How firms can capitalize on China’s megatrends in the next decade

Joe Ngai, managing partner in the McKinsey Greater China office, identifies three forces that are reshaping corporate behavior in what may be the world’s most competitive market.

What are the biggest megatrends you’re seeing in Asian corporations?

Video

The biggest trend that we see today is around digital in China. China is the world’s largest digital consumer market, I think every single company whether you’re facing consumers or whatever your business is, are all trying to figure out how to transform yourself digitally. So we believe that digital transformation is one of the themes that you can see for the next five years for sure.

The second theme is around quantity to quality. In the past as China was growing very quickly people actually got into different businesses. They got into different lines of consumers, they opened offices, they opened shops, they went from the provincial level all the way to the county levels, and all the way to villages.

(They asked) how do I get myself so that I’m all over the country? These days, there’s a lot more people thinking around where are the areas they need to put more resources into, and which areas they need to get out of.

So there’s a lot more picking, there’s a lot more choosing, there’s a lot more thoughtfulness around deploying of capital. And I think that that is going to be very important because quality by itself is not going to solve or be very profitable.

What will it take for these corporations to continue creating value through 2030?

I think that is very important for corporations to be a lot more picky, a lot choosier and also be more thoughtful around where they deploy themselves.

The last one I think is around transforming from within. I think all Chinese businesses today to talk about the next 10 years are going be very difficult and very different from the last decade.

So therefore we have a think about how to evolve? How do we survive?

This is probably one of the most competitive markets that we see globally, so therefore for a lot of companies it’s around transmission or we don’t exist anymore.

And so in that need to transform to accelerate evolution, I think Chinese companies have to move very fast.

Related Articles