Global business support spurs China’s growth

By Natasha Spencer

- Last updated on GMT

China's business future

Related tags Investment China

As China remains a dominant make up producer, particularly in areas of innovation such as lip care, the next ten years are expected to bring increased overseas investment, governmental backing and worldwide business opportunities.

China: A booming landscape

Market research company, Euromonitor International, predicts that by 2025, China will become one of top five business service industries through the globe.

Between 2016- 2025, China is expected to achieve a compound annual growth rate (CAGR) of 11% and increase its absolute value to almost $1,800 bn (€1,644 bn).

China’s closest competition is set to come from the US, which is anticipated to reach a CAGR of around 4.5% and an absolute growth value of just over $1,600 bn (€1,461 bn).

While the Japanese economy is expected to see the second biggest growth in APAC, with an anticipated CAGR of 3% and absolute growth value of $200 bn (€182.6 bn), China looks set to overshadow its APAC counterparts in the international business services sector.

Rising foreign investment, government support and improvements to its business environment are expected to support expansion efforts.

Overseas investment

In 2016, China’s Ministry of Commerce revealed that foreign direct investment (FDI) rose by more than 4.3%, encouraged by an 8.3% investment increase in the service industries. Of the total amount of Chinese FDI received, 70% was given to the service industries.

Simplified regulations relating to investment and the removal of trade limitations in free trade zones are expected to increase China’s FDI over the next decade.

Beauty brands and cosmetics companies are striving to access new customers through their digital environments. As such, high-tech services in China are set to be key markets for investments. In 2025, the Chinese research and development (R&D) and computer services markets are expected to become the second largest region in the business services sector.

If realised, China will leap from third into second place, where it sat in 2016 behind the US and Japan. It will replace Japan as the leading computer and R&D service sector in APAC, being outpaced only by the US.

Government boasts R&D

The Chinese government’s 13th Five Year Plan 2016-2020 will seek to move away from traditional manufacturing towards high-value services areas, particularly the R&D element of business development. R&D is expected to make up 2.5% of GDP growth in 2020 compared to 2.1% in 2015.

In recent years, China has increased investments in R&D initiatives. As a result, this may encourage creative formulations and innovative ingredient choices within the cosmetics and personal care arenas.

Free trade

In 2017, China increased its free trade zones from seven to eleven, to help a variety of business service industries and contribute towards the country’s overall economic growth.

The nation is also planning to strengthen relationships between China’s regions to harness collaboration and boost business activities.

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