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A conversation with Jens Eskelund on the challenges, misperceptions, and changing conditions for foreign companies in China 

Photo Credit: Shutterstock.com/178707863

Jens Eskelund has been president of the European Union Chamber of Commerce in China since May 2023. His present role is Chief Representative for Maersk in the Greater China Area and North-East Asia. He has lived and worked in China since 1998 and held various positions for Maersk in China throughout his career. He is also the former chairman of the Danish Chamber of Commerce in China as well as the Maritime Working Group of the EU Chamber of Commerce in China.

Audrey Plimpton, Salzburg Global Communications Associate: What are the biggest challenges facing European companies operating in China today? 

Jens Eskelund, President of the European Union Chamber of Commerce in China: I think not just for European companies, but for the foreign business community, the largest challenge right now is that the predictability and reliability that were a defining feature of China when companies were making investment decisions have more or less disappeared. Many of us feel that there's a very short line of sight and a high degree of unpredictability in terms of the regulatory environment, and that creates a bit of hesitation.

On top of that, you may add a dose of geopolitical tension. What Covid told us was that there is a certain risk attached to putting too many eggs in one basket and that you simply cannot focus just on cost efficiency, but that you would need to find ways to strengthen resilience and be prepared when black swan events happen, as it did with Covid and as it did with Russia's invasion of Ukraine. 

AP: Having lived and worked in China for over 25 years, how have the conditions for foreign companies conducting business there changed? 

JE: When I arrived in China back in 1998, the GDP per capita in China was around 1,000 US dollars, and today it exceeds 12,000 US dollars. It's a vastly different country. It was a country that was learning how to deal with foreign companies, but there was an air of optimism. China had begun talks on WTO accession, and it became clear fairly early that China was on the path to accession to the WTO. Those possibly were the golden years in terms of China's engagement with the world in the period from its accession to WTO in 2001 until the global financial crisis. These were fantastic years where everything was possible. After the global financial crisis, [China] was brought down to earth again. 

Today, we again find ourselves in a situation where there is a bit of unpredictability. We can feel that change is underway. We don't know quite what it will look like, but I think many of us feel that at the present point in time, the risk is probably primarily on the downside. 

AP: Are there any misperceptions regarding China or doing business there that you would like to address? 

JE: A misperception is that the market is automatically rigged against foreign companies. I think you will find that in some industries, certainly strategic industries, they are receiving ample policy support and privileged access to the market relative to European companies. But by and large, what we are seeing is that many Chinese companies are simply just very, very good, and that oftentimes it's a matter of European companies recognizing the nature of the competition and bringing their best game to China to succeed. In the EU Chamber of Commerce, we have characterized China as a fitness club for European companies.

AP: Is there a disconnect between foreign companies’ perspectives of China and those of their governments? If so, what are the sources of disconnect and how should we address that? 

JE: What we are seeing now is that it is becoming less obvious that what is good for European companies and China is also good for Europe as a whole. There has always been an element of European companies having activities in China, [which] is also creating value in their home markets. But what we are seeing now, is that European economies are under pressure and some European companies are manufacturing in China for export into Europe. Some will argue that the value created for Europe by European companies in China is perhaps not as high as it has been in the past. One thing is the continued value being created for shareholders by companies in China. The other question is how that is being perceived in Europe, where perhaps communities have experienced that manufacturing facilities have closed and moved out for cost or other reasons. 

I think it's important that European companies in China, and European companies in general, work to find ways where it becomes clearer exactly where the value is that is being created, not just for European companies in China, but also for Europe. That value proposition needs to be clearly articulated. 

AP: What do you hope changes within European discussions about conducting business in China? 

JE: I think a common misperception is that subsidies are a very big part of the problem. When European companies are losing competitiveness, I think there's perhaps too little focus on some of the systemic issues that create advantages for Chinese companies, and which will be nearly impossible for European companies to address…

European workers have been striving for 150 years to improve their [working] conditions. It cannot be that it becomes a race to the bottom where you try to compete, and the cost of that competition is that you roll back what have been real advantages achieved. There must be other ways. The discussion we must have with China is how it will be possible to develop a functioning relationship that allows a viable European industrial structure without having to roll back and cause great harm to the European way of life.

Jens Eskelund attended the Salzburg Global Pathways to Peace Initiative titled “Crossing New Rivers by Feeling the Stones? Aspirations, Expectations, and China's Role in the 21st Century” from February 18 to 21, 2024. This program was a forward-looking opportunity to debate and understand the future of global engagement with a rising China. It convened an intergenerational, international, and interdisciplinary group from government, the private sector, and civil society to engage in off-the-record conversations to evaluate sources of misunderstanding between China and the globe, to explore state and non-state mechanisms through which to productively engage China, and to identify risk-mitigating pathways.