INTEGRATED OUTLOOK
Frost & Sullivan grows along with China
Please use three words to describe China’s changes during the past 40 years.
Innovative, profound and unprecedented. In almost all respects of economic and political life in China, profound transformation has taken place. China’s foreign reserves 40 years ago were barely more than $100 million, whereas nowadays they are over $3 trillion. Meanwhile, the country has maintained its role as a socialist economy with Chinese characteristics. Reform and opening-up is essentially a way of innovation in itself. What are the biggest achievements in China since the introduction of the reform and opening-up policy 40 years ago?
After decades of rapid growth, China is now the second largest economy in the world and has become a major player on the global stage. Poverty alleviation over this period has been unprecedented, and the well-being of Chinese citizens has been dramatically improved — particularly in the countryside.
China has made great progress in accelerating economic reforms and pushing for a sustainable model of economic growth. The achievements in high-speed rail and civil aviation clearly show China’s potential.
In terms of technological innovation, the development of artificial intelligence, internet of things, big data and cloud computing technology is also remarkable. What’s the biggest challenge China faces today and how can the country overcome it?
There are concerns about protectionist moves being taken by the United States, which could adversely affect trade. This would in turn impede the recovery in trade volumes worldwide.
It is important for China to keep expanding its trading horizons by diversifying its partners. How has your company benefited from the country’s reform and opening-up policy?
The consultancy industry has thrived along with China’s economic growth. Before 1980, the theme of corporation transformation revolved around the transformation of operational mechanisms, which offered companies the opportunities for mass production, especially for private small and medium-sized enterprises.
After 1980, there was a shift of focus on the reorganization of property rights. This provided more companies with the chance for financing and further developments. By advising on different cases, we have grown together with our clients and the country. What measures are needed if China wants to deepen reforms?
China is one of the biggest manufacturing hubs in the world. With the rapid development of the IT industry, faster integration of manufacturing and internet technologies will be a critical move for China to deepen reforms.
In particular, this includes: the construction of basic infrastructure of intelligent manufacturing such as industrial big data, industrial apps and industrial cloud computing; the gradual completion of software systems of industrial manufacturing, which includes full-period management of products and computer-aided design; and the construction of an intelligent manufacturing ecosystem to merge internet, software, chips and solutions as a whole. What are the biggest changes in the consultancy industry in China?
The most notable change is the diversification of industries and the intensification of segmented industries. Many enterprises started to focus on niche sectors and provide customized services and products with in-depth research on that specific market. As consultants, we act as an advisory group to offer insights and provide solutions and suggestions on a company’s strategy. You’ve helped many clients to list in Hong Kong. What are your biggest takeaways from such experiences?
In general, IPOs in Hong Kong create a relatively loose environment for enterprise financing, which would infuse fresh energies into a large number of mainland companies. It also promotes the development of companies in the so-called new economy realm, and drives the development of unicorn companies. For me, a global mentality is important for both the consultants and the clients. You need to be prepared to be exposed to extreme conditions and rise up to challenges. What are the advantages and disadvantages faced by Chinese companies when they expand overseas?
The advantage of low-cost manufacturing and access to external sources ensures high cost-effectiveness of made-inChina products. Meanwhile, the increasingly expanding Chinese network overseas is something they bank on.
On the flip side of the coin, institutional transaction costs — including inefficient administrative approval and immature tax policy — and high financing costs would bar companies from operating in a foreign country. Meanwhile, we need to watch out for foreign investment risks. For example, certain overseas regions have high geopolitical risk and enormous cultural differences, which could lead to relatively high investment risk for enterprises. How do you view China’s role in the world today?
There is no doubt that China’s international status is continuously rising. However, unipolar hegemony is not what China intends to achieve. At present, the country’s main task is to promote the Belt and Road Initiative and ensure interconnectivity among different countries and economies. China will unswervingly pursue the path of peaceful development while promoting world peace and the well-being of mankind.