The ‘world’s toughest gym’: how global companies fight to survive in China
Innovation, speed, and entrepreneurial agility are needed in China; foreign firms must adapt or lose ground, says McKinsey’s Joe Ngai
Foreign executives used to come to China to study shoppers. Today, many come to study their future competitors. That shift, according to Joe Ngai, chairman of Greater China at McKinsey & Company, says almost everything about how China’s role in the global economy has changed.
For much of the past two decades, China was the market multinationals could not afford to miss. The formula was often straightforward: enter the market, ride the growth of a rapidly expanding middle class and capture a share of the world’s largest consumer base.
“The market has become harder,” Ngai said in an interview with the South China Morning Post. “Twenty years ago, if the tide was rising, everybody got a share of it. Today it’s different.”
“In the past, many companies came to China with a product and a business model that had already worked elsewhere,” he added. “Today, that’s not enough.”
Another factor is that the business environment became tougher amid Covid and rising geopolitical tensions.