Since coming back from the Global Immersion Program in Shanghai, I’ve had some time to reflect on the key takeaways from the trip. A theme that was emphasized in more than one company visit was the challenge that China is facing to adapt its growth model. Due to internal pressure related to labor costs and civil demands, as well as external pressure related to trade and currency frictions, China can no longer present itself as just an automatic low-cost production center. Moving forward, it will be interesting to see how China shifts from a “made in China” approach to a “designed in China / made for China” approach and the movement towards the service industry.
Another theme that was highlighted was just how critical China is for many multinational companies’ global strategy. According to a recent survey conducted by PricewaterhouseCoopers, 33% of CEOs surveyed cited China as a market essential for their respective companies’ growth. This is due to a wide range of factors, ranging from the rapidly growing middle class and increasing mobile phone penetration. As attractive as this market appears, there are still many hurdles to overcome. From the perspective of multinational companies, there are still significant risks to consider when approaching the Chinese market, ranging from rising costs, a lack of market maturity, and fraud. Domestic competition is also a notable threat, since Chinese companies are sometimes given significant advantages, such as free land or lower costs of capital. Overall, it appears that China is heading towards another golden decade, if it can manage to juggle investment and consumption with the various challenges it is grappling with.
I am so thankful that I had the chance to participate in the Global Immersion Program in Shanghai. It was an incredibly educational experience and I appreciated the opportunity to learn more about the challenges and achievements of the Chinese economy. It was also great to explore a new city while getting to know some of my classmates better. A special thank you to Professor Wei and his TA, Angelo Wang, for planning such a fantastic adventure!