The prospect of rapid growth in the Chinese economy could create huge opportunities for your business, says Anita Tang, managing director of Royal Roots Global.
She shared this in a recent interview with Marian Cook, founder of consulting firm Business Transition Experts, as part of a series of interviews on “Selling Your Business for More.”
In this extract from the interview she explains the opportunities in more detail.
Marian Cook: Can you talk a bit about the Chinese economy? What’s going on there generally? Tell us about the three pillars of growth and the five-year plan.
Anita Tang: China is growing very quickly. The three pillars are definitely what they’re basing it on. And they are domestic consumption, domestic investment and net exports.
So what does this mean to a business owner here in the United States? What should they keep their eyes on?
For domestic consumption, we have to look at China as two different economies. There are about 500 million in the urban area and about 700 million in the rural area in China. And about 100 million is migrating from rural to urban.
So if we look at domestic consumption, you have to determine whether you’re selling to the urban area or the rural area.
In the urban area, 170 million are willing to spend quite a bit of money in buying things, whereas in the rural area it may not be the case, because brand of goods may not be what they’re looking for.
And if we’re looking at the Chinese stimulus plan, quite a bit of money was being allocated to the rural area, helping them to buy home electronics and buy vehicles. And a vehicle may not be a passenger car. It could be trucks or farm equipment for them to do production.
So domestic consumption definitely is huge. They’re also talking about putting a lot more emphasis in the servicing industry in China. They would like to increase it a lot. And it’s also part of working with domestic consumption.
So for example, if it’s a U.S. company looking at China, you don’t only sell goods to China. You can also sell services to China, or you can sell training services to China, because there is such an area in the servicing industry that they need help.
And if we look at domestic investment in that sense, definitely the stimulus plan is putting a lot of money into infrastructure, but at the same time if somebody is going to build infrastructure in a remote area, there will be a lot of things needed.
You need housing or temporary housing for these people. You need water, you need food, and you need all kinds of other things that can be supplied, so even though it is domestic investment, it is also bring up domestic consumption as well.
So for business owners who can play in these areas, think about services, too. Keep in mind the importance of education within this culture. You mention training services as one thing that could be in demand.
Right. And if we look at domestic investment as well, a lot of money is being put into environmental related to clean water, solar energy and all kinds of other areas that we in the U.S. can participate in.
If we talk about clean water, for example, China needs a lot of clean water and they may not at this point have the technology to do it. So American firms have been quite familiar in this area.
Here we can just get water from the tap and drink it. That is not going to happen in China now. It will happen in China if we can sell or work with China to use our technology from the U.S. So there are huge areas that we can look at this similar plan and supply our technology, our services, and our products.
For this entire interview as well as those of 14 additional world class experts on selling a business, please visit our Business Transition Experts “Education at Your Desktop” site at: http://www.businesstransitionexperts.com/telesummit .
