Faced with strong external dependence and the economic slowdown of 2010, China is trying to transform its economic model by focusing more on the growth of domestic consumption. The twelfth five-year plan (2011-2015) promoted an increase in the purchasing power of Chinese households by 7% on average, for both urban and rural residents. With inflation under control, tax reform, the creation of 45 million urban jobs and upward pressure on wages, this twelfth plan was a success. Is the Chinese domestic market still attractive?
China’s 13th Five-Year Plan (2016-2020) and its prospects
The thirteenth plan (2016-2020) confirms the desire to develop the internal market. The plan calls for maintaining medium or high growth with a view to doubling GDP and average income in 2020 compared to 2010. The priority is no longer to achieve double-digit economic growth. Today, the objective is to build a healthier and more sustainable economic model built on innovation, domestic consumption and services.
China also intends to modernize and tackle subjects where it was a bad student: the environment and international openness.
The country will continue its commitment to green development and sustainable growth. The Chinese Communist Party even speaks of an era of “ecological civilization”.
The country also plans to accelerate the opening of its capital market and the services sector (including banking, insurance, securities and nursing centers) to foreign investment. And since certain sectors remain protected, the priority of this thirteenth plan is therefore to reduce the barriers to entry for both national and foreign private sector companies.
It is therefore a more open China that will emerge with the opportunity for other countries to conquer the Chinese empire on the markets for goods and services. A China with a new economic model, based on an increase in non-price competitiveness.
What opportunities for French companies?
French companies can benefit from this upheaval in the Chinese economic model. More qualitative growth geared towards consumption and services can indeed offer significant opportunities. In 2014, the French market share in China was already significant since it reached 1.4%, ahead of Italy and the United Kingdom but behind Germany (5.3%). Aero Leads However, the trade balance (the difference between imports and exports) was in deficit of more than 26 billion euros. It is on the basis of this result that for several years, France has reorganized its export support policy, in particular through the reorganization of administrative actors and the redeployment of the diplomatic network towards emerging countries including China.
As China evolves, it expresses new needs: food is changing, health expectations are high, urbanization is creating immense needs for urban development. The country also needs to develop its security system or will need to be supported in its fight against pollution. So many challenges for the country where French companies have a role to play.
Challenges
The Chinese economic sphere is therefore changing, offering significant opportunities to foreigners who would like to join the Chinese domestic market. Australian number data The success of this conquest will largely depend on the capacity for adaptation that foreign companies will have to provide in order to adapt to the Chinese market: being aware of the cultural barriers to be removed and training your teams to achieve this, having a communication policy external and internal viable for this new country, integrate Chinese know-how within the teams and understand the needs of these new interlocutors.
