China and India are increasingly consuming global brands and foods in tandem with their rapid development. The two countries are, after all, the largest and fastest growing economies in the world, and account for one-third of the world’s population. Together, they also host two of the world’s most rapidly developing consumer markets.
Key drivers shaping this consumer market growth is the increasing GDP and greater consumer spending power in these countries, which in turn facilitate rapidly changing lifestyles, a growing aspirational middle class, and rising interest in health and wellness.
By Zolzaya Erdenebileg and Weining Hu
Made in China 2025 (MIC 2025) – an initiative to transform China into a hub for advanced manufacturing – has been met with curiosity, and some confusion, by observers since it was unveiled in 2015.
The international business community is curious about how effective the policy will be. Many wonder whether MIC 2025 will end up like Germany 4.0, which was successful in increasing Germany’s national industrial capacity, or Make in India, an initiative to encourage manufacturing in the country, which has not fully lived up to expectations.
By Jake Liddle
At the beginning of this year, China’s National Health and Family Planning Commission, along with seven other ministries, issued a new policy designed to streamline pharmaceutical distribution channels. The policy, which regulators are piloting in a number of provinces before an expected countrywide reform in 2018, will change the way manufactures, distributors, sales, and compliance teams in the pharma industry operate from both a business and tax perspective.
The policy introduces a ‘two invoice system’, meaning that during the distribution process from drug manufacturer to hospital, only two tax invoices, or fapiao, may be issued. This aims to both reduce the cost of pharmaceuticals and to prevent corruption.
By Alexander Chipman Koty
China’s toy industry posted strong growth in 2016, countering recent trends in China’s light industry sector. While China’s total exports dropped by 7.7 percent and imports by 5.5 percent in 2016, toy exports rose by 9.5 percent and imports by 23 percent.
Although lower cost manufacturing locations in India and Vietnam have attracted investor attention, China’s toy industry has been performing well due to a shift in the country’s burgeoning domestic consumer market and advanced manufacturing processes. Given the maturity of the industry, however, foreign investors must be strategic when entering the market to compete with established players.
By Harry Handley
China’s taste for wine is growing rapidly, and the country is set to overtake the UK to become the world’s second largest wine market by 2020, reaching a value of US$21 billion. According to VINEXPO research, the market is anticipated to grow by an average of seven percent each year over the next four years, with 6.1 billion liters of wine expected to be sold in 2020. Each year a growing percentage of the wine sold in China is being imported from abroad; last year this figure passed 10 percent for the first time.
Customs data shows that in 2016, 638 million liters of wine were imported into China, with a total value of US$2.4 billion – a year-on-year increase of 15 percent in volume and 16 percent in value. This growth is expected to continue, as popularity for imported wine filters down to China’s lower tier cities and wine consumption becomes a more common pastime.
By Weining Hu
On March 5, at the opening meeting of the National People’s Congress, China’s top legislature’s annual session, Premier Li Keqiang announced that China will accelerate research and development (R&D) in new and emerging industries, such as artificial intelligence (AI). It is the first time that China’s highest national meeting has included AI in the Government Work Report. The report’s singling out of AI indicates Beijing’s prioritization of the industry in its economic agenda, and therefore its determination to support its growth.
In recent years, China’s leadership has been increasingly thinking about how to ensure their competitive edge in the AI industry. The acceleration of China’s policy efforts to advance AI development began in 2014, when President Xi Jinping called for innovation and breakthroughs in science and technology, including AI, at the opening ceremony of the 17th Congress of the Chinese Academy of Sciences.
By Tongyu Zhang
In June 2015, the Ministry of Industry and Information Technology (MIIT) published the Notice on Removing Restriction on Foreign Equity Ratios in Online Data Processing and Transaction Processing Business (Operating e-commerce), which allows foreign investors to hold up to 100 percent equity in an e-commerce company. However, it was not until one year later that the first wholly foreign-owned enterprise (WFOE), Heiwado (China) Co., Ltd, a Japanese company, obtained an operational internet content provider (ICP) license from the MIIT. While the Chinese government provides considerable policy support to the e-commerce sector, the specific definition of e-commerce is vague and can lead to a series of problems in practice. For instance, relevant authorities hold a more reluctant attitude towards e-commerce for services than towards commodities transactions.
By Giulia Daverio
According to a 2016 study by the Hong Kong Trade Development Council (HKTDC), China’s health foods market is worth more than US$144.2 billion. As of June 2016, the China Food and Drug Administration (CFDA) had approved a total of 16,573 health food products, of which 15,822 were domestic and 751 were imported.
Due to its impressive growth and to the numerous food scandals which have played a key role in driving consumers towards imported products, this market presents enormous opportunities for foreign businesses. There are several factors, both social and economic, contributing to the industry’s rise: