Doing Business in China? Trouble Ahead

Last Updated Sep 8, 2010 3:22 PM EDT

Harvard Business School professor Nicolas Retsinas sees troubling signs that China may soon encounter the same turbulence that has roiled the U.S. economy.
  1. An aging, decreasing working population, which could create demand for higher wages, force Chinese manufacturing firms to move offshore and promote labor strife. "The government may soon need to confront a burgeoning labor union movement that wants not just higher benefits but the freedom to negotiate."
  2. Housing price increases that are outpacing income growth.
  3. As people live longer, one worker will be caring for four grandparents and two parents.
  4. Stress caused by urbanization, especially worsening environmental conditions.
In an OpEd, Retsinas offers prescriptions for how China can course correct to become a more productive, although perhaps slower growing, economy.

But here's a question for you if you are currently doing business in China or considering same. Does this macro picture of a country showing signs of unraveling socially and demographically scare you? Or is there opportunity to exploit, especially if China's domestic problems scare away your competitors?

(Shanghai pollution photo courtesy Flickr user marcosborn, CC 2.0)

  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.