Capturing the mood: The End of Zero Covid in China
What does the new government strategy imply for German companies in China? Here are 7 questions and answers from our clients at German Centre Beijing.
After almost three years of zero-covid policies, the Chinese government unexpectedly announced nationwide relaxations in early December. What does this mean for companies? Jochen Tenhagen, Managing Director of the German Centre Beijing, asked seven Managing Directors of German companies located in the German Centre for their assessment. Here he shares an initial mood.
7 Questions and Answers to German companies located in German Centre Beijing
How will the end of strict Corona measures affect your sales?
“The end of the strict Zero-Covid measures has no direct impact on our sales. Fewer lockdowns of various suppliers will stabilize our production and we will have to take fewer special measures.”
What are you expecting with regards to your employees?
"I can imagine China pulling the emergency brakes again should deaths run into the hundreds of thousands, as the virus can now spread much more easily. In any case, there will be ups and downs and the likelihood is high that there will continue to be temoprevious lockdowns. And it's important to protect employees from spread."
Which changes will have the biggest impact on you and your business?
"The most important effects for me will be that...
... our sales people will be able to travel again. They've been travel-restricted a good 80% of the time for the last few months."
... In general, demand will increase again."
... the positive mood will hopefully boost the economy and consumers will spend more money again."
How long will it take for people to trust the new situation?
"The most important thing is people's trust and hope that life will return to normal and business can be done instead of getting into new lockdowns again and again. In the short term, I expect many people to stay at home because they have respect for the virus. In the medium term, however, I think business will return to normal."
Do you expect the supply chain problems to normalise quickly?
"I am still sceptical, but I can imagine that our sales figures will recover. For our company, there were a few delays in the global supply chain, but we were okay with them. Locally it was more problematic, but now I expect the supply issues to improve significantly. Above all, Covid was a significant disruption to our business and we need to be smarter going forward and adapt to change."
What do you predict for the time after Zero Covid?
"It is still too early for a reliable forecast. At the moment, we expect more uncertainties rather than a clear trend towards increasing sales distribution and investments. Besides, I don't think that the currently loosened Covid controls will help to solve other problems, like the housing crisis, lower export rates or big geopolitical risks."
What is the most important message for you from the exit from the zero-covid strategy?
"CEOs and business owners, who have not been to China for three years, will travel to China once the quarantine rules for international travellers will be further relaxed. I expect this to have a positive impact on further investment in the Chinese market. Many companies have been holding back, but now everyone can factor the situation on the ground back into their decisions."