Our year kicked off with a trip to Beijing, Shenzhen and Hong Kong, and as always, we were fascinated by China’s evolution. Fifteen years ago, Beijing was under construction and far from being the vibrant capital it is today. Going back even further to a time 40 years ago, Shenzhen was a mere village, and its current role as China’s Silicon Valley was unimaginable.
With the negative sentiment currently surrounding China, it’s easy to forget the incredible developments the country has undergone over the past 20 years, achieving a very high level of economic growth and becoming a middle-income country. This has been achieved notably due to the hard-working culture of the Chinese people, something which was apparent to us throughout our travels.
In our piece, we talk about:
- ‘Downtrading’: since last year, job security has decreased, with many companies laying off staff. Overall, Chinese citizens feel poorer, and their reaction has been to save more and spend less.
- The luxury market: aspirational foreign brands still have a future in China, but in the current challenging consumer environment, local players are at an advantage.
- Online retail: the sector is maturing in China and is undergoing a huge transition away from the incumbents, Alibaba and JD.com, with players fighting for market share.
- Geopolitics: the deterioration of the relationship between China and the U.S., which is is concerning to many Chinese people, and the country’s conflicted relationship with Taiwan.
- China’s real estate market: this is clearly one of the main headwinds for China, at present, and our meetings with property companies painted a challenging picture in the short term.
Our trip highlighted the speed of growth in the country and how advanced China is compared to its neighbours, such as India or Indonesia. Clearly, it is currently facing many headwinds, but we believe that if the government manages to restore confidence in the business community and consumers, the country could resume its growth trajectory.
