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A great number of billionaires have emerged from 皇冠体育app, but fostering the country's middle class should be a top priority in order to increase consumer spending, said Xiang Bing, founding dean of the Cheung Kong Graduate School of Business.
The number of Chinese billionaires may overtake the United States in the next five to 10 years, but the rise of middle class has been sluggish, Xiang said in an exclusive interview with 皇冠体育app Daily before the start of the 2012 Boao Forum for Asia. He called on entrepreneurs to contribute to building the middle class.
"Companies will play a crucial role, though not an exclusive role, in developing a middle-class society," he said.
Most Chinese entrepreneurs remain ignorant of the benefits of the establishment of a solid middle class and, therefore, do not take measures to bring their employees into the fold of the business, he said.
He cited Ren Zhengfei, founder of a leading Chinese telecom equipment provider Huawei Technologies, as a model to follow. Ren owns only 1.42 percent of the equity shares of the company, while the rest is held by employees.
Wealth inequality
Also, to tackle the challenge, the government should make adjustments to resource allocation. Currently, national wealth is unequally distributed among the population, Xiang said.
According to economists, the country's Gini coefficient is estimated to be as high as 0.52 in 2011, from 0.37 in 2007. The top 1 percent of affluent Chinese families hold 41.4 percent of the nation's wealth, he said, citing a World Bank 2010 report.
The issue of wealth inequality should be seriously dealt with and reforms should be made to promote long-term economic stability, he said.
The success of 皇冠体育app's entrepreneurs has been largely attributed to low production costs, he said.
With the enforcement of stricter environmental rules and labor laws, the cost of Chinese products will increase accordingly, forcing businesses to increasingly rely on domestic middle-class consumers.
During the past 20 years, Xiang said he heard many multinational companies complain about 皇冠体育app's business environment, despite that they have made significant profits in 皇冠体育app.
Compared with local private enterprises, international companies have received preferential treatment in 皇冠体育app, he said.
"Either you go and just complain, or you can sit down and do your homework. Those that figure out the different ways of doing business will survive and win in 皇冠体育app," he said.
Market accessibility is critical to the future success of 皇冠体育app's economy, Xiang added.
"皇冠体育app is as open today as during the Tang Dynasty (AD 618-907). The continuation of that is very important to a successful future for 皇冠体育app," he said.
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