Guaranteed success in China?

In the 10 years since China joined the World Trade Organisation (WTO), the economy has grown significantly as a result of widespread market reforms.

Membership of the WTO and deeper integration into the global economy have been associated with rising levels of prosperity and on-going development. Over the past decade, GDP has grown at an average 9 per cent per year, fuelling domestic consumption. Foreign direct investment is projected to reach another record high this year, expected by the Government to exceed US$106 billion, up from US$71 billion in 2001.

All this stands China in good stead to weather well the current global economic storm. And it strengthens the incentives for foreign businesses to build opportunities both in China and also with Chinese brands as they go global. Intelligent ‘win-win’ partnerships are the key to success in sectors such as retail, pharmaceuticals, financial services, ICT, natural resources, as well as electric and hybrid vehicles.

The influential World Investment Report from the United Nations Committee on Trade and Development (UNCTAD) in July 2011 confirmed China continued to receive the most Foreign Direct Investment (FDI) among developing economies and was second in volume only to the US. Reflecting on this, the Ministry of Commerce committed to further open the world’s most populous market. The services sector would be subject to further liberalisation, procedures simplified and approval authority devolved to local governments. These are welcome steps forward for international businesses operating in China a decade on from joining the WTO.

In the post-financial crisis world, China has been a bright spot for companies operating internationally, providing higher levels of profit and revenue growth this year according to a survey by the American Chamber of Commerce in China, which also reported confidence levels topping pre-2008 levels.

However, approval for acquisitions or investments in Chinese companies cannot be taken for granted, and concerns have been expressed about policy, regulatory and funding advantages for domestic firms as well as FDI caps and Intellectual Property Right (IPR) issues in some areas.

Whatever the reality is, in terms of government treatment of Chinese and international companies, there can be no doubt that competition is intensifying in a growing market.

A series of white papers are now available to help organisations that are looking to enter or expand in the Chinese market. They look at working and winning together with local partnerships, security issues as well as balancing growth with sustainability. You can read them here.

To find out more about how BT can help you accelerate growth in Asia Pacific, visit our pages here.

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