Economic changes and government policies are driving millions of China’s migrant workers away from the wealthy coastal regions back to the less developed western regions. The trend is a clear sign that a fundamental change to China’s economy is in progress, as a growth model that lifted more than half a billion people out of poverty starts to slow. From the early 1990s onwards, China’s double-digit GDP growth was fueled largely by the cheap labor provided by people leaving their farms in China’s poorer inland provinces to find work in the factories springing up along the coast. Now this has changed.
Imagine a city where commuters are chauffeured to work by self-driving cars and artificial intelligence systems control every power plant, traffic light and light bulb, making road accidents, power cuts and even traffic jams a thing of the past. Thanks to 5G, the latest protocol for mobile communications, this vision may be realized soon. The world’s leading telecoms companies are already testing the next generation of wireless internet and the first 5G services could be rolled out in 2019. China and the US are locked in a furious battle for control of this and the winner will gain a big economic advantage for years to come.
Decades of breakneck development in China have taken a terrible toll on the air, water, and soil. The good news is that the government has started a massive anti-pollution campaign, investing at least $477 billion in environmental protection and shutting down thousands of factories. While many are being driven out of business by the campaign, it’s also creating new opportunities for green technology companies and pushing manufacturing companies to upgrade. And although a government-led campaign, further clean-up efforts can be made by private companies as local governments search for clean solutions.
What makes Chinese consumers tick? That’s the question Chris Reitermann, CEO of Ogilvy China, has been puzzling over for the last two decades. Reitermann began his career at advertising giant Ogilvy & Mather in the 1990s, moving to Beijing in 2000 to set up the digital agency OgilvyInteractive. Since then, he has risen to head up the company’s entire operations in China. In this interview, he discusses the dramatic changes that have taken place in Chinese advertising during his time here, why China has much to learn from India on running a great campaign, and what the industry may look like by 2027.
Like its whole economy, China’s auto market grew at breakneck pace in the 2000s, and while it is slowing down, it still contains enormous potential in terms of both raw sales and innovation as China shifts toward electric. The Chinese government is actively promoting new-energy vehicles, offering subsidies that amount to about 23% of the price of a vehicle. And consumers, many of whom no longer consider car ownership as a status symbol, are more willing to buy electric cars. Yet despite favorable policies and growing market demand, there are challenges ahead: lack of power stations, fragmented manufacturing of power batteries and insufficient innovation.
In the summer of 2017, MSCI finally agreed to include China mainland stocks in its global benchmark equities indices. The decision means Chinese stocks will become a must-have part of many investor’s portfolios. Indeed, it’s a big opportunity for foreign investors, but the risk management is tricky in many regards. For one thing, speculative mom-pop retail investors have been dominating the Chinese stock market and for another, the state-owned firms have intervened in the trading market to a worrying degree. How will the market change and what can investors expect from this volatile yet promising market?
The sharing economy exploded in China this year, with companies for all kinds of shareable objects taking part in this new business model. While there are businesses familiar to Westerners—shared offices, cars and rides—there are also ideas that seem a little kooky, such as shared basketballs and umbrellas. Although some call it innovative, many realize these companies are just “rental 2.0” companies, assisted by digital technology. As the concept reaches fever pitch, however, it is also facing a reality check, especially as many firms, ballooned by venture capital funds, start to show signs of failing.
For the past few years, China has been pursuing a new and ambitious state-owned enterprise (SOE) reform program. SEOs are huge in terms of size, yet they only provide 16% of jobs, less than a third of national economic output, and a return on assets of only 2.9%. Hugely inefficient, debt-ridden and responsible for most of China’s ballooning corporate debt, SOEs are a drag on an economy that Beijing wants to transition—unlike past efforts which is about privatization, but just the opposite—from investment and export-driven to services and consumption-driven.
Many developing nations see China as a champion and as an investor. Western countries wish to see China shoulder a greater share of the burden of global leadership, and a growing number of Chinese citizens want China to reclaim its ancient role of international dominance. But is China ready to “lead the world?” Has it reached the stage where it can set the international tone, take the central role on global issues and provide preeminent guidance toward the future? To many the answer might be “yes”, but as the foundations of the powerhouse economy are actually weaker than they seem, that assessment may be premature.
Interesting and important China related facts you should care about—from China’s service sector growth to the drastic increase of e-sports players and their audience. You may also care about the country’s new fusion reactor setting a new record in July, and that international sewage and water treatment companies are set to chase big opportunities because the central government has pledged to lay 126,000 kilometers of new sewage pipes by 2020, enough to circle the globe three times. Plus, unknown to most, the Middle Kingdom has quietly grown into a cannabis superpower with half of the world’s legal cannabis cultivation, which is used in textiles and pharmaceuticals.