Wuhan and the coronavirus: an opportunity to talk about risks (and their anticipation!)

Published at 29/01/2020

The city of Wuhan, which has been in the news for the past few days due to the impressive quarantine imposed by the Chinese authorities in an attempt to prevent the spread of the coronavirus, is a former French trading post. The links between this metropolis of more than 11 million inhabitants and our country are as powerful as they are ancient: today, it is the Chinese city that receives the most French investment. More than 500 French expatriates work there, mainly in the automotive sector. PSA has three production sites there, and Renault opened its first Chinese plant two years ago.

Beyond the automobile sector, Wuhan has long been a popular gateway to China for French companies, and more broadly for European companies. Its strategic location, at the crossroads of the Pekin-Hong Kong axis and the Yangtze River, is a clear advantage, making it a prime location. Wuhan also has several European consulates as well as a very active Alliance Française, and has been developing important cultural partnerships with France for many years (notably with the University of Lille and the Ecole des Chartes): So many facilitating elements in a country that, in many ways, may seem (wrongly! ) to be difficult for French companies to access.

While the factors of attractiveness are well known, the risks are less so. For example, the rollercoaster trade war between Beijing and Washington over the past few years has not necessarily been well anticipated by all players. The consequences of the customs taxes imposed by Donald Trump are having a real commercial impact on foreign companies operating in China. Of course, the particularities of the Chinese political model are more familiar to us. But even then, few people had seen the Hong Kong crisis coming and the sudden uncertainty that it brought to the heart of a regime that is so often praised for its stability.

Health risk: an imprecise fatality

Health risks can never be ruled out - but they are inherently extremely difficult to predict. However, it is wrong to claim, as we have heard on several occasions in recent days, that it is ”unpredictable” and that it occurs suddenly and inexplicably. In recent years, the question of anticipation, prevention and management of health risks has been the subject of new interest, particularly by experts in the field of internationalization of companies. Based on the state of health infrastructures, on the degree of implementation of international health standards, or on demographic modelling, these experts provide valuable forecasting elements.

Of course, even the most sophisticated expertise would not have been able to predict the current situation, nor would it be able to guess at future developments, all of which one hopes will be as limited as possible. But the role of an expert is not to predict the future: It is about finding solutions for each eventuality, valuing its probability and its impact on the company's activity. A French entrepreneur based in Wuhan, specializing in the supply of equipment for the automotive industry, recently explained that intelligent inventory management, which is supposed to alleviate the problems associated with the lack of inventory, is a key factor in the success of his company; The company recently explained that intelligent inventory management, which was supposed to alleviate the supply problems of its Chinese customers in a crisis situation like this one, was suddenly useless. For one fact had not been anticipated: the freezing of all shipments from Wuhan…

In such a case, when the risk could not be fully anticipated, it is necessary to be able to rely on a key factor: adaptation. To act quickly, to activate networks that one would not normally have thought of, to question one's own experience: these are the qualities that these extraordinary contexts require; These are the qualities required in these extraordinary contexts, which will certainly become more frequent and intense in the future due to the extreme risks associated with climate change, and for which expert strategic advice is always needed. The entrepreneur I mentioned earlier decided to supply his customers from his French production sites by air freight. A very temporary solution, of course, but one that can prove crucial in an extremely competitive market such as the Chinese car manufacturing industry.

There will always be wise minds to criticize those who have taken risks, and explain that they were wrong. On the contrary, I believe that taking risks is the most noble part of being an entrepreneur, because it is the most difficult and the most rewarding. The men and women who accept the challenge of internationalization show courage. They deserve to be supported, advised and surrounded by experts in order to make their project a success. As you know, this has been my commitment for many years, and this is the role played by the Mission Internationale marketplace, which I launched last November. By connecting companies with independent or expert consultants, regardless of their country, sector of activity or field of expertise, it provides essential resources for the success of any internationalization process.

Crises such as the one we are going through should in no way fuel discouragement or pessimism: on the contrary, they are all opportunities for reflection, improvement and perfection. Don't we often recall that the Chinese ideogram for ”crisis” is composed of two symbols meaning respectively ”danger” and... ”opportunity”? Entrepreneurs need to be visionary, just like the experts who help them to take the international step.