Self-sufficient China 2025: What the plan means for global trade

China’s $300-billion plan to be virtually self-sufficient by the year 2025 has many observers wondering how it will impact not only companies who are invested in China today but also China’s overall position in the global marketplace.

I discuss these issues in an interview with CTV’s Your Morning News host Ben Mulroney. This article provides a summary of the messages in the video.

The ‘Made in China 2025’ Plan Highlights:

By focusing on 10 key industries, China will:

• Offer Chinese companies large and very low-interest loans
• Help Chinese companies purchase foreign competitors
• Subsidize more research

Western companies are concerned that this would force out competitors from abroad and lead to government-subsidized global players that would compete unfairly. But quite frankly, they have already been doing this for years-- this is just the status quo amplified and formalized publicly.

China’s motivation?

China wants to compete further up the value-chain. They want to be known for more than low-cost manufacturing for others and have been evolving into innovators, not just replicators. China is also preparing for their next generation of advanced workers.

What should foreign companies already in China do?

China is too big of a market opportunity for foreign companies to give up on entirely. However, the Chinese government makes it extremely difficult to do business there and it will likely only get worse. For example, requiring joint ventures with domestic companies and at times, giving up majority ownership, like HP did.

Foreign companies need to operate with their eyes wide open and should also consider diversifying investments into other emerging countries where it is easier to do business.This ‘plan’ might be good for overall global trade in that it might give other countries more of a chance as they seek China alternatives.

Bottom line:

Although aggressive, the plan only furthers China’s existing strategy and desire to be a dominant global player.

With the right strategy, there will be foreign companies and countries who find opportunity in the #MadeinChina2025 plan. Approach with eyes wide open!

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Amy Karam is the Author of The China Factor, a Speaker, Global Expansion Consultant, and Corporate Instructor. www.karamconsulting.com

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