Chine 2024, crisis and opportunities
Those who survive to 2024 will be winners
Geoffrey WU PERROT
December 24, 2023
Chine 2024, crisis and opportunities
Those who survive to 2024 will be winners
Geoffrey WU PERROT
December 24, 2023
*English version below
It had been a year since I had set foot in China. This country, its policies, its trends, its markets are changing very quickly and it was high time to go back for an update on the ground.
After two intense weeks of professional and personal reunions, here are my conclusions:
After the post-Covid reopening a year ago, many expected a lightning recovery of the Chinese economy. Today we have proof to the contrary: growth has not resumed, 2024 will be at least as difficult a year in most sectors. The country's authoritarian health management in 2022 has damaged the most important factor of an economy: trust.
Taxi drivers (Didi and company) told me that even the traffic jams are less severe than in 2021; some of these drivers are in fact struggling entrepreneurs who get behind the wheel to make ends meet.
Reduced consumption, the Shanghai pace is slowed down. The bustling streets that I knew even during the Covid period (2020-2021) have become much more empty. The vitality is still there, the cafes are full, the restaurants too, but the queues to get in are very reduced and the shopping centers are quieter, some have closed; and many stores have not found new tenants after the 2022 lockdown.
Here is the feedback from a branch manager of ICBC (Industrial and Commerce Bank of China) in Shanghai: "We banks are doing well, we have funds. Our customers save and no longer invest, they have become very conservative. They are not buying real estate at the moment because the market is not good so they are waiting. "This saved money is hanging, does not know where to go locally and is very restricted on transfers abroad.
The business world is no more optimistic, and most of my interlocutors confirmed this to me.
Many foreign companies have redirected part of their purchases to Southeast Asia (Malaysia, Vietnam, Thailand, etc.). China, which exports, has therefore lost market share.
The industrialists who made China the workshop of the world are in trouble. Layoffs of workers have exploded, and a price war has begun.
Local orders are also down. The most obvious, almost caricatured example is the situation of medical device producers. The director of a company producing inflatable medical mattresses explained to me that its largest and most stable customers are hospitals, which are subsidized by the State, but the expenses related to PCR tests in 2022 were such that the budgets are dry. Direct impact: the company notes a 15% drop in sales in 2023.
The economic slowdown has of course also affected foreign companies that have invested in the Chinese market. For many, the uncertainty and the lack of short-term results have been prohibitive: those who do not have the resources to maintain the Chinese adventure have often decided to abandon it. It has also been a hard blow in terms of human resources. In 2022, the foreign population of Shanghai has been halved and finding an international executive profile has become difficult or very expensive.
The economy will not recover in 2024, and the 2025 results are uncertain. According to a local consultant, the difficulty in assessing a recovery date and a trend is that contemporary China has never experienced a lockdown like during the Covid period: the usual cycles are no longer usual, consumer behavior is unpredictable.
Stop reading here, and you too will abandon the idea of working with China. A big mistake in my opinion, and here are my arguments:
1 – Demand for premium and high-end products will pick up.
Because Chinese production is going downmarket: The general mood is gloomy, but the Chinese are hardworking and especially fierce in business. Chinese prices had tended to increase with wages over the last decade. However, the ongoing price war is dissuading them from investing in quality.
Because while the middle class is in great difficulty, the rich remain rich. According to a contact in the field of high-end watches, the luxury market is stable or even increasing. The main question for the wealthy is the search for investment opportunities.
The need for premium and high-tech products will not disappear: it is the opportunity for European companies that can or dare to stay in China. Those who survive 2024 will be winners.
2 – The Chinese government reacts.
The central government cannot afford to see its economy in difficulty for too long. It needs internal consumption, foreign investment, and growth. It will play skillfully between increased digital control of flows and information, and an opening towards the outside world. An important signal is the visa exemption for French, German, Italian, Dutch, Spanish and Malaysian nationals for short stays from December 1, 2023 to November 30, 2024.
Just remember that the Chinese government's influence over its economy is crucial and that for its own stability it needs a satiated and economically satisfied people.
3 – Made in China is an opportunity.
Many Western business leaders have shifted their sourcing to Southeast Asia, partly because China has been at a standstill due to its lockdowns in 2022, and partly because Chinese prices have become less competitive. However, the trend is to return to China for purchases of products requiring intermediate quality. Mixed China-Southeast Asia sourcing is likely the long-term trend.
Also, the difficulties encountered by Chinese entrepreneurs push them abroad to expand their markets. They are on the lookout for development opportunities and partnerships.
Geoffrey Wu-Perrot
geoffreywp@doublelink-consulting.com
China 2024, Crisis and opportunities
The 2024 China survivors will be winners
By
December 24, 2023
It has been a year since I have been in China. Policies, trends and markets change fast and I needed practical update. I have just spent 2 weeks in Shanghai meeting with friends and professionals and here are my conclusions.
Since the post-Covid reopening a year ago, many of us were expecting a fast economic recovery with a compensating effect. Now we know otherwise: growth is not back and 2024 will be at least as tough as 2023 in most industries. China's 2022 strict sanitary policies have seriously impacted the most important part of a healthy economy: trust.
Taxi drivers (Didis and others) were telling me even traffic jam got better than in 2021, meaning people would go for cheaper transportation solutions or wouldn't go out as much. Some of these drivers were actually entrepreneurs having no choice but doing this side job to make additional money. Consumption has decreased and the Shanghai lively rhythm is on hold.
Crowded streets I knew even during the Covid period (2020-2021) are quieter. Shanghai is still a fast-going city: coffee shops are full, restaurants too. But the lines to get in have drastically reduced. Shopping malls are quieter, few even closed. Many of the street shops never found a new tenant after the 2022 lockdowns.
'Banks are doing fine, we have money' told me an ICBC manager. 'Our clients are saving money and investing less. They got more conservative and don't buy real estate because the market is not on a good trend.' All this saved money is holding, doesn't know where to go locally and is highly restricted to go abroad.
Business is not going very well either and most of the people I met confirmed it. Lots of foreign companies chose to change their sourcing routes to South-East Asia, mostly Vietnam, Malaysia, Thailand, etc. China has lost export market shares and its factories are dismissing employees, and price wars have started.
Local orders are also decreasing. The most obvious, probably even caricatural example I heard is it the medical device industry. The CEO of a medical inflating mattress company told me most of his sales are coming from hospitals. However local governments have spent so much budget on PCR tests in 2022 that they have nothing left now for hospitals… This friend's sales dropped of 15% in 2023.
The economic slowdown also impacts foreign companies that have invested into the Chinese market. For many of them, the lack of stability and short-term results was too much to bear, and companies without enough resources to maintain the Chinese business journey decided to leave.
Human resources are also facing difficulties: in 2022, half of Shanghai's expat population has left, making it harder to find managers with international backgrounds.
The Chinese economy will remain slow in 2024 and it's impossible to make estimates for 2025. According to a local consultant I met, modern China has never faced an economic freeze like the 2022, therefore common cycles are not applying to the coming years and consumers' behavior is unpredictable.
If you stop your reading here, you might as well give any idea of working with China. Big mistake in my opinion. Here is why:
1 – Premium and high-end products demand is coming back.
Because Chinese production prices decreasing: the general atmosphere is blue but Chinese people are hard workers and tough businessmen. Prices increased in the past decade with a correlated salary increase. However, price wars have started, making premium production investment difficult.
Because although the middle class is seriously impacted by the crisis, the rich remain rich. According to a friend working in high end watches, the luxury market is going well. The main worry wealthy people are finding investment opportunities.
The need for premium products and high tech will not disappear: it is an opportunity for European leaders who can afford or dare to stay in China. The 2024 China survivors will be winners.
2 – The central government moves.
The government can't afford having a slow economy for too long. It needs local consumption, foreign investments, and growth. It will balance a strict digital control on transfers and information, with opening policies. The recent Visa-free policy for French, German, Spanish, Italian, Netherland, and Malaysian passports is a strong signal we have to notice.
Just remember the government's influence on the economy is tremendously powerful and it needs a satiated and economically satisfied population for its own stability.
3 – 'Made in China' is an opportunity
Many western companies reconducted their sourcing towards South-East Asia. On one hand because China has frozen during its 2022 lockdowns, and on the other hand because Chinese prices were getting less competitive. Medium quality is now coming back to China and China – South-East Asia sourcing mix is probably going to be the long-term balance.
Also, Chinese entrepreneurs' difficulties on the local market with competition is encouraging them to develop abroad and to look for new partnerships.
Geoffrey Wu-Perrot
geoffreywp@doublelink-consulting.com
基因2024年，危机与机遇
存活到2024年的人将成为赢家
杰弗里·W佩羅特
2023 年 12 月 24 日
*以下为英文版本
我已经有一年没有踏上中国土地了。这个国家，它的政策、趋势和市场都在迅速变化，现在是时候回去了解实际情况了。
经过两周紧张的职场和个人聚会后，我得出了以下结论：
一年前，中国经济在后疫情时代重启后，许多人预计中国经济将出现闪电复苏。今天我们有相反的证据：增长尚未恢复，2024 年对于大多数行业来说至少将是同样艰难的一年。 2022年国家的威权卫生管理已经损害了经济的最重要因素： 相信。
出租车司机（滴滴和公司）告诉我，甚至交通拥堵也没有 2021 年那么严重；这些司机中有些是苦苦挣扎的企业家，他们开车是为了维持生计。
随着消费的减少，上海的发展步伐也放慢了。即使在新冠疫情期间（2020-2021 年），我所知道的繁华街道也变得空旷多了。这里依然充满活力，咖啡馆人满为患，餐馆也人满为患，但排队的人很少，购物中心也比较安静，有些甚至已经关闭了；许多品牌在 2022 年封锁后仍未找到新的租户。
中国工商银行上海分行一位行长的反馈是：“我们银行的状况很好，我们有资金。 我们的客户进行储蓄并且不再投资，他们变得非常保守。他们现在不购买房地产，因为市场不好，所以他们在等待。 “。这些省下来的钱都挂在那儿，在当地不知道去哪儿，而且汇到国外也受到很大的限制。
商业世界不再乐观，我的大多数对话者都向我证实了这一点。
许多外国公司已将部分采购转向东南亚（马来西亚、越南、泰国等）。作为出口国的中国因此失去了市场份额。
使中国成为世界工厂的工业家们正陷入困境。工人裁员激增，价格战开始。
当地订单也有所下降。最明显的例子，几乎是一幅漫画，就是医疗器械生产商的处境。一家生产医用充气床垫的公司的负责人向我解释说，其最大、最稳定的客户是医院，这些医院由国家补贴，但 2022 年 PCR 检测的支出已经让预算枯竭。直接影响：该公司预计 2023 年销售额将下降 15%。
经济放缓当然也影响了在中国市场投资的外国公司。对于许多人来说，不确定性以及短期内无法取得成果是难以承受的：那些没有足够资源维持中国冒险的人往往决定放弃。对人力资源而言这也是一次沉重的打击。 2022 年，上海的外国人口减少了一半，寻找国际高管变得困难或非常昂贵。
2024 年经济不会复苏，而2025年的结果尚不确定。当地一位顾问表示，评估复苏日期和趋势的困难在于，当代中国从未经历过像新冠疫情期间那样的封锁：惯常的周期不再常见，消费者行为难以预测。
如果你别再读到这里，你也会放弃与中国合作的想法。我认为这是一个严重的错误，以下是我的论点：
1 –对优质和高端产品的需求将会回升。
因为中国的产品正在走向低端市场：总体氛围不容乐观，但是中国人勤劳而且商业头脑灵活。过去十年，中国的物价一直随工资上涨。然而，持续的价格战使得他们不愿在质量上进行投资。
因为当中产阶级陷入困境时，富人仍然富有。据高端手表行业的一位人士透露，奢侈品市场表现稳定，甚至有所增长。富人的主要问题是寻找投资机会。
对具有高技术价值的高端产品的需求不会消失：这是那些能够或敢于留在中国的欧洲企业的机会。那些能熬过2024年的人，才是赢家。
2-中国政府做出反应。
中央政府不能忍受看到经济长期陷入困境。它需要内部消费、外国投资和增长。它将巧妙地在加强对流动和信息的数字控制与对外国的开放之间发挥作用。一个重要信号是，自2023年12月1日至2024年11月30日，对法国、德国、意大利、荷兰、西班牙和马来西亚国民短期停留实行签证豁免。
只要记住，中国政府对其经济的影响至关重要，为了自身的稳定，它需要人民感到满足和经济上的满意。
3 –中国制造是一个机遇。
许多西方商业领袖已将采购转移到东南亚，部分原因是中国因 2022 年的封锁而处于停滞状态，部分原因是中国的价格竞争力下降。然而，购买中等质量产品的趋势是回归中国。 中国和东南亚混合采购可能是长期趋势。
此外，中国企业家所遇到的困难也迫使他们走向海外拓展市场。他们正在寻找发展机会和合作伙伴关系。
杰弗里·吴·佩罗
geoffreywp@doublelink-consulting.com
中国2024，危机与机遇
2024 年中国幸存者将成为赢家
经过
2023 年 12 月 24 日
我来中国已经有一年了。政策、趋势和市场变化很快，我需要实际的更新。我刚刚在上海度过了两周，与朋友和专业人士见面，以下是我的结论。
自一年前新冠疫情后经济重启以来，我们许多人都期待着经济快速复苏并产生补偿效应。现在我们知道了相反的情况：增长尚未恢复，对于大多数行业来说，2024 年至少会与 2023 年一样艰难。中国2022年的严格卫生政策严重影响了健康经济最重要的部分： 相信。
出租车司机（滴滴等）告诉我，甚至交通拥堵的情况也比 2021 年有所改善，这意味着人们会选择更便宜的交通方式，或者不会经常外出。其中一些司机实际上是企业家，他们别无选择，只能做这份副业来赚取额外的收入。消费减少，上海热闹的节奏暂缓。
我所知道的拥挤的街道，即使在新冠疫情期间（2020-2021 年），也变得更加安静了。上海仍然是一个节奏飞快的城市：咖啡馆挤满了人，餐馆也是如此。但排队入场的人已大幅减少。商场一片冷清，甚至有些商场都关门了。 2022 年封锁结束后，许多街边商店都找不到新租户。
中国工商银行的一位经理告诉我，“银行经营状况很好，我们有钱。” “我们的客户正在节省资金并减少投资。他们变得更加保守，不购买房地产，因为市场趋势不佳。’这些省下来的钱都被扣着，在当地不知道用在哪儿，而且出国也受到严格限制。
生意也不太好，我遇到的大多数人都证实了这一点。很多外国公司选择将采购路线转向东南亚，主要是越南、马来西亚、泰国等。中国已经失去了出口市场份额，工厂正在裁员，价格战也已开始。
当地订单也在减少。我听到的最明显、甚至可能是最具讽刺意味的例子就是医疗器械行业。一家医用充气床垫公司的首席执行官告诉我，他的大部分销售额来自医院。然而，地方政府在 2022 年已经在 PCR 检测上花费了太多预算，现在没有剩余的预算用于医院了……这位朋友的销售额在 2023 年下降了 15%。
经济放缓也对在中国市场投资的外国公司产生影响。对于其中的许多公司来说，缺乏稳定性和短期成果是难以承受的，没有足够资源维持中国业务之旅的公司决定离开。
人力资源也面临困难：2022年，上海一半的外籍人士已经离开，寻找具有国际背景的管理人员变得更加困难。
2024年中国经济仍将保持缓慢增长，而对2025年的情况则无法做出估计。据我遇到的一位当地顾问称，现代中国从未面临过像2022年这样的经济冻结，因此未来几年不会出现常见的周期，消费者的行为也无法预测。
如果你读到这里就停止了，不妨提出一些与中国合作的想法。我认为这是一个大错误。原因如下：
1 – 优质和高端产品的需求正在复苏。
因为中国生产价格在下降：总体气氛是忧郁的，但中国人是勤劳的工人和坚强的商人。过去十年，物价上涨，工资也随之上涨。然而，价格战已经打响，高端生产的投资变得困难。
因为虽然中产阶级受到危机的严重冲击，但富人仍然富有。据一位从事高端手表行业的朋友透露，奢侈品市场行情很好。富人最担心的就是寻找投资机会。
对于高端产品和高科技的需求不会消失：对于有能力或者敢于留在中国的欧洲领导人来说，这是一个机会。 2024年中国赛区存活下来的选手将成为胜利者。
2-中央政府采取行动。
政府无法承受经济长期低迷的局面。它需要本地消费、外国投资和增长。它将在对传输和信息的严格数字控制与开放政策之间取得平衡。最近对法国、德国、西班牙、意大利、荷兰和马来西亚护照实施的免签政策是一个必须注意的强烈信号。
只要记住，政府对经济的影响力是巨大的，政府需要满足的、经济上满意的民众来维护自身的稳定。
3 – “中国制造”是一个机遇
许多西方公司已重新将采购目光转向东南亚。一方面是因为中国在 2022 年封锁期间受到冻结，另一方面是因为中国的价格竞争力下降。中等品质现在正在回归中国和中国—— 东南亚采购结构可能成为长期平衡。
此外，中国企业家在本地市场面临的竞争困难也促使他们向海外发展并寻找新的合作伙伴。
杰弗里·吴·佩罗
geoffreywp@doublelink-consulting.com
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