State Affairs Interview | Uncertainty "challenges" multinational companies, how to seize China's window of opportunity?

Text/Xia Bin

　　The 2024 Annual Meeting of the China Development Forum was held in Beijing from the 24th to the 25th. The “top leaders” of multinational companies once again gathered in Diaoyutai, Beijing. Chairman and CEOs of foreign-funded enterprises from various industries directly experience China's economic trends and development policies in a face-to-face manner, and also hope to seize the new round of business opportunities.

　　Chinese officials recently released the "Action Plan for Solidly Promoting High-level Opening to the Outside World and Making Greater Efforts to Attract and Utilize Foreign Investment" to enhance the confidence of foreign investors in investing in China with practical actions.

When attending the above-mentioned meeting , Wu Chun, managing partner of Boston Consulting Group (BCG) in China,

said in an exclusive interview with China News Service: Uncertainty is regarded by most multinational entrepreneurs as the biggest challenge, and China’s impact on the real economy Attention will lead to major adjustments in many industries and will also bring huge development opportunities to enterprises. In the future, more windows of opportunity will be opened to technological innovation, green economy and consumption-driven development.

Excerpts from the interview transcript are as follows:

Guozhi Express: Recently, China has launched a new round of opening-up measures, but we have also seen some fluctuations in the foreign investment data last year. From your contact with customers, how do multinational companies view the opportunities in the Chinese market? What advantages will China have that can continue to attract foreign investment in the future?

Wu Chun:

According to BCG research, in 2023, about 75% of global business leaders believe uncertainty is the biggest challenge facing their companies. It is true that the current complex geopolitical situation, rapidly changing marketing environment, diversified and segmented consumer markets and other overlapping factors have put forward higher requirements for the development of multinational companies in China. However, as China's economy shifts to high-quality development, new opportunities are gradually emerging.

　　We believe that China’s emphasis on the real economy will lead to major adjustments in many industries and will also bring huge development opportunities to enterprises. In the future, more windows of opportunity will be opened to technological innovation, green economy and consumption-driven development.

　　For example: During this year's two sessions, the term "new productivity" was included in the government work report for the first time, and technological innovation is the fundamental driving force of new productivity. China is moving from a development stage driven by factors and investment to a new stage of innovation-driven growth, which will create a huge market space for innovation.

　　The word "consumption" is also one of the hot words in this year's government work report. The Ministry of Commerce designated 2024 as the "Consumption Promotion Year" at the beginning of the year. This series of signs fully shows that the policy expects to use consumption as the "main engine" ", further boosting the macro direction of economic growth recovery; in addition, BCG predicts that by 2030, China will have an additional 80 million middle-class and above population, which will also give the consumer market more growth potential.

　　According to BCG estimates, in order to achieve the dual carbon goals, China will invest at least 250 trillion yuan in total before 2050. Related green investments will contribute 2%-3% to GDP and will provide green solutions for various industries. Create more business opportunities.

　　In the context of the in-depth development of global value chains, China, as an indispensable part of the industrial chain, continues to expand and open its market, which is a very positive signal for multinational companies. The Chinese government is also taking more effective measures to further open up the domestic market. market, eliminate entry barriers, and create a level playing field and more cooperation opportunities for multinational companies and investors.

National Express: In the context of China's economic transformation and upgrading and entering the stage of high-quality development, how do multinational companies adjust their strategies and tap opportunities for business development in China?

Wu Chun:

Under the new situation, if multinational companies want to fully enjoy the dividends of China's economic transformation and high-quality development, they must have a deep understanding of China's relevant policy orientation and innovation ecology, adapt measures to local conditions, exploit strengths and avoid weaknesses, and formulate action strategies.

　　On the one hand, it is necessary to clarify the positioning of the Chinese market. Multinational companies need to clarify China's positioning in their global markets and value chains, formulate clear China strategies and implement them unswervingly. Business leaders should define up front what "Win in China" means, such as using China as an innovation center rather than just a source of revenue. Only with clear goals can we maintain sufficient strategic focus in the face of fierce competition.

　　On the other hand, strengthen localization. Many multinational companies have been working in the Chinese market for decades, and have localized their business models and operating teams; a considerable number of companies have also localized their supply chains, making full use of policy dividends and talent dividends. At present, we have also noticed that many foreign-funded enterprises are localizing R&D to cope with the autonomy, rapid iteration and agile response required for innovation.

　　In addition, multinational companies can also rely on strategic cooperation with local companies to create more suitable and agile development methods for the Chinese market in terms of operating models, supply chains, innovations, etc., to accelerate the growth of the Chinese market.

The country is a direct train: The National Two Sessions have set China’s economic expectations for this year. What do you think of China’s economic trends this year? What are the advantages and challenges for China to achieve its growth target of around 5%?

Wu Chun:

In the past 2023, we have witnessed and experienced a complex and ever-changing international situation and a macro environment full of uncertainty. China's GDP growth rate in 2023 will be 5.2%, which is higher than the previous official forecast of 5.0%. This shows the resilience and potential of China's economy itself in the past year.

　　As a data with guiding significance for annual and medium- and long-term work deployment, China has set this year’s economic growth target at about 5%, which not only reflects a series of factors affecting economic development at home and abroad, but also reflects the transformation of its economic structure. We are confident about our continued growth. Looking forward to 2024, the complexity, severity, and uncertainty of the external environment will still exist, and this year will still be a year of repair and boost. However, we believe that the foundation of China's resilient recovery remains unchanged. As innovation, talent density, consumption-driven development, and green environmental protection gradually become the characteristics of China's economic development, these four driving forces will continue to shape China's future direction.

National Express: In a complex and ever-changing international environment, what issues do Chinese companies need to pay attention to when going overseas? How can we develop overseas business well while avoiding some potential risks?

Wu Chun:

In recent years, affected by factors such as frequent international trade frictions, increased global financial fluctuations, and geopolitical risks, Chinese companies going global have faced unprecedented challenges. Under the new situation, "agile" strategies such as digital capabilities and overseas ecosystem can effectively empower local Chinese companies to go overseas efficiently and continuously deepen their presence in overseas markets:

　　First, clarify the key markets in the short, medium and long term: Most overseas companies are the "leaders" in the Chinese market. When they develop overseas markets, they often focus on the larger US and European markets. However, geopolitical differences Both certainty and financial volatility bring different market considerations. Additionally, each new market entry requires years of investment and trial and error. Therefore, Chinese companies going overseas can help focus their resources by identifying key markets in the short, medium and long term, thereby steadily building their global marketing and service capabilities.

　　Second, create an efficient talent supply chain: The continuous expansion of overseas markets and the increasing demand for digitalization place higher demands on the organization's talent reserve. Enterprises should carry out talent inventory and strategic planning in advance, and improve the future talent echelon through multiple means such as internal training and external introduction.

　　Third, actively build or integrate into the overseas ecosystem to promote the development of enterprises, ecosystems and even the entire industry: qualified local companies should give full play to their initiative and act as ecosystem "builders". Through resource investment and infrastructure (such as data, algorithm tools, supply chain, etc.) construction, attract outstanding talents and enterprises to participate in industrial construction. At the same time, cooperating with enterprises upstream and downstream of the industrial chain to "attack" as a whole can not only deploy the rapid response capabilities of the entire industrial chain to overseas markets, but also enhance the risk resistance of overseas industrial chains.

　　In addition, when Chinese companies go overseas, they should also fully understand the commonalities and differences between overseas and domestic markets, pay attention to policy supervision and cultural integration issues; and form synergy at home and abroad by grafting domestic resources and capabilities to grasp the opportunities for going overseas. Opportunities of the market era.