Despite the news headlines in the West, I did not get a sense that the executives I spoke to were panicking about the state of the Chinese economy. What was intriguing, however, was the impact of current economic conditions on their overseas investment plans. In the past, I had most often heard from Chinese executives that they wanted to expand overseas to acquire advanced capabilities (i.e. technology, talent, management know-how) or get closer to international customers, but this past week I found that many of the executives I spoke to expressed “market diversification,” i.e. beginning to lessen their reliance on the single Chinese marketplace, as a key driver for why they were looking out.
More on LinkedIn.Consistent with the general trend that we have been seeing, executives from private companies were most interested in expanding their international footprint. For example, the CFO from a large private food and beverage company told me about her firm’s current plans to expand into Southeast Asia in order to reach new consumers. She said that the hyper-competitive domestic marketplace and slowing economic performance were two major reasons why they were looking out. On the other hand, the chairman of a major state-owned enterprise in the industrial space talked about his firm’s decision to enter markets in the Middle East as an outlet to compensate for overcapacity back home.While the executives I spoke with were not panicking about stock market fluctuations or currency devaluation, there was a clear sense that everyone recognized the days of double-digit economic growth are over, and the strategies that led to their firm’s initial success will not be effective in today’s operating environment—and certainly not tomorrow’s.
Joel Backaler is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.
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