China Forum Stirs Debate on Sustainable Growth
With the world focused on its rapid development, China has generated both excitement and concern among investors, policy makers and potential business partners. Now that global corporations have gained access to Chinese markets, they are concentrating on stability and sustainable long-term progress. Against this backdrop, the Wharton China Business Forum recently brought together business leaders and academics to discuss China’s strategic plan for continued growth. The conference, entitled “Global Transitions: Demystifying China’s New Path,” included discussion of financial reform, entrepreneurship, consumer markets, and environmental and energy issues, among other topics.
Few would deny the need to overhaul China’s financial system. The difficulty of gaining access to capital, the plague of non-performing loans, and the sluggishness of securities markets all point to the failings of the status quo. But exactly how and when financial reforms should occur is anything but a foregone conclusion. Balancing the needs of the state with the needs of the business community is a delicate dance, especially in a country where governmental control is firmly entrenched. In a panel on financial reform at the recent Wharton China Business Forum, experts noted the challenges of transforming the nation’s financial culture but were optimistic about the government’s commitment to change.
What happens when the world’s most populous nation goes from saving most of its money to spending it? Many consumer products companies are itching to know just that — and want to be there when it happens. While most people think of China as a global manufacturer of products for the rest of the world, it is also fast becoming (and in some cases, already is) the biggest consumer of goods. What its people choose to buy will play a huge role in the kinds of goods that are produced, how they are marketed, and even where they are sold. In a panel at this year’s Wharton China Business Forum, experts talked about how best to tap into the vast pool of potential buyers in China — and the purchasing power of its rising middle class.
China’s state-owned banks — riddled with inefficiency and loaded down with bad loans — represent a serious drag on the world’s most vibrant economy, according to participants at the 2005 Wharton China Business Forum. Yet these banks are also attempting to reform themselves, in part by implementing Western-style management practices and prudent lending standards. In 2003, China’s government recapitalized Bank of China and China Construction Bank with an injection of $45 billion of reserves — a sign that bank reform is a priority for the still-powerful central government.
Companies, as Westerners define them, have existed in China for less than 20 years. Understand that, and much of the flux in the country’s economy and its commercial regulations begins to make sense. “China eliminated firms in 1950 and didn’t reconstitute them until 1988,” said Wharton management professor Marshall Meyer during a presentation at the recent 2005 Wharton China Business Forum. “Therefore, it only has 17 years of experience with Western-style businesses.” Meyer and others discussed the challenges of doing business in China, including such topics as intellectual property protection, privatization, energy consumption and environmental conservation.