The Chinese market is the most competitive environment for both domestic and foreign companies as the country continues its opening up and economic reform, said Joe Ngai, chairman of management consulting firm McKinsey & Company in Greater China.
Ngai said that foreign companies are actively keeping up with China's steps in deepening reform, adding that significantly, more Chinese companies are also going abroad and transforming themselves into multinational companies.
"I think China is definitely the most competitive environment anywhere globally. Right now, I think we're squarely in the medium-proof lane, and that's what we all have to get used to. The CEOs all around, they all say, 'Look, this environment, we're getting used to it, and we're doing bunch of things the right way.' So the first one is, we get used to this environment," he said in a recent interview in Beijing.
"Second, I think that basically I've seen more Chinese companies who want to go overseas than I've ever witnessed before, and I think that it's really a phenomenon of the times. I think the Chinese companies, for the longest time, we were the 'factory of the world'; we manufactured here, and we export to the rest of the world. And I think there's a big difference between being the 'factory of the world' and a multinational company. I think Chinese companies right now, they want to go abroad, they want to become multinational companies. I think that's a big change in there," Ngai added.
According to the chairman, multinational companies operating in China are reevaluating how to best invest in the country.
"I think that they have enjoyed 20 years of unprecedented growth and prosperity. So, I do think the multinationals, for lots of them, they are recalibrating China. They're thinking about what is China is going to mean for us as a global company in the next 10 years, and am I going to invest more money in China? How am I going to transform my business? The conclusion is that we ought to get better in our operations in China, because if we don't do that, we will slowly become irrelevant, right, in the market. And I think that that includes the speed, the localization, the talent pool, the digital transformation, of the above," said Ngai.
At the same time, he shared the secrets to staying competitive in the most competitive market as a multinational.
"For multinationals, this is the market where they face the fiercest local competition. They face the fiercest price competition. And they face the most rapid innovation cycle that they can see anywhere else. Product innovation in China is three times faster than anywhere they've seen, usually, in their home markets. So, what do they need to do? Just like any other Chinese company, you have to get faster, better, cheaper, and close to the market. There's only one formula, and that formula is not any different between a multinational company or a low company. And I think that they all face the same context. So I do think that if they can do it well, they can succeed anywhere," he said.
McKinsey partner sees China as most competitive market for both domestic, foreign firms
McKinsey partner sees China as most competitive market for both domestic, foreign firms
