McKinsey China Survey

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The McKinsey Quarterly, has just reported a new China survey, based on responses from 253 C-level executives in Asia (around a third of them actually have operations in, just under a third trade with, and around half earn revenue from, China).

One of the surprising messages is that “nearly 40 percent of executives in Asia say their companies do no business in China today”. Less surprising is that “90 percent of respondents expect their companies to be doing business of some kind in China within five years”.

Key threats to China’s growth are noted as “pollution, rising income inequality, poor enforcement of commercial laws and regulations, a shortage of qualified talent, and weak financial institutions.”

But a country’s long-term needs do not always align with short-term company ones, and the respondents’ development wish-list focuses on infrastructure and logistics developments, followed by education.

But even if the worst happened to China’s economy (and this particular eventuality is…unlikely any time soon) “a third say that even if the country’s growth rate fell to zero their company’s revenue would not be affected”. So much for China tipping the world’s stock markets!

Clearly the inflow of foreign businesses into China is set to continue. However, it will have to adapt to changing regulatory conditions and a cooler climate for foreign cash. On the other hand, local consumers may have more cash to spend, and that is something that will warm the cockles of many a corporate heart for years to come.

One Response to “McKinsey China Survey”

  1. andrew Says:

    Living in China or working closely with the ex-pat community, we tend to think that the entire world is already active here. While most of the giant MNCs have some China exposure, the lion’s share of overseas SMEs are still not directly involved in China. The good news is that there still a lot of potential business waiting on the sidelines. The bad news is that just because it’s standing there doesn’t necessarilly mean it will get into the game any time soon.

    Agree that last Tuesday’s market drop doesn’t seem to be the sole driver (or even a major one) of international markets.

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