McKinsey: Executives Fail to Deal With China Threat

Last Updated Jun 4, 2008 2:01 PM EDT

While top executives see China as the biggest competitive threat on the globe and expect strong growth from the Middle Kingdom for years, they haven't done much to deal with the threat.

These are the conclusions of a pair of surveys from McKinsey Co. Here are some more findings:

  1. China, by far, presents the most competition, nearly twice as much as from India, followed by Southeast Asia, Eastern Europe, Latin America, the Middle East, Russia and Brazil.
  2. China gets a boost from the following conditions in order of importance: low cost production, government support, lax regulation and privileged access to non-Chinese markets.
  3. Considering all the markets where respondent companies operate, 41 percent found that China-based competitors were weaker than most competitors from other countries and 32 percent found thast they were comparable.
  4. Most companies have not changed their strategies much to deal with Chinese competition.
  5. Internal barriers to dealing with China include a lack of managerial talent, insufficient capital, lack of understanding of foreign laws and regulation, cultural barriers and concerns about shoddy quality of Chinese goods.
  6. Rising labor costs are driving up production costs in China.