«I have just arrived back home from my seventh trip to China in the last few years and the place is still something of a mystery to me: meeting officials last week, they told me we could now speak openly with each other as it was our sixth meeting,»
The cultural part of doing business in China is something you never get taught but have to learn the hard way. For example, I now wonder what on earth was the point of the last five meetings other than to prepare for this one?
Frankly, it remains a surprise to me that a country with such an enormous pace of change and such an incredibly strong work ethic remains at heart so slow at making decisions.
But now, more than ever before, the Chinese authorities are having to respond swiftly as they’re forced to suspend the stock exchange and step in to protect their currency. The speed at which shares fall and markets fluctuate concerns their business community much more than the economic downturn does. A slow readjustment in growth is something they can prepare and plan for, but the idea of quick gains and losses creates an uncomfortable climate for the more stable and steady-minded.
The luxury brand sector that I work in has been hit pretty hard, and walking round the shopping malls over the last few days it’s easy to see the impact first hand. Seventy percent off luxury goods was the normal headline poster and some even reported a 92 per cent discount. Their quite understandable fear is of being left with last season’s stock, which in an ever fashion-conscious market is unlikely to shift, whatever the price.
While at the trade events I attended, there was also a noticeable absence of Russian buyers. We all too easily forget that the drop in Russian oil prices and the impact of sanctions don’t just hit Russia; in fact the lack of their buying power is felt from Paris to Beijing and beyond.
However, there are many reasons to still remain positive about doing business in China. Remember the new normal is hardly recession: it still has a growth rate of 6.4%, which is only really matched globally by India.
And the mood on the ground is far from panic. The Chinese expect a few more market falls and currency adjustments, but not for too much longer. Most predict the market to recover well toward the second part of the year.
But as for the Russians, that’s a tougher one to predict. One knock-on effect from the awful so-called Islamic State may be a reduction in tensions with Russia as the West works with the East to defeat a new enemy. That in turn could see sanctions and embargoes lifted, which would clearly help a great deal.
One way or another, as China immerses itself in its New Year celebrations, the Year of the Monkey will be a critical one for business. We’ll have to wait and see what lies in store.