This blog is an update on the blog originally posted on February 26, 2020.
Bill Edwards, CEO of Edwards Global Services, Inc. (EGS), has been doing business in China for 37 years, starting with living in China from late 1982 through mid 1985. Our company opened an office in Beijing in 2014 and we are currently helping four U.S. brands enter the Mainland China market. Needless to say, things right now are different than ever before.
As of February 20th, all flights from the US to China and most to Hong Kong were stopped and are expected to restart until at least May. Face to face business meetings stopped in February and have mot restarted as of the date of this blog. The Chinese are learning to work remotely.
Here are some recent headlines and articles that define what is going on in China as of this date:
The Chinese government is strongly encouraging businesses to start back up in Guangzhou and Shanghai. The quarantine restriction has also been loosened on these cities. But not as much in Beijing, where the central government is headquartered.
The U.S. Faegre Drinker law firm has a China office and sent out an email on March 6th that states ‘Most employers in China are slowly getting back to somewhat normal operations, with most employees gradually returning to offices and factories. There are several things that employers should know to maximize the speed with which they can return to normal operations and continue to work in the time of the coronavirus.” This timely information is at this link:
http://bit.ly/BacktoworkinChina
The CEO of a California company with two high tech factories in Eastern China says his staff both facilities are open again and staff is gradually coming back but have to go through a 14-day quarantine period before they can work.
The business volume index of China Logistics Prosperity Index (LPI) came in at 26.2 in February, down from 49.9 in January. Fung Business Intelligence 030420
“The Caixin/Markit services purchasing managers’ index (PMI) fell over 25 index points to 26.5 in February from 51.8 in January, with the figure adjusted for seasonal factors, including the Lunar New Year. The latest figure, the first reduction in business activity across China’s service sector since the survey began in November 2005, followed the larger-than-expected deterioration in the official and private sector manufacturing sector PMIs to all-time lows in February.” South China Morning Post (SCMP) 030420
“The value of China’s exports for January and February fell 17.2 per cent from the equivalent period of 2019 to US$292.45 billion, as virus-related production bottlenecks and the extended holiday reduced output. Imports, however, fell by only 4 per cent to US$299.54 billion, due in part to a spike in shipments of food and medical supplies.” South China Morning Post (SCMP) 030720
Manufacturing activity in China sunk in February to its lowest level since managers were first surveyed in 2004. Wall Street Journal. 030720
“Exports to the United States plunged 27.7% in January and February to $43 billion, worsening from December’s 12.5% decline. Imports of American goods crept up 2.5% to $17.6 billion, but China still recorded a $25.4 billion trade surplus with the United States. China’s global trade balance fell to a $7.1 billion deficit for the first two months of the year.” ABC News 030720
“China’s top eight ports, including Shenzhen and Shanghai, reported a nearly 20 per cent drop in container traffic in February from a year earlier, The eight ports account for over half of China’s trade in containers, suggesting that China’s trade last month also shrank by a fifth. SCMP 030520
“Starbucks® said the virus had reduced revenue expectations in its second-biggest market by at least $400 million for its current quarter. They expect same-store sales to drop 50% in its second quarter in China, as opposed to the 3% growth previously expected.” Wall Street Journal 030520
It appears that the majority of Burger King®, Dairy Queen®, KFC, McDonald’s® and Starbucks® stores in China have reopened except in Hubei province (Wuhan),
We daily keep our thumb on pulse of the Chinese business market, monitoring daily changes and trends, and have insight on how you can protect and grow your brand in this critical market. Contact Bill Edwards directly at bedwards@edwardsglobal.com or on +1 949 224 3896
Bill Edwards, CEO of EGS, has been doing business in China for 37 years, starting with living in China from late 1982 through mid 1985. Our company opened an office in Beijing in 2014. Our company is currently helping four U.S. brand enter the Mainland China market. Needless to say, things right now are different than ever before
Here are some recent headlines and analysis that define what is going on in China today:
As of this date, all flights from the US to China and most to Hong Kong have stopped. Business meetings stopped 2+ weeks ago. The Chinese are learning to work remotely.
“China Passenger Car Association said sales fell to just 4,909 units in the first 16 days of February, from 59,930 in the same period in 2019”, South China Morning Post (SCMP), 022120
“China app downloads surge due to coronavirus outbreak Deadly epidemic has left tens of millions of people confined to their homes”, Financial Times 021920
“Coronavirus a boon for China’s tech-savvy supermarkets as homebound customers switch to online grocery orders”, SCMP 022120
Burger King®, Dairy Queen®, KFC, McDonald’s® and Starbucks® closed a total of over 7,500 stores in China in late January or early February.
“McDonald’s has implemented contactless pickup and delivery of Big Macs, fries and other menu items across the China. Customers order remotely and employees seal the meals in bags and put them in a special spot for pickup without human contact.” Reuters 021820
Some feedback from business contacts in China:
“We have been inside our Beijing home for over a month. Only one adult is allowed out every other day. Our temperature is checked by a guard on the way our and on the way back in. Our 8-year-old daughter has not been to school in a month and we have run out of videos for her. Our local grocery store now comes to our housing compound.”, Our company’s Managing Director for Greater China based in Beijing.
“Thanks so much for the nice email and your concerns, Bill. The Coronavirus has essentially stopped inbound/outbound movement and that’s not good for business. All of our staff are doing fine and no one so far has been affected. Many of us try to work remotely as much as possible and avoid crowds, subways, and restaurants.” Message from the Managing Partner of a Shanghai legal firm. 022220
But things are starting to change:
“China’s biggest factories are offering bonuses and the government has laid on planes, trains and buses to ferry people back to work.” Financial Times 022520
“Apple reopens more than half its retail stores in China after coronavirus closures. Apple’s store website shows 29 of 42 locations are opening”. SCMP 022520
With over 37 years of experience of doing business in China, I’m happy to discuss these business ramifications and solutions. I keep my thumb on pulse of the Chinese business market, monitoring daily changes and trends, and have insight on how you can protect and grow your brand in this critical market. Contact me directly at bedwards@edwardsglobal.com or on +1 949 375 1896
In April 2005, New York Times columnist Tom Friedman published the iconic book on globalization, “The World Is Flat: A Brief History of the Twenty-First Century”.
The title eludes to the perceptual shift required for countries, companies, and individuals in order to remain competitive in a global market where historical and geographical divisions are becoming increasingly irrelevant.
Per Wikipedia, “Friedman himself is a strong advocate of these changes, calling himself a ‘free-trader’ and a ‘compassionate flatist’, and he criticizes societies that resist these changes. In his opinion, this flattening is a product of a convergence of personal computers with fiber-optic micro cable with the rise of work flow software.”
Many readers, including this author, initially interpreted this as saying that the world is increasingly the same, diversity is going away. A re-reading of Mr. Friedman’s book, and subsequent writings, shows this is not exactly correct. He is proposing that the business world is adopting the same standards worldwide in order to compete with companies in other countries. A strong case can be made for this postulation.
Along comes culture. Dictionary.com defines culture as: “The quality in a person or society that arises from a concern for what is regarded as excellent in arts, letters, manners, scholarly pursuits, etc.; development or improvement of the mind by education or training; and the behaviors and beliefs characteristic of a particular social, ethnic, or age group.”
Businessculture.org says, “Culture illustrates the accepted norms and values and traditional behaviour of a group . . . ‘the way we do things around here.’ The culture of each country has its own beliefs, values and activities. In other words, culture can be defined as an evolving set of collective beliefs, values and attitudes.”
In my experience working in 68 countries over the past 42 years, culture is alive and prospering. In order to do business in other countries, you must be aware of the local culture and how it impacts business to be successful. Flatness is not as important as the culture with which you are dealing. In other words, you must be aware of the diversity in doing business that the local culture represents to be successful in today’s global business environment.
Robert Shaw, a highly experienced and successful global franchise executive based in Orange County, California, has studied the knowledge of local culture as a way to win in business. Mr. Shaw defines three major cultural types that you have to take into account to win in global business:
The aggressive ‘let’s get the deal done and go home’ that US business people often follow leaves no time to develop the relationships that most cultures value and require in order to get business done.
And here are a few cultural “no-no’s” to remember that Mr. Shaw and I have encountered over the years:
Terri Morrison, in her classic book, “Kiss, Bow and Shake Hands”, shares a few basic but critical cultural differences in doing business in key countries. In regards to meetings:
The bottom line? While business processes may be flattening, cultures are not. To succeed in global business you have to add the cultural factor to your approach to people and companies in other cultures. Ignore the ‘non-flat’ local way of doing business because you think similar business processes are all that counts in a country and you will fail.
Cultures are what make the world an increasingly interesting place!