Opinion | China must stop protecting its own companies, they can stand on their own two feet now

Mats Harborn says China’s economy, outbound investments and innovative firms belie its claim that it needs to shield domestic industries from global competition

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Published: 5:00pm, 20 Jun 2018Updated: 6:35pm, 20 Jun 2018

Not long ago, Chinese enterprises inhabited the margins of the global innovation community, generally focusing their efforts on localising products and services developed by others, or relying on the technical know-how of their joint venture partners. This is no longer the case.

Highly innovative Chinese firms are now going toe to toe with their European competition and are reaching parity with, and even surpassing, global leaders in certain fields. In 2018, they passed an important threshold when, for the first time ever, a majority of European businesses said they found their Chinese counterparts to be equally, if not more, innovative than themselves.

Those of us doing business in China know exactly how competitive the landscape has become. Players from industries in which European firms once held comfortable leads increasingly report that they are having to do more with less.

International firms that rest on their laurels in China will quickly find themselves swamped by agile and efficient domestic firms, be they one of the 115 Chinese Fortune 500 companies or one of the many disruptive start-ups – including three of the world’s five largest unicorns – found across the country.

Many of these firms are no longer content to flex their muscles in the domestic arena and are increasingly going out and entering other markets. Three years ago, Chinese outbound investment outstripped its inbound foreign direct investment (FDI). Since then, Chinese mergers and acquisitions have been grabbing headlines the world over, and some brands that were once known exclusively in China’s home market are thriving in many places around the world.

The dynamism of the Chinese economy is undeniable. However, it stands in stark contrast to China’s claim that it is a developing country; after all, it certainly no longer behaves like one.

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.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Mats Harborn says China’s economy, outbound investments and innovative firms belie its claim that it needs to shield domestic industries from global competition

Mats Harborn says China’s economy, outbound investments and innovative firms belie its claim that it needs to shield domestic industries from global competition