Photo by CFP
Photo by CFP
Rupert Hoogewerf, chairman and chief researcher of the Hurun Report
Zhou Jiangong, editor-in-chief of Forbes China magazine
potential consumer base is also very important. Any industry with huge potential for consumption is one which can breed tycoons.
and consumption significantly. What do you think? ZJ: Many people in the solar energy sector have fallen off the rich list. I’m not very optimistic about organic agriculture either. In many parts of China, the earth, water and air have all been polluted. In the strict sense, there is no organic agriculture in China. To produce real organic food, the soil needs to be prepared without pesticides – an expensive process. The Chinese market is unlikely to be able to afford even more expensive food on a large scale.
NC: What sectors in China measure up to these criteria, in your opinion? ZJ: We may draw a comparison between China and the United States. Many people think today’s US could be tomorrow’s China. India is also an important reference point. Its population size and development level are similar to China’s. I believe real estate is still a very important sector, plus its related industries. In India, the real estate sector has generated plenty of tycoons, while in America the number is much smaller due to the more advanced state of urbanization. The urbanization process in China will still continue for some time, which will directly benefit these industries. As in America, service and retail sectors come as a by-product of urbanization, and these sectors also create wealth. In China, these sectors are a good source of start-ups. With the savings rate still high, finance and investment will continue to be important. Pharmaceuticals and healthcare will develop as the population ages – in this respect, India is more developed than China. The Internet is also a promising area. It’s still the most active sector in terms of creating
millionaires. New concepts and novel things keep emerging - mobile Internet, cloud computing and megadata. Artificial intelligence may be next. One sector is difficult to be judged – traditional media. America and India have plenty of media tycoons, but in China it’s not clear in which direction the traditional media is heading. Restrictions on the media have stayed in place. Were this area to open, however, it could be a key growth sector. RH: I’m optimistic about the service sector, media and online retail. Finance is also a promising area. Many children of China’s first generation of entrepreneurs are studying finance abroad. They believe that without good financial knowledge, one would not be able to grow a business There’s an expectation that in the future, many entrepreneurs will switch to the financial sector. I’m also optimistic about the Internet. Across the globe, online retail is leading the closure of many brick-and-mortar stores. When the Internet and, say, biological science are integrated, there’s great potential for growth. The same goes for healthcare and education. NC: The potential of new energy and organic agriculture is a popular talking point in China right now. Many believe these two sectors will influence China’s modes of growth
NC: We have noticed that many in the manufacturing sector are now shifting into investment sector. It seems that the first-generation rich are all now engaged in investment. ZJ: This does happen in some areas of the manufacturing sector, especially in labor-intensive industries and the industries that rely heavily on exports and export tax rebates. You cannot turn a blind eye to the phenomenon in Guangdong and Zhejiang, where private manufacturers have either gone bankrupt or switched to investing in other sectors with their existing capital. Younger-generation entrepreneurs, however, don’t seem keen on manufacturing. This phenomenon is worrying. There are still many opportunities in the sector, particularly CHINA WEEKLY I March 2013
April 2013 Issue