Joe Ngai and Nick Leung argue in a new book that multinationals still need a dedicated China strategy, even as the economy settles into a slower 4% to 5% growth era.
China remains attractive because no other market fully matches its consumer scale and manufacturing depth, but they describe it as a hard, oversupplied arena where local rivals move faster and force constant adaptation.
100 billion yuan ($14 billion) in subsidies and discounts over two quarters in food delivery, plus BYD’s price cuts that helped drive a 55% first-quarter profit drop, illustrate the brutal competition reshaping entire sectors.
Foreign brands from Nike to Volkswagen have lost their old premium edge; McKinsey says the companies holding up best either give China teams more autonomy, partner with local firms, or sell to local investors.
Chinese companies are also pushing abroad—BYD sold more than 1 million cars overseas in 2025—and Ngai says AI tokens could become China’s next export even as U.S.-China ties remain only a “cold peace.”
Amid state-backed price wars, is strategic retreat now the only winning move for foreign companies operating in China?
Are U.S. tech restrictions creating a self-reliant AI powerhouse in China, rather than containing its rise?
Does the new U.S.-China 'cold peace' signal genuine stability or just a pause in a deepening global economic war?
China’s Regulatory Crackdown on Price Wars: How Policy Shifts, “Involution,” and Innovation Are Reshaping Domestic and Global Markets in 2026
Overview
China is actively intervening to curb intense price wars in its hyper-competitive markets, marking a significant regulatory shift. This move aims to stabilize industries and foster healthier competition by moving away from aggressive discounting, which has squeezed profitability and slowed consumption recovery. The new strategy emphasizes indigenous innovation, technology self-sufficiency, and supply chain resilience. By focusing on these priorities, China seeks to maximize the domestic market's potential as an economic engine and better withstand geopolitical shocks. This regulatory reorientation is reshaping the business landscape and setting the stage for more sustainable growth.