Chosunllbo: "It's important to watch the Chinese market but that isn't the issue at hand.We should be…"

January 05, 2013

"It's important to watch the Chinese market but that isn't the issue at hand. We should be watching the speed"

“It’s important to watch the Chinese market but that isn’t the issue at hand. We should be watching the speed”

“The Chinese market undergoes sudden changes every three to five years. If careful decisions are not made quickly, the Chinese market will come to face difficulties.”

This statement was made in a recent interview by Xiang Bing, Dean of Cheung Kong Graduate School of Business, a top business school for CEOs in China. He said that the speed at which foreign industries grow within the Chinese domestic market is of utmost importance. He also stated that the mindsetthat foreign companies have adopted – that all is well as long as the Chinese government is behind them – is the fault of the government. It is better to keep foreign companies at a distance that is neither too far nor too close.

It is said that China is moving toward capitalism, and this is partly true. China’s state-owned enterprises have significantimpact, and the government’s role is quite different from that of the government in the United States. On the other hand, private enterprise’s great momentum and drive bring about changes in the market very quickly. Japanese industries, regardless of the sector, have remained constant for 10 years, constantly trying to hone their skills and precision in a given field. China, however, goes through structural changes every three to five years. Korean companies are quick to adapt and may be able to keep up, but it is a tough market for the Japanese. Under the reign of Xi Jinping, Chinese economic policies will speedily head towards reform to make the market more open. Just and fair industries will be promoted, and there will be decrease in the allocation of resources by the government.

The majority of the Chinese economy is run by state-owned enterprises, thus monopoly has become a problem. But for the past 30 years, private enterpriseshave contributed to the progress of the Chinese economy. Private enterprises contribute up to 60% of the economy while supplying employment of around 80% of China’s population. (Editor: However, slightly over 1% of enterprises are state-owned while they rake in 43% of all China’s net profits, and additionally, run 40% of industrial production due to the government-provided monopoly.) Another problem is the issue of openness. Although China has been the world’s number one exporter since 2009, last year, 55% of Chinese exports belonged to foreign-funded enterprises. This demonstrates that there is no country as open as China. In the last decade, there was an influx of $1.1 trillion in direct investments made in China, coming second only to the United States (with $1.7 trillion).

Read the full article here (Korean)

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