Retrospective: Business in China in 2011

2011 was certainly a big year for Chinese business, requiring adaptation to a constantly changing environment, and I would highlight four key areas in which China really raced forward.

The first area is Internet retail commerce. Retail sales in China are growing by approximately 18 per cent annually and have now reached US$1 trillion (Bt32 billion) a year, the result of a burgeoning middle class and more robust disposable incomes. Add to that China’s online population – now over 500 million people – and online retail sales are shaping up to become a lucrative tool for retailers, both in China and abroad. That’s why it is imperative that Thai businesses operating in China develop a well-rounded online strategy, and find ways to target China’s discerning online consumers.

Another positive side effect of increased Chinese spending power is the number of Chinese tourists who have journeyed to Thailand to enjoy everything that makes our Kingdom so great. The Tourism Authority of Thailand expects the total number of Chinese tourists in Thailand in 2011 to have hit nearly 1.4 million, with Chinese tourists spending an average of Bt3,000 a day while in the country. 

Restrictions were relaxed in 2011 on licences for foreign firms to provide outbound tourism services for Chinese tour groups. This was a significant step toward liberalising the sector, which until recently was restricted to local operators, many of them state-owned. Given the recession and a corresponding weakening of currencies in the US and Europe, traditional source markets for Thailand’s inbound tourism industry, China offers a logical target for further inbound tourism growth.

I have also been impressed by the increased “greening” of China’s business and government sectors. China’s 12th five-year plan (2011-15) is focused on green growth, giving priority to environmental issues such as producing clean drinking water and reducing air, heavy metal and soil pollution. The government has also set radical targets for slashing carbon dioxide emissions by 17 per cent during the five-year period and reducing energy consumption per unit of GDP by 16 per cent. The plan aims to increase the proportion of non-fossil fuels in overall primary energy use to 11.4 per cent by 2015.

If China is successful in this ambitious goal, it will encourage new technologies which are more appropriate to a post-carbon era. Inevitably this will affect businesses around the world, including Thailand, so China’s plans are of great interest and importance to us all.

Finally, I see the refocusing of policy toward small business as a boon for China. The China Banking Regulatory Commission recently implemented a range of measures to encourage banks to lend more to small and micro-sized enterprises – commercial banks are being encouraged to give more support to enterprises that borrow less than 5 million yuan (Bt25.7 million) and increase their tolerance for non-performing loans to small and micro-sized firms. These moves are important – they are a true measure of positive commercial expansion for any maturing market and the ability of its citizens to start, build and maintain businesses. 

2011 has been a year of great progress for China, and for Thai business in China. As the Chinese behemoth continues to move forward, and with increasing influence, it is important for Thai businesses to stay abreast of, and adapt to, all of China’s latest advancements and policy developments.

 

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