Chinese companies are thinking long term
May 09, 2009 | BY
clpstaff &clp articlesNo business should live from quarter to quarter
Private mainland Chinese companies have a longer-term outlook than their peers in Asia and the rest of the world, according to a recent research report.
The Grant Thornton International Business Report 2009 shows that 44% of privately-held businesses in mainland China have a formal business plan covering more than three years – the highest in the world. In Hong Kong, only 27% of businesses have a three-year planning cycle, with the figure standing at 29% in Japan, 26% in Singapore and 25% in Taiwan. The worldwide average is 27%.
Within mainland China, enterprises in Shanghai lead in long-term thinking, with 54% holding plans of more than three years.
Clifford Ng, a partner of K&L Gates, was encouraged by the findings.
“We have much to learn from the events of the past several years and the perils of living from one quarterly result to the next,” he said, adding that the statistics show that business people in China adopt a mature level of care and consideration.
Ng said that foreign companies should adapt to this way of thinking when coming in to China.
“As anyone who has done business in China can appreciate, things can take longer to complete in China,” he said.
“China is still a developing market in many ways and a longer horizon should be adopted to gauge success or failure. It is definitely not a market where one lives quarter to quarter.”
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