The New Rules of Global Competition

Global expansion is no longer simply an opportunity; it is a strategic necessity shaped by shifting economic power. As China redraws the terms of competition through scale, cost and control of supply chains, entrepreneurs based in the UK face a more complex path to growth. In this Entrepreneur UK interview, Dr Ram Charan – who has advised senior leaders at major global companies including Toyota, Bank of America, Key Bank, ICICI Bank, the Aditya Birla Group, Novartis, UST Global, Uniqlo, Humana and Matrix – sets out a stark assessment of the global landscape and what it will take to compete within it.

1. In China’s 90% Model, you explain how China builds excess capacity to dominate markets. What key insights from the book should UK entrepreneurs keep in mind?
Cost is lower. Therefore pricing is lower and competitiveness is higher. Chinese exports have increased dramatically. They have also increased quality and productivity. You are unable to compete. Here is what you must understand. China produces at marginal cost. Marginal cost means the cost to produce one more unit when your factory is already built, your workers are already trained, and your supply chains are already running. China has built such massive overcapacity that they can sell at marginal cost and still keep the factory running. You cannot match that pricing. No UK entrepreneur can. But it is worse than the price. China controls critical inputs. Rare earth elements. Specialty chemicals. If they choose to stop supplying the UK economy, they can do it at will. This is why your Prime Minister has gone to China to work out a solution. You have not fully experienced this threat yet because UK manufacturing has been declining for decades. You are getting cheaper, inexpensive imports from China. But those imports are attacking what remains of UK industry. And when those industries disappear, you will feel it.

2. Your book highlights China’s sector-by-sector strategy. Which industries in the UK are most at risk from this model?
Almost all manufacturing industries are at risk. The exception is aerospace and aircraft engines. Service industries are less vulnerable. But you must be careful. Even in industries that seem safe, you are not fully protected. The inputs to these industries in the value chain are still controlled by Chinese companies. Take aerospace. The UK has Rolls-Royce. World-class aircraft engines. But rare earths? China controls them. Specialty chemicals needed in aerospace manufacturing? China controls them. You do not control the inputs. Depending on political negotiations, China may decide to exercise that control or not. The steel industry, for example. An entrepreneur is not likely to suffer immediately unless they are using inputs in certain industries that have been blocked. But here is what UK entrepreneurs must watch. China has destroyed or marginalised 20 industries globally, 10 of those under its Made in China 2025 plan. These include: electric vehicles, renewables, bio-pharma, aerospace, artificial intelligence, robotics, maritime equipment, advanced rail, new materials, advanced agriculture. If you are in any of those sectors or supply to those sectors, you are in the crosshairs. The UK must protect the intellectual property of industries such as Rolls-Royce. Once that IP is gone, it does not come back.

3. How should UK startups and scale-ups adapt their strategies in sectors where China’s pricing and capacity tactics create pressure?
The key is service industries. Wherever there are services, they will be somewhat protected. China cannot easily replicate high-value services that depend on trust, relationships, language, and local knowledge. The UK has strengths China cannot replicate. Financial services. Professional services. Life sciences research. Creative industries. Legal and accounting expertise. These are your natural advantages. Use them. But if you are in manufacturing, here is what you must do:
First, look for the gaps China cannot fill. Bespoke manufacturing. Rapid prototyping where you work directly with customers to customize products. Last-mile customization. Technical support that requires deep customer relationships and local presence. Short production runs where flexibility beats scale. These are your opportunities. Chinese factories are optimized for volume. You cannot beat them on volume. But you can beat them on speed, customization, and service.
Second, protect your IP ruthlessly. If you have proprietary technology, keep it in the UK or within trusted partners in Europe and the American Sphere. Do not transfer it to China. Do not form joint ventures that require technology sharing. Once China has your IP, they will scale it, subsidize it, and undercut you globally.
Third, diversify your supply chains within the American Sphere. The American Sphere means the UK, US, EU, Japan, South Korea, Israel, Canada, Australia, India. Build your supply chains within that network. Yes, costs will be higher initially. But you gain resilience. And as volumes build across the Sphere, costs will come down.
Fourth, build partnerships. Small companies cannot fight this alone. Partner with other UK firms. Work with your industry associations. Lobby the UK government for support. The government is negotiating with Europe and the US right now. Make sure your voice is heard. Look at what the UK government has already started. Tax incentives for domestic manufacturing. Low-cost loans for companies relocating production. Regulatory fast-tracking for strategic industries. Use these programs. They exist to help you.

4. Your op-ed argues China’s trade surplus is a tool of influence. What does this mean for UK entrepreneurs exporting goods or services?
To small companies, it may not make much immediate difference. It depends on which countries you are exporting to. China’s trade surplus is now over $1trn annually. Since 2009, they have accumulated $7.5tn in hard cash from global trade. That money is used for political influence. They are building ports, railways, and logistics infrastructure across the world through the Belt and Road Initiative. They are subsidizing their exports. What does that mean for you? Your exports become uncompetitive. If you are trying to sell into markets where Chinese competitors are operating, they can undercut your price because their government subsidizes them. You cannot compete with a government-backed pricing model. This is why partnerships with the UK government and with Europe and the US matter. Individual entrepreneurs cannot solve this alone.

5. Are there lessons from China’s approach – speed, scale, or efficiency – that UK founders could ethically adopt to grow their businesses?
Despite China’s control of economies and industries, there are three lessons every entrepreneur must learn. First, scale as fast as you can. Hyper-scale gives you lower costs and you can compete against Chinese exports and local manufacturing. Do not stay small if your industry allows scale. Scale fast. But understand what scale means for a UK entrepreneur. You cannot scale to Chinese factory volumes. That is not the game. Scale means: serve multiple markets quickly, build repeatable processes, use technology to multiply your impact. For example, if you are in software or services, scale by serving customers across Europe, not just the UK. If you are in manufacturing, scale by standardizing your production process so you can handle larger orders efficiently.
Second, use artificial intelligence. AI is central to hyper-scaling, lowering costs, and gaining agility. Chinese companies are using AI to drive productivity gains that compound every quarter. If you are not using AI, you are already behind. Let me be specific. Use AI to optimize your supply chain. Predict demand. Reduce inventory costs. Use AI to automate customer service so you can compete on speed without hiring dozens of people. Use AI in product design to cut your development cycle from months to weeks. AI tools are now accessible. You do not need to be a technology company to use them. Start with one process. Automate it. Learn. Then move to the next.
Third, learn about currency exchange rates. Understand how they influence the price of your products. You need full value chain analysis on the basis of adjusted currency. China has devalued its currency by 52%  since 1990. That is how they keep exports cheap. You must factor currency into every pricing decision.

Brexit has already made this more complex for UK businesses. Sterling volatility affects your competitiveness. If you export to the EU, you are exposed to Euro movements. If you source from Asia, you are exposed to Dollar and Yuan movements. Build currency analysis into your financial planning. Hedge your exposure where it makes sense. You must also match the quality and productivity of Chinese products. They are no longer low-quality. The quality gap has closed dramatically in the last seven years. If you assume Chinese products are inferior, you will lose.

6. Looking ahead, how should UK entrepreneurs position themselves to thrive if China’s economic influence continues to expand globally?
A large part of this equation is the partnership between entrepreneurs and the UK government. You cannot do it alone. The government cannot do it alone. The UK government must work with Europe and the US. All these negotiations at government level are happening now. Read them. Watch them. Understand where they are going. These negotiations could go on for a decade. My thinking may sound negative to you. But so far, China has not used anything overtly negative against the UK specifically. However, they are doing it in Europe. Look at the automotive and EV sectors in Germany and France. Chinese brands are gaining market share, opening showrooms, undercutting legacy players. That pressure will come to the UK eventually. The negotiations between governments will need to happen. Entrepreneurs should continue on their path.

Here is what you must do:
Go for exports. Do not limit yourself to the UK market. Post-Brexit, you need multiple markets. Export to the EU. Export to the US. Export to the Commonwealth. Diversification is resilience.
Create scale fast. Build your business to scale. Small is vulnerable. You need volume to drive down costs and gain negotiating power with suppliers
Use AI aggressively. Increase productivity and improve pricing through artificial intelligence. This is not optional. This is survival.
Build resilience in your supply chains. Do not depend on China for critical inputs. Map your value chain. Identify where China controls a component or material. Find alternatives. Yes, it will cost more initially. But when China decides to exercise control, you will still be operating while your competitors are scrambling.
Play to UK strengths. The UK has world-class universities. Deep capital markets in London. English language advantage in global business. A legal system that is trusted internationally. A culture of innovation and entrepreneurship. You have assets China cannot replicate. Use them. But use them fast. The window is closing. The UK still has time to act. But it requires entrepreneurs and the government working together. The US is moving. Europe is waking up. Japan and South Korea are diversifying. India is building manufacturing capacity. The American Sphere is forming. The question is: will UK entrepreneurs be part of that future? Or will you be left behind? Speed matters now. Not next year. Now.

Charan’s book, China’s 90% Model: China Has America by the Throat – Here’s How to Fight Back and Win, examines how China has built a system designed to dominate global markets sector by sector.