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China, Market, Strategy

Success in China: Local Autonomy & Integration

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Success in China: Local Autonomy & Integration June 5, 2023 ‘We are constantly evolving. Over the years, we bought 15 local companies and formed JVs, as required by the government. It took a lot of effort, but we finally exited them all. Now, we are 100% owned. So, we’re fully responsible for everything we do.’ ‘Even with an SOE partner, bidding opportunities were unavailable to us because of our foreign ownership. With reduced competitiveness, we concluded our investment would suffer in time. After considering all the risks and returns from a balance sheet perspective, we decided to exit.’ ‘Several years ago, to qualify as a bidder on state-owned projects depended on how much state- or foreign ownership the bidder had. Now, China is moving to a sanction-free economy, and some industries are on a timetable to be free from foreign suppliers. For example, the top banks must have 100% Chinese-owned companies provide their IT infrastructure, including IP, chips, operating systems, hardware, software – everything.’ ‘I am trusted to know what needs to be done here. I have a lot of flexibility. To be successful in China requires having strong local management. When I started, my mission was to make our firm “the most local of the internationals” and “the most international of the locals.”’ ‘We used to have two teams – one for local clients and the other for MNCs. Now, multinational clients are so localised that we don’t need two teams. Domestic firms and MNCs have different expectations, but I prefer to have one team. Even if the skills required differ, splitting the company in two wasn’t healthy.’ It can be hard to let go. But that is precisely what successful MNCs in China have done. Operating autonomously from HQ has become commonplace for successful foreign firms in China, but how they approach localisation differs significantly. As MNCs balance global standards with local nuances, they confront the unique challenges of China’s market: from navigating its distinct tech platforms and regulations, to maintaining cost-competitiveness against fierce local players. Deepen your understanding & explore the implications for business and strategy in our latest Asia Brief. Log In to access our latest reports. LOG IN Not yet a member?Contact us to learn more. You might also find these insights valuable Asean Asia Pacific China Forecast Geopolitics Japan Leadership Market Strategy Team-Building China’s AI Evolution: Strategic Insights for Executives May 21, 2025/No Comments China’s AI Evolution: Strategic Insights for Executives May 21, 2025 ‘The requirements imposed on China’s AI products matter. They will… Read More Executive Insights on China’s Sales Outlook May 21, 2025/No Comments Executive Insights on China’s Sales Outlook May 21, 2025 Our quarterly China Survey compiles insights from our members to provide… Read More Indonesia’s Promise: CEOs are confident but cautious May 21, 2025/No Comments Indonesia’s Promise: CEOs are confident but cautious May 21, 2025 ‘So long as they maintain political stability and reasonably good… Read More Load More End of Content.

China, Geopolitics, Strategy

US vs China in Tech: Ramifications for Business

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US vs China in Tech: Ramifications for Business May 21, 2023 “President Biden is an internationalist and globalist to his core. He is pro-NATO. His team is working hard to align with allies to prevent China from moving in certain directions. It grates on China because they believe the US is galvanising the world to gang up on China.” “What does it mean to compete exactly? Are we both running a race and staying in our lane, or will we trip each other up? A lot depends on how this gets translated. ‘Compete’ can be translated as “jing zheng”, which implies aggressive competition to the death, or “jing sai”, a more friendly, rules-based engagement. The US has interpreted it as “jing zheng”, which sends an unintended message.” “Competition over technology is the most important area, and second to that is economic competition. Third is competition for military power and superiority. And lastly is the competition over values. Who has the ‘right’ value system is the most dangerous and ambiguous one.” “The idea behind the Big Fund was not to throw capital at big national projects, but rather to imitate Silicon Valley VCs in allocating capital effectively. The Big Fund was successful in terms of ROI, but the problem was that the government wanted big breakthroughs, which never came.” “European diplomatic friends report a China charm offensive. After a long absence, an EU Ambassador to China was finally appointed. The danger is if Beijing misreads the EU position. Polls show that Europeans have a negative view of China, and this puts pressure on European politicians to speak out.” Relations between China and the US are set to get more fractious in 2023. The US will further refine the CHIPS Act and slap more export bans on advanced US technologies in industries such as biotech. Moreover, the newly renamed House Select Committee on the CCP will hold numerous hearings on China, which will undoubtedly stir up negative press coverage. For its part, China is undeterred. The country will continue to seek self-sufficiency in sensitive technologies, and entrepreneurs will focus on the bigger ‘lagging’ edge chips critical for manufacturing everything from cars to electronics. Deepen your understanding & explore the implications for business and strategy in our latest Asia Brief. Log In to access our latest reports. LOG IN Not yet a member?Contact us to learn more. You might also find these insights valuable Asean Asia Pacific China Forecast Geopolitics Japan Leadership Market Strategy Team-Building China’s AI Evolution: Strategic Insights for Executives May 21, 2025/No Comments China’s AI Evolution: Strategic Insights for Executives May 21, 2025 ‘The requirements imposed on China’s AI products matter. They will… Read More Executive Insights on China’s Sales Outlook May 21, 2025/No Comments Executive Insights on China’s Sales Outlook May 21, 2025 Our quarterly China Survey compiles insights from our members to provide… Read More Indonesia’s Promise: CEOs are confident but cautious May 21, 2025/No Comments Indonesia’s Promise: CEOs are confident but cautious May 21, 2025 ‘So long as they maintain political stability and reasonably good… Read More Load More End of Content.

China, Geopolitics, Strategy

Consider Your Options: Entity Restructuring in China

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Consider Your Options: Entity Restructuring in China May 1, 2023 ‘It will be a tough fight if money has to come from overseas. M&A is down. FDI is up but coming from a handful of German firms. If the BU or subsidiary has cash, they can finance development locally. Investment funds are also set up as separate entities for smaller investments. They function like private equity, which gives the China team more influence with local government.’ ‘Semiconductor firms are restructuring themselves to contain the damage. They are creating a China-based R&D ecosystem with multiple BUs in diverse locations. Over time, they will start to have China IP. They will be smaller than they would have liked, but they are still moving forward. Other industries will follow suit as time goes on.’ ‘After high-tech, life sciences got hit for reasons of cost containment, rather than geopolitics. After that, local firms in mobility, automotive, self-driving, and new energy were given preferential treatment . Next, it will be cutting-edge industrial machines, like laser cutters. Finally, agri-food is likely to become more sensitive. If you go through that list, it matches up neatly with the Made in China policy of 2015.’ ‘Entity structures are often viewed as boxes to move around on a whiteboard. But rearranging structures have knock-on effects on R&D, corporate governance, and manufacturing.’ ‘Chinese expats will teach the manufacturing team in the new locations how to create the product and set up the infrastructure. This means we will see more cultural, economic, and other exchanges between China and the rest of the world. A long-term process that could take decades will be good for the world.’ Amid heightened geopolitical tensions, the regulatory environment for foreign companies in China continues to evolve. Mitigating risks through strategic entity restructuring becomes both intricate and imperative for future-proofing the local business as companies balance risk with the pursuit of growth opportunities and prepare for all possible scenarios. Deepen your understanding & explore the implications for business and strategy in our latest Asia Brief. Log In to access our latest reports. LOG IN Not yet a member?Contact us to learn more. You might also find these insights valuable Asean Asia Pacific China Forecast Geopolitics Japan Leadership Market Strategy Team-Building China’s AI Evolution: Strategic Insights for Executives May 21, 2025/No Comments China’s AI Evolution: Strategic Insights for Executives May 21, 2025 ‘The requirements imposed on China’s AI products matter. They will… Read More Executive Insights on China’s Sales Outlook May 21, 2025/No Comments Executive Insights on China’s Sales Outlook May 21, 2025 Our quarterly China Survey compiles insights from our members to provide… Read More Indonesia’s Promise: CEOs are confident but cautious May 21, 2025/No Comments Indonesia’s Promise: CEOs are confident but cautious May 21, 2025 ‘So long as they maintain political stability and reasonably good… Read More Load More End of Content.

Geopolitics, Market, Strategy

Malaysia’s Political Outlook

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Malaysia’s Political Outlook April 25, 2023 Following the completion of Anwar government’s first 100 days in office, we invited James Chin, Professor of Asian Studies at the University of Tasmania and an authority on government affairs in Southeast Asia, to share his views on the stability of the government and Malaysia’s political outlook. This Insight summarises key takeaways from the discussion with Asia Management Forum and Asia Management Forum Global members, along with further analysis and commentary from our Research team. Key takeaways + Anwar’s government has had a good start. But weak support from Malay voters could lead to Anwar’s fall unless his Pakatan Harapan (PH) coalition gains stronger Malay support in six state elections by July-August this year.+ If Anwar fails to win over the Malay voters, then the opposition Perikatan Nasional (PN) coalition is likely to win the next general election, with a prominent place for the strict Islamist party PAS. That would not bode well for non-halal industries (movie theatres, alcoholic beverages, etc). The labour market would also suffer, as PAS is opposed to foreign workers and women working in factories.+ Until a stable government is in place, the economic outlook will continue to be hurt by political uncertainties. We expect consumer spending and capex growth to stay sub-par over the medium-term, which will pull down overall GDP growth to 2.7% in 2023 and an average 4.2% over 2024-26. That compares with 5.8%pa for the decade to 2019. Malaysia’s ethnic politics & election math Malaysia’s political complexity comes down to two points: 1. Malays were 51% of the population in 2015 (ranging from 40- 90% in states on the peninsula) with any stable government needing the support of a majority of Malays, and 2. All Malays are Muslim, and conservative Islam is a rising force within the Malay community, which roughly divides at present into a rural and conservative group and an urban and progressive group. The rest of the Malaysian community is made up of indigenous people in the east Malaysian states of Sabah and Sarawak (12% and collectively grouped with Malays as “Bumiputra”, which means son of the land), Chinese (21%, a steadily falling percentage), Indians (6%), and non-citizens who are mostly migrant workers (10%). For three decades to 2018, political stability was delivered by the Barisan Nasional (BN), a broad coalition that included the main parties for the main ethnic groups. The United Malays National Organization (UMNO) led BN, and collected most of the Malay votes, with the help of extensive payments to key Malay voting groups (such as rubber growers) via the government budget and informal funds flowing through UMNO. In the 2018 election, voters threw BN out of office after UMNO’s informal funds flow became a spectacular river of corruption – including 1MDB – under PM Najib Razak. Coalitions and parties fragmented in the 2018 election with the turmoil continuing as three Prime Ministers (Mahathir, Muhyiddin, and Ismail) each briefly attempted and failed to form stable governments. The 2022 election brought a major realignment. UMNO crashed to 26 seats from 54 in 2018 and 88 in 2013. The BN coalition it leads fell to 30 seats from 79 in 2018 and 133 in 2013. Part of BN’s fall was due to a split in UMNO, with Bersatu (Malaysian United Indigenous Party) created in 2017 and taking 13 seats in 2018 and 31 seats in 2022. Meanwhile, the Islamic-based PAS surged to 43 seats (making it the largest single party in parliament) from 18 in 2018 and 21 in 2013. Given the dramatic realignment in parties in 2022, Anwar did well in forming a coalition of 148 out of a total 222 seats (66.7%) to win a confidence vote in December 2022 with support from his own PH coalition (82 seats), UMNO and the remnant of the BN coalition (30 seats), GPS (a coalition from Sarawak, 23 seats), GRS (a coalition from Sabah, 6 seats), and seven others. Anwar’s PH coalition draws its support from five parties mostly representing urban middle-class Malays, Chinese, and Indians. The Sabah and Sarawak supporters in GPS and GRS while technically “bumiputra” are not Malays. UMNO and the remnant BN do represent Malays but are just 30 seats. Add to that the Malay party inside the Anwar’s PH coalition (People’s Justice Party, 31 seats) and you get to 61 seats representing the Malay community in Anwar’s government. Bersatu and PAS in the PN coalition are the opposition with 74 all Malay seats. So, PM Anwar leads a reformist, multi-ethnic government, which despite holding two-thirds of the seats in parliament does not represent the majority of Malays. Anwar’s government is not secure In his first 100 days, Anwar has scored an approval rating of 68% (reflecting his popularity among the non-Malay communities, as well as progressive Malays), survived a confidence vote in parliament with a two-thirds majority, and tabled a well-received 2023 budget as the finance minister. He continues to enjoy strong support from UMNO, as well as the current King. But the true test for his government lies ahead. The upcoming elections in the six states of Selangor, Penang, Negri Sembilan, Kelantan, Terengganu, and Kedah will be crucial in determining Anwar’s legitimacy in terms of having Malay support. The last three states are the Malay heartland states and are currently governed by the Islamic opposition party PAS. PAS also controls Perlis but it has no election this year. The four states – sometimes called the PAS belt – are rural, poor, 90%+ Malay, and a PAS stronghold thanks to decades of building Islamic schools. Several have also adopted stricter application of sharia law than other Malaysian states. PAS should easily hold them in the 2022 state elections although PM Anwar hopes to woo their voters with cash transfers in the budget paid to the bottom 20% of the national population. The bigger issue is whether PAS and Bersatu can make inroads into the wealthier, urban states of Selangor, Penang, and Negri Sembilan. Bersatu may be held

China, Market, Strategy

Reigniting HQ’s Interest: The Case for China

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Reigniting HQ’s Interest: The Case for China April 16, 2023 “Say China grows at 2% per annum during the next decade, its economy will increase by $3.5 trillion – that’s the same amount as India’s entire economy today. If China grows at 5%, it will add $9.8 trillion to its GDP or the equivalent of India, Japan and Indonesia combined.” “Chinese firms are increasingly competitive and are thinking about scaling globally. MNCs can’t afford not to compete in China because eventually they will face Chinese competitors globally.” “Manufacturers like Foxconn are investing in manufacturing in India and Vietnam to diversify their sources of supply. But those countries lack China’s scale or mature manufacturing processes That is why you have companies like BASF spending $10 billion in Zhanjiang.” “Firms are at a tipping point. They must decide how important China is to their business globally. Automotive and luxury goods firms can only win globally if they are in China, but pharma companies, for example, may see things differently.” Many of our members will host HQ visitors in the coming months who may express scepticism about China and want to slow down. While caution is understandable, it can be misguided. Achieving success in today’s China requires a sophisticated strategy that embraces risk by evolving with the market. China still offers one of the best opportunities of the decade. Of course, there are risks too, but they can be managed. China CEO Forum members met in February to share ideas on the opportunities and how to effectively communicate them to HQ. Deepen your understanding & explore the implications for business and strategy in our latest Asia Brief. Log In to access our latest reports. LOG IN Not yet a member?Contact us to learn more. You might also find these insights valuable Asean Asia Pacific China Forecast Geopolitics Japan Leadership Market Strategy Team-Building China’s AI Evolution: Strategic Insights for Executives May 21, 2025/No Comments China’s AI Evolution: Strategic Insights for Executives May 21, 2025 ‘The requirements imposed on China’s AI products matter. They will… Read More Executive Insights on China’s Sales Outlook May 21, 2025/No Comments Executive Insights on China’s Sales Outlook May 21, 2025 Our quarterly China Survey compiles insights from our members to provide… Read More Indonesia’s Promise: CEOs are confident but cautious May 21, 2025/No Comments Indonesia’s Promise: CEOs are confident but cautious May 21, 2025 ‘So long as they maintain political stability and reasonably good… Read More Load More End of Content.

China, Market, Strategy

The ‘New’ Old Opportunity

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The ‘New’ Old Opportunity March 16, 2023 “We hunt for pain points and move aggressively to address them. Healthcare offers a lot of opportunity. When you look at the over-60 population, there is sizable elder care play. Also we are looking at replacing old appliances and renovations adapted for older people.” “Our firm has forecast high double-digit growth for the next three years. The China 2030 Healthcare agenda is on-track. Many initiatives are very digitally advanced and data driven, including in community care.” “Adult vaccines are a key opportunity. It takes a lot of time to develop the sales channels, but the shift can be dramatic. In a single quarter, we went from selling 30k doses to 100k. The tipping point was a welcome surprise.” As China’s population ages, market opportunities are emerging outside traditional healthcare. These include elder-care services, home renovations, and the replacement of aging appliances, all tailored to the over-40 demographic. This group, poised to make up 60% of the population by 2035, presents a rapidly-expanding market segment with specific consumption patterns, including a notable rise in healthcare spending. Winning companies will recognise these evolving demands and leverage their expertise in mature markets to introduce innovative, age-appropriate solutions for Chinese consumers. Dive deeper.Explore the implications for business and strategy. Log in for the full Forum Insight. Join the peer-group discussion at upcoming Forum events. LOG IN Not yet a member?Contact us to learn more. You might also find these insights valuable Asean Asia Pacific China Forecast Geopolitics Japan Leadership Market Strategy Team-Building China’s AI Evolution: Strategic Insights for Executives May 21, 2025/No Comments China’s AI Evolution: Strategic Insights for Executives May 21, 2025 ‘The requirements imposed on China’s AI products matter. They will… Read More Executive Insights on China’s Sales Outlook May 21, 2025/No Comments Executive Insights on China’s Sales Outlook May 21, 2025 Our quarterly China Survey compiles insights from our members to provide… Read More Indonesia’s Promise: CEOs are confident but cautious May 21, 2025/No Comments Indonesia’s Promise: CEOs are confident but cautious May 21, 2025 ‘So long as they maintain political stability and reasonably good… Read More Load More End of Content.

China, Geopolitics, Strategy

Aligning Ambitions: How to Adapt to China’s Ideological Resurgence

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Aligning Ambitions: How to Adapt to China’s Ideological Resurgence March 10, 2023 ‘It’s important to know how your business fits into China’s ideology and strategy. Executives need to be able to describe how their business aligns with China’s goals.’ ‘If you are a company that needs China, then you need to know who your friends are. What companies depend on you? Who will go to bat for you if you become targeted? Once you know the answers, you need to put together a plan.’ ‘One of the great myths about China is that the government is monolithic and moves as one. Local governments can effectively protect companies that they like and deflect Beijing’s pressure. A firm, which is not part of Beijing’s big plan, still may be a vital contributor to the local economy.’ ‘Create opportunities for the CEO, managing director and others to get involved with the local government. Even small companies cannot afford to ignore this step. At the beginning, it might be advantageous to hire a consultancy to help make introductions.’ ‘If you start to get visits and see problems occurring, then leveraging relationships at more powerful levels within the supply chain can help. You may want to go to the OEM and see what they can do for you. A better partner might be a Chinese SOE client and your local industrial park contacts.’ In many markets, firms must meet environmental, social, and governance objectives to be considered successful. Meanwhile, in China, ideologically driven policies are experiencing a revival, and GDP targets are no longer the primary focus. Businesses that find common ground with China’s objectives and utilise preferred terminology will gain a competitive edge. Deepen your understanding & explore the implications for business and strategy in our latest Asia Brief. Log In to access our latest reports. LOG IN Not yet a member?Contact us to learn more. You might also find these insights valuable Asean Asia Pacific China Forecast Geopolitics Japan Leadership Market Strategy Team-Building China’s AI Evolution: Strategic Insights for Executives May 21, 2025/No Comments China’s AI Evolution: Strategic Insights for Executives May 21, 2025 ‘The requirements imposed on China’s AI products matter. They will… Read More Executive Insights on China’s Sales Outlook May 21, 2025/No Comments Executive Insights on China’s Sales Outlook May 21, 2025 Our quarterly China Survey compiles insights from our members to provide… Read More Indonesia’s Promise: CEOs are confident but cautious May 21, 2025/No Comments Indonesia’s Promise: CEOs are confident but cautious May 21, 2025 ‘So long as they maintain political stability and reasonably good… Read More Load More End of Content.

China, Geopolitics, Strategy

US-China Ties & the Role of Business Leaders

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US-China Ties & the Role of Business Leaders March 5, 2023 “Deng Xiaoping’s attitude was let’s put heavy problems aside and cooperate where we can. Now, it’s the US saying it. In the US, there’s genuine support working together on global issues like climate change, law enforcement, health, vaccines, etc.” “China’s view of the world connects it to Russia, and now Putin is a pariah. China says it wants an end to the war and pushes for negotiation, but Russian and Chinese leaders view the world as hostile – they want to make it safe for their form of government.” “On the one hand, businesses want to know if they have a visitor visa or a resident permit. Will they only be in China long enough to be replaced or stay for the long term? Some of China’s self-reliance talk is more aspiration than reality. But, on the other hand, many in the party realise they need foreign businesses to be connected to the world.” “There are different worldviews. Headquarters sees a lot more risk, whereas people in China see the opportunity. It’s important to remember that many views are legitimate. ‘People in China grew up with different information than those in the West. It will colour how they look at Hong Kong, Xinjiang or Taiwan. ‘When an American raises human rights, the Chinese person will bristle and counter with a question about the number of gun deaths in America.” “Many divides are due to a lack of communication. I advise CEOs and executives to get off group calls and have one-on-one conversations. Take the time to understand each other’s viewpoints – but then align on the long-term plan for the business without getting bogged down in disputes.” China CEO Forum and China CFO Forum members recently met to discuss the vital role that business plays in moving the US-China relationship forward in a way that diplomats and politicians have been unable to do. Indeed business is an increasingly important bridge as interactions in other sectors diminish. Executives must adapt to regulatory changes, avoid politicised discourse, and focus on pragmatic business contributions to China. Effective internal and external communication, along with aligning business objectives with government goals, will be key to success. Deepen your understanding & explore the implications for business and strategy in our latest Asia Brief. Log In to access our latest reports. LOG IN Not yet a member?Contact us to learn more. You might also find these insights valuable Asean Asia Pacific China Forecast Geopolitics Japan Leadership Market Strategy Team-Building China’s AI Evolution: Strategic Insights for Executives May 21, 2025/No Comments China’s AI Evolution: Strategic Insights for Executives May 21, 2025 ‘The requirements imposed on China’s AI products matter. They will… Read More Executive Insights on China’s Sales Outlook May 21, 2025/No Comments Executive Insights on China’s Sales Outlook May 21, 2025 Our quarterly China Survey compiles insights from our members to provide… Read More Indonesia’s Promise: CEOs are confident but cautious May 21, 2025/No Comments Indonesia’s Promise: CEOs are confident but cautious May 21, 2025 ‘So long as they maintain political stability and reasonably good… Read More Load More End of Content.

Leadership, Strategy, Team-Building

Leadership in Action: Driving Success Through Mental Wellness

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Leadership in Action: Driving Success Through Mental Wellness March 3, 2023 “A recent study in Europe showed that more absentee days were due to mental health issues than physical health concerns. Mental health’s financial hit to the bottom line is much higher than people realise.” “CEOs need the discipline and tenacity to make sure that mental health policies are set, and the programs are well integrated. When CEOs get involved, mental health becomes normalised and mainstreamed into the corporate culture.” “CEOs tell us they can see the impact of mental health programs, but they want a more science-backed approach to understanding the results. They want clarity about where progress is being made and where programs need to catch up. This has been hard to achieve until now.” “Young people may say they want more flexibility, but the results show it can harm their mental health when face-to-face interaction decreases. The data is mixed and conflicted.” Business leaders play a critical role in promoting a positive mental health culture; however, a lack of data makes it difficult to select and assess strategies, despite understanding its impact on productivity and business success. A recent Asia CEO Forum briefing was led by three members commended for their proactive approach to managing the challenge: Jon Penrice, President Asia Pacific, Dow Chemical, which is among the industry leaders in identifying and managing health issues as part of the firm’s Total Worker Health approach. Gordon Watson, Chief Executive Officer of AXA Asia & Africa, and Founding Chair of the Shared Value Initiative Hong Kong, which helps private firms create measurable economic value while generating value for the community by improving social or environmental conditions. Elisa Mallis, Vice President and Managing Director for the Center for Creative Leadership Asia Pacific, is a professional therapist and has provided mental health counseling, support, as well as helped develop programs for community mental health centers. Deepen your understanding & explore the implications for business and strategy in our latest Asia Brief. Log In to access our latest reports. LOG IN Not yet a member?Contact us to learn more. You might also find these insights valuable Asean Asia Pacific China Forecast Geopolitics Japan Leadership Market Strategy Team-Building China’s AI Evolution: Strategic Insights for Executives May 21, 2025/No Comments China’s AI Evolution: Strategic Insights for Executives May 21, 2025 ‘The requirements imposed on China’s AI products matter. They will… Read More Executive Insights on China’s Sales Outlook May 21, 2025/No Comments Executive Insights on China’s Sales Outlook May 21, 2025 Our quarterly China Survey compiles insights from our members to provide… Read More Indonesia’s Promise: CEOs are confident but cautious May 21, 2025/No Comments Indonesia’s Promise: CEOs are confident but cautious May 21, 2025 ‘So long as they maintain political stability and reasonably good… Read More Load More End of Content.

China, Exchange Rates, Strategy

China’s Digital Ambition & the E-Yuan

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China’s Digital Ambition & the E-Yuan March 9, 2022 ‘Company-wise, I only see benefits to the e-yuan. It could make the system more transparent and make taxation, invoicing, compliance, and legal issues easier. In addition, transaction costs should go down, which will save human resources.’ ‘Large transactions are under the supervision of the central bank because they reflect the health of the financial system. The PBOC wants to reduce fraud, money laundering and corruption. But the central bank does not care about small transactions. They aren’t in the business of trying to track every purchase of lipstick or bubble tea.’ ‘Going digital produces huge cost savings. We have already seen the results with mobile payments, which have grown dramatically. Digital RMB can also replace the need to maintain, transfer, secure, and detect forfeit physical bills.’ ‘The PBOC and the DCRI are doing extensive trials and testing to assess the security and reliability of the network. Faked e-yuan and frauds have already begun popping up.’ MNCs, already familiar with electronic transactions, may not see immediate impacts from China’s digital yuan due to their minimal use of physical cash. However, the e-yuan could offer broader systemic benefits, enhancing transparency and efficiency in taxation, invoicing, and compliance, while reducing transaction costs. The e-yuan represents a pivotal shift in China’s monetary policy that is not merely a new payment method but a strategic move to modernise the economy, enhance transactional transparency, and strengthen regulatory oversight. This shift towards a digital currency is not just about internal efficiencies; it’s about positioning China at the forefront of global financial innovation, with implications for international trade and investment strategies. Dive deeper.Explore the implications for business and strategy. Log in for the full Forum Insight. Join the peer-group discussion at upcoming Forum events. LOG IN Not yet a member?Contact us to learn more. You might also find these insights valuable Asean Asia Pacific China Exchange Rates Forecast Geopolitics Japan Leadership Market Strategy Team-Building China’s AI Evolution: Strategic Insights for Executives May 21, 2025/No Comments China’s AI Evolution: Strategic Insights for Executives May 21, 2025 ‘The requirements imposed on China’s AI products matter. They will… Read More Executive Insights on China’s Sales Outlook May 21, 2025/No Comments Executive Insights on China’s Sales Outlook May 21, 2025 Our quarterly China Survey compiles insights from our members to provide… Read More Indonesia’s Promise: CEOs are confident but cautious May 21, 2025/No Comments Indonesia’s Promise: CEOs are confident but cautious May 21, 2025 ‘So long as they maintain political stability and reasonably good… Read More Load More End of Content.

China, Market, Strategy

Reassessing Production in Asia

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Reassessing Production in Asia February 18, 2022 ‘In the past, selecting a manufacturing location was simple for most companies. Essentially, the key was to get the lowest landed cost. With the pandemic and geopolitics, now there are three dynamics: the lowest cost is still important, but now it is accompanied by supply chain resilience and sustainability.’ ‘Vietnam has been successful for us because early on the government understood the industry. They built the infrastructure and helped to attract some of the supporting industry that we need. In contrast, Indonesia targeted employment for unskilled workers, but didn’t think about anything else.’ ‘China will remain a major manufacturing hub for at least the next three to five years. There’s just no substitute. Because of the trade war and COVID, some companies took some supply chain out of China. China doubled down. The provincial governments in China offer generous incentives to keep you there. When they double down, the economics of it changes; it makes it hard to pull out.’ “India has the ingredients for a fantastic export business. They try to dangle the carrot, “If you make it here, you can sell it in the domestic markets.” But the domestic markets are incredibly complicated. The market is small for premium products in our industry and there are many challenging barriers.’ ‘We’re redesigning our products to have fewer features and to simplify things. Over time, we see that consumers will buy outcomes on a subscription basis, rather than a one-time purchase of hardware. We’re able to customize the outcome better for customers when they have an ongoing subscription. ‘It’s a greener way to sell as well. There’s no trucking in between, no distributor, and you don’t need to pick it up. So, you cut out many loops.’ US-China trade disputes and the pandemic have prompted companies to reassess their manufacturing, and while cost remains a critical factor, the resilience of supply chains and adherence to local ESG regulations are increasingly key. The shift reflects a broader, more balanced approach to evaluating manufacturing locales, underscoring the need for agility and sustainability in the current business landscape. Deepen your understanding & explore the implications for business and strategy in our latest Asia Brief. Log In to access our latest reports. LOG IN Not yet a member?Contact us to learn more. You might also find these insights valuable Asean Asia Pacific China Exchange Rates Forecast Geopolitics Japan Leadership Market Strategy Team-Building China’s AI Evolution: Strategic Insights for Executives May 21, 2025/No Comments China’s AI Evolution: Strategic Insights for Executives May 21, 2025 ‘The requirements imposed on China’s AI products matter. They will… Read More Executive Insights on China’s Sales Outlook May 21, 2025/No Comments Executive Insights on China’s Sales Outlook May 21, 2025 Our quarterly China Survey compiles insights from our members to provide… Read More Indonesia’s Promise: CEOs are confident but cautious May 21, 2025/No Comments Indonesia’s Promise: CEOs are confident but cautious May 21, 2025 ‘So long as they maintain political stability and reasonably good… Read More Load More End of Content.

China, Market, Strategy

China’s Logistical Upgrade: Implications for MNCs

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China’s Logistical Upgrade: Implications for MNCs February 10, 2022 ‘I estimate shipping freight costs will remain as they are for several months. About half the ocean freight is locked into one-year contracts. Prices may start to normalise in the second half of this year. The US$20,000 per container price will likely decrease to US$4,000 to US$5,000. But I predict it will take a while before we get to US$2,000 again.’ ‘I don’t think China’s air freight rates will return to pre-Covid levels in the next few years. As China moves to high value-added products, exports will be increasingly time-sensitive and demand for air freight will rise. Both air and ocean rates skyrocketed during the pandemic. Ocean rates are 10 times higher, while air freight is only three times higher. Both will get lower, but not to pre-Covid levels.’ ‘I don’t see supply chain costs going down in the foreseeable future. The issue is not just the high cost of air and sea freight; the bigger issue is a significant lack of drivers to move boxes in the US and Europe. And it’s coming to China; I can’t hire drivers. People don’t want to be truck drivers anymore. The situation will worsen as China moves toward middle to upper-class society. And the technology to replace drivers is probably 20 years away.’ ‘In the 14th Five Year Plan, the word logistics was mentioned 20 times and transportation 22 times, demonstrating its clear importance.’ As China’s logistics sector transforms, firms are grappling with enduring high costs, particularly in shipping and air freight. Consolidation in the shipping industry has further complicated the situation. A significant shift is not expected until later in the year, with freight costs projected to stabilise at higher than pre-pandemic levels. This trend is mirrored in air freight, where demand for time-sensitive, high value-added products is keeping costs up. However, the next decade offers a more optimistic outlook. Firms have shown a newly-found interest in shoring up their resilience by creating regional supply chains, sourcing inputs close to production, and moving factories closer to consumers. For senior executives, understanding these dynamics is crucial as they not only impact local costs but also inform broader strategic decisions in Asia Pacific. Dive deeper.Explore the implications for business and strategy. Log in for the full Forum Insight. Join the peer-group discussion at upcoming Forum events. LOG IN Not yet a member?Contact us to learn more. You might also find these insights valuable Asean Asia Pacific China Exchange Rates Forecast Geopolitics Japan Leadership Market Strategy Team-Building China’s AI Evolution: Strategic Insights for Executives May 21, 2025/No Comments China’s AI Evolution: Strategic Insights for Executives May 21, 2025 ‘The requirements imposed on China’s AI products matter. They will… Read More Executive Insights on China’s Sales Outlook May 21, 2025/No Comments Executive Insights on China’s Sales Outlook May 21, 2025 Our quarterly China Survey compiles insights from our members to provide… Read More Indonesia’s Promise: CEOs are confident but cautious May 21, 2025/No Comments Indonesia’s Promise: CEOs are confident but cautious May 21, 2025 ‘So long as they maintain political stability and reasonably good… Read More Load More End of Content.

Asia Pacific, China, Geopolitics, Strategy

Adapting to Biden’s US-Asia Pacific Policy

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Adapting to Biden’s US-Asia Pacific Policy January 5, 2022 ‘Biden understands the national mood and consensus that China represents a threat to the US rather than an opportunity – and that constrains his flexibility on what he can do.’ ‘The Biden team is better at ‘quiet diplomacy’ because there are more long-term players. They’re not necessarily smarter but are more experienced.’ ‘What is being done is an attempt to turn China into a focal point of foreign policy, particularly for the Asian region – but not make it a focal point for activity. Japan policy, Korea policy, SE Asia policy all come from China policy. But they will not lead to intense direct engagement with China.’ While upholding Trump-era tariffs and sanctions, the Biden administration has made a nuanced shift towards ‘competitive co-existence’; a move away from outright antagonism. While this recalibration may take a backseat to pressing domestic issues, there is a strong undercurrent to achieve supply chain independence from China, which will reshape global trade dynamics. The technological rivalry, particularly in semiconductors and AI, is at the forefront of this strategic game. Re-engagement with ASEAN and a potential free trade deal with Taiwan add layers to the complexity. In this evolving geopolitical landscape, Biden’s preference for ‘quiet diplomacy’ and alliance-building is more than a policy choice; it’s a strategic imperative for the US to maintain its influence in Asia Pacific. Dive deeper.Explore the implications for business and strategy. Log in for the full Forum Insight. Join the peer-group discussion at upcoming Forum events. LOG IN Not yet a member?Contact us to learn more. You might also find these insights valuable Asean Asia Pacific China Exchange Rates Forecast Geopolitics Japan Leadership Market Strategy Team-Building China’s AI Evolution: Strategic Insights for Executives May 21, 2025/No Comments China’s AI Evolution: Strategic Insights for Executives May 21, 2025 ‘The requirements imposed on China’s AI products matter. They will… Read More Executive Insights on China’s Sales Outlook May 21, 2025/No Comments Executive Insights on China’s Sales Outlook May 21, 2025 Our quarterly China Survey compiles insights from our members to provide… Read More Indonesia’s Promise: CEOs are confident but cautious May 21, 2025/No Comments Indonesia’s Promise: CEOs are confident but cautious May 21, 2025 ‘So long as they maintain political stability and reasonably good… Read More Load More End of Content.

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