Sometimes, we witness the moment that a client suddenly sees it: their own China blind spot. These blind spots exist for many different reasons: a lack of insight into the role of China in the world economy, a negative experience from the past that discredits the entire nation, or a sense of complexity paralysis because the issue at hand is too overwhelming. But when you have seen the risks and/or opportunities facing you, you often cannot go back and unsee it.
Our China Strategy Framework helps European companies find their own blind spots, related to Greater China and define actions to confront their China challenge. This covers (practically) all aspects of your business operations, ranging from legal to governance to strategy. But it all starts with the simple awareness that China has an influence on your business—even if you are not active in the country itself.
China’s growing role in global innovation
The past few years have shown how China has taken up a strategic position in various frontier technologies and supply chains (e.g., artificial intelligence, semiconductors, biotech). Taking the example of green-tech innovation, we can see how the Chinese government has formulated and executed a long-term vision to become a leading player in solar, batteries, and electric vehicles (EVs).
Following decades of massive state subsidies and coordinated industrial policy, China now controls around 90% of global solar manufacturing capacity and 85% of global battery-cell production capacity. Additionally, they control critical mineral supply chains that make the production of batteries, chips, and other electric devices possible. Most European firms in solar and battery have now become reliant on Chinese resources for their own production, creating dependencies that stand in opposition to Europe’s ambitions for strategic autonomy.
And, for EVs, Chinese automotive firms like BYD, NIO and XPeng are leading the electric transition with over 60% of worldwide EV sales. With BYD’s car factory in Hungary as a frontrunner, these Chinese companies will increasingly become a larger part of the European sustainability landscape. It raises the question: where does that leave our own tech companies?
Defining China’s role in relation to your business
What we have learned from our many years of experience in supporting European companies in China, is that we cannot derail China’s progress in green tech, as the US and the EU are trying to do via protectionist measures. In fact, to keep our European innovation ecosystem up to speed, we actually are in need of China. Even if China is not within your (current) scope, it should have a place in your long-term corporate strategy.
For many companies, China is simply put away as a competitor that is too strong to beat alone. However, thinking in a different way about China opens doors that can keep our innovation speed up to par. Is China just a competitor to you? Or, could it also possibly be a partner or a supplier? Considering what China’s exact role is to you, should be one of the first questions you should be asking yourself.
Our China Strategy Framework
Asking the right questions about China within your organisation leads to having the right discussions and making the right decisions. In our China Strategy Framework, for companies in different stages of their growth cycle, we have defined how China might play a role in their strategy. It asks you to address the ‘dragon’ in the room directly and formulate answers, that can give shape to your Global and China strategy accordingly.
These questions serve as catalysts for the development of your China strategy that should be discussed within management teams and taken as the foundation for a strategic correction in your organisation. At China Inroads / EQ+, we facilitate tailored China Strategy Sessions with management teams where we guide the discussion, highlight risks and opportunities, and ensure alignment across different board roles to arrive at an updated China Strategy.
Contact
Looking away is no longer an option when active in innovation-driven sectors. Interested in how the China Strategy Framework would fit within your organisation? Send us an email to explore how our China Strategy Framework could help you address your China blind spots. We are always happy to discuss your China challenge and come to a tailored solution for your specific situation.
