Shotgunner51
RETIRED INTL MOD
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China's New Year Heralds Growth, Not Woe
Chinese New Year happened this month, with the Year of the Fire Monkey starting on 8 February. Three days later, the Dow Jones Index bottomed out at 15,660 – a low not seen for two years. The biggest worry on many investors’ minds has been slowing growth in China and the implications for worldwide economic vitality. Are the markets over-reacting? I think so.
Innovation on the Rise
Jamie Dimon, CEO of JPMorgan Chase, said during this week’s Investor Day that all this fretting about China is wrong. He made the point that China today wouldn’t look all that different from the United States in the 1860s: politically unpredictable, risky, with an immature economy and infrastructure. Having just returned from Asia I have to agree with Dimon. Regardless of what official GDP statistics say, China looks nowhere near its ultimate potential.
I visited the 50,000 employee campus of Huawei, the telecoms manufacturer in Shenzhen. All evidence points not only to continued growth, but to accelerating strategic sophistication. Coping with enormous customer-driven complexity from the telecoms carriers who buy most of its gear, Huawei is learning very quickly how to use platforming in its supply chain strategy. Software-enabled networks are a critical trend that Huawei could end up leading.
Back in Hong Kong I met with the Chief Strategy Officer of China Mobile International. Here, too, the perspective is forward-looking, with a huge emphasis on internet of things, digital supply chains and customized content delivery. Relationships with suppliers like Huawei, Samsung and many others in the region are fast evolving in search of collaborative wins and an end consumer value proposition suited to the still huge opportunity in China.
Viewed through the eyes of its smaller but muscular neighbour South Korea, on the other hand, China also looks a lot like Dimon’s view of a surging mega-nation. Samsung, who may be the most respected electronics company on earth, looks to China no longer as a low-cost manufacturing location, nor even mainly as an important customer, but now as a dangerous rival.
As at Huawei, China Mobile and seemingly everywhere else in the world, much attention centers on Xiaomi, the aggressive Beijing-based maker of smartphones. Xiaomi matters less because they compete intensely on price, and more because they cycle innovation so rapidly.
Employing a direct-to-consumer model for sales in China, coupled with a lively feedback loop driving software innovation from end users, Xiaomi threatens the traditional carrier-based model that dominates in the US. Xiaomi has announced its intent to enter the US market next year and although its strategy faces serious channel questions, the disruption could be just what the market needs to spark new interest and demand.
Meanwhile of course, Chinese firms are busy acquiring rivals around the world, investing in futuristic technologies like genomics and robotics and branching rapidly out of making toys and computers for export and into innovative new businesses in entertainment and e-commerce. GDP growth may be tailing off a bit, and governance is still an open question, but China is not in any kind of fundamental trouble.
Data from our Future of Supply Chain survey last fall shows, in fact, that for every supply chain executive planning to eliminate positions in China over the next three years, there are at least four planning to create new jobs. Despite meaningful reshoring to the United States, more plan to add supply chain jobs in China than anywhere else in the world.
Ambitious and Adventurous, but Irritable
According to one Taoist blogger: “The Year of the Monkey is ideal for a quantum leap in your life! Now is the time to shake things up, create change and innovate a new path.” For an ambitious China, this isn’t only about finding the way of consumer-led growth.
For supply chain executives everywhere this means focusing not only on what Chinese consumers want, but also how the nation as a whole is evolving from producer orientation, through the consumer era to a creative future.
2004 was also Year of the Monkey, but that was the helpful and stubborn Wood Monkey, ideally suited to China’s role as “factory to the world”. This is a very different animal.
Chinese New Year happened this month, with the Year of the Fire Monkey starting on 8 February. Three days later, the Dow Jones Index bottomed out at 15,660 – a low not seen for two years. The biggest worry on many investors’ minds has been slowing growth in China and the implications for worldwide economic vitality. Are the markets over-reacting? I think so.
Innovation on the Rise
Jamie Dimon, CEO of JPMorgan Chase, said during this week’s Investor Day that all this fretting about China is wrong. He made the point that China today wouldn’t look all that different from the United States in the 1860s: politically unpredictable, risky, with an immature economy and infrastructure. Having just returned from Asia I have to agree with Dimon. Regardless of what official GDP statistics say, China looks nowhere near its ultimate potential.
I visited the 50,000 employee campus of Huawei, the telecoms manufacturer in Shenzhen. All evidence points not only to continued growth, but to accelerating strategic sophistication. Coping with enormous customer-driven complexity from the telecoms carriers who buy most of its gear, Huawei is learning very quickly how to use platforming in its supply chain strategy. Software-enabled networks are a critical trend that Huawei could end up leading.
Back in Hong Kong I met with the Chief Strategy Officer of China Mobile International. Here, too, the perspective is forward-looking, with a huge emphasis on internet of things, digital supply chains and customized content delivery. Relationships with suppliers like Huawei, Samsung and many others in the region are fast evolving in search of collaborative wins and an end consumer value proposition suited to the still huge opportunity in China.
Viewed through the eyes of its smaller but muscular neighbour South Korea, on the other hand, China also looks a lot like Dimon’s view of a surging mega-nation. Samsung, who may be the most respected electronics company on earth, looks to China no longer as a low-cost manufacturing location, nor even mainly as an important customer, but now as a dangerous rival.
As at Huawei, China Mobile and seemingly everywhere else in the world, much attention centers on Xiaomi, the aggressive Beijing-based maker of smartphones. Xiaomi matters less because they compete intensely on price, and more because they cycle innovation so rapidly.
Employing a direct-to-consumer model for sales in China, coupled with a lively feedback loop driving software innovation from end users, Xiaomi threatens the traditional carrier-based model that dominates in the US. Xiaomi has announced its intent to enter the US market next year and although its strategy faces serious channel questions, the disruption could be just what the market needs to spark new interest and demand.
Meanwhile of course, Chinese firms are busy acquiring rivals around the world, investing in futuristic technologies like genomics and robotics and branching rapidly out of making toys and computers for export and into innovative new businesses in entertainment and e-commerce. GDP growth may be tailing off a bit, and governance is still an open question, but China is not in any kind of fundamental trouble.
Data from our Future of Supply Chain survey last fall shows, in fact, that for every supply chain executive planning to eliminate positions in China over the next three years, there are at least four planning to create new jobs. Despite meaningful reshoring to the United States, more plan to add supply chain jobs in China than anywhere else in the world.
Ambitious and Adventurous, but Irritable
According to one Taoist blogger: “The Year of the Monkey is ideal for a quantum leap in your life! Now is the time to shake things up, create change and innovate a new path.” For an ambitious China, this isn’t only about finding the way of consumer-led growth.
For supply chain executives everywhere this means focusing not only on what Chinese consumers want, but also how the nation as a whole is evolving from producer orientation, through the consumer era to a creative future.
2004 was also Year of the Monkey, but that was the helpful and stubborn Wood Monkey, ideally suited to China’s role as “factory to the world”. This is a very different animal.
