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China for China: How MNCs Are Rewriting Their Playbooks · C-Suite Perspectives

0:00
Welcome to C-Suite Perspectives, a signature series by the conference board.
0:04
I'm Steve Lin from the conference board and the host of this podcast series,
0:08
and in today's conversation we're gonna discuss the latest situation in China, and
0:13
specifically what companies who are trying to do business there are facing today.
0:19
Joining me is David Hoffman, the senior advisor and the China Center
0:23
leader for the conference board.
0:25
David, welcome.
0:27
It's great to be here, Steve.
0:30
So David, you've been in and around China for decades and you
0:33
lead our China center in Beijing.
0:37
And uh, just for our listeners, if anyone wants to hear more about the
0:40
China Center and membership and that and all of that stuff, just contact.
0:45
David directly via email.
0:47
Um, but we've been, David, you've been, uh, developing insights,
0:51
uh, about China and how businesses can do, particularly Western
0:56
businesses, can do business in China.
0:58
Talk to us about the state of play in China today versus
1:03
where it's been in the past.
1:05
Yeah, thank you Steve.
1:07
Um, you know, in fact I just returned from China last night.
1:11
I've been there the last three weeks in both Beijing and Shanghai, and, um.
1:18
You know, for, for the listeners, um, it, it may help to recount our, the
1:23
China Center setup in 2006, that's when a group of 10 of our trustees got
1:29
together and decided that China was big, important, mysterious, risky, innovative.
1:37
Um, inscrutable, risky, all these things, and that the chi, that the conference
1:42
board should have a presence there on the ground to study the economy, to study the
1:47
business environment and inform them with the facts they need to needed to succeed.
1:53
So we've always had an orientation of helping.
1:56
Foreign companies, our members, uh, understand the business environment there.
2:00
And today, the business environment is, um, is complex.
2:05
You know, on one hand you've got a slowing growth trajectory.
2:10
China's going through a structural shift in, in, its in its growth model.
2:15
Relying on very heavy investment and now trying to transition more to a, you
2:21
know, a knowledge based, services based and consumption based economic model.
2:26
And, and that's not easy.
2:29
Uh, you've got the rise of competition.
2:32
Uh, Chinese competition, which have really improved their capabilities
2:37
along design and quality dimensions.
2:40
Um, and we can talk more about Chinese competition and, and what it means
2:44
because, um, we think it means big things both in China and globally.
2:50
Uh, you've also got a policy agenda that's sort of trending in an un marketized way.
2:57
And what I mean by that is.
2:59
There's more of a heavy hand on planning and industrial plans
3:03
than there is on market forces.
3:05
And you know, our Western businesses, American businesses,
3:09
our members are very market driven.
3:11
So when they have to kind of contend with state.
3:15
Influences, it can make things difficult.
3:18
And of course, you've got the geopolitical issues.
3:21
Those are sort of the downward pressures on the upside.
3:25
You've got a su, you know, a supply base in China that is just, um, astonishingly
3:32
broad and diverse and capable.
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Um, highly innovative where innovations cycles from sort of rapid prototyping to
3:44
mock-ups and finished products are, are just unbelievably fast and competitive.
3:51
Uh, you've also got, even though the, the, the.
3:54
Policy environment is, as I mentioned, unfavorable in a way.
3:58
And so far as it's not really oriented towards reform and
4:02
marketization, it is very stable.
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And I, I say that, uh, you know, with a grin, because I would argue that probably
4:12
China and Singapore are maybe the two.
4:17
Countries in the world where all the policy environments are stable.
4:23
And you've said many times before, Steve, that what businesses really
4:26
like is a stable environment.
4:28
Even if, if the environment is less favorable than they, like, stability
4:33
is something they can manage.
4:35
Um, so you've got a big market, a slowing market, an innovative market.
4:40
An increasingly competitive market and, um, you know, external
4:45
issues to deal with as well.
4:46
But I would argue that China remains just as essential as ever.
4:51
Even, even more so, um, not just as a big market that our members,
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uh, you know, need to support their scale and global competitiveness, but
5:02
increasingly as an innovative base.
5:05
Yeah.
5:06
And you know, when you think about doing business in China, there's China for
5:10
China, and then there's doing business in China really as part of a supply chain
5:14
to supply businesses outside of China.
5:18
You just talked about primarily, um, the situation for businesses
5:22
doing business in China.
5:24
Just just talk a little bit about the opposite, you know, what, what the,
5:28
what's the supply chain environment like in order to, in order to
5:32
supply businesses outside of China.
5:35
Well, the supply chain is incredibly competitive and, and.
5:41
You really need to appreciate the sort of end-to-end ecosystem components of
5:48
the supply chain across almost every category, Steve, and all supported by very
5:55
modern, very large scale infrastructure.
5:59
So China's competitiveness as a manufacturing base is not diminishing.
6:06
Secondly, they are not abandoning the lower end segments of the
6:12
value chain of the production chain, even as they move overseas.
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And this is unusual because Western companies, when we began to, um,
6:24
produce in China, we often engaged with suppliers on a subcontract.
6:30
Basis.
6:31
China is not doing that.
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They're actually replicating their supply chains overseas.
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So you've got kind of end-to-end control and, and that poses a real
6:44
challenge from a geopolitical and geopolitical competition standpoint.
6:49
But from a. From a producer standpoint, if you are actually producing in China,
6:56
the products are globally competitive.
6:59
And you can see this in China's export numbers, which have
7:04
been Unfathomably strong.
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Um.
7:07
During COVID and since COVID and in fact, so strong that China accrued a
7:12
1.2 trillion US dollar, um, export, um, surplus or trade surplus last year.
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And if anything.
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China's export competitiveness.
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So if you say, say our members go there and, and, and buy stuff or procure
7:29
stuff, it's very, very competitive.
7:31
But it's becoming a big problem in terms of balance of trade arrangements
7:36
around the world and the US.
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Government has, has raised barriers to, to Chinese exports.
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Europe has, has imposed some and is considering more, and we expect
7:48
trade defense measures to rise around the world because they just
7:52
can't handle these imbalances.
7:54
So back to your question, it's a great market to procure and
7:58
produce and export from, but.
8:01
It's so great at it that it's running these trade surplus, trade
8:05
surpluses that are unsustainable and, you know, something's gotta give.
8:09
Uh, we don't know when, but, uh, soon, I would reckon.
8:13
Now, you know, there's, there are geopolitical tensions and we're
8:16
gonna talk about that in a minute.
8:17
But how is it, you know, you've been, there, you is just spent
8:20
three weeks there, but you go, you're, you're there every month.
8:23
How is it for Westerners in China today?
8:27
I mean, for, you know, initially, you know what it was it 50,
8:30
60 years ago it was closed.
8:31
Then it kind of opened and it was a little tense and gradually it warmed, and
8:36
then it was kind of like very friendly.
8:37
It was like anywhere else in the world, but it seems to have chilled again.
8:40
So, are Westerners welcome in China to do business or is it, is it uncomfortable?
8:48
No, absolutely.
8:49
Uh, not.
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It's actually very comfortable.
8:53
Very friendly.
8:55
Very welcoming.
8:56
Welcoming.
8:58
Probably a lot, a lot more efficient than the last time
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you, you've been there, Steve.
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You know, things have gotten really smooth and easy, whether it's, you know,
9:08
booking a car, getting in from the air.
9:10
Everything is, is smooth and easy.
9:12
Um, but the people are very friendly and, um.
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You know, I think, um, the, you know, the environment is, is very enjoyable.
9:23
Air quality has improved.
9:25
Um, you know, all sorts of things are, are, are net positive.
9:28
One thing I would say though is that since COVID, um, when a lot of
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expatriates left China due to various, um.
9:41
Issues like, like they did around the world.
9:44
Um, there's a lot fewer westerners there now.
9:48
It feels a lot like it did to me when I first went there as a, a
9:52
young expert in a joint venture graduate school in 1985 and, um.
9:58
There are fewer, and I would say China is kind of de westernizing.
10:03
It used to be you could find lots of, uh, western restaurants and, and, and,
10:08
and western pubs and things like that.
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There are, there are still, there are still some there, but there are fewer.
10:15
And, um, the de westernization is on, on the one hand, sort of offset
10:21
by a, by a, by a real revival.
10:24
Or, or, or burgeoning.
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Chinese cultural sector.
10:30
So there's a lot to do and it's very interesting and, um, but it's changing,
10:36
you know, it's changing and it, it could be that we see a, a, a influx
10:41
of expats once again, and we see kind of the, you know, the western
10:45
culture things re-emerging in China.
10:48
I don't think it has anything to do with anti westernism, it's just that there
10:52
are fewer westerners there, so, you know.
10:55
Restaurateurs and hospitality venues aren't catering as much to, you know,
11:01
the Western taste as they once did.
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But top line, very friendly, uh, very accessible and, um, extremely interesting.
11:12
And of course you've got the geopolitical, uh, overlay to all
11:15
of this, which, which does create some tension between the west and.
11:20
China doing business there.
11:22
Um, even though what you've said is that the environment is friendly, the,
11:26
you know, the, there are the tensions between, there are trade tensions, as
11:30
you said, between China and the West, but, um, but there are also tensions,
11:36
uh, around, you know, military dominance who's gonna control the South China Sea.
11:42
And the situation in Taiwan, just talk about that overlay.
11:45
We're, you know, we're not political at the conference board, so we
11:48
don't get into that element of it.
11:49
But, uh, just in the context of doing business there, how
11:53
do all of these tensions play?
11:56
Yeah, so.
11:58
The tensions raise a lot of risks and uncertainty at kind of a global level,
12:06
and we've been doing a lot of work with members to help them understand and
12:11
contextualize and plan for these risks.
12:14
We have a couple different models that we've developed a, a, a gray swan
12:19
planning tool to add nuance to, um.
12:23
Planning, uh, scenario planning exercise and what we call a bottoms
12:27
up or, um, impacts based approach to geopolitical risk management.
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So there are ways to manage these risks, but I wouldn't say our members think about
12:38
these day to day at a business level.
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They're really focused on developing the chi, their China
12:46
business, and in this kind of.
12:50
Bipolar or polarizing or multipolar world that we now live in fraught
12:56
with geopolitical risk, which looks like, I mean, my assumption would be
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that this is going to be the state of the world for some time to come.
13:06
The playbook is really that, that companies should over
13:10
overinvest in resilience.
13:12
Localize operations to the deepest level possible in each country or region they
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play in so as to insulate themselves from external geopolitical risks.
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And that's what we refer to when we say China for China and our members.
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So any company, any large western company, European American or Asian company that's
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committed to China and the China market.
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Because it's important to them for, for various reasons, has has now moved
13:42
down a China for China track that sees them becoming more and more localized.
13:48
China is becoming a more and more divergent market.
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It's, it stack is almost entirely different from what
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we use in America and Europe.
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And, and companies are needing to address that, that that changing environment.
14:03
And I think the best way to think of it is, you know what, what, what companies
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have done in Japan, I think you, you've worked in, in Japan before, you know how
14:12
different the business environment is.
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And you know, any American company that has a large presence in Japan, their
14:18
Japan operation will look very different.
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Than their, their home country operation.
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And that's how China is becoming.
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So geopolitical risks are real.
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Um, companies are doing the best they can to plan for downsides, um, if they happen.
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And in the meantime, they're trying to ring fence and build resilience
14:42
around their China businesses by making them less connected to.
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You know, global influence is either supply chains or there are other things
14:53
so that the businesses are are protected.
14:56
We're talking about the business environment today for Westerners in China.
15:01
We're gonna take a short break and be right back.
15:05
Welcome back to C-Suite Perspectives.
15:07
I'm your host, Steve Lin from the conference board.
15:09
And I'm joined today by David Hoffman, who is the senior advisor
15:13
and the leader of the conference boards China Center in Beijing.
15:17
So David, we, um, we were talking about geopolitics and trade largely, you
15:22
know, before the break, you know, let's talk about what's happening in China.
15:26
You, you mentioned in your introductory comments, but.
15:30
Growth, Chinese growth, GDP, consumption, all of that is
15:35
slowing you, you've said that and
15:37
Right.
15:38
You know, we've talked for several years about the real estate market
15:41
and how that has impacted it.
15:42
That's not intuitive to people.
15:44
How does that, how does this, the slowing nature of, uh, of, of how
15:49
does the lowering growth in GDP and, and the real estate environment
15:54
impact doing business in China?
15:57
Well, you know, real estate, um, still has farther to go down in China.
16:03
It peaked in 2021.
16:07
Prices are down about 40% off their peak, and I reckon it can
16:12
still go down further that has.
16:16
Consumer pocketbooks hard in China because, um, in China, households put
16:23
very significant down payments down on their, on their properties, much
16:28
more so than, than we do here in, in the us And that that means that
16:33
that's good for the banks, but it does mean that Chinese households bear.
16:38
The capital risk for the Chinese real estate sector, and, um, that's a problem.
16:43
So, um, a declining market, the decline of real estate as a, as an
16:49
investment asset that was appreciating strongly, all of this drags on
16:54
consumption, but more importantly, Steve, it drags on investment so.
17:00
China has been an investment, uh, driven economy for some 45 years.
17:06
It's the long, has had the longest running investment led growth
17:10
cycle in contemporary history.
17:13
The closest equivalent here was South Korea, I believe, at 28 years, and
17:18
usually after a long period of time.
17:22
Um.
17:22
Of, of an and of investment cycle, the returns on investment become
17:28
too low, um, or, or the investment becomes so inefficient that, um, it,
17:35
it's costing more to invest in it.
17:37
Then, then you're getting back as to the aggregate economy,
17:40
that there's a, an adjustment and you begin to see investment.
17:44
Drop and real estate investment upstream by developers in new projects has really
17:52
fallen off a cliff, and that has put a huge hole in Chinese aggregate investment.
17:58
They're trying to fill it with manufacturing and infrastructure,
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but the hole is too big, and that is what is bringing growth down.
18:06
So that's kind of how the, the two relate.
18:09
But on the consumption side.
18:12
China has, um, tremendous potential to, to further develop its consumer markets.
18:20
Um, they need to undertake structural reforms in order to do this.
18:25
The net net is that Chinese households in aggregate.
18:30
Don't have enough money to spend.
18:32
So it's not impoverished.
18:34
We're not talking about a, a poor society, but the average
18:38
Chinese household has very little discretionary, uh, income to spend on.
18:45
Consumer products.
18:46
Uh, it does have a large cohort of wealthy, uh, uh, families and wealthy
18:52
individuals, but they're, you know, at best nine to 12% of the total population.
18:58
That's still huge.
18:59
We're talking 200 million wealthy people there.
19:03
At the aggregate level, the large bulk of Chinese people, you know, aren't poor,
19:09
but they also don't have pocketbooks that extend much beyond basic lifestyle needs.
19:16
So reforms are required there that would lift.
19:20
Income, um, through, you know, topping up pensions and, and also, you know, more
19:27
progressive tax schemes and other things.
19:30
And, um, China has been unwilling so far to do this, and that's
19:35
kind of a separate topic.
19:36
We could go down a real rabbit hole there, but, uh,
19:38
yeah.
19:39
Yeah,
19:40
yeah.
19:41
So just a couple follow ups, this, this whole notion of real estate.
19:44
Is, uh, is very complex.
19:46
You, I, you, you did a really nice job e explaining it, but you know, there there
19:50
are, there's residential real estate and there's commercial real estate.
19:53
Both of 'em are, are underwater.
19:55
Um, but, but your point about the down payment is really important because, you
19:59
know, in the US if you put down 15%, um, you, you know, and then a lot of that, a
20:05
lot of times that's insured it, it's not that it's not that much money that you put
20:09
down, but when you're putting down 30%.
20:11
The first 30% decline is your money, is the, is the, is the
20:15
consumer or the buyer's money, and that's what's happening.
20:18
So they feel poor, number one and number two, they, they really can't
20:22
move because they're underwater on their, on their homes.
20:25
And that's the how, that's the home side.
20:27
The commercial side is the same thing.
20:28
They way overbuilt and way over invested.
20:31
Now those, you've got buildings that are, that are just empty.
20:34
And so that's all stranded.
20:36
Cash.
20:36
So everything's kind of seized up here, uh, a little bit.
20:40
And so it's almost a miracle that their GDP is still projected
20:45
to grow at 4.5% versus five.
20:48
I mean, you would think, given what you've described there would be, you know, a
20:52
three, 400 basis point hit, but it's, it's 50 ba you know, it, it's 50 basis points.
20:59
Well, you know, China has.
21:01
So, so they have the ability on a, what we would call a administrative level
21:08
to just kind of suspend these problems.
21:12
So in the US if a, if a sector like real estate collapses, the way China
21:19
has it would begin to transmit to other.
21:23
Institutions or sectors of the economy that had linkage to them.
21:28
The Chinese authorities can kind of go in there and sort of su suspend everything.
21:33
So they don't, they don't experience Lehman moments, uh, per se, as,
21:38
as, as, as western economies do.
21:41
And that means that the.
21:43
The nature of the crisis is not sort of sudden seizure correction and then
21:49
a, you know, a a period of pain, a, a recession and, and then a recovery
21:54
instead, it, it manifests in stagnation.
21:57
Slow stagnation.
21:59
Yeah.
21:59
So that's what you feel there.
22:02
Um, and again, the Chinese numbers, what they're projecting to do, you
22:07
know, with net exports as strong as they are, toggling infrastructure, um, you
22:13
know, for, for most of our companies.
22:15
Our members, the growth rate doesn't feel anywhere near 5% to them.
22:21
Um, but that's because they're probably not touching the
22:25
sectors that are growing at 5%.
22:27
So we need, we need consumer markets growing at 5% and
22:31
then our members feel it.
22:32
But if upstream infrastructure to build climate defense systems
22:38
in, in, in northwest China is where they're spending the money.
22:42
To drive investment.
22:44
Very few western companies are gonna touch that.
22:47
GDP, do you, do you see what I mean?
22:50
Yeah.
22:50
Real really important points.
22:52
Now, you know, the, the trade issues are, you know, on, in
22:55
the headlines every single day.
22:57
And, um, you know, the tariffs on Chinese goods floated all over the place
23:02
for, you know, for reasons we won't go into, but that, that's been the case
23:06
from Europe and from North America.
23:09
And so you've seen a lot of.
23:12
Different ways of dealing with that.
23:15
People have tried to move their supply chains, but, but also people
23:18
are still manufacturing in China and then running it through Vietnam or
23:21
other, you know, nearby countries and thereby, you know, avoiding the tariffs.
23:26
Talk about that whole strategy and how it affects doing business in China.
23:32
Wow.
23:34
A lot of our members, a lot of Western companies are also join enjoying the
23:40
benefits of China as an innovation and production and export base.
23:49
So when we say diverting through Vietnam.
23:53
That is happening or that happened, it may still be happening.
23:57
Um, we are tracking that, but I, I don't have the latest figures in front
24:02
of me, but I would say, what's, what's, what's, what's actually underneath
24:06
that is not so much that stuff is being produced in China and then run
24:11
through Vietnam and relabeled and put on a different boat and transiting.
24:15
Instead, Chinese suppliers are moving to Vietnam and setting up factories.
24:23
And, and they're often bringing their Western clientele with them.
24:30
Um, and that's where we, we see the real development.
24:34
And, and what that means, Steve, is this, is, this will bring Chinese competition
24:40
to a theater near you very soon.
24:45
And we're seeing.
24:46
Yeah.
24:46
And, and, and, and this, this is all playing out, you know, on,
24:49
on a global stage as people are.
24:51
Absolutely.
24:52
Yeah.
24:52
And trying to deal with, but there, there's no more important product
24:56
that's being produced and shipped around here than advanced microchips.
25:01
And so you see that even the, uh, the Taiwanese companies who
25:06
are TMC is the primary opening up factories in China, um, as well.
25:12
So you've gotta talk about the whole microchips scene as well.
25:16
Well, yeah, I mean they're, they're doing China for China, a a as well.
25:21
Um, you know, ch on the advanced semiconductor side,
25:27
uh, you know, I wouldn't say.
25:29
Um, anybody, you know, TSMC or any of the top US or Japanese or Korean
25:36
or other firms are, have ever put their top stuff in China and, and the
25:43
reason they haven't is because, you know, intellectual property protection
25:47
safeguards still aren't there.
25:50
And specifically.
25:52
The penalties for IP infringement are just too low to be credible.
25:56
So, uh, you know, one of the reasons, you know, why, you know, these, these
26:02
supply chains didn't ever move to China, was not because the business
26:06
case wasn't there, it was because the institutional safeguards weren't.
26:11
Now we've got the geopolitical influences above it all, and so that that has,
26:17
you know, put a damper on on that.
26:20
A change.
26:22
Um.
26:23
But yeah, the semiconductor, you know, China is as dependent on, uh, mainland
26:28
China is, is a, is as dependent on Taiwan's semiconductor supply chain as,
26:34
as we are, as is the rest of the world.
26:37
I often liken it to Dune, you know, um.
26:41
I've seen the movie or read the book, but it's like araki and semiconductors
26:46
of Taiwan are like spice, um, in a way.
26:49
And, um, the Silicon Shield, um, concept that they invented, um, 30
26:57
years ago or conceptualized as a means to preserve their geopolitical space.
27:03
I, I guess you would say it's working, but it is, it is, um, it
27:08
is a complex and, and risky issue.
27:11
So then wrapping up in the final couple minutes that we have you taking all
27:16
of that in, you know what, what's your advice for multinationals or any company
27:22
that's trying to do business or develop business or grow their business in China?
27:26
Yeah, I mean, the main thing I would say, and we didn't really get
27:29
to it much today, is that Chinese competitors in manufactured products.
27:38
Are really, really competitive and it's not so much over capacity
27:44
based, so there's too much capacity.
27:46
That's why the prices are low.
27:48
Actually, Chinese firms for my entire career there have always
27:54
competed along dimensions of price.
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It's what you experience when you go to markets there and, you know,
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you high goal with, with sellers, it's a, it's a price kind of based.
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You know, merchant culture, what's changed is that Chinese design and
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quality has risen to global standards, and they've brought that price competition
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now to the level of advanced products.
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If, and, and it really poses if, if you remember Clay Christensen's famous book
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in the eighties, the Innovator's Dilemma.
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It is bringing an innovator's dilemma to so many categories where you
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either confront Chinese competition by lowering your price or you see your.
28:42
Cash cows eaten away where you have to retreat into ever smaller niches, or
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you compete with them head on through innovation and faster market operations.
28:53
But it really requires a fundamental rethink of how we do business because they
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focus on scale and unit cost advantage.
29:04
We tend to focus on profit maximization.
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Well,
29:10
they, they, they also have still the labor arbitrage advantage.
29:14
Yeah, well, they've got that too.
29:16
But let me give you an example.
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I was in a San Diego, I don't know, a month ago, and I, there's a, there's
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a, a mall there, a very nice mall in La Jolla called U University Town Center.
29:29
Walk by a shop, and it's a Chinese brand called Dreamy, and dreamy, makes
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consumer home appliances and white goods.
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I think of it like a Dyson.
29:41
So Hairdryers fans and this, they're beautifully designed.
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They're, gosh, you know, I don't even know, like one fifth the price.
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Their quality's very good.
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But not only this, Steve, they had like three Chinese salespeople working
29:57
the store and they were out in the middle of the walkway, you know,
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kind of handing out brochures and welcoming people in, in a very kind
30:05
of China style salesmanship approach.
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I thought, gosh, you bring, and it's appealing.
30:12
It was, it was get bringing people into, into the store and, um, you know,
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this is, uh, you know, it's, it was very surprising me to, for me to see
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a dreamy shop in San Diego already.
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Um, but, you know, this is something we all need to prepare for and this
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is what our China Center is really focused on all of this year, is
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helping our members understand.
30:38
Um, how Chinese firms compete and how we can compete against them and, and win.
30:44
And taking into account the upstream parts where, where they have state support
30:50
and labor arbitrage and other things.
30:52
We also need to, to to, to deal with that aspect as well.
30:56
And it's, um, it's a important topic and, um, we're working hard
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to try to shine a light on it.
31:04
So what I hear you saying is that China has, you know, you didn't say
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it this in in these words, but they, they've pretty much caught up here.
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You know, their quality is great, their productivity is great.
31:15
Um, it's dealing with their internal economic issues, which won't be
31:19
resolved soon, but, and it's of drag on growth, but it's still a viable, um,
31:25
attractive market to do business in.
31:27
It's still a good place to do.
31:29
Business for, for export.
31:31
'cause a lot of the, you know, the advantages still are there.
31:35
The geopolitical overlay is there, but, but that's, you know, that's just part
31:40
of what's going on around the world and, you know, something that doesn't
31:44
seem to intrude in day-to-day business.
31:46
And, um, and then, you know, they're, uh, approaching, you know, higher
31:51
levels of innovation and, and quality, which, uh, you know, has never.
31:56
Has never been part of the mix before.
31:58
And so watch out rest of the world when, you know, price, quality
32:03
function, you know, really delivers products and services that, uh,
32:07
are truly competitive and maybe more attractive than Western goods.
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Did I wrap that up?
32:12
Okay.
32:13
You know, I think, I think you did great.
32:15
I mean, again, I'm, I'm not, um.
32:19
Trying to sugarcoat it.
32:20
The, the China market is big and stable, but uh, price competition is intense.
32:27
So it's, you know, growth is under pressure, margins are under even
32:32
more, geopolitical issues are, are difficult, but I would argue manageable.
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Um, and, um.
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On the, uh, supply chain side, China offers a sandbox, a gymnasium.
32:49
You know, one of our colleagues at the China Center likes to call it a gymnasium.
32:53
You go to work out there because that's where, you know, if you get fit in China,
32:58
you're gonna be competitive globally.
33:00
So I would, but getting fit is not easy.
33:03
So I'm not sort of saying like, it's all sugar candy there.
33:06
No, it's really, really hard work.
33:08
You're gonna have to bench press, uh, triple your own weight to succeed.
33:13
All right, we'll leave it there.
33:15
David Hoffman, head of the conference, sports China Center in Beijing.
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Thanks for being with us today.
33:21
Thanks so much, Steve.
33:23
Thanks to all of you for listening in to C-Suite Perspectives.
33:27
I'm Steve Oland and this series has been brought to you by the conference board.