McKinsey: What will happen in China in 2014

Old Gordon, chairman of McKinsey Asia Pacific, releases predictions about China every year. The following are this year’s predictions:

1. Two words are important: “productivity growth” and “ Technological Disruption”

China will work to rein in soaring costs, from labor to land to capital, by supporting higher productivity. And the focus on improving productivity will move beyond factories into agriculture and services.

China will also rely more on disruptive technologies. One example is the rise of private banks, which is expected to encourage the Internet-crazy country to use online banking.

2. Chief technology officers are in demand

A natural consequence of the increased focus on technology and productivity is reliance on managers who can do it. To that end, companies are expected to shift their mindset - information technology (IT), which currently has a support role, will be seen as a means to growth.

“In fact, finding a CIO in a state-owned enterprise is as difficult as finding a needle in a haystack.” Ou Gaotun wrote in the report.

This shortage of talented people to help the country achieve its technological goals means higher pay for the few who can, he said.

3. The government focuses on employment, not growth

This government is expected to shift its focus from economic growth to creating new jobs for people in the manufacturing and service industries. Because productivity gains and disruptive technologies will threaten their survival.

As more graduates leave campus and find themselves scrambling for fewer and fewer job opportunities, “they’re going to be dissatisfied and they’re not going to resist.” warned.

So, how will the government resolve the crisis hanging over its head? State-owned enterprises may "will be under pressure to recruit and retain staff they don't really need," he said. "The government and the leaders of these enterprises have long argued that these jobs are the safest. They find it difficult to declare that these people It is expendable.”

4. More mergers and acquisitions in logistics

Currently, state-owned enterprises control a US$500 billion logistics sector, including shipping, ports, toll roads, and railways. , airports and small-scale companies, etc. But O'Gordon predicts that industrial concentration will occur at a faster pace than now due to a focus on productivity growth.

“Many fields are increasingly encouraging the participation of private and foreign companies, and the intensity of competition may increase.”

5. Old and dilapidated buildings have received widespread attention

According to McKinsey reports that China can be divided into two halves in this regard. On the one hand, China boasts some engineering and architectural marvels, but on the other hand, they are more the exception than the norm, and more commercial and residential buildings are old and ugly.

“Some cities have reached a critical point.” Ogolden said that rebuilding decaying buildings has become a priority, but the funding source of these projects is still a question mark, and local developers and developers must be considered. Government protests.

6. Double the mileage of high-speed rail

China's strong interest in high-speed rail will take on a new look in 2014, the report said, with the focus shifting to expanding passenger traffic on commonly used routes. rather than adding new routes.

The report said daily high-speed rail ridership has jumped from 250,000 in 2007 to 1.3 million in 2013, partly due to aggressive ticket pricing strategies. The Shanghai-Nanjing line has a train every 15 minutes, equivalent to nearly 5,500 miles of operating routes, which is expected to double in 2015.

“Most of the investment will shift from building entirely new routes to increasing passenger numbers on already established and successful routes,” Ogolden wrote.

7. The solar energy industry is booming

The solar energy industry will continue to revive in 2014. Growth in domestic demand is one of the driving forces. Another driving force comes from Japan, which has experienced the Fukushima nuclear power plant leakage disaster. According to the report, Japan's installed power capacity quadrupled from 1.7 million kilowatts in 2012 to more than 6 million kilowatts in 2013.

Ogaarden expects that a State Council subsidy program that encourages solar panel manufacturers to invest in building and operating solar power plants will be further expanded this year.

At the same time, as China's big cities are adversely affected by severe pollution, a viable market for electric vehicles is expected to emerge in 2014, starting from Shenzhen BYD (38.60,1.14,3.04%) Daimler The launch of the first cars of new technology begins.

8. Some shopping mall developers face bankruptcy

The rapid development of online retail is expected to endanger the prosperity of traditional brick-and-mortar stores and the interests of shopping mall developers. Electronics retail sales surged 50% in 2013.

The number of wholesale clothing and electronics stores is declining, the report said, although developers plan to increase the area of ??physical retail stores by 50% in the next three years.

Ogaarden expects this trend to jeopardize developers in smaller cities or areas with fewer consumers. And, because of possible mergers and acquisitions, many stores will close.

9. The Shanghai Free Trade Zone is quiet

Ogaarden said that the future and potential advantages of the Shanghai Free Trade Zone are still shrouded in vague policies.

One of the advantages of free trade zones is that companies allowed to invest in them do not need to go through an approval process. However, the report pointed out that its "negative list" of restrictions and prohibitions is consistent with the categories in the government's catalog of industries to guide foreign investment.

Although the free trade area may ease these restrictions, the ambiguity leaves the authorities "full freedom in 2014 to maintain the status quo of the free trade area or pursue bolder Liberalization - if they think some form of stimulus is needed. "Generally speaking, I think that's less likely to happen," O'Gordon added.

10. European football teams invest in the Chinese Super League

Ogaarden admitted that this prediction is a repeat of last year. The Chinese Super League has lagged behind Spain's La Liga and Premier League in ratings due to corruption and a lack of vision, despite China hiring star players and David Beckham to serve as the game's ambassador.

Ogaarden pinned his hopes of success in Chinese football on untapped potential and on Guangzhou Evergrande winning the AFC Champions League - just one year after hiring Italy's Marcelo Lippi as coach. years later.

There is also the possibility that Chinese managers may take action, spurred by news that Rupert Murdoch has decided to invest in a football league in India and that Manchester City's Qatari investors have poured money into New York City of a football franchise company.

Ogadon said: "The era of cross-border synergy between the development of sister football teams and brands is approaching." Ogodon said.

At the end of the report, Gordon called for an end to the term "BRIC". BRIC is the abbreviation of the English acronyms of the emerging economies Brazil, Russia, India and China. Jim O'Neill, a global economist at Goldman Sachs, first invented the term.

Ogolden’s reasoning is that when the term was coined a decade ago, the four countries were growing at similar rates, while China’s GDP contributed 13% to global growth, while Brazil, Russia and India combined only Contributed 9%. However, in 2013, China contributed 29% to global economic growth, while the other three countries combined accounted for only 7% of global growth.

"It's time to let the 'gold bricks' sink." O'Gordon said.