As China's new leaders move to embrace foreign direct investment to revive the global economy, market entrants and investors can find a path to sustainable success in China with an open mind and flexible strategy, according to PwC's latest edition of Doing Business and Investing in China.
"With the current economic situation and change in leadership, we're seeing an increasing liberalisation of the China market to foreign investment," says Frank Lyn, PwC China and Hong Kong Managing Partner. "As multinational businesses shift their focus from China's ‘emerging labour pool' to its ‘emerging middle class,' now is the time to step up your China strategy and capitalise on new market reforms."
Rapid changes in demographics and market forces are opening up exciting new sectors and opportunities that would never have been believed possible a few years ago, much less open to foreign investment.
In addition, in November 2012, the 18th National Congress of the Communist Party of China (CPC) sent the international community a clear and consistent message that the new leadership remains committed to "deepening reform and opening up."
"As China moves towards the "new normal" of single-digit growth, investors should focus on China's growing domestic market and rising income, as well as green projects and the movement of labour-intensive industries towards the central and western parts of the country," says Lyn.
China's simultaneous catalysts - an aging population, growing wealth, changing consumer attitudes, rising environmental awareness, greater mobility, urbanisation, and decreasing household sizes - are pushing the country through a process of great change.
To keep up, market reform is moving a growing number of sectors and markets towards liberalisation. The agenda for China's new leadership is to encourage more private investment and to nurture the growth of the private sector. It is also committed to opening up new markets and sectors to foreign investment.
Meanwhile, with no signs of a pickup in the euro zone and US economies, strong expectations are being placed on China for growth opportunities. Careful planning, according to PwC's specialists, is key to any China strategy, particularly in entry and growth.
"The best way for investors to mitigate on-the-ground risks is by knowing their customers and partners, government touch points and stakeholders," says Lyn. "Tailored due diligence, with trusted and independent sources, is the strongest safeguard."