Own the Future: 50 Ways to Win from The Boston Consulting Group

Chapter 9

What the West Doesn't Get about China

George Stalk, Jr. and David C. Michael

Abridged and reprinted with permission. Copyright © 2011 by Harvard Business Publishing; all rights reserved.

When many managers think about China, they imagine a container ship whose hold and deck are brimming with cartons of toys, clothing, iPhones, and other goods bound for the world's consumer markets, whose populations power China's economic engine.

That view couldn't be more wrong.

Despite the Chinese government's well-publicized program to encourage domestic consumption, few Westerners grasp just how much progress the country is making on this front. Although millions of peasants live on subsistence wages, millions more Chinese are moving to urban centers and achieving a recognizably middle-class lifestyle. Consider just a few data points that give evidence of China's unexpectedly fast-paced move toward a more balanced, consumer-driven economy:

• In a variety of consumer categories—including such items as automobiles, consumer electronics, and jewelry—China already ranks as the number one market in the world (Figure 9.1).
• The combined flow of shipping containers between Asia and North America and between Asia and Europe is already less than the flow among Asian nations—with much of the latter consisting of goods imported to China.
• Domestic demand accounts for most sales of Chinese-produced ...