Choose China: Why – and How – to Participate in Today's Historic Pivot

I recently returned from China, and I am proud to report that opportunity is on the rise.

Yes, many have been alarmed by the stock market turmoil in recent months. Some economists have even suggested a “severe adjustment period” is just around the corner. But, even in this time of uncertainty, there is extraordinary opportunity in China… if you know where to look.

A Once-in-a-Generation Pivot:

The fact is that China’s economy is in the midst of a once-in-a-generation transition: President Xi Jinping’s pivot laid out in the recently announced 13th Five Year Plan, away from the hazards of commodity exports… and towards the economic strength and stability that flow from higher levels of domestic consumption and tradable value.

I was lucky to have a front-row seat thirty years ago when Deng Xiaoping opened China to the world. And in the decades since, I have had the privilege of watching – and even better, participating – as China’s rise has transformed not only China, but the rest of the global economy.

Today’s transition, too, holds great promise, if you offer the right solutions to the Chinese market.

In China today, that means helping its middle class grow.  By 2022, China’s middle class will grow to 630 million, twice the present U.S. population, creating enormous demand for high-value, sustainable solutions like water purification technologies and products that enable energy efficient construction.

Still not convinced of China’s opportunity? From my own observations, here are three more predictions that may change your mind:

1. China will move to a new phase of SOe’s… with a little “e,” an entrepreneurial ecosystem unique to China (think Alibaba and Jack Ma).

2. China’s consumers will outspend their U.S. counterparts, on a run-rate basis, by 2025.

3. “Made in China” will be matched by “Invented in China.” And IP enforcement will become stronger and stronger.

Now, I am not suggesting that growth and prosperity will be automatic. That you can just throw a dart and hit a bulls-eye, so to speak, as you might have been able to do in China a decade ago.

Positioning yourself for success in China – today, tomorrow, and ten years from now – requires an active choice: a choice to participate… to focus on delivering sustainable, consumer-focused solutions… to become an entrepreneurial partner in this new phase of the Chinese economy.

Here are two strategies to help you make that choice… and to deliver targeted growth.

1. Invest in local talent:

I often say that a company is made up of its communities. You are where you operate. That should include China.

Dow has thousands of talented local women and men on the ground in China, working at our business centers in each and every geographic region. You too can put down roots in China to play a part in its knowledge-centered growth. Which brings me to my second suggestion:

2. Focus your efforts on collaborative innovation:

In 2009, Dow launched a global R&D hub in Shanghai, our largest outside of the U.S., where more than 500 scientists and engineers work closely with our commercial teams to develop locally focused technologies with the potential for global impact. For example, to address China’s water challenge, Dow has worked with the Haier Group to commercialize the world’s first eco-friendly washing machine, which reduces water consumption more than 30 percent… while removing as much as 99 percent of bacteria during washing.

Thanks to technologies like this one, Dow managed to grow volumes in China last year as the most significant economic pivot in a generation came into full swing.

Of course, it will take time to position your product mix in China… to build out local talent and a local innovation engine. But if you do choose to participate, your potential for growth, as China moves towards quality products… not just quantity of products, will be truly extraordinary.

Just think: at $10 trillion in GDP, China, even at just 6.5% growth, adds a G20 economy every year. Don’t you want to play a part in that? Go East!