Smaller firms, or in management lingo “small and medium size enterprises” (SMEs) matter more than their size suggests in China’s foreign-business ecosystem. True, as I show in my forthcoming book Dragon Suit, most foreigners (about three-quarters according to some sources) in China are employed by large multinationals. But first, many global corporations enter the PRC as small firms: when I chaired the SME Forum of the EU Chamber in China, a third of our members were startup offices created by large corporations with the prospect of eventually developing them into larger operations. Secondly, foreign SMEs are essential for large firms as service providers: legal, financial, relocation, design, advisory and lots more. Large multinationals regularly bring, invite or encourage their home providers to set up a small shop in China.
I see both worrisome and promising trends in the future of small European companies in China. Recent studies on European investment to China show a handful of established large firms sending healthy sums to the PRC. But interest from smaller firms, and especially new ones without existing China presence, has basically dried up in recent years. This is important because maultinationals have diligently replaced expat managers in China with local talent, so smaller foreign firms are vital for younger foreigners to find jobs there. A young Mandarin-speaker from Italy or Australia is likelier to find employment at an SME supplier of Audi or LVMH China than the behemoth itself. On the other hand, which is the positive news, Beijing rolls out subsidies and incubators to encourage foreign startups in selected Chinese cities, making it easier than before to incorporate a small operation in the country. Sino-British College lecturer Christian Göttker, my guest at next week’s free East-West Leadership webinar, interviewed many such SMEs in search of their prospects in a post-pandemic Chinese market. I was one of his interviewed experts, but now I invited him to share his findings and answer our questions, both about the future of small European firms in China and the mood among young prospective China expats. I hope I managed to show that these two issues are intimately connected, and allow an insight into the future of China as an attractive expat destination: German chemical and automotive firms alone cannot manage the increasingly troubled relations between two continent-sized economies. Join us June 1, 11am (Europe) or 5pm (China). Read more and register here: https://www.holch.biz/events
Take the next step and join Gabor Holch’s East-West Leadership Coaching or Dragon Suit Coaching in a variety of formats, starting from 2 hours and up to 20-hour executive coaching programmes. Click here to find out more, ask questions and register: https://www.holch.biz/coach
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