Mega-trends drive a business and attract consumers, among other things. I underestimated the way in which these trends are interlinked. Fluctuations in one trend ultimately can affect the business environment and economic activity in the other trends. This book did an excellent job of describing megatrends of urbanization, Chinese manufacturing scale, rise of Chinese consumer, money, brainpower, and the Chinese internet. This helped to not only clarify what trends to be most cognizant of, but also how they seem to rank in terms of importance in shaping the country. The first, and arguably the most important, trend in the book is “urbanization”. Over 300 million people moved from the rural countryside to cities in the past 30 years. The author predicts that this is just the beginning. I was shocked to read that is another 350 million people anticipated to follow-suit in the coming years. This will have a huge impact on the business environment in the sense that, as we learned in our Economics class, there will now be a much higher demand for workers as major changes will need to be made to accommodate all of these newcomers. Infrastructures, transportation, the food industry, and educational institutions are just some of the areas that will be directly impacted. The more people that come to the city, more steps will need to be taken to accommodate the needs and demands of the newcomers. Though this vast migration may seem overwhelming, I can see why urbanization will continue to create a great deal of wealth for China. New opportunities present opportunities for more people continue to move out of poverty. This means that they will potentially have more disposable income. These funds can be used to purchase better housing, food, etc. In 2012, for example, one of China’s leading developers, China Vanke, decided to build approximately 80,000 modern apartments in several cities in China to accommodate the growing middle class. This helped to funnel money back into the economy. Also to accommodate the growing population, businesses will have to respond by increasing the supply of those good and services to meet the demand. This poses the question of how much they might need to increase the manpower to for the increasing level of production. I also wonder if excessive urbanization will add to the current population growth issue in China and how the government will work contain it at a healthy level without compromising the country’s economic growth. I now understand how and why urbanization is the most important trend. It is connected to each of the other five trends because that is what is providing the basic foundation for every other trend. Urbanization is what sets the foundation for the other trends to grow and flourish. The second, and perhaps most well-known trend, is Chinese manufacturing scale because China known to be the world’s largest manufacturer. Their value approaches approximately $2.2 trillion dollars. Almost every product in the Western World such as bikes, toys and coffee mugs have a “Made in China” stamp on it. This is due in part to the fact that China is known for their traditionally low labor costs. The reading indicates that and there is aggressive movement from low-tech assembly to high-tech manufacturing. One of China’s largest telecommunications company, Huawei Technologies, has grown outside its native market. This shows that the country will be more than capable of handling this growth. I like how the authors reiterate that fact that this company already has a reputation for developing lower-priced equipment for second- and third-tier cities. This is a wonderful distinguishing characteristic for them that will continue to help them compete with other top manufactures around the world because they are operating on such a large scale. They have been very successful in the past decades and their numbers are showing absolutely no signs of slowing down anytime soon, which is wonderful news for the Chinese economy. I see this trend being closely linked to the urbanization trend in the sense that as demand increase, they will need to hire more employees. The main people seeking employment will most likely be amongst the newcomers of the city.
The Rise of the Chinese consumers ranks as the third most important trend. It was very helpful to have the Chinese consumption compared to the familiar American level of consumption. The American middle class was the world economy’s growth engine throughout the 20th century. However, China may soon take over in this role. Urban Chinese people, for example, are shopping to meet their needs, driving a growing demand for middle-class goods, food, and entertainment. Pardon my ignorance, but it was surprising to learn that China consumed more than 13 million tons of chicken in 2012—more than the United States. This shows that the urbanization and consumer trend are interconnected. Urbanization seems to be the main cause for the rise in Chinese consumers. If there is a continued focus on the Chinese middle class as the main consumer, I believe that the Chinese business environment will continue to prosper. Money is indicated as the fourth most important trend that helps to shape the Chinese economy. To be honest, I was surprised that this was not higher on the list. Every single one of the other trends is directly connected to this trend. In fact, the entire book is talking about the trends affect the business environment. Money is usually the main motivating factor for starting a business in the first place, and it is what continues to keep the business running. Money is also what consumers and manufacturers use to purchase, sell, and trade goods. China’s $15 trillion in bank deposits continues to grow by $2 trillion every year. The book states that a monumental “lending market outside the formal banking system has emerged, complete with underground finance, off-balance-sheet lending, and wealth-management products that is invested in various projects.” I do foresee a need for the Chinese to find a way to specify where funds are used because otherwise this creates much more room for more risks to fester within the business environment and the economy as a whole. As we learned in Financial Accounting, ambiguity is the last thing that you want in your accounting books. There could be serious ramifications.
The trend of Brainpower takes the fifth spot on the line-up of trends in China. It comes as no surprise that the number of the number of college graduates has risen from 1 million in 1998 to 7.5 million in 2012. That amount of exponential growth is amazing. In that regard, this trend connects back to the other five trends. The more educated the population is becoming the more brainpower that become available to help the business environment to thrive like never before; internationally and domestically. The text indicates that there is a substantial disconnect between education, employment, and other markers of Chinese brainpower. I think it would be extremely helpful if the government found ways to help link corporation and local businesses with the educational institutions in the form of possible internships, fellowships etc. This gives the younger generation a chance to find their passions, and employers can get the befit of receiving fresh, new, innovative minds. I find that brainpower becomes useless if there is no way to stimulate it. The resources are there they just need to be put in place.
The Chinese Internet is the sixth and final trend in this model. The text shows us that of the approximate 60 percent of the 618 million Chinese consumers that no have internet access, 40 percent of the population actively uses it. I agree with the authors when they said that there is still a lot of potential for further growth in internet expansion. We have proven here in the United States that the internet produces so many possibilities. I believe it would be beneficial for the Chinese culture to could find a way to connect more of its population to the internet, in an affordable manner. This could impact the business culture and the education system. The internet connects with each of the trends because it offers various methods to better the business environment and the overall quality of life within China. I understand that this is still a fairly recent concept in China so naturally it could take some time. The more connected that the Chinese culture becomes to the worldwide web, the more opportunity that the Chinese market will have to grow. The authors recognized this as an important trend because they see how valuable it has been to the American society. The internet connects and offers opportunity to everyone from the top the business world executives to the young teenagers on Facebook. Internet access a way to make sure that all of these trends stay connected, and internet is a sure way to do so.
As the population continues to grow at a rapid rate, will these trends continue to be considered the most important, and what other measures will need to be taken into account to accommodate the needs of the future generations? We don’t always know how to anticipate and plan for what will happen in the future. However, The Chinese have already shown themselves to be a group of quickly adaptable people. I will be eager to see if there is a shift in any of the trends as time progresses, and if any new trends will emerge.