8 reasons to go to China

8 reasons to go to China article image

I have just returned from China at the end of our latest BRIC+ Study Tour China, a one-week program of briefings, presentations, site visits, activities and workshops for a leading group of Australian investment professionals on their first visit to Shanghai and Beijing. This was my first visit to China since the global financial crisis (referred to in China as the 'American Financial Crisis'!) but the signs of confidence, growth and national pride are everywhere. 1. China's economy is booming: The evidence is everywhere, in construction, infrastructure, property, retail and large-scale manufacturing. China's economy seems certain to maintain its average growth rate of 8.5 percent per annum since 1978, despite dire predictions of late last year; 2009 will be remembered as the year China 'de-coupled' from the US. To use a well-worn analogy: the train has most certainly left the station-either get on it or get out of the way! 2. The Chinese Government is making all the right moves to ensure confidence, stability and national pride in the country's achievements. The timing, size and impact of last year's US$586 billion stimulus package has delivered an immediate return to the economy, but the greatest benefits have been delivered in so many other ways, including infrastructure upgrades in first tier cities and investment in the second tier cities. The quality of service is now at an international level. Regular travellers to China (myself included) used to complain that, while the 'hardware' (i.e. hotels, shops, roads) was often world class, the 'software' (i.e. service, language, skills, attitude) was often lacking. This is changing rapidly. English is widely spoken at all levels of society, particularly among younger generations. This was evident in Beijing, in the wake of last year's Olympic Games, which appears to have become a truly international city compared with five years ago. 3. Domestic consumption is rising rapidly: With the collapse of its exports to the developed world, can it consume enough internally to maintain momentum? The signs are encouraging on the streets of Shanghai and Beijing, plus the data is positive in terms of household income and expenditure, consumer sentiment, confidence and other leading indicators, e.g. use of credit cards. But the greatest indicator of increasing domestic consumption and confidence is in the sale of motor vehicles, which are exceeding even the most positive expectations. 4. China is leading the world in renewable energy sources: This was a surprising aspect of our visit. China now produces more solar energy than the rest of the world put together, and this was noticeable in Beijing with many of the street and highway lights powered by solar panels. We also read that China plans to build seven large wind power bases over the next decade and, while China's energy needs are expected to double by 2030, it could reasonably expect to meet at least half of those needs from wind and solar power sources. 5. The private sector is growing rapidly: China is now shaking off its image as a country dominated by a small, lumbering collection of large state owned companies. Private companies in the US$5 million to US$50 million turnover range were identified as representing the most interesting investment opportunities, and there is significant interest from many foreign companies and investors looking to gain a foothold in the private sector. 6. China is going global: I was the guest speaker at an investment forum held at Innovation Valley in Ningbo at which more than 70 companies attended to learn how to take their businesses offshore, with a particular focus on Australia as a business and investment destination. China seeks to implement its new Going Out strategy (announced in July 2009) to diversify its foreign reserves and increase its share of global exports. 7. China is moving up the value chain: China is looking to upgrade the quality of its exports by moving into higher value manufacturing capabilities. As a result, the development of technology-led sectors and high-value capabilities has become a key policy focus. The collapse of low value exports is a blessing to China as it has forced the whole country to accelerate its move down this path. 8. Australia is not taking China seriously enough: In conversation with many Australian Chinese and expatriates living in China, I was dismayed to hear that Australia is losing out to the US, Japan, Korea and European countries by not taking China seriously enough. While many Australians come to China to 'take a look', very few come back to do something serious. Australia's exports to China are dominated by our resources sector, which represents only six percent of our GDP, which means that there is significant potential to export the other sectors of our economy, especially those in which we offer innovative processes, technology and world-class products and services. -David Thomas is the CEO of Think Globalconsulting A video of Think Global and China Blueprint's 88 Day China Marketing Challenge launch is available on YouTube.


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