A Turbulent but Bright Future in China
It’s fashionable nowadays to paint a rather bleak view of the future. In addition to global economic woes, in this region commentators cite China’s economic slowdown, the decline in luxury products and five-star banqueting, rising military tensions in North Asia, environmental issues and more. Those same commentators extrapolate current trends and predict dire consequences for us, and for the world.
I couldn’t disagree more.
Martin Sorrell, CEO of WPP and a highly respected commentator, recently described himself as “A Raging China Bull” – I couldn’t agree more. Despite some current instabilities, the future for China, and thus for the Asia Pacific region, is extremely bright. Xi Jin Ping’s new regime is embarking on an ambitious reform drive and crackdown on corruption. This is not just about cementing his authority as leader – although he will achieve that. This reform drive will go far deeper and have far more profound impact than previous attempts. Xi is the first of China’s leaders to come from a “Red Empire” family – his father was close to Mao – and he sees the reform programme and anti-corruption drive as critical, not just for the future of China but for the very survival of the communist regime. Xi looks back at China’s history and sees how all the previous dynasties - the Guo Min Tang, the Qing, the Ming – were brought down by decay and corruption from within. Xi is determined that the same fate will not befall the Communist Party and Government.
The recent plenum should give us plenty to be cheerful about. Whilst the wording was vague, the intent was very clear. A significant and deep reform programme, which will open the economy, make State Owned Enterprises market competitive, address the issue of rural land ownership – and thus as a result secure China’s position as major global economic power. Because it is so strongly centrally controlled, China is completely capable of forcing change – unlike many more liberal and western democracies.
From a consumer and marketing perspective China will move 300 million people from rural to urban over the next twenty years. Those people will buy a lot of air conditioners, refrigerators, smart-phones, sports shoes, cars and more. Coupled with China’s determination to raise domestic consumption and create a more balanced economy, increased urbanisation will thus herald a new era of growth and prosperity.
Of course we should not ignore the current threats and tensions – I have no doubt that 2014 will be a challenging year in many respects. Multinationals in particular are facing troubled times, with Coca-Cole, IBM, GSK, McDonald’s, adidas and more predicting slower rates of growth. Shaun Rein, Managing Director of China Market Research, recently said, “In my 16 years in China, it’s some of the worst business sentiment amongst foreign executives. ” Added to this, the very real problem of pollution should not be underestimated – if only the negative impact this has on China’s reputation and position in the World.
However, the mid and longer term prognosis is extremely bright. Selling business services in China will always be challenging, given the preference to buy “things” rather than “ideas”. But I for one celebrate the fact that I live and work in the communications business in Asia, and am thus able to seize all the opportunities the bright future will bring.
