As China gears up to overthrow the U.S. as the leading superpower in the world one can only expect things to heat up on the world stage. It has become almost impossible these days to not find a mention of China in the leading business newspapers of the world. As some of us are gearing up to visit China next month as part of our course module “Doing business in emerging markets”, the School decided to play host to Michael J. Enright, “one of the world’s reigning strategy guru”. Michael is a leading expert on the regional strategies of multinational companies in the Asia-Pacific and he shared his insights on China’s business environment.
Michael explained the magnitude of opportunity that exists in China for businesses to exploit. It has become one of the largest markets for numerous consumer and industrial goods. As per the data provided by China Statistics Bureau, 25 provinces in China had a GDP of over $100 billion for the year 2011. The two major drivers of consumption have been economic growth and growing urbanization. Clearly, China is an opportunity which global heavyweights can’t afford to miss. In fact it needs to be an integral part of the strategy of these companies. Though, China is based on different values but it has still been able to prosper, which is a fact many people in the democratic part of the world find hard to digest. The government has played a dominant role in China’s economy until now and it seems it would continue to do so in future as well but off late it has been taking steps to enable the private sector improve its contribution to the economy.
The challenges of operating in China are as big as the opportunity. Companies are discovering that many industries are in the nascent stage of growth and this rapid growth is sometimes not turning into profits. Also, consumers are not that brand loyal in China. Communication can also be a big issue for foreign multinational companies operating in China. It’s not being right, but being on the right side and having effective communication. Though it can be a difficult market to crack for businesses, the potential rewards can be enormous. In the words of Michael, “China changes, China adjusts.” The lecture provided us with valuable insights which not only helped us understand the Chinese market but also understand the nitty-gritty one can expect to encounter in an unfamiliar environment. These are lessons for lifetime and I would be looking forward to more such intellectually stimulating lectures.
– Rahul Jindal, FT MBA 12/13