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Chinese Market Delivering New Business Opportunities

2017-02-17 · Seoul

China's economic environment is fundamentally changing. The growth rate is decreasing and the factors that fueled the growth of the Chinese economy are facing new environmental changes. New opportunities, however, are also arising during this period of structural transition. Dong-A Business Review, a premium business magazine published by Dong-A Ilbo, one of Korea’s top daily newspapers, introduced a lecture delivered by Li Xiaoyang, professor at Cheung Kong Graduate School of Business (CKGSB) to provide insights on the latest economic environment of China. The lecture was given for China-Korea EMBA students, focusing on on-going change that China’s economy is going through.

 

 

Professor Li Xiaoyang explains the “Changes in China's Management Environment and Strategies to Cope” at the China-Korea EMBA class held at Jinmao Tower in Shanghai, China on January 14th.

Image Source: Dong-A Business Review No.218

 

Professor Li Xiaoyang noted that various business opportunities are emerging in the industrial transformation process. “At present, China’s economy is in transition period due to the changing environment. Until recently, China has enjoyed amazing economic growth due to its growing population, cheap labor and strong investment from government. However, such merits are weakened, with decline in the trade growth rate and the savings rate, as well as an acceleration of capital outflow,” emphasized Professor Li.

 

The Chinese government is seeking new breakthroughs in response to these changes. Firstly, the government coined the term 'New Normal' in 2014. The government now aims to achieve a slower rate of economic growth through its new policies and is trying to eliminate an imbalance in the development structure. To mitigate this imbalance, China will focus on developing core technologies so that China would not have to import core elements or technologies anymore.

 

Second, the Chinese government is emphasizing supply side reform. Supply side reform stresses that companies must focus on the demand of the market rather than expanding production capacity.

 

 

CKGSB Professor Li Xiaoyang

Image Source: Dong-A Business Review No.218

 

Professor Li stressed that this current state, when China's economic structure is going through significant changes, should be viewed as a new growth opportunity.

 

Professor Li suggested Zhaogang.com as an example of how companies can create their growth opportunities amid considerable change in industrial structure. Previously, the steel industry was experiencing a consistent supply shortage, but Zhaogang.com noticed that the steel industry is now experiencing an oversupply. Zhaogang.com has developed a number of services that benefit from these changes. In particular, the company has achieved great success by effectively connecting producers and purchasers and providing online services to enable them to trade at lower prices. Professor Li highlighted that this tremendous success has implications for many companies facing inevitable changes in their management environment.

 

The EMBA course, established by CKGSB and Seoul School of Integrated Sciences & Technologies (aSSIST), was held on January 12-15 in Shanghai.

 

To read the original Korean article in the Dong-A Business Review, please click here.