In the eyes of Prof. Chng, Han Ming Daniel, Associate Professor of Strategy and Entrepreneurship at China Europe International Business School (CEIBS), foreign-funded enterprises in China have experienced nearly 30 years of exploration and a period of vigorous development. Nowadays, they are more or less facing difficulties in varying degrees.
Q: What factors have created the "excitement" of foreign enterprises in China and the irreplaceable nature of the Chinese market?
Z: One of reason is that of expanding the consumer market under the guidance of policies. For example, since 2008, China has implemented an economic policy of "Boosting Domestic Demand". Expanding consumption allows international brands to switch from selling basic products to selling high-end products.
All these make China indispensable to multinational corporations. The first is the technological infrastructure ecosystem of manufacturing and logistics, which is large and efficient. Although the cost is increasing, the overall efficiency is still high. In addition, China has leading industries such as artificial intelligence and digital payment, which constitute important advantages of the Chinese market. In addition, China's high-income users have high disposable income and Consumption Willingness, and they have demand for international brands. For example, China is an extremely important market for luxury brands.
Q: Under such circumstances, what kind of foreign-funded enterprises will have more opportunities in China in the future? What kinds of enterprises are moving out of China? What are the opportunities and challenges they are facing? What impact will it have on China?
Z: From the perspective of China as a consumer market, luxury goods and overseas brands with strong irreplaceablewill have a good performance. On the contrary, products without global differences and products unable to meet localization and customization needs, will lose their advantages. It is strongly irreplaceable ones unique IPs can win. Its brand marks high-quality and reliable products and services, such as Coca Cola; And not only to provide products, but also to provide "solutions".
WKI comments
The uniqueness has been developing and maintained for overseas brands who had been in China for many years. Yet for new comers, building up the uniqueness at the beginning is easier now than ever with the emerging of social media. Self-made anchors users spreading original content at virus speed and reaching out to the most active spenders.
More and more, a simple “overseas“ trait won’t mean much to consumers in China. Either for domestic brands highlighting patriotism, or foreign brands stress high-end premium, a stand out selling point, the uniqueness and irreplaceable character shall be ever critical to win the favor of consumers.
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Source: This article was adapted from a resent interview of YiMagazine with Prof. Chng, Han Ming Daniel.
