At the beginning of the COVID-19 pandemic, China adopted a “zero-COVID” policy with a goal to reduce infections to zero instead of living with and trying to limit the spread of the virus. Widespread lockdowns of the population were instituted, and businesses were shuttered.
At first, this approach was revered as the preferred path by the Chinese population and also supported by many Western health officials. While Wuhan experienced a major lockdown on the eve of the COVID-19 outbreak, the impact of how China handled the pandemic wasn’t really felt until the lockdowns reached major cities like Shanghai, Beijing, Tianjin and Guangzhou. Lockdowns only intensified in 2022, which could go down in Chinese history as the true year of the lockdowns.
Loosened Restrictions
With the third anniversary of the COVID-19 outbreak nearing, waves of mass protests by Chinese residents have pushed the government to loosen restrictions that have crippled businesses and stoked unemployment.
China’s National Health Commission (NHC) will no longer track and record asymptomatic COVID-19 cases and the country’s “travel code,” used to track whether people had traveled to areas with COVID-19 cases, has gone offline. Mainland China is also eliminating many of its quarantine and testing requirements, and Hong Kong has lifted all COVID-19 curbs on inbound travelers.
But political and economic risk remains high. Combined with the regulatory crack down on tech companies and U.S.-listed Chinese companies, MNCs are questioning their overall investment objectives and supply chain relationships in China.
Growth estimates for China in 2022 have now fallen below 3%, or half China’s official 2022 GDP target of 5.5%. China’s GDP in 2021 was 8.1%. China’s lockdowns have also disrupted supply chains and other nations’ economies worldwide.
2023 Outlook: Observe and Shift
2023 is shaping up to be the year of “observe and shift”: China-watchers will be observing what is happening very closely and shift their business approaches as a result.
Now that China’s key leadership is solidified, stakeholders with a China interest will be watching how closely and how quickly policy will change. They’ll also be observing if those changes are enough to reduce social dissatisfaction and reduce instability and volatility.
All decision-making will be further complicated by what is predicted to be a huge surge in China’s COVID-19 cases, with seemingly little in place as mitigation measures to deal with a flood of hospitalizations and deaths.
Ambiguity is the norm. Parents are used to school buses not showing up and urgent notes about online learning. Testing requirements are discarded, and people are making travel plans. Some people remain cynical while others are hopeful. There are some positive dynamics we are seeing such as more transparent auditing access for U.S.-listed Chinese companies, public commitments to greater openness, flexible health care management for illness, and others.
Communicate with Caution
So how should companies communicate in this environment? In short, with a much greater level of caution.
There is now a higher level of skepticism and criticism among Chinese citizens, though hope remains for many. As a result, brands need to navigate even more carefully than before in order to avoid “taking sides” and walk the fine line of neutrality. The wise path will be a return to the roots of the brands themselves. Avoid agendas and focus on the product and consumer pain points instead.
Some issues and agendas that are paramount in the West lack relevance in Asia and China specifically. Consumer brands should focus on how they address pain points with balance, how they can make people’s lives easier without getting into to the weeds about what will happen regarding COVID-19. The same holds true for technology or business-to-business.
Global media will continue to seek comment on how companies are handing the changes and what they are doing to respond. Given the greater ambiguity and overall volatility, tread carefully. Corporates should take full advantage of owned media to tell their side of the story. After all, things can change very quickly in 2023.
Follow for on 2023 trends in business, read the full ICR Trends series on the ICR Insights blog.
