When I spoke at a Canada-China Business Council event in Vancouver, Donald Lindsay, President & CEO, of Teck Resources was the keynote speaker. I have heard countless keynotes at China events by CEOs of big companies and this was the best I’ve heard. Most North American CEOs have little personal involvement with China, but it took about two minutes for me to realize this was not true of Lindsay. He started his speech by saying that as soon as he started at Teck, he made clear China would become its focus and he would be intimately involved with it.
I also liked how he stressed the need for companies doing business in China to adjust their China business plans to China’s Five-Year Plan. Lindsay talked of how he always carries a business card sized summary of China’s Five-Year Plan so he can easily check it and hand it out to others in his company.
He went on to say that if you want to know where China is going over the next five years, read the plan, as China has and will continue to hew closely to it. If your China business plan coincides with China’s Five-Year Plan, your likelihood of success will be greater than if it does not. Lindsay has it absolutely right.
I asked him for a copy of his Five Year Business Plan card (he had offered it out) and I have kept it in my wallet ever since.
What does that card say and what does its content mean for those doing business in China or with China?
It starts out with the following preamble: “Long-term, steady and relatively rapid economic development.” I buy that. China wants high growth, but it wants to avoid bubbles. It wants growth now to help with growth later.
It then gets quite specific:
- “Balancing the needs of growth with the needs of sustainability.” I see this as meaning the next five years will be good for companies with products or services that are good for the environment. Conversely, if you are in a high pollution, low wage business, expect things to get tougher for you in China.
- “Annual 7% GDP growth while creating 45 million urban jobs and promoting the service sector.” I see the 7% part of this as not terribly relevant, but I the part on 45 million urban jobs means we should expect China’s cities to continue to grow rapidly in population. No surprise here, but good news for companies involved with housing and urban transportation and whatever else city dwellers consume in greater per capita numbers than rural dwellers. The service part is also no surprise, as China has explicitly been shooting for this for years.
- “Maintaining stable prices and growing domestic consumption.” Good for you if you are in the consumer goods business or something related.
- “Breakthroughs in strategic emerging industries (bio-tech, clean-tech, IT, high-end equipment, new energy, new materials, green vehicles).” If you are in one of these industries, consider yourself lucky.
- “Developing China’s inland regions.” This has been a governmental goal for a long time. Couple it with the first goal listed above, and decide where your best chance is for locating your high pollution business.
- ” 13% annual increase in the minimum wage.” I am constantly surprised by foreign companies that both express surprise at China’s ever-rising wages and predict those wage increases will end soon. If you are counting on China’s wages rising less than 13% a year, you probably should re-formulate your business plan and/or consider leaving China.
- “Improved public services and better social management to achieve social harmony.” I know this is anecdotal and a less than representative amount of time, but in the last three months, my firm has seen an onslaught of medical related companies looking to go into China or expand their existing busineses there. Education is another public service that will keep rising in China over the next five years.
