A reader from Ireland brought to our attention to a recent paper, called “China’s Five Surprises,” written by Dr. Edward Tse, of Booz Allen. This paper does an excellent job discussing where China business is today and where we can expect it to be in the future. Its five main themes are as follows:
1. Many Chinese companies are already more than simply low cost competitors and even more of them will compete on quality in the future.
2. We should expect Chinese companies to become more innovative over time.
3. China has been able to draw top people from around the world, accelerating business competence.
4. “Out from Guanxi.” Guanxi is overrated and rapidly declining. “High-quality management and transparent governance structures count more.”
5. Chinese companies are going overseas.
Our own experiences cause us to agree with all five of these themes. We also agree with Dr. Tse that neither the “China will take over the world” nor the “China will crash and burn” scenarios reflect the reality on the ground in China.