A strategist’s guide to China’s Belt and Road initiative

16 February 2018

China’s Belt and Road initiative (BRI) is now well underway, with new railways being laid across the participating nations. The Belt and Road initiative, once completed, will span over 65 countries and will contribute a third of the world’s economic output. These railroads will use the latest digital technologies. Countries around the world are invited to invest finance, technology and other resources into this initiative and by doing so, tap into the Chinese market and create further opportunities in other BRI pathway countries. A sound business strategy to engage with this initiative must however start with a strong understanding of China’s capabilities and limits. China’s plan is to build an overland and maritime infrastructure, such as high-speed railroads from Eastern to Western hemispheres, to facilitate trade between and with participating countries, encourage stronger partnership links, grow participating economies and improve political and economic stability. Despite this optimistic outlook, due to the scale of the initiative, there are many challenges on the way to its completion, such as a lack of finance for the large scope of of the BRI projects and concerns about the geopolitical motives of China.

Due to these concerns and challenges, China will need the BRI to show commercial returns as soon as possible, and this is where foreign companies can come in and make their participation count. During the first phase (infrastructure development), foreign companies can participate by investing in infrastructure projects, providing advanced machinery, equipment and solutions, partnering with companies to share design and development experience, and sharing effective and sustainable management practices and experience. Companies also need to be aware of and carefully manage risks associated with participating in the BRI. This includes operational issues, trust and commitment issues, investment exposure risks and potential territorial or regional disputes. Despite the risks, there are immense potential rewards. To make the most of the potential benefits, companies are advised to have a long-term focused strategy, to build strong relationships with the right local partners, to have good practices for intellectual property protection, to evaluate specific BRI projects and supporting facilities, and to develop a contingency strategy. With the right strategies in place, companies can be a part of this massive economic growth opportunity.

Read the full article on the Strategy + Business website.

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