The economy of China has transitioned from a centrally-planned system to a more market-oriented economy since 1978, which as of today ranked as the second largest in the world by nominal GDP.
The outlook of the market opportunity in China remains promising despite the recent slowdown of the economy due to Covid-19. Key underlying demand drivers (e.g. urbanisation, the emergence of the middle class with increased spending power, macro policy shift towards the support of a more consumption-driven economy, industry positioned as a key growth pillar) continue to hold.
However, the business operating environment in China is very complex: economic, political, legal and socio-cultural systems; and is very different from the Western world.
Competition is getting increasingly fierce and played out across different industries. With the recent surge of high publicity cases of multinational companies due to a lack of cultural knowledge, it is paramount that foreign companies have an understanding of how China works. This requires us to have an acute awareness of invisible and subtle differences between Chinese and Western culture, mindsets, behaviours and ways of working and to have an informed understanding of up-to-date business environment in China.
Overlaying those is the need to build cultural intelligence capabilities of your people to drive long-term success in China.
Organisations doing business with China know that the operating environment is complex and very different from the western world. However, the market opportunity remains promising, despite recent challenges from the coronavirus pandemic. Success depends on identifying and managing a number of China-specific risks, including the following: