Applying a Fit for Growth approach in China: Implications for Chinese players and multinationals

John Jullens
January 12, 2015

Executive summary

After 30 years of unprecedented economic growth, China has arrived at another crucial turning point. Its export-based development model is rapidly running out of steam and needs to be replaced by higher-value activities and more domestic consumption as the country continues the notoriously difficult transition from a low-cost to a high-value economy. The eventual outcome remains uncertain, and this transition will have serious, albeit very different, implications for both local Chinese firms and foreign multinationals. Although both must significantly improve their capabilities in this new environment, the actual steps that local Chinese firms and multinationals need to take will differ significantly.

For local Chinese firms, a Fit for Growth* approach means developing world-class capabilities along the entire value chain from innovation to operational excellence, including management itself. By contrast, a Fit for Growth approach for foreign multinationals means reconfiguring operations, lowering costs, improving productivity, strengthening local management, and designing products that truly appeal to the often unique wants and needs of Chinese consumers, especially those in the fast-growing mid-market.

* Fit for Growth is a registered service mark of PwC Strategy& LLC in the United States.