China is no longer a low cost investment destination, according to Henry Tan, director of consulting firm Nexia China, which is part of Nexia International, a worldwide network of independent accounting and consulting firms. Mr Tan said that business opportunities will increasingly lie in the country’s domestic markets as the country experiences growth in its middle and upper classes. HSBC predicted that China's economy will grow in excess of 8% in 2013, and Mr Tan said that this growth will be domestically driven. Foreign investors, said Mr Tan, should craft a local strategy for the country, in order to seize its business opportunities in the coming years.

“There are a lot of opportunities in China for businesses but they must focus on the needs of the local people,” said Mr Tan. “China used to be very reliant on exports but because of the crisis in 2008, it restructured its economy a lot. If you look at China today, it is in a very different situation, in the sense that it has restructured to be more domestically driven. In the past, companies came, set up a production factory, exported all their products to Europe or the US, and it was very export oriented. Now, it is not about going to a country of low costs, because China today is no longer cheap. If [companies] are coming to China, they must have a local strategy.”

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According to Mr Tan, companies must be aware that China’s operating environment has evolved, and success will be characterised by business ventures that focus on higher value-added operations that serve the needs of local customers. “The clients that Nexia receives from the US and Europe we find in general [have] a lack of knowledge about operating in these developing areas, specifically in China,” he said. “If I compare Nexia's offices in Shanghai with its offices in Singapore, the cost of office rent in both is the same. There is no cost benefit. People cannot go low cost and that strategy means people need to think high value-added if they think of going to China. They must have a local strategy, to manufacture for the locals. [Many] people are really upgrading [their lifestyle] and their disposable income has become high.”

Viewing China's new leadership under president Xi Jinping as “pro-enterprise”, Mr Tan maintained that China’s investment climate will become even more open to private enterprise, and the government will work to encourage private sector-led growth in the coming years. “Xi Jinping is a very pro-enterprise president, and he believes in the free market,” said Mr Tan. “In his first trip after he became president, he went to south of China [to] Guangzhou, where the birth of entrepreneurialism [occurred]. [This] sent a signal to the country not to focus on huge projects, and not rely too much on state-owned enterprises, but to encourage the private enterprise to create an economy that is sustainable. Economic recovery will be driven a lot by the private enterprise, which is healthier than a purely state-led [growth]… and that augurs well for the future for China.”