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Interview about future Chinese export & exhibition strategies

Interview with Mr. Lin Shunjie – Director General
of the Chinese Governmental Department
of Trade and Investment Promotion of CCPIT

1. Matthias Tesi Baur: Dear Mr. Lin Shunjie, you are Director General of the Chinese Governmental Department of Trade and Investment Promotion of CCPIT (China Council for the Promotion of International Trade). Can you please tell me more about whether the role of trade shows will increase or decrease in future?

Mr. Lin Shunjie: Here in China the economy is slowing down. I expect that the growth will remain flatline for at least one or two years. Compared to Europe we will still have a positive GDP growth rate but for a country like China that is more flatline than an improvement of the situation.

We are under pressure to define and roll out new business models which is always harder for smaller players to adapt to in the market.

That means that exhibitions outside of China become more important than in the past, especially for SMEs. Big companies have the power, knowledge and most often also the money to react to different economical situations. The new situation is challenging for the SMEs. The small players need help to find new customers and new distribution channels.

2. Matthias Tesi Baur:
How could show organizers in western markets help?

Mr. Lin Shunjie: Many Chinese companies do not have the knowledge about the legislation systems and legal situations in their target markets. Often these companies are overwhelmed with import regulations and the economical “dos and don’ts” of the western markets. At this point show organizers can jump in and help through education and guidance on importing laws etc. One perfect example is the US safety regulations. These are very complicated and we offer seminars to help our companies but show organizers can play a very important role here through education on those kind of topics as well. That would be a great push to make the commercial exchange between the markets smoother.

3. Matthias Tesi Baur: What else will change the way in which Chinese companies present their products at exhibitions?

Mr. Lin Shunjie: Branding will become extremely important for our economy. When you look at an exhibition in Europe and US you will often find Chinese exhibitors in the corner at the back of the hall. This picture will change. In future, we will need to occupy more central and more prestigious positions at tradeshows so that our products can be shown in a different light.

One perfect example for a new branding strategy of a Chinese company is the acquisition of the football club Inter Milan by the Suning Holdings Group. The company is unlike other football club investment as it is pumping much more money into the club than it is taking it out. Football is a bonding element between the Chinese and the European culture and the purpose of that acquisition is to enhance the branding of Suning products not just to make money with the club.

4. Matthias Tesi Baur: Will these changes be enough to bring the Chinese economy back on track?

Mr. Lin Shunjie: On no, this will not be the only change. The Chinese economy will focus much more the emerging markets than beforehand. In the past Europe and US have been our priority. Whilst these markets will remain important for CCPIT the emerging markets on the borders to the EU and US such as Mexico, Eastern Europe and Africa will play a much more important role. We will not put all our eggs in the EU basket anymore, instead we will become much more diversified in our approach. The borders of the western markets offer excellent growth opportunities for Chinese exports.

5. Matthias Tesi Baur: How is Chinese economy looking at the EU at the moment and the last year including Brexit, the financial crisis in Greece and the fact that the EU is not really functioning at the moment?

Mr. Lin Shunjie: The European Union is not in a good shape. Many companies in China are terrified by Brexit and the potential consequences for exporting to that huge market of which the UK will soon not be a part of anymore. But it is not all just negative. The positive side of the situation is that the tough situation is forcing our economy and our companies to become smarter. For the last 60 years CCPIT focused purely on export. In the future, our priorities will also be import and investment.

6. Matthias Tesi Baur: Please explain to me exactly what your investment priority means.

Mr. Lin Shunjie: In China, our economy is mostly based on the manufacturing sector and therefore it has been logical that the majority of all investments were made in the Chinese inland production lines. In the future China will invest much more in overseas production plants. We recently did an analysis of production costs between the US (specifically the southern states like Alabama, Georgia, Florida etc.) and the Chinese coastal area. Surprisingly, the results showed that it is only the labour costs that are lower in China. All other costs such as energy, water, infrastructure etc. were lower in the southern US states. Investing in Chinese production lines in such developed regions makes sense.

7. Matthias Tesi Baur: So Chinese money will acquire more and more companies in US, Germany and UK in the future?

Mr. Lin Shunjie: Not only in the developed markets. Chinese companies will also push their M&A in the emerging markets. Investments in markets such as Germany or US makes sense for fine-engineered high-end products. For the manufacturing of mass market and low-end products it makes more sense to acquire production lines in regions such as Africa.

8. Matthias Tesi Baur: Will that create a rival situation between the Western and the Chinese economy?

Mr. Lin Shunjie: I don’t think so. I would even argue that this offers an enormous chance to work together. Chinese people love French and German products because of their branding. An example is Volkswagen or Audi. The Chinese market regards these brands as the top of the car industry. In fact, technically Chinese cars are nowadays nearly on the same level as the German cars but the Chinese consumer still regards the German cars much higher because of their brilliant branding power. Coming back to your point I think China and Europe or the US could approach the emerging markets by combining the Chinese production efficiency with the western power of branding. Such an approach could be very powerful. It would be more than just a cooperation – it would be a combination of the best of both worlds.

9. Matthias Tesi Baur: As my last point can you tell me one fact the western world might not know about China

Mr. Lin Shunjie: The one fact I would tell you and this might come as a surprise to you is that…we love Donald Trump. (Small pause.) He will ruin America’s economy and that will be good for our exports.

10. Matthias Tesi Baur: (Startled.) Can I publish this?

Mr. Lin Shunjie: (Laughing out loud.) Sure, of course I’m just kidding! In business, humor is always important and that is what the western world might not know about China! In China we want to make business but we also want to build strong relationships and we want to have fun with what we are doing.

Matthias Tesi Baur: (Laughs as well.) Thank you very much for the interview!

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