China is an increasingly important player in the world economy. However, nearly 40 percent of executives in Asia say their companies do no business in China today, according to a McKinsey survey, and a third say that even if the country’s growth rate fell to zero their company’s revenue would not be affected.

Executives also see significant threats to China’s continued growth; these include a shortage of talent and weak enforcement of commercial laws and regulations. But many respondents say that the country can address its challenges sufficiently.1

Assessing and addressing the threats

When respondents are asked to consider how quickly China should respond to the threats to its continued growth, more than 80 percent say China must address those threats within five years. The majority (60 percent) say China is likely to be able to do so, although only 12 percent see it as “very likely” (Exhibit 5). Respondents in China are the least likely to be optimistic; less than half say the country is very or somewhat likely to be able to address the problems sufficiently. Executives whose companies are currently generating revenue in China but whose offices are located elsewhere are somewhat more optimistic: 69 percent see it as very or somewhat likely that China will sufficiently address the threats it faces.

Notes

1 The McKinsey Quarterly conducted the online survey in January 2007 and received 253 responses from C-level executives in Asia.

Source: Doing business in China: A McKinsey Survey of executives in Asia