The Global Rollercoaster and Chinese Business

Chinese business has come a long distance. Throughout the first seven decades of the 20^th century China was largely inward looking and disrupted by political fragmentation, famine and foreign invasion. Although Mao Zedong reunified China, it was Deng Xiaoping’s rise in 1978 that made the economy a central priority, perceived as a useful vehicle to pull millions of Chinese out of poverty and restore China as a serious international power. Two short decades after Deng, Chinese business, both state-owned and privately held, began to stride in significant numbers on to the international stage.

Companies like Alibaba, Huawei and CNOOC are now known around the world, either as significant market players, a place for long-term investment, or employers. The landscape for Chinese business is changing. While business development and expansion into world markets was complicated before, the pre-2008 period and even up until 2014 were a relatively good time for Chinese businesses, both at home and abroad. This year represents what may eventually be considered a turning point as global politics have overridden economic and business considerations, encompassing everything from war in Ukraine, anti-Russian sanctions, the creation of a disruptive Middle Eastern Islamic Caliphate, an uptick in Asian maritime tensions, the outbreak of Ebola in West Africa and a commodity price collapse. Even the home environment is changing. The government’s new anti-corruption campaign is toppling some long-established players in the country’s business-party universe and structural reforms seeking to develop stronger domestic demand are having an impact in terms of slower economic growth. The earlier advantages enjoyed by Chinese state-owned companies and private sector companies with cozy party and government ties are now potential liabilities. Like their Western counterparts, Chinese business management teams are facing a more perplexing and complicated politico-economic environment, where uncertainty is the new normal. Welcome to the rollercoaster.