China’s economy has grown largely on the crest of a wave of exports fueled by foreign direct investment over the past 30 years, but as the global market changes and China adapts to new realities, what are some potential opportunities that arise from companies with an existing presence in the export industry in China and how might they leverage that experience to benefit from the changing domestic economy?
China’s export industry is indeed changing, while it is by no means going away, physically or metaphorically, there are certainly some challenges that will present themselves over the coming years. But like any challenge, there also comes opportunities; as China’s imports rapidly increase, despite the ebb and flow effect of global markets, the trend is clear, China will become both the world’s largest importer and largest economy in the world in the not-too-distant future.
In a previous article, we spoke of about how China, in an effort to maintain economic growth and offset the effects of a decrease in exports, while at the same time attempting to close what has been an increasingly larger wealth gap and create a more robust (and happy) middle class. In so doing, we may be seeing a shift in the China model, one that is increasingly more consumption, and therefore import-oriented than only foreign direct investment and export-oriented.
Businesses currently exporting from China are in a marvelous position to take advantage of this trend. In the process of offsetting rising costs as a result of the changing global economy and China’s pivot to adapt to it, these companies can use their existing production capacity, experience on the ground and/or human capital to make sales on the mainland and capture a part of what will be the world’s largest consumer market.
While traditional imports, often components ready for tertiary production and future export, as well as luxury goods and status symbols such as wine will remain, there is nary an industry that will not be touched by this development, while some more readily or imminently accessible markets exist such as those that cater to China’s aging populous, professional services, design and medical products, a nascent middle class will ensure that the market for quality goods will only grow for the foreseeable future.
While, as with any pivot, timing is essential to ensure that these products come to a market that is ready for them, the future is bright for forward looking enterprises that see the opportunity when it presents itself.