China: A new frontier (for me at least)

13 Jul 2015 | Francis Wright

Some of my colleagues have lived in China and one is fluent in Mandarin, but my recent 10 day trip to meet companies and investors was my first experience of the country. I knew that China was a big market, but this did not prepare me for the vast scale I encountered. In the UK, a new housing development with 3 towers might be considered large, whereas in one second-tier Chinese city I witnessed multiple developments some with as many as 40 towers (10 in a row and 4 deep). London’s efforts to solve its current housing problem seem feeble by comparison. Some third-tier cities have a population larger than Scotland.

Some of the Chinese whom I met commented that London looks very under-developed; after driving past the CCTV building in Beijing you understand why. Some regions of China remain very poor, but, from an infrastructure and buildings perspective, the coastal provinces have caught up or overtaken many Western countries. The years of double digit growth are probably now over, but China still offers huge opportunities as it continues to develop.

The Communist Party is starting to promote the idea of rule by law, but significant change is still required for this to be achieved. In the absence of a robust legal system, Chinese businessmen have relied on ‘guanxi’ – simplistically, trusted relationships and connections with the purpose of mutual co-operation.

For a foreign company seeking to operate in China, relationships and trust are crucial but can take years to achieve, especially with the language barrier (even now few mainland Chinese speak English). A second key to success is support from the Chinese Government. Government officials have the best understanding of policy changes that may create significant business opportunities to help achieve policy aims.

Environmental issues are high on the political agenda and sweeping change can occur rapidly. Petrol motorbikes and scooters have been almost entirely replaced by electric scooters and there is strong pressure to improve efficiency and reduce emissions in all sectors.

Francis Wright

Managing Director

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