China Is Not the Risk. Leaving Is.

Link: China Is Not the Risk. Leaving Is.

By Emmanuel Hemmerlé, 30 December 2025

Tomorrow, December 31, 2025, Triumph, the German lingerie leader, will exit China. One of the first Western brands to enter in 1994, Triumph became iconic for generations of Chinese women. Its departure adds to a growing list of Western brands scaling back.

Trade wars are not the cause; business dynamics are: declining market share, falling sales, weak profitability, and investment demands HQs can no longer support.

That said, many executives on the ground believe these outcomes were avoidable.

Yes, the macro environment is tougher. Consumption is softer. Price sensitivity is higher. Competition is fiercer. Foreign brands’ historical advantages have narrowed as local players catch up.

From my experience, the true constraints often lie within, including:

- Unfounded alarmism around 'China risk'
Misconceptions about political or geopolitical risk mislead boardrooms and lead to flawed strategic decisions. Boards must seek realistic, on-the-ground intelligence.

- Leadership gaps
A dearth of competitive drive, poor execution, or compromised integrity may sometimes be factors that undermine business. Today's GMs must be brand architects, talent developers, strategic translators, and, above all, courageous, entrepreneurial, and ethical leaders.

- Decision bottlenecks
Insufficient local autonomy and limited China literacy at HQ create missed opportunities. Today’s complexity demands agile, empowered local teams supported by a China-savvy HQ.

- Underinvestment
Excessively high return expectations stifle growth. Profitable expansion requires sustained investment in innovation. In some cases, profits generated in China were effectively repatriated, leaving little to reinvest locally.

- Overpowered support functions
Bureaucracy and over-regulation choke entrepreneurship. By contrast, Chinese companies keep HR and finance lean and clearly subordinate to the business, driving action.

The real risk is not where most think it is: exiting China…

- Undermines credibility and market value. The idea of returning when conditions improve is an illusion. Markets don’t forgive those who walk away.
- Prevents market diversification across key global markets.
- Misses the chance to build muscle in a living lab of commercial and tech innovation. Some global companies I’m supporting are learning from local competitors to sharpen their global edge.

Today, sustained success hinges on two key factors: leadership talent and brand. Emerging Chinese companies allocate more revenue to these areas than their Western peers. Brands including Ubras (Triumph’s competitor), Yili, Songmont, Pop Mart, and Xiaomi illustrate this shift.

More than ever, playing to win means partnering with top local experts for key talent acquisition and brand development. Self-medication won’t cut it.

The message is clear: Don’t capitulate. Adapt. Commit. Invest. For any company with global ambitions, no future unfolds without China.

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