China leading shifts between world’s economic powers

Written by on 4th October 2011
Category: Business Travel

From politics to the environment, from business to the media, it’s hard to miss the fact that the balance between the world’s economic powers is shifting somewhat. The world seems at a turning point: as the Arab spring creates nascent democracies across the Middle East (and dictators tremble in anticipation); as the economies of western Europe and the US shudder and splutter; as the populations of the world’s most populous countries move en masse into urban areas, change is afoot, although it’s not exactly clear what the world is going to change to.

The economist Jim O’Neill foresaw these changes in 2001, coining the term ‘BRIC’ to refer to the emerging economies of Brazil, Russia, India and China. His report predicted that the combined economies of these countries could eclipse the economies of the world’s current richest countries by 2050. Since then the term has shifted in meaning, and been a little controversial, but the key point of his thesis – that western economies will gradually be surpassed in coming decades – appears to be strengthened with each passing day. The four original countries have consolidated their power to create a group which now holds yearly summits and recently welcomed South Africa into the fore. O’Neill has also recently coined another term – MIST – to refer to the now similarly important economies of Mexico, Indonesia, South Korea and Turkey. Other countries could now be associated with the term, particularly African countries such as Ghana and Nigeria which have strong forecasts for growth and a wealth of raw materials.

But it’s really China who is leading the growth of emerging economies – a fact that many critics of the BRIC thesis have pointed out: research by Deutsche Bank, for example, has stated that China’s economy is larger than that of the three other BRIC economies (Brazil, Russia and India) combined. The country now has the world’s second largest economy after the US and its predicted growth over the next four decades far outstrips those of other BRIC countries – not to mention the US and Europe. Western corporations are queuing up to invest in the country. Microsoft has recently announced that its search engine Bing will be providing support for English-language searches through Baidu, China’s main search engine, after censorship and corruption drove its main rival Google from the country. Even the British company, M&S, is investing in China, with a recent announcement that it intends to unveil a further six stores in China over the coming years – bringing the total up to nine.

It’s not surprising, then, that this year’s HSBC Expat Explorer Survey concluded that China – and its BRIC counterparts Brazil, Russia and India – were ‘emerging expat hotspots’. In general, expats based in these countries felt more positive about the economic outlook of their new countries, and enjoyed much higher levels of disposable income. But moving to these countries, and doing business there, is far from straightforward, as Google discovered in China. Established business cities such as Hong Kong or Singapore – with long histories of western influence – are relatively straightforward compared to the sprawling, chaotic metropolises of Shanghai or Mumbai.

Richard Collett is Managing Director of Our Man in Beijing Consulting Services, a company which aids expats in the city. He told Re:locate magazine that whatever industry you work in, the experience is by no means easy:  “The culture shock in China is massive. For a start, language is one of the biggest barriers, as is knowing where to start. People arrive and think they are going to be able to manage; that is, until they want to buy a loaf of bread or a pint of milk. Asia is very different to Europe, and China more so.”

As economic powers shift and develop, all businesses need to adapt and ensure that moves to other countries take place as smoothly as possible. This is particularly important in the business travel industry, where agents, business travel buyers and accommodation suppliers need to make sure they are fully prepared. SilverDoor, for example, have recently recruited a Mandarin and Cantonese speaker, Matthew He, who will help us to respond to our clients’ needs and develop relationships with property partners that can offer a broad range of serviced apartments in China. This will ensure that as more and more business travellers head to China, we are thoroughly prepared, with a range of properties and a more complete understanding of the challenges involved in moving to the country. As other countries gain global economic power, we will ensure that we have the in-depth knowledge that’s necessary to advise our clients and make their move as straightforward as possible.