Why does my friend Gabor Holch publish a book about expatriate executives in China right now, at such a precarious time? Some may think this book is a brave effort but off sync with recent developments between China and the world. But in my opinion, Dragon Suit could not have come at a better time. To explain why, allow me to illustrate the topic of Western expats in China in the widening contexts of my own story, the history of my firm in China, and finally the likely direction of the entire country.
The company that I am heading in Beijing, the German chemical giant BASF, established its first operations in Shanghai during the Qing dynasty, in 1885. The year before the First World War broke out, China represented 17 percent of the conglomerate’s global sales. Over a century later, in 2021 China accounted for 15 percent of our global sales, but the pie itself had become an order of magnitude greater, resulting in a business worth an astounding 12 billion euros for us in China alone. From our first incorporation in the country until now, BASF executives have accompanied China through recurring cycles of triumph and disaster, and consequently enjoyed a front-row seat to the most impressive economic comeback story of the 20th century.
Such sagas of countries and corporations are made possible by the determination of visionary entrepreneurs. They are people with the willingness to take risks and endure uncertainties, and so they benefit from the wealth of rich social interactions and the rapid speed of business development that this grand nation can offer. Gabor and I are proud members of that community, although we represent different generations within it—I first arrived in China in August 1982, Gabor exactly 20 years later in 2002. We both spent the following two decades weathering China’s frequent ups-and-downs while helping our businesses ride the waves, along with a growing number of multinational businesses in the country.
In recent years, doing business in China has undeniably become harder, with mounting challenges from geopolitical conflicts and rising nationalism in the PRC. Newly arising suspicions have both distorted the views that many Europeans have of China and clouded the judgment of many Chinese about Europe. At the time of writing, China’s zero-tolerance approach to COVID-19 gravely inhibits human engagement and has become a major headwind for the further development of the Chinese economy. The foreigners who once followed promising career opportunities to China often vote with their feet: Europeans are in danger of becoming virtually extinct in China, with numbers dropping to levels unseen since the 1990s. Meanwhile, polls indicate that China’s popularity in Europe has plunged to historic lows.
But my long experience in China taught me that such hardships always indicate the beginning of another cycle, with new headaches and prospects. As I write this in August 2022, BASF is in the process of establishing a 10-billion-dollar production site in China’s southern province of Guangdong, the largest overseas investment in the company’s history. Thousands of foreign businesses across a wide array of sectors, from pharmaceutical through automotive to professional services, continue to thrive in a tougher environment which, however, still offers virtually endless opportunities.
It is therefore more important than ever that curious minds, regardless of whether they are in Europe, China, or elsewhere, understand the intricacies and complexities of conducting business in the world’s second largest market, as well as the ramifications of China’s push to establish its economic champions in Europe. Nothing helps to convey these messages better than first-hand accounts from expats who have lived the experience of doing business in China. Their stories are important because they remind us not to lose sight of the long-term prospects of China, a continent-sized country we have successfully engaged for decades.
Forty years of living and working in the country have convinced me time and again that Chinese people are resilient and have a proven comeback gene. Because of this, I believe the biggest risk associated with doing business in China is not to be there at all. May everyone who reads Dragon Suit become part of this exciting journey!
Shanghai, August 25, 2022
—Joerg Wuttke, Chief Representative, BASF China and President
EU Chamber of Commerce in China