For more than a year we’ve been relentlessly writing about how China has become so much riskier for manufacturing and how so many companies that manufacture in China are desperately looking to move their manufacturing elsewhere. I predict that at least 50 percent of the American and European companies that do all of their manufacturing in China today will have moved at least 50 percent of that manufacturing out of China within the next 2-3 years. As Kenneth Rapoza, Forbes Senior Reporter for Emerging Markets, put it in his recent article, Coronavirus Could Be The End Of China As A Global Manufacturing Hub: “The new coronavirus Covid-19 will end up being the final curtain on China’s nearly 30 year role as the world’s leading manufacturer.”

And yet, as negative as I am about China as a global manufacturing center, I am nearly equally optimistic about it as a place for foreign companies looking to make money on certain goods and services. And on this I am not the only one as our China lawyers have in the last six months or so been seeing a meaningful uptick in companies looking to go into China. I cannot resist noting however that with the uptick in our China company formation work we are seeing a near corresponding uptick in our work in helping companies in China shut down their operations there. For how to shut down a China company correctly, check out A Guide to Shutting Down Your China WFOE. All of this just goes to show how what to do in business with China truly does so much depend on each company’s specific situation.

With all that China has been going through with the coronavirus, with China’s economy in shatters, with relations between China and the United States and between China and the EU in rapid decline, why are many Western companies moving as fast as they can to go into China?

First off, they uniformly believe that China will eventually recover from the coronavirus and on that I 100% agree. And when China does recover, there will be a lot of pent up demand for goods and services and on that I 100% agree. What goods and services? I keep seeing people on places like Linkedin talk about how this pent up demand and how now is a good time to start preparing to meet that demand, but pretty much every time I try to get these people to be specific, they demur.

The coronavirus is, as we say in the law sui generis, which essentially means of its own kind. Sticking with Latin, it’s terra incognita. We could go back and look at what industries thrived after the Spanish Flu but that was so long ago I’m not sure that would be helpful. So I am going to venture that the industries that will thrive in China after the coronavirus ends will mostly be the industries that were thriving before the coronavirus hit, along with some that will thrive due to the changed perspectives of people who went through the coronavirus situation. People moved online and some good percentage of them will stay there. People have been cooped up in their houses for long stretches without being able to travel. Will this eventually lead to an increase or a decrease in future travel? I don’t know. Construction of buildings other than hospitals has gone way done. Housing sales have plunged. I am guessing both of those things will eventually rebound and then go into overdrive dealing with pent up demand. And with that will come the sale of goods and services like furniture and architectural services, etc. I could go on and on, but you no doubt know much better than I do what drives demand for what your business sells.

Way back in October, 2018 — when many still believed China trade would quickly revert back to the way it had always been — we did a post, setting out what we were seeing then, which is pretty much what we are seeing now: