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China Overview


China overview

My first thoughts and I’m sure I am not alone as a ‘Westerner’ in this thinking, was that China is not such an innovator but extremely good at duplicating good products through their very cheap and vast labor force. It was an awakening to me to begin to understand that things are changing in theZhōngguó (中國)01 and very quickly! Not only has China pinpointed a number of areas that need targeting but it is also acted swiftly on them. Area’s of particular interest are that the Chinese market is becoming more sophisticated and young consumers who are one of the biggest markets are moving away from quick fast and cheap products to more high quality luxury goods. This is due to higher wages in city centres and more young skilled and educated consumers. To support this more demanding Chinese consumer there is massive investment into creative and innovative business fields to provide luxury goods and services creating a brave new China and all the rewards that come with it. However it is not without some major and seemingly insurmountable challenges.

Xi Jinping (President of China) coined a phrase “The Chinese Dream” This phrase acknowledges and is intended to appeal to upwardly mobile urban residents now striving for the comforts of their rich world counterparts. The statement recognizes a number of things. Firstly that China is well over 50% Urbanisation and by 2030 will have close to 1 billion people living in Cities. Secondly that there are a number of challenges ahead that China need to solve rapidly in order to pave the way for this growth including worsening pollution, urban sprawl, increased congestion and perhaps most importantly, while the urbanization growth is well in excess of other countries at similar levels of development China’s urbanization plans and policies lag well behind these countries.

Getting their cities and policies right is vital if China is to continue to grow rapidly in the years to come. Getting this wrong will be disastrous leading to inequality, spread of slums, acceleration of global climate change and increased social and cultural unrest and/or loss of talent to other countries.

Chinese residents having dinner outside their home in a slum or shanty town area by the second ring road of Beijing. Photo by EPA

Chinese residents having dinner outside their home in a slum or shanty town area by the second ring road of Beijing. Photo by EPA

In particular large numbers of Chinese middle class are looking for boltholes abroad for themselves and their families and their assets. To alleviate these problems Mr Xi and China realize that they need to initiate huge cultural change and cut deep into traditional areas normally taboo. Breaking through these barriers to reform including tackling corruption, ingrained cultural racism against rural license holders (farmers) allowing them to sell their rural properties so they can leave to the cities with cash in hand and deal with a fast growing urban migrant population (Almost 1/3 of the urban population) and supporting a fast growing middle class population (again around 1/3 of the urban population)

Louis Vuitton Shanghai Credit: Reuters/ Carlos Barria

Louis Vuitton Shanghai Credit: Reuters/ Carlos Barria

Is this even possible? From what I have seen over the past few weeks is anything to go by I would say most definitely for a number of reasons. The Chinese culture have a unrelenting pragmatism about them which enables them to have a good hard look at themselves and meet these problems head on. They also have a huge engine enabling rapid response to problems due to their group mentality mindset and large population.

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