Finding the right growth prescription(2)

Opportunities still abound in china

Amid the ongoing antitrust investigations, there have been growing concerns that the "golden age" of rapid growth and easy profits for foreign companies is over in China. Some have even suggested that it is an opportune time for multinational companies to switch to markets outside of China. Richard Lesser, president and CEO of the Boston Consulting Group and Christoph Nettesheim, senior partner and former managing director of BCG Greater China, share their views on the continued prospects for foreign companies in China and the way forward.

Richard Lesser:

It is easy to offer a stock answer on the question of investigations: "We do not know what the future is."

But that is not the right way to assess the situation, as it does not take into account the challenges faced by foreign companies.

China has been a difficult place for various reasons for many years.

Premier Li (Keqiang) was incredibly frank and direct when he said that China wants to establish clear rules and regulations and enforce them consistently across all companies, and create an environment that is conducive for business.

Most foreign companies would say that's exactly what they wanted - to know what the rules are and ensure that they are implemented in a uniform manner.

Most of the foreign companies are going through a period of uncertainty, due to the recent investigations. Obviously, there is a lot of anxiety on the outcome of the investigations.

But if one factors the intentions of the top leadership, the eventual outcome of a level-playing field, and articulated rules will create an environment that welcomes all kinds of businesses.

That is not only good for China but also for the rest of the world.

Christoph Nettesheim:

It is still too early to predict whether it is the right time for foreign companies to exit China and tap other markets, as I believe that China will continue to be a crucial growth market for foreign companies.

From a consultancy perspective, many of our clients used to seek our help on "understanding China" and on other aspects relating to market entry.

That is not the case now. Most have an established presence in China and their problems are more to do with organizational issues viz. tapping the growing middle class in big cities and joint venture problems like how to deal with local companies.

There are also several foreign companies that have their second headquarters in China.

So we not only have projects that are specific to a country or region in China, but also others that cater to wider geographies.