I recently made a visit across Guangdong province in order to meet up with suppliers. My last buying trip to China was about six months before Covid struck, so the changes in China were far more evident than if I had been a regular visitor. How have things changed since Covid ? Rediscovering the country after 4 years meant that the remarkable changes in China were all the more noticeable and striking….
What economic changes have happened in China?
The China government’s crusade to clean up pollution has had far reaching effects on factories across China. There are now much tighter restrictions on pollution. Many smaller factories who didn’t choose to follow the rules have closed down. It is more expensive to follow the anti pollution rules, so the cost of some products has been affected by this clean up, especially in metal electroplating and bottle coating plants. NPR reported that whole industrial zones were shut down in a bid to tackle polluting enterprises.
More suppliers are offering mono material plastics and PCR materials nowadays, but still very few suppliers are offering biodegradable materials. The efforts to offer more green solutions still feel a bit half hearted when one takes into consideration what is actually possible nowadays with biodegradable plant sourced plastics.
Changes in China Infrastructure
China continues to build and develop, the high speed train network is now reaching smaller cities and towns, making it much easier to get around China in less time. We covered huge distances in clean, fast trains which are frequent and affordable, often travelling at 300km per hour.
Changes in supplier understanding
Gradually more China suppliers are listening more to the needs of their clients and making efforts to provide what their clients need, though sales people are often still just order takers who speak English. There is still not enough anticipation of clients needs and communication of new product opportunities. Generally we have to visit China and ask the suppliers ‘What’s new’ in order to find out what new technology they can offer or new product moulds have developed. The children of the factory owners younger are now bringing about a change in China. Many of the bosses sent their kids abroad to study, so they generally speak English and have a better understanding of Western ways.
The perfume market is growing
The cosmetics market has been performing well for many years in China, even local brands have a big following and sales. However, that was not the case for perfumes. People have recently developed a taste for perfumes in China. Still we are not at the same consumption levels of the West, far from it. However, online purchase and bid influencers are driving sales of perfumes. This trend is set to continue.
What can we expect for the future?
- The worsening economic situation in China means that more Chinese suppliers will start to travel overseas to visit clients.
- Suppliers will develop more creativity in order to develop their own brands. Those who to not adapt their business to be more creative will have to accept 'commodity' prices for their goods.
- Another change in China is that more suppliers will set up factories overseas where labour is cheaper, probably in neighbouring countries.
- China suppliers will have to increase prices in order to cover the extra costs of environmental rules and higher labour costs.
- Online buying changes in China will continue to affect younger people who now prefer to buy online. They also buy according to the advice of online influencers.
Will we still need to travel to China so often?
It will still be necessary to visit China regularly in order to stay on top of new developments, as most suppliers, even long established ones, cannot be relied upon to communicate regularly about new developments.
Rediscovering China after 4 years absence made me appreciate the country more. It made me enjoy the amazing Chinese culture, generosity and hospitality even more. It was really wonderful to meet new people and visit beautiful new places again. The changes in China I perceived were much bigger due to major changes taking place during COVID. This is a rapidly evolving society which is undergoing a very fast pace of change in some areas.
In our article ‘Stiff competition for China’ we explore how the rising costs of doing business within China may affect its commercial dominance.