Updated Vision in China

“Updated Vision in China“
© PK* Oct.29, 2009

 

WHAT?
As a potential leader, you have to keep your eyes on things that happen around the world. A little change can have a huge impact on the whole system. With the economic insight, you will be able to see a big picture and make a better decision, especially in the global business.

In the past few years, many companies thought they would be in a better position following the economic trend to relocate their businesses to China. Books about how to do business in China are written to support the increasing rate in demands. As I have read, most stated that: 1.) There is a great opportunity doing business in China, and 2.) You have to understand Chinese culture in order to be successful. That’s true. However, many people forget that, in the economic growth, demands not only increase but also change. It’s a dynamic process.

Today, Shaun Rein from “China Market Research Group” mentioned in “Forbes” that we could no longer rely on the idea of low-cost manufacturing in China since the Chinese government and people are now demanding change.
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What is the change here?*

1.    China’s economy is export-led

“…the government wanted to reduce its reliance on foreign energy, so it pushed for a more service-led and less export-led economy. “

“The export sector is going to continue to play a diminishing role as domestic consumption increases…”

[PK*Note: This is interesting but it’s still a prediction. Some doubt if the domestic consumption will really increase.]

2.    China has a limitless supply of cheap labor

“They have far more job opportunities closer to their homes…“

“Many mainlanders feel, why work for Google if you can get a job with its Chinese competitor Baidu and feel there’s no glass ceiling above you? “

“Companies need to make clear to young Chinese that they’re dedicated to retaining them. They need training programs, overseas rotations and clear paths for advancement.”

[PK*Note: This is the most interesting point. Chinese people are everywhere because they are seeking for a better living. Well-educated people didn’t want to go back when there was no hope in China. Now, things are changing; more people build and bring the opportunity back home. They learn and leave the foreign companies to establish their own. ]

3.    Connections are everything

“Regulations are more transparent than they were just five years ago…”
“Connections can actually damage your business if a factional fight breaks out and your well-connected partner is on the wrong side.”

“You do need to cultivate relationships with government officials, but do not base your whole business on them.”
[PK*Note: Well, I think the author might look at the case of Google Vs. Baidu and thought that “Yes” a relationship with the government is very important. From my experience, I would say that it’s definitely true, especially for a big company in the developing countries.]
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Some points are not new but most people may not realize until there is a change. Overall, I still do not 100% believe in all the points mentioned above, but at least, I think we all should keep our eyes on those issues. You got the idea.

PK* [Oct.29, 2009]

*Source: http://www.forbes.com/2009/10/27/china-exports-labor-leadership-managing-connections.html?partner=alerts