China Stick or Twist?

So, what’s going on with China?

China Stick or Twist?

Is it a place where you should still be doing business? Or, if you’re not there already, one where you should be? With so much in the media about the escalating trade war between the United States and China, these are questions I’m being asked a great deal.

The answers depend on whom you speak to and, as so often, come down to different interpretations of the same facts. Some China watchers point to the ‘exodus’ of westerners as evidence of how difficult the Chinese authorities are making it for western companies to operate in the country. Others explain it as a natural response to falling growth rates, rising prices and widespread localisation – for example, of senior management jobs.

It’s true that fewer western businesses are moving into China, but that’s largely because most big western corporates are already there. Also, with the heady days of 15% annual growth a thing of the past, it’s no longer an economy that attracts bands of trail-blazing pioneers ready to live on a dime a day. China has moved on.

The New York Times recently ran an article headlined “Trump: the leader China deserves.” The serious point was that Trump is right to call out the unfair practices China foists on western firms operating in the country: subsidising its own companies, maintaining high tariffs, ignoring WTO rulings, forcing western businesses to transfer their technology in exchange for market access and stealing intellectual property.

But while some of that’s undoubtedly accurate, the Chinese economy continues to grow at two to three times the rate of western countries — and will soon be the world’s largest.

China also has a voracious, seemingly unlimited appetite for western products and technologies. Just take Louis Vuitton, which recently announced “unheard of growth rates” in China – hardly a message of doom and gloom.

So, my advice to anyone who’s doing, or looking to do, business in China is – don’t stop! Yes, you should do your research, get advice and take all the sensible precautions. But, if you have the right product at the right price and the strategy to match, China may well have the potential to deliver “unheard of” growth for you, too.

And if your competitors are hesitating or somehow impeded – as some in the US might be at the moment – all the more reason to strike now!

Greg Sutch
Greg Sutch

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