This might just be why you’re looking at this article: you’ve heard, from nearly everyone that claims to be business-savvy, that China’s gold rush is coming to an end.
You know the story: it has been all good and well in China, but now the party is drawing to a close. The bull is finally starting to retire: at the very least, we won’t be seeing the old glorious 8%, even 10% annual growth rate for quite a while – growth rates are now unlikely to exceed 3-4%. More ominously, as growth slowed, China’s mountain of debt will be piling up; and old debts could be due. China has thrived on borrowed money, now runs on borrowed money, but one day the borrowing will come to a stop.
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If you think it is game over – think again!
Pessimists will tell you that these signs of economic decline are sure signs that it’s time to pull out: it’s ‘game over’ time in China, or it’s going to be in the future ten years or so. But we beg to differ: The market might be in trouble, but being in trouble does not necessarily equal ‘crashing’. The government and business world is already rallying and adapting, and while it’s true that business opportunities will potentially be less potent than before, ‘to quit’ is not the right conclusion. ‘To wise up’ is.
The truth is, the national stereotypes we know about China and the way business is run within it might not necessarily apply anymore. As China was brought to a rude awakening from the soaring profits, it will have adapted; not only will foreign businesses have become more careful foraging into China, but your business partners on the Chinese end, potentially even government officials – will also have become more careful, more reserved and most importantly, more rational. Doing business deals over drinks may yet be the Chinese model for a good many years, but you’ll be surprised to see just how many recognizable elements in China there are: Contracts are thickening and getting more detailed, and the general attitude towards business is becoming more pragmatic, focusing more and more on practical results than which year’s wine you brought to the dinner table.
Tackling economic decline
Moreover, there is no party in China more eager to stop economic decline than the government itself. And many of the current inhibitions on China’s economic growth are stoppers: post-Snowden backlashes, restrictions on foreign banks and even the restricted internet access that most working in China have learned to adapt to. Should the situation require it, the government could potentially be willing to remove these stoppers – it has shown that it’s practical enough to allow a slower rate of growth in exchange for seriously modernizing the system and fixing the problems left by the economic surge, and it has gradually been relaxing control in various aspects of trade and commerce that it feels has the need to be unimpeded. These are all opportunities for a bold, but cautious entrepreneur with the right support and approach.
Everyone wants a gold rush, but the truth is just that a gold rush does not continue forever. For China, the end of the gold rush could potentially be China’s chance to sober up and stabilise – and your chance to secure your place in the Far East.