China is back in business!
Kicking off the webinar, CBBC welcomed Mark Harrison from KPMG Shanghai who provided the audience with a 6-point update of the current situation in China.
Slide from KPMG China
In sum, the rapid reopening of China was a surprise for everyone but people in and out of the country are responding positively to the development. The Zero Covid infrastructure that once surrounded cities has been scaled back leading to a renewed sense of optimism for 2023. Whilst it might take time for outbound travel to China to operate at ‘full capacity’, the nation is slowly coming back to its vibrant self. For example, despite the challenges in 2022 Mark noted that multi-national corporations (MNC’s) continued to demonstrate good financial performance and commitment to the Chinese market.
The Chinese government is actively encouraging multinationals to invest in areas such as Shenzhen and has taken steps to attract foreign investment by reducing the sectors on the negative list . Further, Mark pointed out that despite the current geopolitical tensions there is an eagerness from KMPG clients & Senior executives to come to China. The reopening of borders has certainly been well received and in the webinar, Mark mentioned that we might see a case of ‘revenge spending’ as it is estimated that during the last three years Chinese consumers have saved between $USD2 and $USD4 trillion! This is larger than the annual gross domestic product (GDP) of the UK. With this in mind, there is a strong belief that China’s GDP will bounce back quickly with the economy recovering in the second quarter of 2023.
To finish off, Mark highlighted the difficulties of reducing supply chain dependency on China. KMPG has witnessed their clients seeking to source products elsewhere in Asia, such as Vietnam, due to challenges brought on from the Zero-Covid policy. This however has been met with additional issues as whilst the supplier might be a genuine Vietnamese company, clients often later find that the owner is Chinese which therefore defeats the objective. Going forward this is a challenge that companies will have to learn to address. Overall, Mark believes that there will be a ramp up of economic activity in China in quarter-three of this year and if the geopolitical tensions can be managed, there will be a lot more activity going forward!
In the second half of the webinar, we heard from CBBC’s China based sector leads on key tradeshows, events, and business development opportunities in China for 2023. Some of the key facts across the sectors included:
- Petcare: The market is expected to grow by £1.63 billion from 2020-2026; 17.6% CAGR. In particular we expect strong growth in Leashes +880%; pet treadmills: +850%; pet birthday gifts: +230%.
- For three consecutive years, the UK has been the first choice among Chinese students wanting to study abroad for higher education.
- The total revenue of China’s logistics industry had seen a steady growth over the last decade, from RMB 177 trillion in 2012 to RMB 336 trillion in 2022.
- The construction industry is expected to register an average annual growth of 4.4% from 2023 to 2026, supported by investments on infrastructure projects as part of the 14th Five-Year Plan (2021-2025).
- The total added value of the digital economy increased from RMB 11 trillion in 2011 to RMB 45 trillion in 2021; an increase from 21.6% to 39.8% of GDP.
Thank you to everyone who joined our webinar and a huge thank you to Mark Harrison for speaking. As a follow-up, please find selected materials from the webinar:
- If you would like to replay the webinar, a copy of the recording can be found on CBBC’s YouTube channel here.
- A copy of the PowerPoint presentation with the upcoming activities is also available for download here.
- If you would like to contact any of the speakers you heard from, we would be more than happy to facilitate an introduction.
- For companies looking to travel to China, CBBC can help issue visa letters to secure a Chinese visa. Further details can be found here.