The Chinese Government have a dream, and businesses that align with that dream are well placed to prosper.
For a prospering business, we only need to look to online shopping and specifically Alibaba. eCommerce is one of the key pillars of China’s 12th Five Year Plan, aiding China’s transition from an investment-led to a consumption-led economy. But the Government’s support spans deeper than that. Beijing’s official line on its much-publicised “Chinese Dream” is first and foremost about national “rejuvenation” (民族的伟大复兴) and the development of a “comprehensive national power” (综合国力的发展). Nothing represents a strong and rejuvenated China more than its ecommerce sector.
Alibaba competed head to head with hugely-resourced and experienced foreign giants such as eBay, and more recently Amazon, in one of the few online categories that wasn’t regulated to handicap foreign players. Despite heavy investment from its foreign competitors, Alibaba has dominated the industry and is a metaphor for a confident China: a world leader, poised to be the largest ever tech IPO, innovating global firsts and increasingly setting its sights to expand abroad. The value of merchandise sold on its platforms surpassed eBay and Amazon combined in 2012.
Whilst Government support has assisted with the spectacular rise of eCommerce, those industries and companies that aren’t in the good books often face an equally extreme path. Just ask most luxury fashion and accessory brands, or importers of high end spirits and wines about how changes in Government policy can change fortunes overnight.
Yet just because the Government isn’t on-side, we shouldn’t all pack up our bags and return home. Companies such as Volkswagen and Apple are great examples that even if you are disadvantaged by negative coverage in state media or policy changes, there are smart ways of addressing the issues. Volkswagen, who were singled out for faulty gear boxes early last year, present a case study for dealing with Government concerns and still coming out on top. Likewise, Apple who were recently targeted by the state as a security risk, have adapted swiftly to address the issue.
Any business in China, foreign or local, is at risk from a shift in favour from the Chinese Government. Fortunately we have the luxury of learning from businesses who have addressed state issues and still come out on top. Go to Page 2 to see this week’s China news and highlights.