China in 2025 and Implications for Automakers

Gao Feng Insights Report, January, 2015

Dear Friends of Gao Feng, 
We are pleased to share with you a report titled: China in 2025 and Implications for Automakers.  As we know, China’s economy has been growing dramatically for more than two decades.  China is now the second largest (and will inevitably soon become the largest) economy in the world.  Yet we are recently confronted with rising concern over the impact of a deceleration in overall economic growth, especially in the automotive sector.

Since 2011, we have seen single digit growth in 3 of the past 4 years, raising questions over the future prospects for the industry.  In this analysis, we seek to avoid the trap of “driving by looking in the rear-view mirror”, and instead look in front of us at the plausible scenarios which may unfold which will impact the auto industry over the next decade.

We believe that China’s economic growth is likely to continue over the next decade, driven by a mix of continued (albeit more selective) fixed-asset investment and growth in consumption.  A broad transformation is expected to continue and will present an environment that is characterized by a long-term and sustained shift towards a middle-income, consumption-based economy.  This trend would lead to a profoundly different economic landscape.

We also believe that discontinuities int eh political, social and economic landscape have the potential to reshape China dramatically by 2025.  While the outlook is positive, there will likely be discontinuities - both upward ad downward - along the way.  The key to sustainable success for businesses in such an environment depends on an ability to anticipate the trends and challenges that are in the “blind spots” today - but which can create disruptive threats or discontinuous opportunities for those who can respond rapidly.  In essence, and “early warning system” is needed which leverages unique insights which can be brought to bear on the question of how the market, the regulatory system, and business models may develop over the next decade in China.
We welcome your comments and feedback on our briefing paper or in general about our firm. We would be glad to meet you in person to share our data and perspectives in a fuller manner. Please let us know if you are interested in meeting and discussing directly how we can help you to operationalize these insights. 
Thought leadership is core to what Gao Feng does. We will, from time to time, share with you our latest thinking on business and management, especially as it relates to China and China’s role in the world.   
Best Regards, 
Dr. Edward Tse
CEO, Gao Feng Advisory Company
Bill Russo
Managing Director, Gao Feng Advisory Company
Chee-Kiang Lim
Principal, Gao Feng Advisory Company
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