China in 2012: What's Next for a Developing Economy

China in 2012: What’s Next for a Developing Economy

It is almost impossible to open a newspaper or open a world news station without finding stories that cover China’s economic growth in recent years. With a consistent annual growth rate of around 10 percent over the past decade and the title of the country which is the largest global exporter of goods, this country is a center of industrial strength that can be understood as the goal of many companies considering international expansion.

Witnessing China’s meteoric rise over the past few decades has been interesting, but the latest news about slowing growth raises the question: What will happen next for this growing economy? Is growth sustainable? What factors will emerge and what challenges will develop for those who want to do business in this opportunity-rich country?

Global interconnectedness and the impact of a connected world economy

An economy that has traditionally been seen as a foundation for the health of the world economy is being shaken. The Eurozone is teetering on the brink of a crisis, while the United States hopes to prevent a double recession. But China can no longer rely on the isolated remnants of this problem. Our integrated world economy does not allow one country to function as an island. Economic problems, both in the G8 countries or in a small country far apart, causing ripple effects throughout the world.

In the case of China, the impact of the world economy in chaos can be devastating. As the world’s largest exporter of goods, shrinking purchasing power in places like the US and Europe reduces consumer demand, which means less demand for low-cost products. China has an interest in positive economic growth throughout the world

Dealing with internal deficiencies

While China’s push in recent years has been to boost economic strength, rapid growth is beginning to catch up with its inadequate infrastructure and internal state of affairs. Lax environmental regulations, sharp income inequality and an overloaded national pension system are just some of the issues that this still emerging nation needs to tackle in order to maintain consistent growth.

The Chinese government is working to address these issues through reform. While its 12th five-year plan, released March 2011, is heavily focused on sustaining the country’s extraordinary success (targeting an annual GDP of 7 percent), the plan also outlines several objectives around improving infrastructure and improving quality of life for the average Chinese citizen. Some highlights include: developing the western regions of the country, investing in priority industries (clean energy, biotech, high-end manufacturing and more), reducing pollution, increasing life expectancy, developing affordable housing units, and boosting the service sector.

A challenging environment with huge opportunities

Though China is working to improve its infrastructure, it’s a market that is still notoriously difficult for foreign companies to break into. This is not likely to change; in fact, it may become more difficult as the country works to cultivate more sophisticated, native industries, rather than looking to overseas businesses to take the lead.

While no one has a crystal ball that …

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Chinese influence on the US and Global Economy Part 4 of 4

Chinese influence on the US and Global Economy Part 4 of 4

In the fourth and final series of my four sections on China’s influence on the US and the global economy, we focus on the benefits of working with international expertise for your business if you have plans to enter the Chinese business market. My extensive Asian market business experience encouraged me to write this series so that you can help you better understand how you can open your business to benefit from the Chinese market.

Cultural mistakes can take a lot of time

In 1973, Procter & Gamble sought to expand their Camay soap line in Japan. Their ad showed a Japanese man meeting a Japanese woman for the first time, and praising her on porcelain dolls like her skin (achieved with a firm soap, of course).

Over the next 13 years, the company lost $ 25 million in the market. Japanese people shouldn’t be soft soapy.

Best intentions …

P&G is a large corporation, and has been warned by advertising consultants that advertising (which has been running successfully in many other countries) will not work. But P&G executives ignored it.

The problem is that while Western culture sees the ‘porcelain doll’ praise flattering, in Japan it is seen as disrespectful. The ad said ‘use Camay and attract abusive comments’.

That is a very special cultural difference because of the lack of understanding between Western norms and people in societies that are as different as those around the Pacific Rim. Often differences are more down to earth: legal, logistical, linguistic, even meteorological, and they can become minefields.

International experts can save you time, money and your shame

If you do or think about doing business with China, for example, consider hiring international experts who will bring with them the kinds of experiences and knowledge that will help you learn from the mistakes of others. Experienced international consultants will help you to:

look at potential disasters in time so that you take avoidance measures.

educate you and your employees in certain cultural differences and perspectives.

understand Chinese economic and marketing strategies.

identify important components of your international business plan and their impact on culturally different markets.

sort out the rules and regulations of law and government.

avoid expensive mistakes.

Building your company in the Chinese market is a long-term project, and requires huge time, money and resources. The rewards have great potential, but also the risks, so that frugality in a small part of the project can cut both ways: not only can you lose a profitable business, the whole exercise can open you at costs that you don’t dream of. from.

Measure that against the ability to have someone on your team who has spent a lot of time in this country, know people, know the law, know the market and clearly the benefits it will bring.

Auditors and business consultants with international expertise, especially in Asian countries like China, which are just emerging quickly, can make a big difference in whether your international business ventures soar or sink.

Understand …

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