Companies that fail to understand them risk falling behind.
August 26, 2024
Deng Heping/VCG via Getty Images
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China’s hybrid “state capitalist” system, driven by centralized planning and fierce competition, has led to dominance in critical technological fields and emerging markets. Western multinational corporations are advised to adopt a pragmatic approach to capitalize on four key strengths of China’s economy: its innovation ecosystem, its investment in the Global South, its ultra-competitive markets, and its vast consumer base. Those who fail to engage risk losing global revenue and strategic opportunities.
In 1978, Deng Xiaoping launched his “Reform and Opening” policy to leverage Western technology and know-how for China’s development. It was a politically risky move: Ideological hardliners in the Communist Party resented the implicit assumption of China’s economic backwardness under socialism — and the superiority of the capitalist West. But Deng recognized that China’s modernization required both pragmatism and humility.
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Mitch Presnick is a visiting fellow of practice at the Fairbank Center for Chinese Studies at Harvard University. He is the founder and former chair & CEO of Super 8 Hotels China, the founder and former managing director of the China practice of APCO Worldwide, a Washington D.C. advisory and advocacy firm, and the former vice chair of the American Chamber of Commerce in China.
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James B. Estes is a senior at St. Paul’s School, Concord New Hampshire. He is research assistant to visiting fellow of practice Mitch Presnick at the Fairbank Center of Chinese Studies at Harvard University. He is co-founder and project director for educational startup company Reason & Rationality LLC.
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