Member Article

Challenges for Entrepreneurs in China: Over-exaggerated?

A lot has been made of China’s current economic slowdown, and to be sure, it is a serious situation that the government now finds itself in. However, longtime China watchers will admit that the question has never really been if the Chinese economy will slowdown, but when. One day in the not so distant future, I believe that multi-nationals will look back on the China of the 90s and 2000s with great nostalgia, and while this Golden Age appears to be fading, China is not collapsing. And there is no need for panic.

However, China has been the lone bright spot in the global economy for several years now. Companies in the automotive and luxury sectors especially have latched on to it and used it as the single factor in their growth equations for years. Is it wonderful that companies have been able to grow at rates greater than 10% YoY with sales flat in the US and Europe? Absolutely! Was that ever sustainable? Of course not, at least not over the long-term.

Now executives everywhere are scrambling to re-assess their China strategy, and those who are simply need to understand that China is currently transitioning into what is known as a lower-middle income economy. While hundreds of millions still face poverty in the countryside, China is no longer in a place where it would be normal or natural for it to experience growth rates of 10% annually. With this in mind, expect China to start to look less like the China of the past and more like Japan did in the late 70s, as it overcae its reputation for poor quality manufactured goods and moved higher up the value china. This comparison seems especially apt in light of the fact that China, like Japan, has a rapidly aging population.

This was posted in Bdaily's Members' News section by Cardzgroup Smart Cards .