Sunday, March 27, 2011

"Five Reasons for the World to Care About China’s New Five-Year Program -- Full Text"

From Accenture:

Many multinationals’ CEOs are under increasing pressure to demonstrate that they can tap the abundant opportunities in China—whether or not they have a presence there already. 

Setting up shop in China’s major cities, a well-known luxury jewelry maker has been unable to replicate the success it has enjoyed in most other countries. A big reason? Its stores are too small. Little stores make Chinese consumers feel disrespected.

That’s just one instance of how easy it still is for foreign executives to misunderstand China and its people. Not long ago, a brand-name smartphone maker failed to get the sales surge in China that it had enjoyedelsewhere. One of several problems: The phone was being packaged with monthly subscription plans but most Chinese prefer to buy pay-as-you-go charge cards.

Just as Western executives think they are starting to get to know China, the nation is evolving again—and very quickly. Despite all that is now known about the modern nation—in spite of the extensive coverage of the 29th Olympiad in Beijing in 2008 and all of the articles about growing consumer affluence in China—there’s still a large gap between the realities of doing business there and the outdated perceptions held by many business leaders from overseas.

Now there is golden opportunity to narrow that gap. The central government is about to release its 12th Five-Year Program, the document that will guide national policy through 2015. Whereas the five-year plans of previous decades have been only of passing interest to businesses, the new program marks a big departure in intent and implication. It is a document that foreign business executives must care about if they are to participate fully in China’s next growth phase.

Although the document continues to highlight the market reforms and the opening-up process begun several plans ago, it does not accentuate the achievement of quantifiable gross domestic product (GDP) growth rates. Instead, it strongly emphasizes the restructuring of China’s economy, targeting domestic demand, industry performance, the urban-rural divide, the “green” economy, and regional economic structures.

Why this program is differentThe main themes of any Chinese five-year plan are never a surprise. But the latest strategy has sparked a lot of interest for many months. Historically, the five-year planning cycles have been used as guides for central government control. Over time, they have become less about control and more about guidance for a fast-growth economy. Thus the document is now titled as a five-year program or strategy rather than plan. But whatever the name, they continue to influence the plans of China’s many state-owned enterprises (SOEs) such as China Construction Bank and oil and petrochemicals giant Sinopec, and most of the country’s private sector is attuned to the five-year rhythm.....MUCH MORE
HT: MetalMiner who describes the report as refreshing and insightful.
I've never found an Accenture report "refreshing".
Bain & Co. on the other hand...

Here's HSBC's take on the Chinese: "HSBC on China's 12th Five-Year Plan: "'Delivering Low Carbon Growth'"