MNC’s To Get a Smaller Share of a Much Bigger Market
Again the organizing concept for MNC’s in China is shifting. Whereas once the focus was on setting up, and quick expansion, now this should move to standard business development. The “land rush” is over, and now to borrow agricultural imagery its time to till the soil and produce good crops. Of course land rushes are far more exiting than farming, so there are complaints that growth is much slower than it used to be, and that some government practices and policies are unfair. At the same time, growth is slower than it was in the boom years around 2004-2010, with current official GDP growth rates at about 7%, and true growth likely even slower than this, in the range of 3-5%. In sum, for some of the shine has some off the China market.
While there may be some reason to complain, the fact is that the most recent 10-15 years represented an ideal period for foreign businesses in China: very fast development combined with relatively open access, and an under-developed set of domestic competitors, depending on the market. In the past several years though, these have all begun to change, with greater focus on compliance, stronger domestic players, and slowing growth. As a result MNCs are in effect being squeezed, with many losing market share in their target industries. Much of this though comes down to the natural progression of China’s development, rather than actions by the Chinese government.