Background

China’s economy has experienced 30 years of continuous double digit growth, and is expected to grow by 7.5-8% annually over the next ten years. It is now the world’s second largest economy, and is expected to overtake the United States to become the largest within 10 years. Some experts predict this may happen as soon as 2018.

China has an enormous population of 1.38 billion people, of which some 400million are now categorized as “Middle Class”. It is the largest market for cars in the world, and also the largest for luxury goods in general. It also has the largest foreign currency reserves of any country in the world, standing at US$3.3 Trillion at the end of 2012.

China is transforming itself from an exporter of low end products, into an innovation led high tech consumer economy. It’s moving up the value chain. This presents many opportunities for investors in China. Similarly Chinese companies are beginning to invest in Europe, a trend that will increase dramatically over the coming years.

Despite all this good news, many western companies do not find it easy to operate in China. A significant proportion of companies do not meet the expected business goals they have. That is not to say they are unprofitable. More that they have under achieved compared to expectation or the growth in the market in general.