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Competitive China

Hundreds of thousands of new Chinese companies have made this country the world’s most competitive business environment. Indeed, China is now the world’s largest and fastest-growing source of entrepreneurial start-ups. It is also an incubator for large businesses, both foreign and home grown.

Nearly 300,000 foreign-invested businesses have been established in China, vying to tap into the country’s manufacturing base and reach its consumer and business markets.


Enterprises by ownership category, in thousands
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And China is also an innovative center for outsiders. The best of the world’s companies have come here to transform themselves, gaining experience and capabilities in China that can be applied to the rest of their business worldwide. Meanwhile, many of China’s leading entrepreneurs, like Li Ning, see themselves as potential global competitors.

Companies such as computer maker Lenovo, white-goods firm Haier, and telecoms equipment manufacturers Huawei Technologies and ZTE are building platforms of sufficient scale to take their businesses worldwide. They will be joined, in turn, by hundreds and then thousands more.

During the past fifteen years, global companies have gone to China either to sell or manufacture goods. Over the next decade, international corporate leaders will go to China to integrate this vast market and sourcing hub with their global strategies and operations. Accomplishing this will require enormous leadership skills, within China and outside the country, especially at headquarters level.

At the same time, Chinese producers themselves will face unprecedented challenges, including the challenge of sustainability. Since 1978, China’s economic growth has been phenomenal, but also extremely inefficient. Driven by huge amounts of investment and fed by China’s huge reservoir of rural labor, the focus has been on volume.

But the related waste has been enormous, the environment has suffered, and demand has been a secondary consideration. China’s emphasis will switch toward creating a more efficient economy, as well as a more productive and competitive one. There will be a greater emphasis on demand as the main driver of growth versus investment, and on reducing the resources consumed per unit of output and the environmental impact, while raising technological and managerial standards.