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China’s Five Best Business Opportunities

Posted in China Business

Way back in 2010, I was asked in an NPR interview what I saw as the being the best opportunities for American companies doing business in China or selling to China.  I answered with education, healthcare, food, clean-tech/green-tech, and software. These were the same five industries I had been saying for years.

So I could not have been more delighted to have just seen a Financial Times article, entitled, Hidden benefits of China’s slower growth, quoting Helen Qiao, Morgan Stanley’s Chief China Economist, on how foreign companies can benefit from China’s slowing growth:

As China’s traditional growth drivers fade, other countries and companies need to look at the areas where they can benefit tremendously,” says Ms Qiao from Morgan Stanley. “They should focus on what really bothers Chinese middle class households and where China really needs to fix its problems — problems like pollution, bad traffic, food security, poor-quality medical services and substandard education.

In other words, education, healthcare, food, clean-tech/green-tech, and software (I see software as a way to advance remedies for all of the problems).

What do you think?

  • http://www.postlinearity.com gregorylent

    eco design fair in shanghai last weekend had a large turnout, and many boothes with organics, composting, natural products .. the boom has begun in living more consciously

  • dan berg

    Clearly, “pollution, bad traffic, food security, poor-quality medical services and sub standard education” are problems in Seattle (magnified 100 x in China), but firms dont seem to be “benefitting tremendously.” Those are goods only (mostly) govt can supply, and of course govt in China is failing miserably. Does Ms. Qiao really think the Chinese govt is going to turn education over to a foreign MNC?

    • http://www.chinalawblog.com/ Dan Harris

      I doubt she thinks that the government will turn k-12 education over to a foreign MNC, but rather that foreign companies can profit from most other education sectors.

      • dan berg

        Fair enough; my turn to delete: so delete the sentence ref MNC, which was intended to elicit an “of course not” response; but I still think the main point holds: these are public goods.

        • govKguy

          So does the government also develop and produce the inputs for those goods? Of course not! Most of the inputs come from private entities and the gov just pays for them. Government contracts.

  • http://twitter.com/allroads All Roads Lead to CN

    Dan, I have worked on (or overseen) the development of 25-30 projects related the 5 sectors that you mention, and there are markets there that firms (foreign or domestic) can compete in. For foreign firms, there may be some regulatory barriers depending on the market that you want to access, and how, but that is no different that many other industries in that regard.

    In my experience, the bigger issue is that the average firms still do not understand the demographic, market dynamics, or government interests in enough detail to be effective at developing strategy…and are almost solely focused on entering the tier 1 cities. which are already saturated. Beyond that, executing the tactics or accepting the realities of the market can be more difficult in firms run by foreigners whom have expectations that can be out of whack with local realities.. but that gap can be spanned by a good local team or knowledgeable (enough) consultant).

    One issue that I seem to be running into lately across category is that Chinese competitors are growing in strength, and that is something new for firms who claim to offer the best service… but in one recent case (water filtration co), what we found was that the foreign groups were actually believed to have the worst service as they were inflexible in providing 24/7 on site service. their competitors literally would install a satellite office inside the client building so that the client could have access anytime of day.

    Additionally, one of the more interesting markets that I am seeing, which is a subset of the healthcare sector, is the maternity clinics where new mothers check in for 30-60 days for around the clock treatment. this is a sector that offers great premiums for groups who are able to establish a brand and loyal client base.

    RB

    • http://www.facebook.com/jun.s.yang.9 Jun Sheng Yang

      You mentioned, “ …average firms still do not understand the demographic, market dynamics, or government interests in enough details to be effective…” . I couldn’t agree more. Particularly, most western firms fail to realize that the China government interests is the dominant or even the sole success factor for them to locate the greatest business opportunity in China.

  • http://www.facebook.com/jun.s.yang.9 Jun Sheng Yang

    Ms. Qiao makes the same mistake as most western firms will do– fails to realize that the China government interests, instead of “what really bothers Chinese middle class”, is the dominant or even the sole success factor to locate the greatest business opportunity in China.