China will remain one of the most important markets in the Asian region in the future. The development of China’s economy, despite the recent weakening of growth, is still unmatched. For decades the country has had double-digit growth rates and is currently the second-biggest economy in the world with a middle-class expected to reach about 740 Mio people by 2025. This development is increasingly affecting European key industries such as engineering, chemicals, automotive and exhibition industries which now generate a large share of their topline results in China. While the Chinese market contains enormous growth potential, risks shall equally be addressed. Particularly, the increasing pressure to reduce costs in an intensified competitive environment due to limited market growth as well as up-and-coming local challengers shall be mentioned. To counter these risks and to guarantee long-term success in China requires the design of tailor-made implementable solutions. EAC has been active for over 25 years as a reliable and result-oriented partner for German, European and international mid-caps and MNC’s, and has successfully advised these clients in numerous projects in the fields of Strategy, M&A and Operational Excellence.
Sustainable success in China requires an in-depth understanding of the local rules of the game – EAC supports projects with an in-depth market, product and customer analysis as well as competitor benchmarking to derive implementable localization strategies. The experience of our local consulting teams with sector-specific and functional expertise is complemented by an established network of industry associations, public decision-makers and government representatives.
Although the majority of international companies are now already present in China, there is still the question of how to successfully enter new market segments, regions or promising application industries in order to guarantee sustainable growth in the future. Particularly high-tech industries such as semiconductors, automation and robotics, but also chemicals, FMCGs and service industries have to reinvent themselves constantly to stay competitive. In this context, it is also necessary to develop the optimum sales and service set-up and focus on meeting specific local requirements with an appropriate solution.
In addition, many Chinese companies have developed from pure Copy Cats to market contenders that have to be taken seriously. Not only the low-market but also major shares of the mid-market segment in several industries, for instance in machinery and plant engineering, have been taken over by strengthening domestic players. Theses competitors harbor ambitions to challenge foreign companies in the premium market segment in China and in the mid-market segment in their home markets. Because of this development, it is necessary to gain an early in-depth understanding of these contenders (with focus on expansion targets and value chain structures) so that effective preventative measures can be taken in time. One of such measures that we could observe in recent years and where EAC offers concrete support options has been the acquisition of local competitors through foreign enterprises.
EAC also supports its clients in the development of market-specific product portfolios which take account of impactful megatrends in China. In addition, strategic consulting support is complemented by the formulation of concrete proposals for measures to reflect the growing level of digitalization in all areas of commerce and industry.
China is becoming increasingly less attractive as an export platform and the focus of localization strategies is now primarily local market access – in the medium term, this is even the case for emerging regions in western China. Here, EAC’s M&A Practice supports the identification and acquisition of suitable companies with market-oriented products to secure market and customer access. A growth strategy increasingly means looking closer at non-organic growth options. The M&A expertise of EAC is based on many years of experience of the M&A Team (CPA, Private Equity and MNC’s) that has been successfully involved in numerous acquisition projects.
Changes in the market environment can lead to a number of challenges for operations in China, such as increasing competitiveness of Chinese companies, a rapid change in technology, increasing pressure on costs or falling domestic demand.
Inefficient corporate structures often arise in times of unbridled expansion, and now, because of a leveling off of economic growth, these structures are endangering a company’s continued success. As a result, many of our clients are increasingly seeing the need to strategically, operationally and financially re-adjust their existing business models in China. Thanks to our excellent understanding of business models and sector developments in the People’s Republic, we possess the necessary experience for successful restructuring.
The Service Portfolio of EAC encompasses the following areas:
EAC also offers the following services to support its clients in the field of human resources: interim management, executive search and assessment of management structures.