China’s Business Future and Past

Doing business in ChinaGot a great email today from a China lawyer friend. The email noted how a blog post we did more than ten years ago, entitled, China’s Five Surprises, was so incredibly prescient in predicting China business today. It truly was, but as I noted in my response to my friend, the credit should go to Dr. Edward Tse, the person who observed and wrote about China’s five surprises. We merely reprised them and agreed with them.

It is though amazing to me how accurate Dr. Tse was with his observations/predictions.

Here is what we wrote about the five China surprises way back in 2006:

This paper does an excellent job discussing where China business is today and where we can expect it to be in the future. Its five main themes are as follows:

1.  Many Chinese companies are already more than simply low cost competitors and even more of them will compete on quality in the future.

2.  We should expect Chinese companies to become more innovative over time.

3.  China has been able to draw top people from around the world, accelerating business competence.

4.  “Out from Guanxi.” Guanxi is overrated and rapidly declining. “High-quality management and transparent governance structures count more.”

5.  Chinese companies are going overseas.

Our own experiences cause us to agree with all five of these themes and we have already discussed some of these on our blog, here, here, here and here.  No controversial stand here, but we also agree with Dr. Tse that neither the “China will take over the world” nor the “China will crash and burn” scenarios reflect the reality on the ground in China.

I hardly need mention that all five of these things came true.

  1.  Chinese companies are today fierce competitors and not just because of cost. See Your China Factory as your Toughest Competitor. 
  2. Many Chinese companies have become more innovative. See Can China Innovate?
  3. China has been able to draw top people from around the world.
  4. Guinxi has become far far less important today in China (in most industries) than ten years ago. As one indicator, we mentioned guanxi an average of ten times a year from 2006 to 2014, but only four times a year since then.
  5. Chinese companies are going overseas. True, but. This has definitely happened but not without its starts and stops.

What are you seeing out there that is telling you what China business will be like ten years from today?

This article was written by Dan Harris and published on China Law Blog. Original Post: https://www.chinalawblog.com/2018/05/chinas-business-future-and-past.html      

View the original article here.

Dan Harris

Dan Harris is internationally regarded as a leading authority on legal matters related to doing business in China and in other emerging economies in Asia. Forbes Magazine, Business Week, Fortune Magazine, BBC News, The Wall Street Journal, The Washington Post, The Economist, CNBC, The New York Times, and many other major media players, have looked to him for his perspective on international law issues.