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Advisor insights: Doing business in China

Views from Kenneth DeWoskin on Chinese market conditions, M&A, and more

From policy updates to cross-border M&A, US Chinese Services Group senior advisor Kenneth DeWoskin explores the key topics affecting organizations doing business in China and the unique dynamics of Chinese markets.

Letters from China: The 100-year Party

On July 1, China officially celebrated the 100th anniversary of the founding of the Chinese Communist Party. What will be the significance for international trade and investment of China reaching and celebrating the 100th anniversary of the Party’s founding? What relevance do the celebration activities have for MNC executives with significant China engagement?

While July 1 marked the official anniversary, preparations and many large-scale activities began well in advance. Overseas and local tourists in Shanghai lined up at the once-modest facilities where the Party first met and was formally founded in 1921—a meeting of only 13 delegates, including, of course, Mao Zedong. It is a small museum now ensconced in the sprawling, modern, and opulent Xintiandi shopping and entertainment center. Nothing better represents the seismic changes in China and the Party than the transformation of Shanghai and this spot over one century’s time.

Letters from China: The 100-year Party

July 1 means much more than an occasion to celebrate the long history of the Party. It is a framework that gives shape and incentives to a range of special, energetic activities in China that dominate the public sphere through massive cultural productions and public events, including films, songs, theatrical productions, historical accounts, reading and study sessions, “red tourism,” new textbooks, novels, parades, exhibitions, and, of course, powerfully amplified Party campaigns and presentations by top Party leaders. Around the world, the 100th anniversary has also been marked. It has long provided themes for studies such as Michael Pillsbury’s Hundred Year Marathon, a controversial and polemical presentation published in 2015 in which the author argues for an ambitious agenda that China’s Party leaders sought to achieve by this anniversary date.1

Between the Two Sessions and 100th anniversary, the messaging from leadership falls along the lines of the “Dual Circulation” concept. Domestic circulation (Circulation 1) acknowledges a new growth paradigm and a list of challenges in fixing significant imbalances in China’s current economic and social workings. It expresses confidence that China will succeed in fixing them. It is also an exposition of where China stands and is heading with ”Circulation 2” of the Dual Circulation program: China’s relationship to the rest of the world.

MNC executives tasked with guiding strategic investment decisions about China could find it useful to understand how Chinese leadership uses this milestone to depict the Party’s own history, emphasizing Xi Jinping’s perspectives on it, and to reflect on the future of the Party and country, a future that President Xi has called “invincible.”2 This is because the overall storyline of the event is all about how, under Party leadership, China developed and ascended dramatically beyond the rest of the world, from its place as the “sick man of Asia,” to become a neck-and-neck contender for global economic and technological leadership.3

The Party’s oversight and direct influence over public discourse also suggests that the 100th year anniversary will shape consumer perspectives on their own personal prospects, their understanding of China’s role in the world, and even their perspectives on foreign investors and visitors in the Mainland, down to foreign brands and products in the Mainland marketplace. There is a natural arc in Asian economies that developed in the past century—seen clearly in Japan and Korea, for example—where consumers become infatuated with everything foreign in the midst of rapid development, but then settle into an internationalized lifestyle where they also return to updated versions of legacy things and their cultural roots—diet, dress, living arrangements, celebrations, and entertainment. We see the possibility that the 100th year Party may accelerate that process in China.

Put simply, while MNCs pursue a China-for-China policy, Party leaders and Chinese consumers appear to be doing the same.

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