Columbia International Affairs Online: Working Papers

CIAO DATE: 10/2011

Organising an investment in China: Prepare for opportunity

November 2011

Economist Intelligence Unit


Foreign companies continue to be attracted by the opportunities offered by China’s large and rapidly growing economy. China has a population of over 1.3bn, and the size of the economy is likely to grow to just under US$13trn a year at market exchange rates by 2015. Although GDP per head will still be relatively low by the end of the forecast period, at just under US$10,000 a year, this will represent a substantial improvement from just under US$4,500 in 2010. Significant regional disparities within China will persist. The provinces of the eastern seaboard enjoy standards of living well above the national average. However, there are also markets to be found in inland China, where many large cities are located. To some extent, the size of the population and the pace of economic growth belie the challenges of operating in China. Nationwide distribution networks will increasingly be put in place, but the Chinese market is likely still to be a fragmented one by 2015. Market opportunities for foreign companies in China are greatest in those sectors where domestic enterprises are weak, markets are underdeveloped and market opening is proceeding fastest. Although the government continues to ban foreign firms from a number of industries—such as broadcasting and armaments—or to restrict their involvement, overseas companies continue to find numerous business opportunities in a wide range of sectors across the economy. Market opportunities are opening up for companies that can advance the government’s strategic objectives either within or outside the country. Chinese enterprises are also looking for joint-venture partners in resource exploitation and infrastructure.