A couple years ago, I was on a panel at Northwestern’s Kellogg School of Business that was asked what we saw as the best opportunities for foreign businesses involved with China. We all agreed on the following five, in no particular order:
- Software/High Tech
Nothing shocking or earth shattering, obviously, but as time has gone on I have become even more convinced these are the top five. Last month I gave out this same top five list while interviewed on public radio and my interviewer expressed a bit of surprise at education.
Whereas three years ago, the above five “industries” clearly made up less than fifty percent of my law firm’s China-related work, I now estimate that these five now make up well over 75 percent and it is in those five where I continue to see the most growth.
Financial Times’ Beyond Brics Blog just did a post, entitled, “Chinese health care: big opportunities,” on a recent McKinsey & Company article, entitled, “Identifying private-sector opportunities in Chinese health care.” Quoting from the McKinsey article, the post notes how Beijing’s plans to “stimulate China’s health care market and create opportunities for private payers, providers, and IT vendors,” will make health care growth in China exceed China GDP growth:
If China’s health care spending simply keeps pace with projected GDP growth, it will increase to $480 billion by 2018. We, however, believe that it is likely to rise faster than GDP, as a result of better insurance coverage, improved access to high-quality care, and rising demand (tied to aging, urbanization, and lifestyle shifts). If health care spending hits 6.5 percent of GDP by 2018, the market could increase by an additional $150 billion.
McKinsey goes on to note that “private insurance could become cheaper and more accessible” in China, creating a $90 billion market by 2020 and that “regulatory reforms are making it easier for private hospitals to provide publicly-funded care.” McKinsey sees better health care requiring better IT as well. China is “set to overtake Germany to become the world’s third-biggest pharmaceutical market – with growth of 25-27 per cent next year, compared to an emerging market average of 15-17 per cent.”
The New York Times did a story today on the booming foreign education business for Chinese students, entitled, the China Boom. The story talks of how the number of Chinese undergraduate students coming to the United States to study has tripled in just the past few years. This increase in Chinese students attending college in the United States has led to a concomitant increase in the need for schools and tutoring both in China and in the United States to help these students prepare for their United States college experience.
I have always seen education and health care as being somewhat similar as they both become very important to people once they get past day-to-day survival mode. And as millions and millions of new Chinese hit the ranks of the middle class, I continue to see both growing faster than China’s GDP as a whole and I continue to see a whole host of opportunities for foreign companies.
What do you think?