Jinping has announced that China wants to become carbon neutral by 2060, which is a very ambitious target. In wastewater treatment, waste-to-energy, combating desertification and off-shore wind energy there will certainly be opportunities. Infrastructure is also important, including traditional infrastructure such as the high-speed rail network and new infrastructure such as 5G, big data, AI, and charging stations for electric vehicles. We should also not forget sports and health products. Three big sports events are being planned in the coming years: the Winter Olympics, the Universiade and Asian Games, for which there will also be huge investments. There are also many small sectors, such as for example animal food and welfare. People are spending a lot of money on their pets. So in several niche sectors there are also plenty of opportunities.

Bart Boschmans: E-commerce has increased significantly, including elderly people who have for the first time made online purchases. The importance of online learning, meeting and working will perhaps diminish a little, but will remain important. The use of streaming, gaming, and videoconference platforms has increased and Chinese have resumed consuming. Sales of luxury vehicles has increased substantially, but also those of middle-class cars. But there are no miracle sectors.

Eva Verstraelen: Sectors offering opportunities to Flemish companies also include electric home appliances because people realize the importance of comfortable living. All those appliances need to be interconnected inside the home but also to the outside world. For example, a company is producing sensors to be installed in beds for sick or elderly people, which can measure the heart rate. If a problem is detected, a hospital is automatically contacted. Everything related to health, including fresh foods, is also important. A certain segment of the Chinese population is earning more and can afford to buy high quality and reliable products. Everything related to milk products, baby foods, organic products, bio-foods etc. is booming. Chocolate containing less fats has been more popular among Chinese consumers. Chinese also want to discover new tastes as they have become more interested in foreign countries. A consumer expo will be held in Hainan in early 2021, for which there is already a lot of interest in Chinese media.

What are the most important challenges, besides not being able to travel to China? Eva Verstraelen: Travel is still difficult as not many visas are issued and in China the 14-day quarantine is strictly implemented. Goods can be imported and exported and travel in China is possible, but Flemish companies cannot come to China and the Chinese can’t go to Europe. Personal contacts remain important to the Chinese, not only initially, but also to maintain the relationship. There is also some suspicion about what is going on in Europe and the U.S. concerning the handling of the Covid-crisis as the numbers are again going in the wrong direction. Chinese businesspeople are not inclined to travel to Europe in the coming months because they consider it to be too dangerous. Bart Boschmans: There is still no prospect of ending the quarantine requirement in China and you can’t choose the hotel where you need to spend the 14-day quarantine. Marc Struyvelt: the biggest challenge is how to remain in touch with your customers. One way is to open a WeChat account, which is the most important way of communication in China. It is a very good way to stay in touch with potential Chinese customers and colleagues. The app is easy to use and also has a translation function.

How can a Flemish SME prepare exporting to China? Marc Struyvelt: A good protection of intellectual property rights is very important. The China IPR SME Helpdesk can help companies to solve their IP issues. They will receive a reply within three business days. Compared to a few years ago, there is better IP legislation and enforcement in China. Moreover, trademark protection in China is not expensive. The website of the EU SME Center is also freely available following registration. They complement what FIT is doing and are doing many market and case studies freely available. There are at least 50 sector studies available worth looking at. If you don’t find the sector study you are looking for, you can send them a suggestion. For example they are now working on a study of cross-border e-commerce. Eva Verstraelen: Don’t forget that Chinese do not have access to some websites, such as YouTube, Facebook or WhatsApp, so you should also use TikTok and live-streaming.

Is Wechat safe from a privacy point of view? Bart Boschmans: In China, you can’t do without it, just don’t divulge any company secrets on it.

WeChat IDs:
Marc Struyvelt: wxid_dbkjzic7xtmo12
Bart Boschmans: wxid_2oth2bq1ag4412
Eva Verstraelen: FeiXiawa
Gwenn Sonck: gwennsonckfccc