Tier-three cities the key to success

By GEORGINA BOND

The rules for business success in China are typical of most market economies, says McKinsey & Co director Andrew Grant.

In a session looking at business strategies for New Zealand companies seeking a toehold in the world's most populous country, Grant said China was the most capitalistic country on Earth and, therefore, as tough as any to compete in.

But the free-trade agreement presented tremendous opportunities for New Zealand companies, large and small, provided they approached it the right way.

Most business leaders had not got to grips with the real China, which was one of the world's most diverse countries in every dimension.

It had one of the fastest-growing economies in the world as well as competitive marketplaces.

Growth was expected to continue for the next 30 years at least. The risks to such growth were a crisis in the banking system, stalls in state sector reform, a major drop in consumer consumption, the limits on Government spending capability, and any substantial increase in social unrest.

He said that with increasing amounts of wealth available in the major cities, and a growing wealthy, brand-aware class, China presented attractive and exciting market opportunities for New Zealand companies.

So what was the best approach?

Most "market oxygen" could be found in the 600 smaller "tier-three" cities and these were a good place to start.