Why the sudden change?

The 180-policy reversal seems to have been prompted by three main factors: a major outbreak in Beijing, growing frustration at zero covid (and hard lockdowns in particular) and recognition of the low health risk omicron presents to the population.

A plan to shift away from zero covid was likely already being considered (mostly likely for Spring 2023) but was fast-tracked after covid slipped out of control in Beijing and authorities found they could no longer turn to hard lockdowns. The demonstrations over the weekend of 25-27 November thus played a small but significant role in bringing about the shift in policy by removing hard lockdowns from the policy toolkit.

The economic impact was likely a secondary factor. After all, China has been unflinching in its willingness to weather the economic impact of zero covid over the last three years – and especially so over the course of 2022. The economic issue is also neither new nor surprising (as CBBC members can attest) so doesn’t explain the sudden change of strategy. The preferred approach of the Chinese government would likely have been to weather a few more months of pain to see out the winter, but circumstances had other ideas.

The first post-zero covid wave

With the end of mass testing and the reporting of community cases, it is difficult to get accurate data on infections. However, China is clearly experiencing its first major population-wide wave of covid. Informal surveys conducted by Beijing residents indicate infection rates of between 40-60% of the city’s population within just the last couple of weeks.

We are also hearing reports of companies with cases among as many as 50% of their Beijing staff. Positive infections are now so commonplace in Beijing and across China that people are posting their positive test results on WeChat without any of the fear or stigma previously associated with catching covid. The shift in perception towards covid is staggering to say the least (and certainly very welcome).

Home quarantine is now the standard way for people to recover, with only the most serious cases being admitted to hospitals. Fever clinics have been set up in over 300 hospitals across Beijing, with admissions on Sunday 11 December topping 22,000 according to a report from Caixin.

The authorities are actively discouraging people from calling emergency services or going to hospitals unless necessary. This hasn’t prevented some hospitals from being swamped, although so far it appears that serious cases remain few. State media has also been working in overdrive to shift perception of covid and disrupt the cultural instinct of seeking treatment for mild symptoms at hospitals.

The expectation is that Beijing is a prelude and case numbers will soon surge in other cities across China over the coming weeks with most major cities likely a couple weeks behind. A growing number of cases are already being reporting in Shanghai. Estimates put the peak for this spike in cases at around mid-January, so we are still in the early stages of the first wave.

Dismantling zero covid

The end of zero covid means the dismantling of much of China’s zero covid industrial complex. At one point testing alone was estimated to be 1.3% of GDP. Local governments will be particularly relieved at the easing on their finances, though perhaps not those which have embarked on large zero covid-related investments sprees (e.g., building quarantine centres that are now obsolete).

Testing sites have closed, ‘dabai’ (the nickname for the epidemic prevention and control personnel who wear white hazmat suits) are seeking new employment, the national green code system for tracking travel ended on 13 December (though local HealthKits remain), tests are no longer required for domestic travel, and restrictions on the sale of flu and fever medicines have been lifted. Some restrictions remain, such as 48-hour tests to enter restaurants, bars and gyms.

Much like in the West, the use of home test kits (rapid antigen tests, known in the UK as lateral flow tests) have already become the norm. Sales of flu medicine have naturally spiked along with prices. Procuring medicine has become a challenge, with many left scrambling to get their hands on drugs.

Outlook and implications for UK business

The easing of restrictions is beginning to lift the mood among CBBC members albeit from a sustained period of low sentiment which has persisted since the Shanghai lockdown (March to June). We are unlikely to see a sharp rebound in sentiment but rather a gradual recovery over the coming six months as we get through the first wave of infections and further announcements are made regarding the easing of international travel restrictions.

Coexistence with covid brings a new set of issues for businesses to manage. The risk of infection has increased significantly for UK businesses operating across China as the first major wave makes its way through the population. To mitigate, companies are shifting to flexible working, updating their covid prevention measures, and procuring flu medicine and test kits for their staff.

The easing of restrictions also means the likely return of international travel to China. For the first time since China’s borders closed in March 2020, we believe UK businesses can begin to plan with confidence to visit China during 2023.

Quarantine remains 5+3 (hotel + home) at the time of writing, although we expect this will ease in the coming months, with a full removal of hotel quarantine potentially by the summer. This will likely lead to a sharp uptick in business travel, delegations and tourism. It also bodes well for the prospect of a return to ministerial visits and potentially a resumption of UK-China Government exchanges such as the Economic & Financial Dialogue and JETCO.

The end of zero covid also removes a significant risk factor for business operations and production, logistics and supply chains in particular. Zero covid disruption has been high on the risk index for businesses over the last three years since the initial outbreak, and even as recently as November major companies like Apple were dealing with severe disruption to their supply chains in China.

While we can all breathe a sigh of relief at the end of zero covid, new uncertainty will emerge over the coming weeks and months as cases spike across China. Regardless, the prospect of a return to normality is very much welcome as China begins to reopen and reconnect with the rest of the world.

The post What Happened to China’s Zero Covid Policy? appeared first on Focus - China Britain Business Council.

On 11 November, the China National Health Commission released a list of 20 adjustments to the country’s Covid-19 prevention and control policies. The adjustments relate to both the domestic-level implementation of Covid policies and international travel, including shortening the length of hotel quarantine for international arrivals and reducing the pre-travel PRC test requirements.

Below are the policy adjustments that relate to international travel:

• The quarantine requirement for inbound travellers has been reduced to 5 days of centralised (i.e., hotel) quarantine plus 3 days of home quarantine (previously 7 days of centralised quarantine and 3 days of ‘home health monitoring’)
• Only one negative nucleic acid test is required within 48 hours of boarding a flight to China
• The circuit breaker mechanism for inbound flights, which saw flights cancelled if they had a certain number of positive Covid cases, has been abolished
• According to the Chinese Embassy in the UK, there are no additional prevention and control requirements for people with uncertain test results, close contacts, a history of Covid infection or suspected symptoms. The above groups can now apply for the health code based on a negative nucleic acid test report within 48 hours before departure.

Read the latest notice on pre-travel testing requirements from the Chinese Embassy in the UK here.

Domestically, quarantine for close contacts was also reduced to 5 days of centralised quarantine plus 3 days of home quarantine. In addition, secondary contacts (close contacts of close contacts) no longer need to be identified. The categorisation of Covid risk areas has been simplified to just “high risk” and “low risk” (i.e., Covid cases present vs no Covid cases present) and mass testing across whole districts or even cities has been discouraged unless the origin of new infections is particularly unclear. The apparent goal of these adjustments is to avoid sweeping lockdowns for one or two Covid cases.

These policy adjustments do seem to make China’s Covid rules slightly less draconian. However, as case numbers increase across China in November 2022, it is likely that the implementation of these policies will vary at the local level, so both domestic and international travellers are cautioned to stay abreast of the latest developments.

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Since late March 2020, China’s borders have been tightened considerably, with the number of travellers entering China dropping sharply.

International flight seat capacity and passenger numbers are down by 95% compared to pre-Covid-19 levels. Thankfully, recent efforts to increase international direct flights with China indicate this figure may begin to recover marginally as more flights are added to existing and new routes. China’s quarantine measures, however, are expected to remain in place for the foreseeable future, and many are understandably put off by the prospect of ten days in a hotel room and the cost of making the journey.

Early Summer of 2022 saw a reduction of China’s quarantine duration from 21 to 10 days, as well as the simplification of the pre-departure testing procedure. Although still a lengthy and expensive process, these changes have helped to encourage those living in China or overseas to take on the journey.

In addition, China has also relaxed its visa rules by removing the requirement for British nationals to acquire PU letters in order to apply for a Z (work), M (business), or F (non-commerce visit – e.g. lecture, research, cultural exchange) visa.

Below is a summary of my experience of travelling to China in late July and early August of 2022. I have written this article in the hope it could be helpful to anyone planning to make a similar trip from the UK to China via a third country (in this case, Germany), although I must stress that experiences can vary greatly depending on which route to China you take. This is also by no means a complete guide and only aims to provide a summary of what I consider to be the key information. I also already had a Chinese visa so I’m not able to offer any first-hand experience of the application process at present.

The information below covers available flights, my experience with the pre-departure and arrival procedures and some tips for quarantine.

What flights to China are available?

I booked a seat on the German Chamber (AHK) charter flight service which operates one-way flights from Frankfurt to Qingdao. My ten-day quarantine subsequently took place in Qingdao. Further details on this service can be found here.

Direct flights between the UK and China had been suspended since Boxing Day 2020 but have now resumed with Air China between Heathrow and Beijing/Shanghai as of August 2022, with other Chinese airlines planning to operate additional routes also. Airlines will start initially by operating flights from China to the UK with return flights expected to resume in due course. For those looking to travel to China I recommend keeping a close eye for further announcements from Air China, Capital Airlines, China Eastern, and China Southern.

Other popular routes for those travelling from the UK to China include flights transiting in Helsinki and Copenhagen as well as flying to Hong Kong and then on to Xiamen or other cities within China. Hong Kong’s reduced quarantine time of three days now makes this option a lot more appealing, as do the lower cost of London to Hong Kong flights when compared to those going to the Mainland. Destinations such as Xiamen and Qingdao also have a good reputation for the standard of quarantine hotels they provide.

International passengers are greeted by a small army of ‘Dabai’ on arrival in China

The pre-departure process

As my journey began in Edinburgh, I had to acquire a Health Declaration Certificate (HDC) before I departed the UK to catch my flight in Germany. On arrival in Frankfurt, I was then required to complete a second HDC application before boarding my flight to Qingdao. Each HDC application required two PCR tests and various other pieces of information such as my flight itinerary, visa, and so on.

Below is a step-by-step summary of the pre-departure process I followed:

1. PCR Test 1 (within 48 hours of departure to transit country): Tests 1 and 2 must be completed by two different covid test companies. In my case, I used Randox and ExpressTest. Both companies have testing sites across the UK. Some test companies can provide a single service with two different test results specifically designed for those who are travelling to China.
2. PCR Test 2 (within 24 hours of departure with a minimum 24-hour gap from Test 1)
3. Health Declaration Certificate 1: Apply for the HDC using the MFA platform once Test 2 is received. The HDC is an orange QR code that will turn green or red depending on the outcome of your application. When filling out the HDC application, make sure to put the correct Chinese Embassy or Consulate branch in the UK according to the region where your tests were completed. If the tests were taken in two different UK regions, then use the embassy/consulate in the region of the first test. The HDC will take around 1-2 hours depending on how busy the embassy or consulate is at the time. Once received, take a screenshot on your phone.

Travel to your transit country (in my case this was Frankfurt).

1. PCR Test 3 (within 48 hours of departure to China)
2. PCR Test 4 (within 24 hours of departure with a minimum of a 24-hour gap from Test 3)
3. Health Declaration Certificate 2: Follow the same process as above. Again, make sure to select the correct Embassy/Consulate branch according to where the tests were completed. In my case, this meant Edinburgh Consulate for my first HDC completed in the UK, and Frankfurt Consulate for the second HDC.

*Note that for the second HDC application I am also aware of people who have travelled from the UK to China via a third country (e.g. Copenhagen) and taken the second pair of PCR tests within a transit period of as little as 8 hours and still received a green code for the second HDC application. The two tests will still need to be taken at different testing sites or by a company that can provide a China-specific service for both tests. Though I haven’t found it anywhere in writing, this suggests the Chinese Ministry of Foreign Affairs may show flexibility on timescales for travellers who are transiting through third countries.

Prior to boarding, the airlines I was flying with asked to see my second green HDC code. I was also asked to complete a Chinese Customs Declaration on my phone. Once completed you will receive a QR code which will need to be shown on arrival, so again, take a screenshot.

The pre-departure process for travel to China has been somewhat streamlined in recent months

What happens upon arrival in China?

On arrival in Qingdao, I had to provide various forms which you can download below. To speed up the process, I recommend printing out these forms and filling them out ahead of your arrival.

1. Transfer Record Sheet of Key Persons for Covid-19 Control (two copies)
2. Informed consent for sampling (one copy)
3. Covid-19 Epidemiological Investigation (one copy)
4. Chinese Customs Declaration QR code (screenshot)

When I arrived at the airport, I was required to take a PCR test, submit the forms above and show the Chinese Customs Declaration QR code before collecting my luggage and being assigned a hotel. The whole process took around three hours. The hotel was a further hour away. On arriving at the hotel, I was asked to provide my onward (home) address in Beijing, where I would travel to after completing my quarantine. The hotel room charges were paid upfront with any additional expenses paid the day before checkout.

What is quarantine in China like?

Quarantine itself was largely uneventful, as you might expect. I would strongly recommend bringing supplies of your favourite coffee, tea, snacks, and whatever you can fit into your luggage. Items I found particularly useful included a cafetière for making fresh coffee and a penknife, as all cutlery provided was disposable. Snacks like Babybel cheese, dried meats, cereal bars and nuts were all greatly appreciated. The food provided by the hotel was better than I was expecting but still, bring what you can. The hotel I stayed at also provided basic toiletries, alcohol wipes and tissues, but I believe this can vary depending on where you stay.

I am writing this article on the final day of quarantine in Qingdao. My Beijing HealthKit QR has already reverted to green ahead of my flight early tomorrow morning. Ahead of checking out of the hotel, I will be given a hardcopy of all my test results and a ‘certificate of completion’ for my ten days of quarantine. Though rather than a congratulatory pat on the back the certificate is to provide proof I have completed the ten days of isolation in case I am challenged at any point.

All in all, it was a smoother experience than I was expecting. A lot of jumping through hoops and admin. The uncertainty of successfully completing four PCR tests and two HDC applications in four days and transiting through busy airports ahead of departure is the biggest downside along with the high cost – though of course worth going through to see family and friends again after two and a half years. The resumption of direct flights will help reduce some of the pre-departure stress and hopefully, with time, begin to reduce the costs involved.

The post How to travel to China in 2022 appeared first on Focus - China Britain Business Council.

“Our prevention and control strategy is determined by the Party’s nature and mission, our policies can stand the test of history, our measures are scientific and effective,” said state media after a meeting of the Communist Party’s governing Politburo Standing Committee on May 5th. Reading between the lines: the Party considers Covid to be an existential threat, not just to itself and its rule, but, as far as the government is concerned, the continuation of the Chinese nation-state. That is the logic informing China’s zero Covid strategy, and it goes a long way in explaining why the policy will not be disappearing anytime soon. 

There has been some public debate in China surrounding whether the country should 躺平 (tang ping) or ‘lie flat’, and accept that choosing to live with the virus risks a surge in Omicron cases that would overwhelm China’s intensive care unit capacity by as much as fifteen times. These voices are quickly quashed by the politics, however, as faith in the Party trumps science. 

This Policy Update explains the rationale behind the Party’s decision to stick with a zero Covid strategy while shedding light on how it is changing everyday life in the country. 

Background 

To borrow the smoker’s old adage, defeating Covid is easy, China’s done it many times already. Back in April 2020, for example, air-raid sirens blared and car horns were honked as people took to the streets in jubilation to mark the official end of the Battle to Defend Wuhan. Two years later, as the state media now speaks of further battles to defend Shanghai and Beijing amid a spate of Covid outbreaks in China’s two largest cities, previous declarations of freedom from Covid could start to ring hollow and risk the public wondering whether the Party is suffering from a case of premature emancipation. And looking ahead, if there are more battles in the second half of 2022, the masses may even edge closer to questioning whether President Xi really is the new infallible “Great Helmsman” that propaganda organs are busy positioning him as ahead of his election to an unprecedented third term in the autumn.

There are also compelling scientific reasons for China to maintain a zero Covid strategy. Firstly, some 52 million people over the age of 60 are yet to receive two jabs of the various indigenously-developed vaccines that regulators have approved for use in the country. A fact that is worsened by China having elected not to approve any foreign-developed mRNA vaccines for domestic consumption (the regulators approved two China-made mRNA vaccines to enter clinical trials in April 20224 ), while its Sinopharm and Sinovac vaccines are only as effective as BioNTech’s mRNA vaccine across all age groups after three shots. Secondly, China lacks the intensive care facilities it would likely need to cater for a massive spike in Covid cases. A recent study carried out by researchers at Fudan University models that hospitals would end up at 15.6 times overcapacity, resulting in 1.55 million excess deaths. 

Testing times call for testing measures 

As Shanghai enters its seventh week of hard lockdown, with residents confined to their apartments and those found either to have Covid or be a ‘close contact’ with someone who has, through daily mass testing, being sent to centralised quarantine, commentators are wondering whether what is currently happening in Beijing is indicative of China’s zero Covid future. 

Beijing residents are currently obliged to turn out for testing every day, and there is a requirement to show that a test has been taken in the preceding 48 hours in order to enter any public spaces (people have also been instructed to work at home, while inside dining is no longer permitted, taxis cannot take passengers across district lines, and all non-essential shops have shut). At the time of writing, the city has managed to avoid going into a hard lockdown, and cases hover around 50 per day; people are still free to leave their apartments to go to the supermarket and exercise. 

Tensions are running high in the capital, however. Beijing residents worry that their city could soon succumb to an extended lockdown. On 12th May, fears that the Beijing government was about to announce a three-day lockdown gripped Chinese social media platforms after the start of the city’s daily Covid press conference was delayed by an hour; netizens couldn’t help speculating that the city was going to follow Shanghai down a path where a three- or four-day lockdown turns into a never-ending one. 

Meanwhile, testing appears to have become a part of daily life even in areas that are supposedly Covid-free. Jiangxi Province as well as the cities of Jinan in Shandong Province and Yulin in Shaanxi Province, for example, have all announced that they will test all their citizens on the same schedule as Beijing, even though their respective governments have not reported any cases. Finally, even though life has reportedly returned to normal in Shenzhen after the city exited a lockdown, there is still a requirement to provide proof of a negative test taken in the preceding 72 hours in order to enter public buildings or use public transport.

Economic impact 

The lockdowns are having an enormous impact on the country’s economy, particularly in terms of supply chains, logistics, and the country’s labour force. 

Shanghai is home to one of the world’s busiest ports, yet hundreds of ships are currently anchored off its shores, unable to offload their cargo. Furthermore, even when companies can unload the components they need for manufacturing or the products their customers have ordered, they cannot get the permits required to move them off the dock, across the city, or into other parts of China. Supply chains are under considerable strain nationwide as a result. 

Meanwhile, with lockdowns shuttering factories in city after city, the country’s 300 million migrant workers that comprise the country’s informal economy are locked out of economic life with no alternative other than to go back to their family farms and a subsistence way of living. That is significant because 60% of China’s labour force works within the informal economy, and the unskilled service sector is the fastest-growing part of the country’s labour force as a whole. While it is too early to tell the full extent of the impact of a zero Covid strategy on the country’s economy, it is likely that the informal economy and migrant labourers might feel the effect for years to come, not least because of the influence it will have on industrial productivity. 

China’s Covid end game 

At present, there appears to be no clear way out of Covid for China. The country has not approved foreign mRNA vaccines for use, nor has it socialised the idea of living with the virus among the public. So, how might the government resolve the situation? These are the front runners among China watchers:

• The government very gradually eases the restrictions people are facing without stating that it is abandoning its zero Covid strategy
• After the National Party Congress this Autumn, and President Xi’s election to a third term, the government becomes more relaxed about Covid and eases the restrictions fairly quickly
• The World Health Organization downgrades the status of Covid, declaring the ‘Pandemic’ over 

The CBBC View 

Zero Covid is clearly here to stay, so CBBC has been working actively to support members by: 

• Sending a letter to Minister Wang Wentao of the Ministry of Commerce (MofCom) outlining the specific issues members are facing as a result of the lockdown measures. A copy of the letter was also shared with Mayor Gong Zheng at the Shanghai Municipal Government
• Meeting with the MofCom department for Foreign Direct Investment
• Holding a series of sectoral roundtables considering how the Shanghai lockdown has affected companies in the city and across the country more broadly, and exploring mitigatory measures.

Entering China is a key decision for businesses of all sizes. Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC can provide you with the platform to unlock your potential.

The post Inside China’s Zero Covid Strategy appeared first on Focus - China Britain Business Council.

Over the past two years, China has developed and managed effective Covid-19 control measures. Rapid lockdowns, quarantines, mass testing and travel restrictions have helped ensure China has been able to keep Covid-19 outbreaks under control. For everyone in China, the policies have allowed us to work and live safely with minimal risk of infection, and for our businesses to operate, albeit with barriers to travel to and from China.

China now finds itself in the midst of the worst outbreak of Covid-19 since 2020. Circumstances in China have led policymakers to maintain strict zero-Covid policies which are now affecting business confidence in the country. This follows the recent outbreaks, most notably the very challenging situation seen in Shanghai. The risks facing many British businesses operating in China today are at their highest since 2020, as a recent survey conducted by the British Chamber of Commerce in China shows.

BritCham China conducted a survey of its members from 6-14 April 2022, receiving over 200 responses from start-ups, small-medium enterprises and multinational corporations. Multinational corporations constituted 44% of the total respondents, while 43% of respondents were SMEs. The vast majority of respondents reported that their operations in Shanghai (68%), Beijing (34%), Shenzhen (21%) and Guangzhou (19%) had been the most affected. The highest representation of companies is in education (19%), followed by business advisory and business services (11%) and food and beverage (8%). 

Overall impact of Covid-19 and general outlook

The overwhelming sentiment expressed by respondents was that the impact of recent outbreaks of Covid-19 on British businesses in China has been severe: 74% of businesses reported a “very serious” or “large” impact on day-to-day business, business operations and cash flows. Almost no companies reported “no impact” or a “positive impact”.

If the current Covid-19 restrictions were to remain in place for the next year, surveyed businesses expected a reduction in:

1. Revenue and profit (68% of responses)
2. Expatriate and local staff (57% of responses)
3. Investment (34% of responses)
4. Local (China) operations (34% of responses)

Impact of Covid-19 on supply chains

Companies dealing with physical goods were, predictably, impacted heavily by Covid-19 lockdowns and control measures. “Slow, reduced or halted production or business operations due to supply chain issues” was reported by 42% of goods companies, but only 23% of companies overall.

However, in considering the future effects of Covid-19 control measures on their business, all respondents were concerned about supply chain issues, reflecting the delayed effect of supply chain disruption on the economy. A majority of all respondents (66%) expected continuing Covid-19 control measures to lead to a negative impact on their business through supply chain disruption, which was consistent across businesses of different sizes and across different areas of China.

Goods and services companies consistently reported transportation issues and rising costs as the top two factors causing disruption to their business. Goods companies also reported downstream delivery of products (32%) and the upstream supply of materials (25%) as significant pain points.

A majority of all respondents expected continuing Covid control measures to lead to a negative impact on their business through supply chain disruption

Impact of Covid-19 on labour and talent

A consistent trend that BritCham China has observed since the start of the pandemic is the adverse effects of the pandemic on hiring and retaining staff, particularly foreign staff. This is the case for the service sector in this survey, with 42% of respondents reporting a severe impact on attraction and retention of talent owing to recent Covid-19 outbreaks.

In the longer term, 72% of service sector companies reported a large or noticeable impact on the attraction or retainment of foreign talent based on China’s approach to zero-Covid. Only 7% of firms reported that their hiring and retention had not been impacted at all. For goods firms, the impact was notably less but still significant: 48% reported a large or noticeable impact on attraction or retention.

The three biggest labour-related issues were:

• Entry requirements such as pre-arrival testing and vaccination requirements
• Visa regulations
• Frequent flight cancellations

The education industry specifically stands out due to the difficulty in hiring foreign talent (74% of responses). Forecasts for the upcoming 2022-2023 school year indicate an expected turnover of at least 40% of teachers in foreign passport schools. Should they not be replaced, international families will be forced to relocate to ensure continued education for their children and those considering moving to China will look elsewhere. This will further exacerbate the flow of talent from China in the coming months.

Should [foreign teachers] not be replaced, international families will be forced to relocate to ensure continued education for their children and those considering moving to China will look elsewhere

Impact of Covid-19 on Revenue and Investment

Reduction in revenue is expected by 68% of companies. When asked about the impact of recent outbreaks on their company’s revenue projections, 60% of goods firms unequivocally stated their revenue projections for 2022 have decreased, and a further 32% said it was too early to predict. Services firms answered 51% and 43% respectively. Somewhat surprisingly, 77% of MNCs expect their revenues to decline if Covid-19 restrictions remain in place over the next year, in comparison to 63% of SMEs and start-ups.

Despite severe disruption to business activity, especially for businesses with operations in Shanghai and Shenzhen, there appears to be a tendency towards a cautious approach to revising investment plans, with one-third of respondents reporting that they had not yet decided on any change in investment. Another third of businesses responded that they had delayed investments in China as a result of recent Covid-19 outbreaks, suggesting that businesses were not proactively looking to reduce investment in China.

Nevertheless, when considering how the continuation of current Covid policies over the next year would impact investment decisions, 34% of all businesses expected a reduction in investment if present policies were maintained. The primary driver of these kinds of decisions was instability due to unpredictable and frequent lockdowns and other control measures.

How do British businesses feel about the current Covid-19 restrictions?

Given the success that China has had in managing Covid-19 in the two years following the initial outbreak, it is not surprising that many surveyed companies commended China on its effective contact tracing measures (46%), success at controlling the spread of Covid-19 (41%), and the efficient rollout of the vaccine programme (39%).

However, 33% of respondents indicated they were not satisfied with the management of Covid-19. Comments from respondents also report a sense of exhaustion with travel restrictions, exasperation with the scale of disruptions, and concerns over the continued shrinkage of the foreign talent pool within China.

Key recommendations for managing the Covid situation in China in the future

Respondents offered a number of recommendations for the management of Covid-19 in China moving forward:

• Allowing for home quarantine and/or other substitute options to centralised quarantine on arrival and for asymptomatic and close contact cases
• Allowing more flights into/out of China
• Allowing foreign vaccines into China
• Allowing family members to quarantine
  together
• Improving communications on quarantine and lockdown provisions and ensuring they are standardised across cities

As the world continues to work towards a future where Covid-19 becomes endemic, the approach to controlling the spread of Covid-19 in China is starting to have an increasingly negative effect on businesses. The question now is whether it is possible to mitigate outbreaks through measures that minimise economic and social disruption, but that protect the most vulnerable and do not compromise public health. If not, the foreign companies surveyed by BritCham China suggest that the prospect of prolonged and sporadic disruptions on business operations, people, logistics and supply chains will have significant consequences for their businesses in China.

Click here to read the British Business in China: Covid-19 Impact Report in full

The post What is the impact of Covid-19 on British businesses in China? appeared first on Focus - China Britain Business Council.

According to a source familiar with the matter, this timeline was set during a meeting in May amid concerns that highly contagious variants from abroad may disrupt key events like the Winter Olympics in February 2022. Government bodies did not make an official statement to confirm this timeline.

At a press conference on Wednesday, 23 June, foreign ministry spokesperson Zhao Lijian stated that “The coronavirus is still spreading in many parts of the world with the emergence of many variants. China will continue taking prevention and control measures through scientific analysis in light of the evolving situation. On the basis of ensuring safety, China stands ready to work actively to foster healthy, safe and orderly personnel exchanges with other countries.”

Other countries that have attempted to maintain zero-Covid strategies, such as Australia, have also indicated that they may not open borders until 2022.

The news comes as the southern Chinese province of Guangdong emerges from a series of outbreaks in May and June, some of which have been attributed to the Delta Variant. Experts from the Chinese Center for Disease Control and Prevention said the outbreaks should “sound the alarm” for other Chinese cities in terms of preventing the importation of variant strains.

Guangzhou reported more than 150 locally transmitted cases between May 21 and June 17, but highly targeted lockdowns and several rounds of mass testing have brought the outbreaks under control.    

China initially introduced tight border restrictions at the end of March 2020 to curb the spread of the coronavirus. In March 2021, the Chinese embassy in the UK announced that it would facilitate visa applications for non-Chinese nationals who have received at least one dose of a Chinese-produced vaccine.

All travellers arriving in China must complete at least 14 days and up to 28 days in a centralised quarantine facility depending on their living situation and final destination in China. For example, those arriving in Fujian province must complete 14 days of centralised quarantine followed by a further seven days of at-home quarantine. Nucleic acid tests to detect Covid-19 may be administered on the first, seventh, 14th, and 21st days after arrival (or more frequently if there are confirmed cases of Covid-19 on your flight).

Note: Travel restrictions are subject to frequent changes. Please check with your nearest embassy or consulate.

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Applying for a visa to China

At a press conference on Monday, 15 March,  foreign ministry spokesperson Zhao Lijian stated that “With a view to resuming international travel in an orderly fashion, starting from… March 15, China provides visa facilitation for foreigners who have received Chinese vaccines and hold a vaccination certificate.” Since then, Chinese embassies in more than 100 countries and regions, including the UK, have published new visa guidelines on their websites.

According to the website of the Chinese embassy in the UK, if you have received at least one dose of a China-produced vaccine at least 14 days prior to application, “non-Chinese nationals in the UK holding valid Chinese residence permits for work, personal matters and reunion will no longer be affected for entry into China.” If you are applying for a business/work visa, you can apply with the same documents as before the pandemic, i.e., you no longer need a special PU/TE invitation. The scope of eligibility for emergency humanitarian visas has also been expanded, including foreign family members of Chinese citizens or permanent residents of China intending to reunite with family, attend funerals, etc.

Flight availability and the travel process

Most major countries have a limited number of weekly direct flights to China, although these flights are subject to cancellation if multiple passengers from the same flight test positive for Covid-19. All passengers travelling to China must present hard copy negative nucleic acid and IgM antibody test results taken within 48 hours of your flight and a certified Health Declaration Form or Health Declaration Code obtained via the Ministry of Foreign Affairs’ Health Declaration Certificate website.  The tests must be taken at a designated institution; for example, this page links to the testing sites specified by the Chinese embassy in the UK.

As of late December 2020, direct flights between the UK and China are suspended until further notice. You can transit via a third country but you must re-take both of the aforementioned tests and re-submit the health declaration. To do this, you must either be able to enter the country you are transiting through or transit via an airport with testing facilities; to date, these include Amsterdam’s Schipol Airport, Helsinki-Vantaa Airport and Frankfurt Airport.

It is also worth noting that in England, you must have a permitted reason to travel abroad (such as work, education, or participation in elite sports competitions) and complete a declaration form before travelling.

Quarantine requirements

All travellers entering China must complete at least two weeks and up to one month of government-organised quarantine, with the exact length depending on your final destination in China. For example, travellers arriving in Beijing must complete 14 days in a centralised quarantine facility, seven further days in quarantine either at home or in a centralised facility if home conditions are not appropriate, and seven days of health monitoring (usually reporting your temperature twice a day to your local community management office). You will receive nucleic acid tests (and potentially blood tests or other tests) when you arrive at your first point of entry in China and at designated times throughout quarantine.

Note: Travel restrictions are subject to frequent changes. Please check with your nearest Chinese embassy or consulate for the latest information before making travel plans.

The post The latest updates on China’s travel restrictions appeared first on Focus - China Britain Business Council.

RED started off as a platform for sharing product reviews and recommendations among young Chinese consumers, after which the platform began to implement e-commerce features that allowed individual merchants or brands to open up stores and sell products. However, despite the e-commerce options and the ability to purchase directly on RED, the platform is still mainly used to research products and find reviews, before the buyers head over to other e-commerce platforms such as Tmall or JD, to purchase the product.

Considered one of the biggest online lifestyle communities in China, last year, the platform reached over 85 million monthly active users on average and had a total of over 250 million users. RED’s user base is predominantly female, with the majority still under 30 years old, which makes the platform popular for categories that include travel, beauty, fashion, luxury goods, and fast moving consumer goods (FMCG). Although beauty is the largest category on RED, travel is currently the fastest growing.

These changes will have a large impact on smaller brands who require a lower commission rate in order to consider opening a store on the platform.

RED has its own user base, but compared to larger e-commerce platforms, user numbers are still relatively small. It’s therefore no surprise that the platform is better known for grassroots promotions and product seeding. The reviewers on the platform are Key Opinion Consumers (KOCs), a type of influencer that’s smaller in scale than a Key Opinion Leader (KOL), and which focuses on product testing and reviews. KOCs are generally considered more trustworthy and authentic due to their image of being ‘just another consumer’, making them a powerful influencing factor on the purchase decision making journey of consumers. Therefore, RED is a powerful tool for building brand awareness, especially if the target audience matches with RED’s already established user base. Many brands invest in building up a presence on RED to increase their credibility and reputation among consumers, even if the brands do not have a store on the platform.

Xiaohongshu reduces commission rate to just 5%

Reduction in commission rate

In early July, RED sent a notice to sellers, informing them of a reduction in the base commission rate that the platform would be charging. Before the reduction, RED’s commission rate was between 15 and 20%, depending on the merchant and the category of goods, which makes the drop a significant change.

Here’s an overview of what the company outlined in their notice to users:

• As a result of the COVID-19 outbreak and the slow recovery of the Chinese market during the latter half of the year, RED announced that it is willing to work with the merchants on the platform to build an ecosystem.
• Starting from July 1^st, 2020, RED will be reducing the base commission rate to 5%.
• The reduction in the base commission rate is applicable to merchants that have signed a store service agreement with RED and whose agreement is still in effect. An exception to this includes instances in which the merchant and RED have other agreements stipulated.
• For sales that are directed from RED’s product recommendation features, the commission rate charged by the platform is reduced to 3%.

With the reduction in commission rates, more brands and merchants will be encouraged to focus their e-commerce efforts on RED, by increasing investments, opening up a store, collaborating with KOLs, conducting product seeding, or by utilising the advertising tools that the platform has available. These changes will likely have a large impact on smaller brands that have lower sales volumes and require a lower commission rate in order to consider opening a store on the platform.

Since RED’s main source of revenue comes from advertisements, dropping the commission rates could be an attempt to increase the merchants on the platform, and therefore the revenue from sales commissions.

The lowered rates will also make RED more competitive for brands when compared to larger e-commerce platforms such as Tmall, which has a commission rate of 0.5 – 5%, and JD, which has a commission rate of between 2 and 8%. The exact commission rates for both Tmall and JD are dependent on the category. Moreover, RED prohibits diversions to other platforms such as Douyin, Kuaishou, Weibo and Taobao, which further limits the loss in traffic to competitors.

The increased attention on RED from brands and sellers will also impact its customers since after opening stores on the platform, brands will begin to drive customer traffic to RED. RED is likely to therefore become more accepted among users as a platform for not only reviewing and recommending products, but also for purchasing products. This shift in perception among consumers should also increase future e-commerce activity on the platform and could be an attempt to create a closed-loop system where users can go to RED both for product research and product purchase.

Sandra Weiss works for RedFern – a China-specific, full-service agency that helps brands navigate the digital ecosystem, increase their brand awareness and convert that awareness into sales. Learn more here.

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What are the main changes that you have seen in Chinese consumers because of Covid?

Mintel’s analysis of consumers, markets, new products and competitive landscapes provides a unique perspective on global and local economies.

Mintel started tracking the Covid-19 impact on consumer behaviours and market shifts as early as February, starting from China, when the country was in a serious situation amidst the pandemic. Our Global Covid-19 Consumer tracker was initiated even before WHO declared this a pandemic. We realised that Covid-19 would have a long-lasting impact on businesses over brands, and we quickly started conducting research and sharing insights via thought pieces on our blog; exclusive insight reports; and running Covid-19 sessions for our clients – both in China, APAC and globally – in order to monitor shifts in consumer sentiment and behaviour, help provide any insights or guidance for their brand repositioning, product innovation or market opportunities.

In China, with the number of diagnosed Covid-19 cases decreasing, economic activities are beginning to resume. In early May, 88 percent of people reported working at their usual office location, increasing from 56 percent who said the same in early March.

Covid-19 has brought many changes to Chinese consumer behaviours and markets as well. Some of them are just short-term changes, like at the very beginning of the outbreak, the most impacted industries were travel, leisure and hospitality industries. But with the pandemic coming under gradual control and people starting to go back to work, we see a slight increase in travelling, and in the hospitality industries. Chinese consumers are experiencing more change as their priorities shift, based on the events of the last few months.

Consumers are reassessing what’s important with around one-third saying that luxuries are less desirable now.

New research from Mintel reveals that when it comes to spending priorities, consumers are reassessing what’s important with around one-third saying that luxuries are less desirable now. The desire for luxury products and services is dampened after Covid-19. In the short-term, this is a temporary setback, mainly associated with financial pressure, and is likely to recover as personal financial circumstances improve. In the long-term, expect to see the definition of luxury evolve and become a state of mind, rather than ownership of things. In general, we predict ‘mindful consumption’ will emerge as a notable trend that will see more consumers turn away from indulgent spending and review what matters in life.

Would these changes have happened anyway, and it’s just the timeline that has changed?

Covid-19 is something that has never been seen in human history. No one has had experience in handling this specific virus before. It is reasonable and understandable that essential changes happen during and after the pandemic. The consumer market and consumer behaviours are always dynamic and subject to changes. That’s why being on the frontline of changes and consumer trends is key for brands to realise a sustainable business going forward.

While the current situation is completely unique, we do have past virus crises like SARS and economic recessions to look back on and learn from. It is Mintel’s research from those difficult times that our analysts refer to in their research and analysis today. For example, in the UK, some of the biggest winners of the last recession were absolute luxuries, the likes of premium skincare and sparkling wine. They are products that no one actually needed, but that did a great job of lifting people’s moods in tough times.

The outbreak has certainly created many challenges for companies in the short term, but it has also made understanding markets and consumers more relevant and important than ever.

Your 2030 Global Consumer Trends report has seven drivers. Can you elaborate on what they are?

The 2030 Global Consumer Trends is our predictions for how consumers will evolve over the next 10 years, and how the pandemic has accelerated these predictions, effectively bringing the future forward. We have incorporated seven key factors that drive consumer spending decisions:

• Wellbeing: Seeking physical and mental wellness.
• Surroundings: Feeling connected to the external environment.
• Technology: Finding solutions through technology in the physical and digital worlds.
• Rights: Feeling respected, protected, and supported.
• Identity: Understanding and expressing oneself and one’s place in society.
• Value: Finding tangible, measurable benefits from investments.
• Experiences: Seeking and discovering stimulation.

Taking tech as an example, how has this changed for consumers because of Covid-19?

The Covid-19 outbreak is pushing brands to test multiple channels to keep consumers engaged. As consumers battle with feelings of loneliness and isolation, technology has become a lifeline for consumers wanting to stay connected to loved ones, work remotely and access both shopping and entertainment. We predict that many of the short-term technology behaviours consumers have adopted during the pandemic will persist long after the restrictions are lifted. We have seen that:

• 49 percent of Spanish consumers say most of their leisure activities involve using digital technology
• 30 percent of surveyed consumers say they have purchased sports and fitness products through public accounts/bloggers’ recommendations
• 73 percent of US consumers agree that they like to keep well-informed about the latest news/happenings in the world

The democratisation of digital entertainment means consumers now expect that to continue, but content providers will be challenged to re-install rates consumers are willing to accept over time. E-Commerce and online transactions have the potential to become – and remain – the norm, and gaming used as a reprieve will become an essential to everyday lives. Consumers will scrutinise their digital entertainment spending and make reductions, but are unlikely to eliminate it entirely. E-Commerce and digital transactions will move further into the mainstream.

Meanwhile, the impact to globalisation could be huge, with more domestic production, less complex supply chains and higher prices as a result.

Here are three technology trends to watch for:

New tech normal

Technology has become a lifeline for people throughout the pandemic, especially seniors, and those expectations are now becoming normalised. The shifts in how and what people do online, and the impacts on traffic patterns will remain, causing companies to further innovate to break down barriers.

Innovate ahead of needs

The resistance to digital adoption that has persisted for decades has seemingly evaporated overnight. Consumer expectations and behaviour will only be better-informed, and more demanding.

Shift from destructive to constructive

The widespread adoption of e-sports shows the collective strength of the gaming community within the global conversation surrounding essential entertainment. This shift toward a more constructive view of technology and connectivity will have profound effects over the next decade.

Which types of clients have suffered from the pandemic and how have you helped them?

The outbreak of Covid-19 has already spread to an extent that it is having a profound impact on the global economy and consumer markets. We are seeing that some industries such as food service and travel are taking an immediate hit due to necessary quarantine measures in order to protect people. Leisure and entertainment industries also suffered a great loss from this pandemic.

Undeniably, it will take time for these sectors to recover, not only so that necessary policy changes can be put into place, but also so consumers’ can heal and prepare psychologically.

The outbreak has certainly created many challenges for companies in the short term, but it has also made understanding markets and consumers more relevant and important than ever.

We have launched monthly Covid-19 tracker data in APAC regions and globally to share with our clients of all industries about the changing impact and consumer behaviours brought about by Covid-19. We have hosted several webinars on subjects including beauty and personal care, food and drink, corporate social responsibility, food ingredients, the overall impacts over local economies, and consumer confidence.

Mathew Nelson has found more time to train for triathlons

How has your work changed? 

Mintel is a global company with local presence in many markets. With economic globalisation, our clients are actually looking for market insights in many markets. For instance, our clients in Australia are very interested in what’s going on in China’s consumer market. Before the pandemic, many of our teams and departments already worked remotely and across different time zones. It’s certainly an adjustment of how we work, but we put our employee’s health and safety as the top priority, then we focus on helping our clients find the right strategy to deal with the dynamic consumer market request.

In the current scenario, Covid-19 changes the way people communicate and do business, and Mintel is no exception. Due to the outbreak, we have reviewed our consumer research process globally, including in the APAC region, where we were primarily using a face to face collection method. We took a decision to adopt an online methodology, which removes the need for close interaction between interviewers and the public, and so allows all involved to comply with social distancing measures.

What are your hobbies and are they impacted because of COVID-19?

I am located in Perth. My wife and I are here until things start to open up – we are Covid-19 nomads essentially. We have both been incredibly busy with work but it has also given us a chance to slow down and find a balance in life, especially as I used to spend 50 percent of my time on the road travelling for work. We’ve settled into domestic life of cooking and catching up on books, movies and the very best of Australian TV. My favourite part is that I am actually getting in more training on the bike and running more than I ever have before, as I spend a lot of my spare time participating in triathlons.  It definitely provides some respite from the stresses of life.

The post Matthew Nelson of Mintel APAC looks at the future of Chinese consumer trends appeared first on Focus - China Britain Business Council.

As a CPPCC committee member, what are your thoughts on the way the Chinese government has handled COVID-19 so far?

The two sessions were delayed this year from March to May due to pandemic. When the Coronavirus disrupted our community at the beginning of 2020, the government took swift and resolute measures to quickly put the situation under control, showing its edge in responding to such a crisis.

The 5,000 years of Chinese history is one marked by myriad adversities and vicissitudes but the people always came out stronger. In 2018, I witnessed what the country had achieved after 40 years of dedicated reform and opening up. In 2020, we are not only fighting against Covid-19 but also eradicating poverty. Every one of us wants to contribute, as we know that the realisation of the country’s ambition of “building a moderately prosperous society in all respects” ultimately relies on every individual’s efforts to make a better life.

As Honorary President of the All-China Federation of Returned Overseas Chinese, how have ethnic Chinese overseas contributed to China’s success in fighting Covid-19?

I have been through the more than 40 years of Reform and Opening-up and witnessed how the market economy and businesses have blossomed in China during this period. Many overseas Chinese have devoted themselves to making contributions to their homeland over the years, and the overseas Chinese community always support their homeland in difficult times.

When the outbreak was confirmed, the All-China Federation of Returned Overseas Chinese (ACFROC) issued a written proposal for donations for the pandemic, and members of the federation were extremely resourceful in their response. The Reignwood Culture Foundation earmarked a fund for delivering supplies to the neediest places, and local Reignwood offices all acted quickly, donating beverages and providing supplies for front-line workers. Reignwood Aviation also volunteered to deliver urgent supplies to the then epicentre Wuhan.

Yan Bin suggest China invest further in the health industry and the aviation sector

What did you and other members propose to CPPCC for post-pandemic China?

Considering the current challenge of pandemic prevention and economic recovery, I included the following three points in my proposal to the government:

1. To invest further in the health industry and advocate a healthy lifestyle. In a post-Covid-19 era, people will be more aware of the importance of their health and pay more attention to various aspects of health-related issues such as diet, lifestyle and their environment. China has included building wellness retreats into the national development strategy with the Healthy China Initiative 2030. The plan of building towns into wellness retreats not only offers opportunities for the health industry but also brings together tourism, recreation, wellbeing, healthcare, and elderly care. The wellness retreats and the business opportunities it creates offer a new economic growth point in a post-Covid-19 society.
2. To explore the benefits of traditional Chinese medicine. Integrate TCM and Western medicine into prevention, treatment and recovery, while advocating scientific methods and a healthy lifestyle. At the same time, equip TCM with modern technology. For example, new techniques of plant extraction can be used in developing medicine based on herb extract, and new fermentation technology can also be adopted to improve the quality of TCM products.
3. To leverage general aviation in emergency-responding and economic recovery. The general aviation can add to the capacity of civil aviation when there is a vital emergency. It can also meet the urgent demands of short-haul delivery, disaster relief, fire fighting, and field patrolling. For example, helicopters can be used to widely spread medicine for pestilence, extinguish regional fires, and fly ad-hoc delivery lines. It contributes to the national efforts in supply-side structural reform. China’s general aviation industry is still young and needs to catch up with international standards. Nevertheless, the industry is a growth point, with strategic implications and profound potential. If the government can support with favourable policies, tax reduction, financial subsidies, professional guidance, state-led purchases and the opening up of air space, the general aviation industry will bourgeon and become one of the key drivers of our post-Covid-19 growth.

The plan of building towns into wellness retreats not only offers opportunities for the health industry but also brings together tourism, recreation, wellbeing, healthcare, and elderly care.

How might the Reignwood business change or be affected in a post-COVID-19 world?

When Covid-19 became a global crisis, human health was not the only thing that took a hit – the global economy has felt the impact too. Now, as the conditions improve, countries have put return-to-work plans top of their agenda, to ensure they are not left behind in the economic race.

In China, we believe in a hands-on experience. As a businessman whose career spans more than 40 years – long enough to witness the transformation that the market economy brought to the country – I have always committed to the real economy where I can, in a bid to build strong businesses and contribute to society. As a member of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC), I sometimes think about the bigger picture and as a result, feel it’s my responsibility to give back more and do more.

How do you think the hospitality and the travel industry will change?

The hospitality and travel industry will move towards higher quality travel in the future, where people will carefully choose their holidays or business travel to ensure it is done safely and in an environmentally-aware way. As I mentioned above, travel and wellness and other types of healthcare will become increasingly intertwined.

How is Britain currently regarded as an investment destination in China?

Premier Li Keqiang stressed in his Work Report that economic recovery is China’s top priority, with important roles for China’s private sector, the role of Chinese SMEs and the importance of foreign trade and investment.

Therefore, I believe the UK-China relationship will be even stronger with both countries working hard to create jobs and upgrade bilateral trade and investment.

We are all going through a difficult time where confidence has a higher value than gold. I have great faith in China’s economic recovery, not only because I believe the government is capable of leveraging the resilience of the socialist market economy, but also because I know our people are of indomitable spirit.

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