The lure of 1.4 billion buyers

Has life ever been tougher for international firms wanting to do business in China? Travel bans and lengthy quarantines designed to quell Covid infection rates have curbed flows of goods and people. Delay and disruption to supply chains, especially in container shipping, have created bottlenecks for trade flows. Simmering tensions between Beijing and Washington over trade tariffs and technology exports aren’t helping much either.

In this kind of context, companies could be forgiven for pressing pause on their strategies for the Chinese market. But that’s not what they are doing, according to the latest instalment of HSBC’s Navigator report, which was released earlier this week.

The Navigator series offers an inside track into what business decisionmakers around the world are feeling and planning. This year’s ‘Succeeding in China 2021’ chapter asked a representative group of foreign firms for their views on doing business in the Chinese market. Despite the backdrop of gloomy headlines, the outlook from the companies was much more positive.

“Contrary to some media reporting, our findings indicate deepening confidence and further investment in China among international firms,” was the conclusion of the study’s authors.

The survey polled 2,174 companies across 10 major economies in September, suggesting that nearly nine in 10 respondents were anticipating an increase in their sales or exports to China in the next 12 months. Around 87% of the firms in the study expected an improvement in sales in the year ahead, with 63% predicting organic growth of more than a fifth in their revenues.

More than half of the sample said there were plans for M&A activity in China in the same period, with six in 10 respondents expecting to expand their supply chains as well.

Some of that sentiment is buoyed by hopes of better commercial conditions as the pandemic subsides further. But one in three respondents identified the strength of China’s economic prospects as driving their decision to do more business there, alongside similar percentages that cited the scalability of the Chinese marketplace and the efficiency of its supply chains as compelling reasons to invest further.

Read More at https://www.weekinchina.com/2021/11/the-lure-of-1-4-billion-buyers/