What’s next for international negotiators in China?
To the marketing folks at Yum, GM, GE, Siemens, Nokia and the other multinationals that have carved out a big chunk of the Chinese market – Gongxi Gongxi. Congratulations. Well done.
For those that have not ramped up in China – hold on. The land rush is probably over. The foreign firms not already killin’ it here can just chillax a bit and wait for the other shoe to drop – because it’s happening now. New New-China is a post-saturation scenario – where there will be big opportunities in moving money and charging fees going from Shanghai to New York (other places, too, but you get the idea).
China’s growth charts seem to be flattening. The big-picture numbers are still positive, and the country has a great future – the China bear-hunters have a very thin story to sell. But so do the old-school bulls.
Fourth-tier growth is so 2010. It’s not wrong – but it’s done. It’s a demographics issue now, a formula. Middle class growth is fragmenting. Those pesky structural imbalances are starting to bubble up into real-life business plans. It’s harder to staff factories and impossible for grads to find work. Localization is a double-edged sword as lower-paid foreigners start competing directly for Chinese mid-management jobs. Inflation is the key issue – and that may drive Chinese investment overseas.
The land grab is over in China. Now it’s about protecting franchises and building market share for multinationals and established brands.
The good news? Chinese state-owned enterprises and internet companies are as incompetent about opening the US as Westerners were about opening China (in the early years). They are blundering – for the moment. Huawei and ZTE are never going to make it overseas because everyone thinks of one as part of the PLA and the other as a government funded R&D chop-shop. China is going to have to start buying better advice and allowing mainland entrepreneurs (independent but still adequately financed) to expand internationally in a realistic way.
Money will be spent by – and made on – Chinese businesses that want to move capital, products and people to Western markets. Households will be buying real estate, investing in education (at US$250,000 per degree, it’s an investment) and starting businesses in the US. Companies will be spending on the services needed to buy, sell, or set up operations in the US & Europe. There will be IPOs. There will be marketing tie-ups and branding deals, franchises, subsidiaries, buy-outs, shoot-outs and work-outs. The fees will be enormous, the valuations astronomical.
As mainland money starts to find its way east – to America – it will be interesting to see what the Chinese think of Americans as partners, service providers and bureaucrats. Some people have been pretty critical of the way China Inc. treats foreigners. Now Western sellers, contractors and consultants get to decide if they grab the quick buck or take the time to build value-adding long-term partnerships.
Happy Year of the Rabbit.
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