Five keys to change in China
Business conditions have changed in China since the GFC. I’m constantly being asked “What are we seeing on the ground right now in China and across Asia?”
During the recent economic downturn, China, along with governments around the world, unleashed massive economic stimulus programs.
Since then, the global economy has been showing encouraging signs of recovery, albeit gradually with intermittent volatility caused by government and corporate debts and financially crippling natural disasters.
The question many are asking now is—is it sustainable?
According to the National Bureau of Statistics (NBS), latest figures show China’s economy grew 11.1 percent year-on-year to hit 17.28 trillion yuan ($2.55 trillion) in the first six months of 2010—an all-star performance many other countries can only dream of matching.
But no matter how good they are, official statistics only tell one part of the story, and often fail to take into account the many ways in which China is changing.
A few key points stand out.
1. Chinese firms are looking to the domestic market for growth
From the standpoint of our business, the mix of products that FedEx ships internationally hasn’t changed because of the global recession. Post recession, we’re still speeding high-value goods like computers, telecoms, semiconductors and more in and around Asia and across the world to more than 220 countries and territories.
But what we move domestically in China is changing. For one, Chinese firms are relying much more on domestic markets rather than overseas markets for growth since the global slowdown.
And the rise of the Chinese consumer is boosting domestic trade. In fact, there are more than 1.3 billion reasons why that should spark optimism at a time when many major economies are not out of the woods yet.
For instance, anything that Chinese consumers can buy online is doing very well—mobile phones, clothing, medicine, cosmetics. These are just some of the goods FedEx is being asked to deliver in China.
As part of this online trading phenomenon, items like credit cards are also being shipped in and across the country. All of this business is growing strongly off the back of home shopping via catalogues, television and the internet, flowing through to the rest of the economy and companies like ours.
2. China’s mid-tier firms are making their presence felt
Whatever your view on how fast China will grow over the next year, one thing is certain: there will be plenty of new kids on the block driving that growth.
Local companies are becoming a greater force in China and the major economies of Asia, and its mid-tier companies making their presence felt the most.
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