Firms should adapt as China changes
China’s economic slowdown is a fact. Some foreign companies are said to be considering a withdrawal from the Chinese market, while others are making the choice to stay.
Nobody can say that all foreign companies can succeed amid the nation’s economic restructuring, but it’s very likely that the ones who remain calm can emerge as winners in the market of more than 1.3 billion consumers.
China’s economic slowdown is making headlines around the world with signs of weakening growth against the background of trade tensions. Several Western media outlets in recent weeks have published articles suggesting China’s slowdown has started to weigh on some of the world’s biggest businesses, spreading alarm in the market.
The sales of a number of big companies are reportedly suffering as a result of China’s economic slowdown. Those reports have led many to believe that those companies are losing confidence about the Chinese economy. Some companies have plans to withdraw from China. However, investors may be misled by those reports. Official figures show that inbound foreign investment in China reached an all-time high in 2018, reflecting overseas investors’ growing confidence in the Chinese market.
China is having a hard time amid its economic restructuring. In fairness, most of the world economy is suffering. Still, the Chinese economy has turned in a relatively good performance with GDP growth of more than 6 percent.
The explosive growth of China’s middle class has generated a boom in business opportunities, and other factors such as urbanization are having a positive effect on consumer spending.
It is very likely for the government to further open the Chinese economy to foreign investment. Although the external economic situation is complex, China is moving quickly to push forward a draft law amendment that supports the concept of pre-establishment national treatment, which will encourage fair competition between foreign and domestic businesses. Such measures will give foreign investors more opportunities to share China’s growth dividend.
China is at a critical point in its economic restructuring and rising up the value chain. If foreign companies leave the country at this crucial juncture, it will be difficult for them to re-adapt and re-enter the market after the economy reaches a new equilibrium.
Amid the economic restructuring, only foreign enterprises that remain calm and adapt to China’s development can survive and win their place in the market.