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Decoding the New China Playbook: 9 strategic shifts that redefined the dragon in the decade to 2025
China’s economy shows contradictory signals – macro headwinds yet surging innovation investment and competitive intensity. To decode this evolving reality, here are the nine key trends global businesses must understand about operating in today’s China.
Many global boardrooms are grappling with how to interpret China’s current trajectory, characterized by the country’s seemingly contradictory macroeconomic conditions and business performance.
Headline indicators of slower GDP growth and stress in the property sector have led much of the mainstream commentary to question the sustainability of China’s economic momentum. As a result, the dominant narrative has shifted quickly from “unstoppable rise” to concerns about whether China has already peaked.
At the same time, this macro-level reading sits uneasily with what many multinational executives experience on the ground. In key sectors, local competitors are becoming more capable and innovative, but also more aggressive, intensifying competitive pressure rather than easing it. The coexistence of macro-economic strain and micro-level competitive dynamism is creating genuine ambiguity and demands a more differentiated understanding of China today.
Continued investment in R&D, despite a slowdown in GDP
A common misunderstanding of China’s recent trajectory is the assumption that innovation investment stalled during the pandemic. In fact, China’s commitment to research and development strengthened rather than weakened through that period and beyond. Official statistics show that China’s total R&D spending continued to grow strongly through 2021–2024, rising by an average of 8–9% year-on-year and exceeding ¥3.6tn (~US $500bn) by 2024, with R&D intensity (R&D as a share of GDP) increasing to around 2.7%, which is near OECD levels and close to the figures seen in other major economies. At the enterprise level, firms such as BYD significantly expanded their innovation capacity during this period: between 2021 and 2024, the company more than tripled its R&D personnel to over 121,600 engineers and researchers, and allocated a growing share of revenue to core technological development. This trend is far from a pause; rather, it reflects a recalibration toward sustained, strategic investment in science and technology even as near-term economic pressures mounted.
This apparent contradiction between external sentiment and internal capacity points to a larger shift in China’s economic strategy over the past decade. In 2015, the Chinese government launched the ambitious Made in China 2025 initiative to accelerate the country’s ascent up the value chain and reduce dependence on imported technology.
A decade on, the question isn’t simply whether those goals were achievable, but what has actually changed in the structure and direction of Chinese competitiveness from 2015 to 2025, and how does that evolution reshape the competitive landscape for global firms?
We explore these questions and their implications – both for China and for multi-national companies (MNCs) – by looking at three pillars of the New China Playbook:
- New sources of power
- New shape of demand
- New rules of engagement
Within these pillars, we explain the nine strategic shifts of this transition since 2015, together with a brief review of “winners” and “losers.”
New sources of power
The first pillar of the New China Playbook reflects a fundamental rewiring of China’s supply side. Capital, talent, and policy attention have shifted from speculative, resource-dependent assets toward productive, innovation-driven capabilities. This shift has reshaped where competitive advantage is created and which firms are best positioned to capture it.
1 – The economic engine: From real estate-led growth to ‘New Productive Forces’
For much of the past two decades, China’s growth model leaned heavily on debt-supported urbanization. At its peak, real estate and related industries accounted for an estimated close to 30% of GDP, anchoring local government revenues and household wealth. This model delivered scale and speed, but it also relied on rising leverage and continued land appreciation.
Since around 2020, policymakers have sought to rebalance rather than abruptly abandon this engine. As property investment slowed, capital and policy support increasingly flowed toward advanced manufacturing and clean energy. Under the banner of New Productive Forces, particular emphasis was placed on the so-called New Three: electric vehicles, batteries, and solar energy. The transition has been uneven and costly, but it reflects a deliberate shift in priorities.
Incumbent model under pressure:
- Evergrande became emblematic of the high-leverage, high-turnover property model. After years of rapid expansion, it collapsed under more than $300bn in liabilities when credit conditions tightened.
2015 revenue: ~$21bn | 2024: in restructuring/liquidation. - Wanda, a major commercial real-estate player, pursued aggressive global acquisitions before retrenching. Since 2017, it has divested many assets to stabilize its balance sheet.
2015 revenue: ~$43bn | Significant asset sales since.
- Evergrande became emblematic of the high-leverage, high-turnover property model. After years of rapid expansion, it collapsed under more than $300bn in liabilities when credit conditions tightened.
Emerging beneficiaries of the shift:
- BYD expanded its vertically integrated capabilities across batteries, power electronics, and vehicles, positioning itself competitively as EV adoption accelerated.
2015 revenue: ~$12bn | 2024 revenue: ~$111bn. - CATL grew into the world’s largest EV battery supplier, benefiting from scale and close ties to downstream automakers.
2015 revenue: ~$0.8bn | 2024 revenue: ~$53bn.
- BYD expanded its vertically integrated capabilities across batteries, power electronics, and vehicles, positioning itself competitively as EV adoption accelerated.
Takeaway: Headline macro indicators increasingly obscure where competition is intensifying. MNCs must track where capital, talent, and policy support are concentrating, rather than relying on aggregate GDP or sentiment measures.
China’s earlier innovation success was built on the rapid commercialization of consumer internet models adapted from abroad.
2 – Innovation model: From ‘fast follower’ to selective deep-tech scaling (focused)
China’s earlier innovation success was built on the rapid commercialization of consumer internet models adapted from abroad. That phase has matured but not disappeared. What has changed is where incremental advantage now accumulates. External technology constraints and domestic upgrading pressures have pushed leading firms to concentrate resources on capital-intensive, longer-cycle technologies, including semiconductors, industrial software, advanced hardware, and systems integration.
This is not a blanket shift across the economy. Rather, deep-tech investment has been selective and uneven, favoring firms with scale, patient capital, and close alignment with manufacturing ecosystems.
Maturing internet platforms:
- Weibo remains profitable but faces structural limits as user attention shifts toward algorithm-driven video platforms.
2015 revenue: ~$0.48bn | 2024 revenue: ~$1.75bn. - Meituan scaled local services through operational excellence; its current challenge is sustaining differentiation as competition intensifies.
2015 revenue: ~$0.63bn | 2024 revenue: ~$48bn.
- Weibo remains profitable but faces structural limits as user attention shifts toward algorithm-driven video platforms.
Selective deep-tech leaders:
- Huawei, under sustained sanctions, doubled down on internal R&D, enabling partial recovery in key systems and products by 2024.
2015 revenue: ~$60bn | 2024 revenue: ~$118bn. - DJI created global leadership in commercial drones by integrating proprietary hardware, software, and manufacturing – illustrating how deep-tech advantage emerges from system-level execution, rather than single breakthroughs.
2015 revenue: ~$0.9bn | 2024 revenue: ~$11bn.
- Huawei, under sustained sanctions, doubled down on internal R&D, enabling partial recovery in key systems and products by 2024.
Takeaway: China is not a uniformly deep-tech economy, but where deep-tech capabilities take hold, they compound quickly. MNCs should assume shorter iteration windows to differentiate in affected sectors.
3 – Supply chains: From cost efficiency to clustered resilience
Low-cost labor is no longer China’s primary competitive advantage. Increasingly, strength comes from dense industrial clusters that integrate suppliers, engineers, logistics, and rapid iteration within tight geographic footprints. This does not eliminate cost pressures, but it improves speed and adaptability.
Cost-driven models under strain:
- Yue Yuen, the world’s largest footwear manufacturer, relied on labor arbitrage across regions. As wages rose, margins tightened despite continued scale.
2015 revenue: ~$8.4bn | 2024 revenue: ~$8.1bn. - Zhong Fu, once a major PET bottle supplier, struggled with debt and limited technological differentiation.
2015 revenue: ~$0.5bn | 2024 revenue: ~$0.1bn.
- Yue Yuen, the world’s largest footwear manufacturer, relied on labor arbitrage across regions. As wages rose, margins tightened despite continued scale.
Cluster-based competitors:
- Fuyao Glass embedded itself within global automotive clusters, operating near OEMs in multiple regions to balance efficiency with resilience.
2015 revenue: ~$2bn | 2024 revenue: ~$5.3bn. - LONGi Green Energy leveraged China’s integrated photovoltaic ecosystem to scale production and drive down costs globally.
2015 revenue: ~$0.8bn | 2024 revenue: ~$11bn.
- Fuyao Glass embedded itself within global automotive clusters, operating near OEMs in multiple regions to balance efficiency with resilience.
Takeaway: China’s advantage now lies in system density rather than labor cost. MNCs must decide which capabilities require proximity to these clusters, and which can realistically be rebuilt elsewhere without performance loss.
Chinese firms are no longer defined solely as manufacturing contractors.
4 – Global role: From OEM supplier to active global competitor
Chinese firms are no longer defined solely as manufacturing contractors. Many now export brands, operating models, and direct-to-consumer capabilities, though success varies widely by industry and geography.
OEM strength with limited upside:
- Galanz remains a global microwave manufacturing leader but continues to face challenges in capturing premium brand value.
2015 revenue: ~$3bn | 2024 revenue: ~$8bn. - Foxconn exemplifies world-class manufacturing execution while operating on thin margins relative to the brands it serves.
2015 revenue: ~$140bn | 2024 revenue: ~$208bn.
- Galanz remains a global microwave manufacturing leader but continues to face challenges in capturing premium brand value.
- Brand- and model-driven expansion:
- SHEIN built a digital-first, demand-responsive retail model that competes directly with global fast-fashion brands.
2015 revenue: minimal | 2024 revenue: ~$37bn. - Haier, following its acquisition of GE Appliances, demonstrated that Chinese management practices can scale internationally when adapted to local contexts.
2015 revenue: ~$13bn | 2024 revenue: ~$40bn.
- SHEIN built a digital-first, demand-responsive retail model that competes directly with global fast-fashion brands.
Takeaway: Chinese firms are no longer confined to upstream roles; many now compete directly on brand, speed, and customer experience in global markets. MNCs should reassess supplier and partner relationships with the assumption that today’s collaborator may become tomorrow’s rival, often outside China.
New shape of demand
This second pillar reflects a reconfiguration of demand shaped by demographic change and evolving consumer psychology. China is no longer a single mass market, but a portfolio of overlapping, fragmented demand systems. Growth has not vanished, but it accrues selectively to firms that align with specific segments, propositions, and local contexts.
China’s working-age population peaked in the mid-2010s, marking the gradual erosion of the traditional labor-cost advantage.
5 – Demographics: From population dividend to talent dividend and silver economy
China’s working-age population peaked in the mid-2010s, marking the gradual erosion of the traditional labor-cost advantage. At the same time, the economy has benefited from a rising supply of educated talent. With more than 10 million university graduates entering the workforce annually, the composition of the workforce has shifted toward engineers, technicians, healthcare professionals, and digital specialists. In parallel, rapid population aging has expanded demand for elder-related products such as medical services and diagnostics, and created what is often described as the emerging “silver economy.”
Labor-intensive models facing limits:
- Shenzhou International, a global leader in textile manufacturing for brands such as Nike and Adidas, scaled successfully on the back of disciplined execution and labor-intensive production. While revenues have grown, its model faces structural pressure as wages rise and labor availability tightens.
2015 revenue: ~$2bn | 2024 revenue: ~$4bn. - Youngor, long a staple of China’s mass-market apparel sector, has seen core apparel growth plateau and has increasingly diversified into non-core investments.
2015 revenue: ~$2bn | 2024 revenue: ~$2bn.
- Shenzhou International, a global leader in textile manufacturing for brands such as Nike and Adidas, scaled successfully on the back of disciplined execution and labor-intensive production. While revenues have grown, its model faces structural pressure as wages rise and labor availability tightens.
Beneficiaries of demographic recomposition:
- Mindray expanded alongside rising demand for higher-quality medical diagnostics and localized R&D capabilities, benefiting from both aging demographics and skilled engineering talent.
2015 revenue: ~$1.2bn | 2024 revenue: ~$5.2bn. - Xiaomi leveraged large pools of engineering talent to build an integrated Artificial Intelligence of Things (AIoT) ecosystem, monetizing scale across hardware, software, services, and the whole ecosystem, rather than relying on labor arbitrage.
2015 revenue: ~$10bn | 2024 revenue: ~$51bn.
- Mindray expanded alongside rising demand for higher-quality medical diagnostics and localized R&D capabilities, benefiting from both aging demographics and skilled engineering talent.
Takeaway: Rising wages do not automatically reduce competitiveness when offset by deeper engineering and technical talent. For MNCs, China is increasingly valuable as a capability and solution-development base, not merely a manufacturing site.
Chinese consumers have not abandoned foreign brands entirely, but their decision criteria have evolved.
6 – Consumer psyche: From status signaling to more rational and culturally confident consumption
Chinese consumers have not abandoned foreign brands entirely, but their decision criteria have evolved. The earlier phase of conspicuous consumption, where Western brands signaled status and modernity, has given way to a more value-conscious and self-referential mindset. Purchases are increasingly evaluated on functionality and emotional resonance. Concepts such as “rational consumption” and guochao (China-chic) reflect this shift, though preferences remain category- and cohort-specific.
Brands losing cultural relevance:
- Metersbonwe, once a leading casualwear brand, struggled to differentiate itself as consumers demanded clearer identity and quality-value propositions.
2015 revenue: ~$0.9bn | 2024 revenue: ~$0.09bn. - La Chapelle, which expanded rapidly through Western-inspired fast-fashion labels, failed to sustain relevance as tastes evolved and cost structures became burdensome.
2015 revenue: ~$1.4bn | 2024: bankrupt and delisted.
- Metersbonwe, once a leading casualwear brand, struggled to differentiate itself as consumers demanded clearer identity and quality-value propositions.
- Brands aligned with new preferences:
- Anta combined performance positioning with culturally resonant branding, allowing it to gain share in the domestic sportswear market while continuing to operate globally.
2015 revenue: ~$1.7bn | 2024 revenue: ~$9.9bn. - Pop Mart built a niche but scalable business around collectible art toys, monetizing emotional engagement and “self-pleasing” consumption among younger consumers.
2015 revenue: negligible | 2024 revenue: ~$1.8bn.
- Anta combined performance positioning with culturally resonant branding, allowing it to gain share in the domestic sportswear market while continuing to operate globally.
Takeaway: Brand premiums based on foreignness alone are fragile. MNCs must justify value through clear functional, emotional, or experiential differentiation, not inherited prestige.
As Tier-1 cities mature, incremental growth increasingly comes from hundreds of lower- and mid-tier cities.
7 – Market geography: From Tier-1 concentration to distributed growth complexity (tightened)
As Tier-1 cities mature, incremental growth increasingly comes from hundreds of lower- and mid-tier cities. These markets are not simply lower-income replicas of large metropolitan areas. Lower housing costs and local social dynamics often translate into meaningful discretionary spending, but with far greater heterogeneity. The strategic challenge is not geographic reach, but local operating fit, including price architecture, assortment discipline, last-mile economics, and others.
- Urban-centric models under pressure:
- Renrenle, built around the hypermarket model, struggled to adapt to fragmented local demand and e-commerce competition.
2015 revenue: ~$1.6bn | 2024 revenue: ~$0.3bn. - GOME, once dominant in home appliances, found its premium-location strategy increasingly misaligned with shifting traffic and purchasing behavior.
2015 revenue: ~$10.3bn | 2024 revenue: ~$0.01bn.
- Renrenle, built around the hypermarket model, struggled to adapt to fragmented local demand and e-commerce competition.
- Lower-tier specialists:
- Pinduoduo used social commerce and price transparency to reach consumers underserved by traditional platforms, later expanding beyond its initial low-tier base.
Founded 2015 | 2024 revenue: ~$56bn. - Mixue Bingcheng built an ultra-low-cost beverage model supported by a tightly controlled supply chain, enabling dense penetration across smaller cities and towns.
2024 revenue: ~$3.5bn.
- Pinduoduo used social commerce and price transparency to reach consumers underserved by traditional platforms, later expanding beyond its initial low-tier base.
Takeaway: Lower-tier growth is real, but it rewards operating discipline and localization, not brand transfer alone.
New rules of engagement
The third pillar of the New China Playbook reflects a recalibration of how business is governed and conducted. The period of rapid, lightly regulated expansion has given way to a framework that places greater emphasis on data sovereignty, systemic risk control, social alignment, and professional governance. This shift has not eliminated entrepreneurial dynamism, but it has raised the bar for compliance and long-term legitimacy.
China’s digital economy has moved from an era of permissive experimentation toward one defined by clearer boundaries.
8 – Digital ecosystem: From open experimentation to walled sovereignty
China’s digital economy has moved from an era of permissive experimentation toward one defined by clearer boundaries. The introduction of the Personal Information Protection Law (PIPL) and the strengthening of anti-monopoly enforcement have redefined acceptable practices around data, algorithms, regulations, and platform power. Innovation is still encouraged, but increasingly expected to support productivity, consumer protection, and the “real economy,” rather than rely primarily on traffic monetization or regulatory arbitrage.
- Models no longer tolerated:
- P2P lending platforms, which proliferated in the 2010s, operated with limited oversight and high leverage. As systemic risks became evident, regulators dismantled the sector by 2020 to contain financial instability.
- Ant Group (pre-2020) represented the peak of lightly regulated fintech expansion. Regulatory intervention halted its IPO and required restructuring into a financial holding company, significantly altering its growth trajectory and valuation.
- Platforms that adapted:
- ByteDance adjusted to increasingly stringent rules governing content and data handling. Its continued growth reflects an ability to align regulatory compliance with evolving commerce and content models.
2015 revenue: ~$0.5bn | 2024 revenue: ~$120bn. - Baidu, once heavily dependent on advertising, has repositioned toward AI cloud services and autonomous driving, shifting from traffic-based monetization to enterprise and industrial applications.
2015 revenue: ~$10.2bn | 2024 revenue: ~$19.5bn.
- ByteDance adjusted to increasingly stringent rules governing content and data handling. Its continued growth reflects an ability to align regulatory compliance with evolving commerce and content models.
Takeaway: China’s digital environment now operates under a fundamentally different logic. MNCs must redesign their digital architectures and operating models if China is to remain a meaningful growth or innovation market.
9 – Corporate leadership: From founder centrality to institutional governance
As many first-generation founders age or step back, Chinese firms are navigating the complex transition from founder-centric control to professionalized governance. This process has exposed weaknesses in opaque ownership structures and informal decision-making, while highlighting the advantages of clearer succession planning and institutional checks.
- Founder-led fragility:
- Wahaha, long governed through the personal authority of its founder, faced governance and succession challenges that became public following leadership transitions, underscoring the limits of paternalistic control.
- Baoneng, built around highly centralized leadership and leveraged expansion, struggled when strategic bets collided with tighter regulatory oversight and financial discipline.
- Institutionalized leadership:
- Midea exemplifies a managed succession, with founder He Xiangjian stepping aside early and empowering professional management to drive long-term transformation.
2015 revenue: ~$21bn | 2024 revenue: ~$56bn. - JD.com has gradually decentralized authority as its founder reduced operational involvement, demonstrating that founder-led technology firms can evolve into institutionally governed organizations.
2015 revenue: ~$28bn | 2024 revenue: ~$160bn.
- Midea exemplifies a managed succession, with founder He Xiangjian stepping aside early and empowering professional management to drive long-term transformation.
Takeaway: As Chinese firms professionalize, they become more predictable and more competitive. MNCs should expect institutional discipline, not founder volatility, in partnerships and rivalry.
Navigating the metamorphosis
The transformation of China between 2015 and 2025 represents a systemic reset rather than a cyclical adjustment. For multinational corporations, the mental models that worked for much of the past four decades – such as scale first and adapt later – are increasingly becoming liabilities. The central risk executives now face is strategic marginalization: remaining physically present in China while steadily losing relevance and influence.
Marginalization unfolds quietly. It occurs when global firms continue to operate and report revenues, yet find themselves consistently outpaced by local competitors in speed, cost, innovation, or even brand awareness. Avoiding this outcome requires confronting three uncomfortable realities.
Slowing growth, increased competition, and strategic challenges will test global players
First, growth in China is no longer automatic. In the past, riding the wave of broad market expansion could compensate for weak positioning or slow adaptation. Today, performance depends far more on distinctive advantages in clearly defined segments. Simply participating in the market is insufficient; firms must compete on capabilities that outperform local players.
Second, China has become one of the world’s most demanding competitive environments. Rapid iteration and compressed learning cycles create conditions that expose organizational weaknesses quickly. For companies that can adapt, China increasingly functions as a stress test, sharpening capabilities in ways that translate beyond the Chinese market.
The third and most consequential shift, however, is not uniquely Chinese; it is strategic. China now encompasses in one market what many companies will face sequentially elsewhere: slower aggregate growth, tougher regulation, more capable local competitors, and less tolerance for strategic ambiguity. Firms that struggle in China often do so not because China is exceptional, but because their own operating models are brittle, optimized for expansion, and not ready for sustained rivalry. In this sense, China is no longer just a market to win or lose; it is an early warning system. Companies that can compete effectively in China’s new environment are likely to be resilient globally. Those who cannot may find that China is simply the place where their limitations become initially visible.
China is no longer an outlier to be explained away, but a stress test environment that reveals whether a company’s strategy, operating model, and leadership are resilient enough for this more demanding global era. The question for global CEOs has shifted from: “How much can we sell to China?” to “How much can we learn and leverage from China to avoid marginalization and survive in this new era?”
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