China has found its feet

I travelled to Shanghai for the second time in a month this past week. With plenty of flight time on my hands I read through numerous magazines, newspapers and journals. China cropped up everywhere. Political commentary, expert economic analysis and social commentators decoding China’s complexities, filled many pages.

Now, after the better part of a month in Shanghai, I’ve come to a few of my own home-grown observations.

For decades, globalisation has been pitched as a one-way street: a kind of cultural and economic hegemony from the West to the rest. And certainly, during China's stratospheric rise to the economic powerhouse that it is today, the country has at times imported Western ideas, industries, and idiosyncrasies during a voracious growth spurt that, for many years, showed little sign of abating.

Back then, China's optimal route to double digit growth required rapid replication of successful ideas trialled elsewhere in the world. Had it been required to develop everything itself, from scratch, it would have taken far too long.

As every successful tech entrepreneur knows, optimisation is key to growth, and in some respects, China has acted just like a tech start up for the past few decades - hungry to grow and make its mark by mergers, acquisitions and unbounded energy.

It has, however, become increasingly apparent to me that China has now evolved beyond its extraordinary headline growth and “start-up” mentality phase, into something quite different and exciting. It has found its feet.

Our business in China reflects this. China is now Rolls-Royce's second largest market, with sales up 40% on last year. And I foresee a day in the not too distant future when it will become our largest market.

Interest in, and appreciation for, luxury products remains strong - but it is no longer the manic “buy-at-all-costs” spending spree experienced a while ago. It is more thoughtful, more considered and, dare I say it, more “western”. Going forward, we predict that our growth trajectory in China is going to be steady, predictable and probably more traditionally cyclical.

And this is good news for businesses like Rolls-Royce with our very long-term outlook and distant planning horizons.

At the end of March during our World Dealer Conference, when our valued dealers from around the world gathered in Shanghai to discuss future trends and business strategy, I was surprised to discover that our Chinese dealers were the most upbeat of all, even more so than the Americans, who are usually fountains of optimism.

Likewise, at the Shanghai Motor Show, which I attended last week and during subsequent meetings and dinners with our Chinese customers and investors, I once again experienced a palpable sense of optimism.

Our stand was inundated, and our press conference was attended by hundreds of journalists. The atmosphere was, I noted, somehow more sophisticated and mature than in the past.

Chinese car brands are swiftly coming of age as China increasingly finds its own way within the automotive sector. Pleasing original design language is coupled with hi-tech interiors and electrified prototypes abound.

Chinese media and our customers react very positively when I tell them of our plans to take Rolls-Royce fully electric starting next decade.

At the show, we debuted a Rolls-Royce Phantom with our remarkable Privacy Suite, that at the touch of a button, allows the occupant to separate the front and rear cabins with electrochromic glass to create a truly private sanctuary.

The Privacy Suite is going to be very popular in China; indeed, we almost exclusively developed it for the Chinese market. Testament to this: within 10 minutes of the Shanghai Motor Show opening, the show car was sold to a discerning customer.

Beyond business and fiscal considerations, China is also finding its own unique way.

With summer approaching in Shanghai, I am struck by the amazing modernity of the city, the exceptionally clean streets and neighbourhoods.

Pollution tackling electric mopeds, cars and buses are everywhere and there is beautiful attention to detail across all environments. Western and Eastern contrasts abound. The parks here are all neatly trimmed, and it is clear the authorities in Shanghai are doing a fantastic job of presenting their city as a future-facing, truly global city. I feel very welcome, safe and at ease.

Of course, on the main shopping boulevards you will find the globally ubiquitous “temples of luxury” representing every major European and American luxury house. And certainly, the passion of Chinese consumers for Western luxury is self-evident in the clothes they wear, and the cars they drive.

However, despite the prevailing notion that global fashion and luxury trends tend to flow from the West, it is clear that the Chinese have developed, matured, and have optimistic confidence in their own highly unique taste patterns and global view.

I’ve come to realise that, increasingly, the standard, received wisdom about globalisation is wearing thin. Particularly when viewed from Shanghai. For whilst it is true that globalisation may have primarily been driven by Western influences, China’s rapidly maturing economic transformation makes it clear that cultural influence now flows both ways.

China has very much found its feet.