The People’s Republic of China is a complicated and amazing place – the world’s second largest economy, home to 1.5 billion people and a place experiencing change on a scale hard to imagine from the outside. It also inspires vast amounts of comment and opinion, and much of this comes from people with strong prejudices.
I try very hard not to be prejudiced (“professional scepticism” is a corner stone of my role) and from my 5 days of immersion in China last week at the Global Praxity Conference in Beijing (presentations, Q&A, visits, reading, discussions …..) my potted summary is:
- The Chinese economy is still very rapidly changing and new features are:
– Manufacturing, exports and construction are all still huge but are no longer growing;
– Domestic consumption and services are growing rapidly; and
– The cost of doing a lot of things in China is no longer any cheaper than in Britain
- There are incredible opportunities in this changing economy for:
– Supplying the domestic consumers in China; and
– Working with the higher cost and more sophisticated businesses to deliver great and value added services.
- Chinese markets are still very challenging, with particular challenges from:
– Uncertain protection for intellectual property rights (but signs of improvement);
– Erratic enforcement of rules, especially with State owned Enterprises; and
– Official decision-making – the crackdown on corruption seems to be real, with an unintended consequence that all decision-making is slowed down
- Political and commercial links are at an all-time high between China and the UK
– Chinese sensitivities over criticisms of human rights have been eased;
– The UK economy has always been exceptionally open to international investment and Chinese capital is now taking full advantage (see Airport City in Manchester);
– Commercial links are improving, for example the expansion of direct flights to China from Manchester.
The key point is unquestionably that you can leverage great success but it requires care and effort. PM+M’s allies in China are ShineWing, the largest domestic Chinese accountancy firm. They are thoroughly accustomed to working with western businesses, helping them deal with the challenges of the Chinese market and avoid the regulatory pitfalls. We can introduce you to great people to talk to in Beijing, in Shanghai, in Hong Kong and can draw on the network of 23 offices around China.
If you’re thinking of doing business or already do business in China, please get in touch. I can be contacted at email@example.com or on 07710 703463.
David Gorton – Senior Partner and Head of Corporate Services