Now that we have a new foreign minister, it is interesting to see the future through Chinese eyes as I roam the streets of Shanghai. From this window into the state of the globe (as distinct from the state of the nation), it is clear that small business is not only alive and well but also thriving.
This week marks China’s calculated transition from yesterday’s generation of leaders to a new crop that is more inwardly focused. The next five years will see a slower growth trajectory and the anointment of its ‘fifth generation’ of leaders.
It is anticipated that slower growth of around 8% will reduce policy options because an increased focus on a greater China demands sustainable outcomes to address disparities, corruption, and environmental degradation.
Domestically, a burgeoning middle class is generating pressure for more accountable governance. But, motivated by the Arab Spring, the system has moved aggressively to contain social discontent that might spark more politically sensitive movements.
Internationally, China’s rise is seen as having stimulated nationalism. The potential for conflict will force China and the United States to play out a power struggle in the Asian region, reflected in President Obama and Prime Minister Gillard’s Darwin announcement of a stronger US presence on our shores.
Under these conditions we can reasonably expect:
- 1. The growth of China, India and other Asian countries will continue to outpace the rest of the world. Chinese growth can be expected to hold (7.5% to 8%), protecting the Australian two-speed economy well past our next federal elections in 2013.
- 2. Inflation pressures will remain weak and relatively stable for the next couple of years opening a window for smart company expansion based on cheaper imports and higher levels of household saving.
- 3. There will be a steady shift back into the equities markets as commodity prices get pulled down by weaker growth in the developed world,and pushed up by limited spare capacity and continued robust growth in key emerging economies such as India and China. Gold prices are likely to steadily decline as governments begin to accept that investment in job creation is the best response to cultural, political and social stability.
- 4. Central banks will generally keep interest rates stable and on hold with policy rates already at or near zero (the Fed, Bank of England and Bank of Japan). Some central banks that had been raising rates have now stopped (e.g., the Reserve Bank of India). Others that had been tightening have reversed course and are now easing (e.g. the European Central Bank and the People’s Bank of China).
- 5. Online customers and social media will expand rapidly as smart companies and start-ups recognise the potential for going global early rather than try to build a country by country presence.
More companies will use their ethnic and cultural advantages to enter the emerging economies to take advantage of the demand for overseas brands and expertise and overcome the limited perspectives of lending managers.
The phenomenal expansions of Chinese online services marketing is proof that old marketing methods will no longer deliver the results they used to with an increasingly savvy and critical audience. New and innovative marketing strategies, such as social media, are seen as the key to getting your message heard and acted upon.
There can be no doubt that Australia must address the view from China and look for prospects and new marketing initiatives rather than lay blame, demand more taxes on online sales and a traditional failure to invest in innovation, creativity and entrepreneurship.
Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.