Will China Continue to Be a Growth Marketplace

Will China Continue to Be a Growth Marketplace?

China is expected to have some 200 million people in the middle-and upper-income categories by the early 2020s. This is a tenfold increase in people with significant purchasing power in China in the last decade, from only about 17 million people in these income brackets as recently as in 2010. China’s purchasing power for virtually all products and services has strong potential, and foreign companies now strategically try to take advantage of these market opportunities.

What have we learned culturally that can help companies establish themselves in China’s marketplace? What went wrong early on? The experience of well-known companies such as Best Buy and eBay can serve as a learning experience for others. From a retail perspective, the motivation for many foreign companies to enter China some years ago – beyond those companies that have been in China for decades to achieve low-cost production-was the triple growth of the Chinse economy that was seen from 2000 to 2010.

With this growth, China overlook Japan to become the second-largest economy in the world behind only the United States, and its large population makes for an enormous target market. Investment from foreign companies was the largest driver of China’s growth. Many companies also increased their exports to China. The United States, for example, saw its companies increase exports to China by 542 percent from 2000 to 2011 (from about $16.2 billion to $103.9 billion), while total exports to the rest of the world by U.S. companies increased by only 80 percent in the same time period. Exporting to China has become somewhat stagnant in the last few years, now representing about $113 billion.

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