2.8b The Tiers of Chinese Cities (Expert Sharing by Mr Gordon Lam, Vice-Chairman and Chief Executive of Hang Seng Bank (China) Limited)

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From the course by Китайский университет Гонконга

China Strategy

14 ratings

Китайский университет Гонконга

China Strategy

14 ratings

Course 2 of 4 in the Specialization Doing Business in China

This course is designed to help you, as a strategist of a foreign company, better understand how to develop your China strategy. Specifically, after studying China’s changing strategic landscape, you will focus on mastering three strategic issues: who – the major players in China, how – the entry modes, and where – the location strategy for your China business. This course is aimed to deliver updated knowledge and real experiences of developing China strategy.

From the lesson

Who and Where? Players and Locations in China

Foreign entrants are often puzzled by varying types and unique features of players they encounter in China, and often make mistakes by treating the locations in China as homogeneous. This Section helps in developing a better understanding of China's context in terms of its players and locations, and a number of strategies to deal with them in China. Who are the players in China? How do foreign firms identify and differentiate different types of Chinese players? What does subnational location mean in China? How do foreign firms respond to the idiosyncratic natures of different Chinese locations?

2.8a Key Issue: The Tiers of Chinese Cities7:21

2.8b The Tiers of Chinese Cities (Expert Sharing by Mr Gordon Lam, Vice-Chairman and Chief Executive of Hang Seng Bank (China) Limited)3:28

Meet the Instructors

Prof. Xufei Ma
Associate Professor, Director, Center for Entrepreneurship
Department of Management

Em I think the first-tier city, we usually

call the ‘Big Four’. The natural order

would be ‘Bei Shan Guang Shen’ –

Beijing, Shanghai, Guangzhou, and Shenzhen.

But recently, I think people try to change

the order somewhat, they tend to think

Beijing, Shanghai, Shenzhen, then Guangzhou

because Shenzhen has been doing quite well

recently. Beijing to be the first,

not necessarily because of its economic

power but more importantly, I think China

is still very much affected by the, you may

call it the visible hand and I think

the visible hand is still very important.

The government's involvement is still quite

important; so the people have to put

Beijing as top. But of course, I think

the Big Four is at a quite advanced

stage in terms of size of the economy.

So certainly we do see this very much

the first-tier. And the second-tier

would naturally include Tianjin,

would include Chongqing because they

very much enjoy the provincial level status

and and then would be very much

the capital cities of the major provinces.

But having said that, there are certain

city that they are as strong as some of the

capital cities, for instance,

if you are looking at Suzhou,

Suzhou is as as prosperous as Nanjing,

and similarly for Qingdao versus Ji’nan.

And then you go down to like the

third tier cities, then third, fourth,

fifth to nth tier cities.

As we discussed earlier, I think China is a

huge market and they are very different.

So we just have to sort of look at the

different tiers. They could be very

different in terms of the economic

developments and also the GDP

per capita could be quite different.

Of course, I think the Big Four,

they probably have enjoyed more wealth

and the average income of those people

is higher. And then also some of the

infrastructure, the education, the medical,

and some of the supporting facility

would be better in a major city.

But then, whereas in some of the

inland provinces and they are still doing

very much the catching up.

And so so it is quite different.

The good thing, I think, on the more

prosperous area is that you probably

get a … get the purchasing power

and you got all the sort of convenience

in establishing your business.

The flip side is that you probably

would face more competition

because a lot of players are there.

They could be local player, international

player. They are competing

in all these sort of major cities.

And also the costs could be higher.

The good thing you probably got

good people but at the same time you're

also competing …these sort of like

talents with the other firms.

So there are pros and cons.

And so the company have to be very clear

what exactly what objectively

we want to achieve in China.

And they have to re-set the target

very wide, rightly, and also to

monitor the situation and adjust

the strategy accordingly.

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