Managing Discontinuities in China

Booz Allen Hamilton --- Per capita gross domestic product (GDP) in China has grown steadily at about 9 percent for the past 15 years and the country is now a top five market in many consumer product categories; in mobile phones, it’s No. 1, going from virtually zero subscribers in 1995 to 400 million ten years later. However, many executives from leading companies around the world are still having a difficult time grasping the opportunities and dangers in China.

Its rapid growth and local rules of business do not mean that China will repeal the fundamental laws of economics, but the fact that the country is growing much faster than what most global executives are used to—with the possible exception of the dotcom boom—requires a different frame of reference to operate effectively. In such a tumultuous environment, the demand and supply patterns are often characterized by changes that are sudden and severe. We call these “discontinuities” or “inflection points.”