Constant change is the new normal
Not so very long ago, the idiom of when America sneezes the rest of the world catches cold was often used. That has not completely changed of course, but these days the world looks eastward keeping a close, sometimes nervous eye, on how China's slowing economy is performing, wary of the implications this has for the world economy. Because now, when China sneezes maybe we all catch a cold?
Yes, China’s annual GDP growth rate has declined, by almost half over the past 7 years, and is now hovering around the critical 7% threshold. That’s a long way from the heady days of 2007 and the glorious heights of 14% GDP growth. Signs of a declining global power, or simply part of the long term plan towards the Chinese Dream, the 'New Normal'?
Whichever way you choose to look at it, China is going through a different phase in its development. The Government is grappling with a fine balancing act as it moves to a value-generating economy, buoyed by stronger domestic consumption, while juggling an ever threatening property bubble, rising labour costs, air pollution and the growing rich-poor divide.
It is certainly an increasingly more complex and challenging landscape in which to do business, quite different to when we first ventured into China way back in 2004. The latest EU Chamber of Commerce survey reports a growing pessimism among foreign firms, or perhaps a decline in optimism on their prospects in China! But the fact remains, China still offers huge potential for growth, and most companies are heavily invested in ensuring they achieve sustained growth and success. Coupled with this is the basic common sense viewpoint, as mentioned in a recent McKinsey report, that the country still offers vast opportunity thanks to its rapidly growing household income - so don't fret about the GDP percentages, just focus on the long term volume growth potential.
But for businesses striving to get an edge and mark themselves out in these shifting sands and ever more congested, competitive marketplaces, the key is to is focus on your value proposition and what makes you different. And then communicating that effectively to your customers and stakeholders. Something we help our clients with on daily basis, across China and Asia. It is not always easy, but it’s the only way forward - and then you don’t need to worry about catching that cold.