China's double boom: From ‘Made in China’ to ‘Sell to China' | Weijian Shan | Big Think

China's double boom: From ‘Made in China’ to ‘Sell to China'
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China is no longer an impoverished manufacturer of the world's products; it is a major consumer market of 1.4 billion people.

When its manufacturing boom hit a wall, China changed tactics and invested heavily in consumerism at home – a second boom that will make China king.

Global brands are desperate for a piece of China's $5 trillion private consumer market.
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WEIJIAN SHAN:

Weijian Shan is chairman and CEO of PAG, a private equity firm. He has been a partner of TPG, and co-managing partner of TPG Asia; a managing director of JP Morgan; a professor at the Wharton School of the University of Pennsylvania; and a farm laborer in China’s Gobi Desert in Inner Mongolia. He holds an MA and a PhD from the University of California, Berkeley, and an MBA from the University of San Francisco. He received no formal secondary education.
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TRANSCRIPT:

WEIJIAN SHAN: You have to remember, this is a country of 1.4 billion people – four times the population size of the United States. And China has become a major market for many of the American companies. China has been known as exports for a long time was the engine of China's economic growth, along with a lot of investments, representing about 50% of GDP. No other country has invested so much as China in the past 10 years, largely because China has the highest savings rate in the world. When I say no other country has invested as much, I mean any country, at any time in history, at any stage of their industrialization process.

But China's growth model exports peaked about 10 years ago, representing about 36% of GDP. Today, it has fallen to 19% of GDP. So export is no longer the engine of economic growth. And if you look at investments, it has come down as well. So what China is doing is to shift its growth model, growth engine, away from exports and investments to private consumption, which 10 years ago represented about 35% of GDP, and today is more than 50%. So for American companies like Apple, China is no longer the factory of the world. It has become a market of the world. And the Chinese market has become very significant. For Apple, it's 20% of its sales-- about $50 billion. For a company like Qualcomm, 65% of its sales. Skyworks Technology is more than 80%, and I think it's 84% of their sales. You have Starbucks, you have Boeing. And all these companies have very large market shares in China. General Motors today sells more cars in China than in the United States, Mexico, and Canada combined. That is, General Motors sells more cars in China than they sell in North America. So that's how significant the China market has become. Chinese private consumption now is about $5 trillion, more than 10% of the entire private consumption expenditure last year. So we should view China has a market of the world as opposed to the factory of the world.

I think there are many misperceptions in the United States about China. And there's no question about it. I think so much is written about China, yet so little is understood about this country. And that's why I thought my book, Out of the Gobi, is quite relevant. My view is that if you don't understand the modern history, most recent history of a country, you won't be able to understand the country. It's like here in the United States, if you don't know about the Civil War, if you don't know about civil rights movement, then you won't be able to understand the United States. So I think to know something about the history of China, especially the most recent history in our lifetime, will be very useful to dispel the misperception and to have better understanding of that country.

[yu-jdjg]

The cultural difference between China and the West is, the Former, Do More Talk Less, whereas the Later, Talk More Do Less.

[MCCRTHY]

This man’s so easy on he eyes I can listen to him all day 😆 but seriously, I’m happy for China and it’s growth but we all as a whole have to stop being so consumeristic and the things we are producing find greener ways to do so

[SonfHobs]

Can you add the speaker name and book name in the description?

[ozsharpener]

American companies running in China are mostly on consumer goods selling to both countries, the world's 2 largest consumer markets. Thus no American low end workforce can benefit from that, which causes the trade war. Higher end import market in China is dominated by European countries and Japan where American products are not competitive at all.

[ChessMasteryOfficial]

*No tree, it is said, can grow to heaven unless its roots reach down to hell. ÷*

[cryogenic]

the problems is jobs...not market shares and who owns what. By all fair means baidu and youku shouldn't have even existed...look at your own chinese majority countries like Taiwan, Hongkong, Malaysia, Singapore...top 3 websites are google youtube and is playing unfair now...

[chfgbp]

That s always been the Motivation ever since the first industrial revolution. With lots of bad unintended consequences. Happiness does not equal material consumption. If China consumes like America, we are all doomed.

[aeonian]

Name of the Speaker! Name of the Book, Please!

[fharrison]

China had the highest saving in the world, people born after 90s no longer save money just like America.
That’s the downside of welfare, people have no reason to save anymore, yet so many economists saying don’t save money is good for economy, so I guess what is bad for you and your family are good for the economy then

[heesingsia]

This bloke sounds like the comedian joe Wong

[genius]

The moment someone is proud of the perecntage of private consumption

[rajunaidu]

China messef up with the one child policy

[patrickhui]

In terms of economics, yes, they can create huge GDP via internal consumption within decade. In terms of politics, PRC will be a huge problem for those developed countries (especially claimed to be democratic) as the China govt will put their influences globally. TBH, China people (those with power) are not well educated & civilized to understand what's the global world needed. They just want to keep their power in hand to gain whatever they want to have from inside & outside China. PRC will not change politically to be more democratic, we learn from the past 30 years already. They go back to be more communist starting from 2012. So, western countries need to find a balance between money & beliefs when working with PRC.

[importantname]

we all need to wait until they build a wall around their divine kingdom. They will cut themselves off from the rest of the world. Then we can all go back to thinking we are the best.

[kenyup]

This guy is pretty much another Gordon Chang

[erickrcisneros]

This is what happens when you have so many people.

[zhaoli]

learn another country's history? Don't you think it's asking a bit too much of Americans?

[CM-jtpw]

I guess being overpopulated has its own

[chanfelix]

I know modern history, I know about Mao, the great famine, the Great Leap forward, the Cultural Revolution, etc., and I know China's only growing (or seems to) in economy. Congratulation on being the BIGGEST economic power in the world (NOT YET), but who care?! I don't. I don't like the air quality, the water quality and the food quality in China. I can be living in a cheap rural area of Canada, New Zealand, or Australia (or most part of this world) and have much better air quality than rich chinese people living in their cities. Being the greatest economy power in the world will by having the most money, but unlike a home, which can be relocated, China cannot "RELOCATE" itself. China has many great infrastructures (seems) that they built in the past decades, but how long will they stand without proper maintenance? What about the poor people's lives in China? What about food safety? What about human rights? In many countries, you can sue companies like Facebook for abusing your personal data, but in China, not only you cannot sue, if you complain, they will take your freedom away. But in this video, this man is saying, MONEY IS NO. 1, and China is NO. 1! I don't believe I subscribed to Big Think channel in which they allow people like this to talk .... here, let me be with him.

Most people don't know modern history, and if you don't know the civil war of America, you won't understand America. But if you know recent history, you will understand the ambitions and determination of Chairman Mao, you will know how the Communist party of China is willing to sacrifices its people to achieve anything for the country! But what makes a country? The people in it? Or the line that draws the boundary?

[vulpesumbra]

Learn of its history? Everyone, look up the great leap forward. Learn what kind of country China is.