Competition from China.pdf

Jean -Fran?ois M artin Competition from China: Two McKinsey Surveys Despite rising wages in China, executives around the world who responded to a McKinsey survey say that low-cost production remains the biggest competitive advantage for companies there and will be for years to come. While more executives see China as a threat than they do any other emerging economy, the survey also shows that surprisingly few of them have made efforts to respond to the global aspirations of Chinese companies. In a parallel survey, most executives at companies based in China say their long-term aspiration is to become globally competitive. The biggest obstacle they face, the respondents say, is a lack of managerial talent. 2April 2008 McKinsey Quarterly surveys on competition from emerging markets and Chinese companies Executives around the world expect competition from Chinese companies to increase, mainly because of their low production costs, yet surprisingly few are acting to meet the threat, a McKinsey survey shows. A separate survey of executives based in China reveals widespread global ambitions and concerns about finding the talent to reach them. Competition from China: Two McKinsey Surveys Higher wages are driving up production costs in China, leading to speculation that companies there are beginning to lose one of their biggest competitive edges. But a McKinsey survey1 of executives around the world shows that, overwhelmingly, they still see low- cost production as the primary competitive advantage of Chinese companies and expect little change on that front in the next three years. Four out of five of the executives also say that they expect to see rising competition from Chinese companies in the next three years. Executives at companies based in China2 come to a similar conclusion: in a parallel survey, they report that they expect strong growth in revenues from outside the country and aspire to be global competitors in their industries. The