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MIT SMR Strategy Forum
Each month, we pose a question about business, management, technology, or public policy to our panel of academic experts. Here you can see what they think and why.
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We asked our panel of strategy experts to tell us how strongly they agree with this statement:
China is no longer the most attractive growth opportunity for Western multinationals.
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Raw Responses
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Responses weighted by panelists’ level of confidence
Panelists
| Panelist | Vote | Confidence | Comments |
|---|---|---|---|
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Neither Agree nor Disagree | 2 | |
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Agree | 8 | “From a purely economic point of view, China remains a huge, attractive market with booming cities and a rising middle class. But politically, it is becoming a more difficult place to do business. These political troubles have not yet tipped over. But American companies may increasingly come to perceive they are better off looking and doing business elsewhere.” |
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Agree | 7 | “Right now with China being the focus of a trade war, that is likely the case. But, in reality, it could only be a growth opportunity for so long.” |
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Neither Agree nor Disagree | 5 | “China is an enormously attractive opportunity for businesses, but there are also many other growth opportunities, particularly when applying new technologies for digitization and AI.” |
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Neither Agree nor Disagree | 8 | “Whether China is the right growth opportunity for an MNC depends on the strategy of the MNC, the industry structure, the cost of investment, the prospective returns on that investment, and the purpose, character, and context for the growth goal in the first place. China is massively important. Whether a specific firm should seek growth in China depends on whether and how the firm engages.” |
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Agree | 6 | “Given the size of its economy, China’s rates of growth have fallen. China’s self-favoritism limits opportunities. India is more attractive for many companies, looking like China 20 years ago but with better institutions.” |
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Agree | 3 | “There are a large number of emerging markets including Africa, MENA, and Southeast Asia. China continues to grow but seems less a unique juggernaut.” |
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Disagree | 6 | “The government’s ‘Made in China 2025’ initiative, together with its already powerful and growing tech industry, have China poised for continued strong growth. Moreover, with close to 1.5 billion people, the domestic market alone is fertile ground for much market-driven innovation.” |
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Neither Agree nor Disagree | 8 | “Demand in China is clearly softening, but given secular stagnation in advanced economies, it is unclear what the attractive alternatives are.” |
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Agree | 4 | “Is the bloom off the rose? It appears so. China is a very large and growing market. But the demographic dividend is over, the middle-income trap may not be easy to evade, and its geopolitical ambitions make it a riskier proposition. Whether Western multinationals see it — is a whole different issue.” |
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Agree | 7 | “Wages in China have risen and so has competition from domestic firms. At the same time, growth in China is slowing and Trump’s trade war creates ongoing uncertainty for those thinking about investing in China. Vietnam is already drawing off low-wage jobs, and growth prospects in Africa are looking up.” |
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Disagree | 6 | “Even at a reduced rate of growth and institutional problems, China is still relatively wealthy and a huge market.” |
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Rebecca Henderson | 5 | “I fear the problem is that there is nowhere in the world that can be described as ‘a particularly attractive growth opportunity.’” |
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Agree | 7 | “It’s just not that appealing to invest in a country where your competitors can reverse-engineer your technology and steal it, without you having any real recourse to IP protection. And the threat of a trade war doesn’t help. Together, these two threats create too much uncertainty and risk.” |
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Agree | 7 | “For companies already in China, its slowing growth rate, political and regulatory risks, and long-standing concerns over IP theft make it look worse at the margin. But for companies not in China (which rules out most ‘Western multinationals’), the opportunity remains impossible to ignore.” |
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Disagree | 8 | |
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Neither Agree nor Disagree | 5 | “It is not clear that China was ever the ‘most’ attractive opportunity across the board for all Western multinationals. It will remain a very attractive opportunity for some, but not all Western multinationals. It is all a question of where China fits into each firm’s business model, relative to alternative sourcing and selling options.” |
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Agree | 7 | “It is possible to get access to inexpensive manufacturing facilities at tremendous scale, but selling within China poses many challenges.” |
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Agree | 5 | “I’m not sure it was ever the most attractive growth opportunity for Western multinationals. And, of course, it depends quite a bit on your industry. It would have been a great growth opportunity for Google absent censorship. It remains a good growth opportunity for Apple. Is it the most attractive growth opportunity for GM? Probably not.” |
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Disagree | 6 | “While opportunities may be more constrained than before, partnerships will still provide critical access to this large market.” |
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Disagree | 4 | |
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Aaron Chatterji | 5 |