• Adam Harper

Time to return to your China growth story

Stock markets are tumbling and growing numbers of companies warning about the earnings impact of COVID-19. For multinationals and global investors, this makes it time to return to – and reinforce – your China growth story.

Why? Because the virus outbreak will ultimately fade away but this critical market is not going anywhere. For multinationals and global institutional investors, continuing to articulate your commitment to China continues to make strategic sense – and it will be valued by domestic stakeholders over the long term.

Although the virus is increasingly spreading to other countries, investors’ attention remains focused on how international companies will be affected by slowing sales or supply chain disruption in China, a vital market for many MNCs and a growing part of investor portfolios.

Among many examples of this: Apple was the outrider for the current wave of profit warnings with its China-focused announcement last week, one survey suggested sales for luxury brands (which are driven by China) could decline by as much as US$43bn this year and United Airlines said near term demand for flights to China had declined by “about 100 per cent.”

So COVID-19 is clearly having a serious impact on business, as well as causing terrible human suffering in China and elsewhere. But this real public health challenge does not mean that the fundamentals underpinning a global organisation’s China strategy have changed.

The country is still becoming more innovative and more affluent. It is still working towards a more sustainable model of higher quality growth in which consumption, services and high-end manufacturing become the driving forces.

Organisations cannot and should not ignore the immediate impacts of COVID-19 but they cannot control them either. On the other hand, how you present your China strategy is under your control. In this context, I would advise CEOs, Heads of Strategy and Heads of Communications to focus on the fundamentals behind your plans to grow in China – and find ways to articulate that strategy now.

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