While e-commerce giants like Amazon and Alibaba continue to rise, many physical-store retailers are dying off. MINISO is a rare exception, however. Founded in 2013 by Chinese entrepreneur Ye Guofu and Japanese designer Miyake Junya, MINISO has exploded into an emerging business empire with 1,800 stores in 40 countries, delivering an eclectic collection of affordable, curated goods, challenging the physical retail naysayers. What is the key to MINISO’s success? Through careful consideration of the customer and a unique aesthetic, it manages to do what online stores cannot: Deliver an experience.
Under the banner industrial policy “Made in China 2025”, China seeks to replace the advanced foreign manufactured goods that it has long relied upon with domestically-produced goods. But the effort is spooking the foreign business community, and the plan may not address China’s most genuine needs. Precise details of the implementation of the grand policy are only now beginning to emerge. For Chinese companies, the real long-term impact of the plan is at best unclear. But for foreign companies, although there will be business opportunities in the short-term, the plan as a whole presents big challenges to their future in China.
Foreign Direct Investment has been an incredibly important catalyst for China’s economic development, bringing in the capital, technology and know-how that made China the world’s factory. But China is no longer so fresh and attractive to foreign investors as return on assets is falling. FDI to China increased 3.9% on the year to RMB 731.8 billion in the first 11 months of 2016—the 2015 expansion was 5.6%. Besides, increasing labor costs have become a heavy burden to foreign enterprises, especially manufacturers, who can cut costs by moving to Southeast Asia.
Chinese companies have been on a buying spree around the globe over the past two years. 2016 witnessed a record level of Chinese outbound mergers and acquisitions (M&A) activity, with 932 deals worth over $220 billion taking place, an increase of 246% compared to 2015, according to PwC China. However, the surge in outbound investments has brought concerns from both Chinese authorities and recipient countries; the latter are becoming more cautious regarding the presence of Chinese capital in large-scale deals in key industries. Affected by such concerns and tighter government scrutiny, the number of M&A deals might not be as numerous in 2017 as in 2016, but the trend will not stop.
Fulfilling his campaign promise, US President Donald Trump took the United States out of the Trans-Pacific Partnership (TPP). With that failure, the spotlight has now fallen on the Regional Comprehensive Economic Partnership (RCEP), a proposed trade deal among 16 countries in the Asia Pacific region which is widely seen as a Chinese initiative and a way of pushing back against US influence in Asia. However, compared to TCC, the RCEP has a much narrower scope and labor, environment, IP, competition policy, issues screaming for attention will not be significantly discussed. Meanwhile, TPP is not completely down without the US: Strong incentives for the TPP or a “TPP-lite” will remain.
“Innovation” is difficult, yet the word itself is so overly used that the meaning of it has become hollow. Some people consider being “innovative” as being “lucky.” Yet for Clay Christensen, a business professor at Harvard, innovation is about finding the “jobs that need to be done” in our lives. In this interview with CKGSB Knowledge, he argues that companies should not take the task as akin to gambling. Instead, companies should adopt a more focused, process-oriented approach of finding the “jobs” that customers need to do in their lives, and then create products that make those jobs easier.
China’s digital economy is booming and creating more employment opportunities, the number of jobs created from this sector is far more than jobs that will be eliminated by technology in future. Alibaba, the e-commerce giant which has expanded into cloud computing, financial technology and media and entertainment, could account for as many as 29.4% job opportunities in China’s digital economy by 2035. In this edition of China Data, we bring you data about China’s domestic debt, clean energy, debt-for-equity swaps and more.
Seven years ago, around 70% of passengers in US-China air trips were American. But today, more than 50% of travelers are Chinese. Flying used to be a luxury mode for travel in China, but now is for the masses. Data shows that by 2029 China will overtake the US as the world’s largest passenger market. The increasing passenger demand has not only brought Chinese airlines big successes in the past decade but also some real challenges like lengthy delays and poor service. In fact, Chinese airlines are struggling to keep up with growth in demand, and compared to foreign counterparts, they are not as global nor as profitable as they should be.
Chinese industrial economy still faces severe problem of overcapacity, according to the latest CKGSB survey of over 2,000 industrial firms nationwide. The survey, led by CKGSB Professor Gan Jie, shows a significant rise in product prices in the fourth quarter of 2016, posing worrying signs of inflation. The investment confidence also remains low: only 1% of the firms considered it a “good” time to make fixed investments, a mere 2% made expansionary investments and 9% of firms made fixed investments. However, given the government’s commitment, the BSI team remains optimistic about the long-term outlook of the Chinese economy.
Just a few years ago, China was a major obstacle to a global agreement on climate change. But the attitude of the government has changed, to the delight of all. But it will take more than good will to clean up and it will be a long time before the smog lifts. In this sense, the idea that China will be a ‘Green Leader’ anytime soon says more about how far they have to go than how far they have come. Yet in recognizing the problems and directing investments towards new technologies, China has stumbled upon a realistic expectation of leadership in the energy technologies of the low-carbon future.