The authors present their views on the article by Foreign Policy highlighting the fact that, “If China is going to build on its growth, it’s going to need an industrial policy that backs it up instead of holding it back.”

Read the article here

“Many western observers think that as the Chinese currency is allowed to float with market forces, it will make Chinese exports more expensive. Couple this with the recent spate of increases in wages of Chinese workers announced by many companies operating in China, it is tempting to conclude that Chinese companies will suffer a setback in their global competitiveness. But this may be at best a short-term effect. To figure out the long-term consequences, one might want to look at what happened to the Japanese companies in the 1980s when energy costs increased dramatically, and Japanese currency appreciated significantly under international pressure. To deal with these pressures, Japanese companies redoubled their innovation efforts. For example, the Japanese auto industry created luxury brands Accura, Lexus, Infinity – brands that have successfully attacked mighty Mercedes, Audi, and BMW. So while we might see less of the low cost Chinese products flooding the western markets, we should also watch out for a slew of innovations from China in the next decade that might change all our lives.”, -Authors, Winning in Emerging Markets.

Do you agree? Looking forward to your comments and experiences in similar situations.

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