On the heels of the global economic recession, China can no longer depend solely on its export market to sustain growth. Professor Li Wei, CKGSB professor, explains that China now needs to target domestic consumers. The Chinese government is also becoming increasingly aware of this phenomenon and plans to prioritize domestic market expansion. For Korean companies wishing to enter China, Professor Li advised them to target sectors where Korean companies are highly reputed for.
“Despite the recovery in developed economies, growth will continue to be low relative to historic levels. The only way to survive in this economic landscape is to expand the domestic market” said CKGSB Professor Li Wei, during his interview with Chosun Ilbo.
When asked why China should focus on its domestic market even though it’s the world’s leading export market, Professor Li explained that “the era of export-driven economy is over. Cheap labor and rent in China are no longer valid. Instead, 1.3 billion Chinese consumers’ thirst for consumption is why the Chinese government should revise its growth strategy to focus on the domestic market.”
Professor Li stressed that Chinese leaders are becoming increasingly aware that China cannot rely solely on its export market to grow. At the third plenary session in November 2013, the Chinese government decided to prioritize its domestic market expansion.
Lastly, Professor Li forecasted that internet, IT, renewable energy, auto and home appliances would be promising domestic industries going forward. China is currently the biggest auto market, with smaller, developing cities driving this growth.
For Korean companies, Professor Li targeted the food and beauty sectors (those that Korea has been highly reputed for historically) as promising areas of growth. For example, given the large inflow of Chinese customers into the Korea health and plastic surgery business, these respective industries represent attractive businesses to introduce into the Chinese market.