CKGSB Knowledge Authors

Chinese companies consider sustainable growth strategies in the face of competition

February 26, 2012

Last year, the high employment rate in the United States, the inextricable sovereign debts of the European countries and the elevated inflation rate in many developing countries contributed to a gloomy economic outlook. Under such circumstances, many countries have turned to China to find new business opportunities.

Associate Dean and Professor of Strategy Liao Jianwen of Cheung Kong Graduate School of Business (CKGSB) offers some perspective for these Western entrepreneurs. “It will be difficult for Western entrepreneurs to create new business in China, just like it has been for Chinese entrepreneurs to create new business overseas.” He suggested that forming entrepreneur partnerships to leverage local knowledge and local channels is a key to success.

On the other hand, Western entrepreneurs who are competing for Chinese customers and resources have challenged Chinese companies to think more long-term about their own sustainable growth strategy.

Professor Liao suggests that a company should strive to achive the the three “E’s” of business, to cultivate “emerging,” “established” and “embryonic” companies under one umbrella as a platform for sustainable growth. With such a platform, companies will be able to maintain consistent sustainable growth rate as well as to withstand risks.

Professor Liao gave the example of the Chinese sportswear maker Anta that rose to the top tier of the sportswear business by acquiring the globally recognized brand Fila. He suggests that Chinese companies should pay attention to the integration of resources on a global scale, which means that Chinese companies should combine their typical advantages, such as cheap labor costs, with the other countries’ strengths, so that Chinese companies can move up along the value chain.