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TRENDSETTERS: Local & Multinational Companies Talk Frankly About China's Business Model

China today is often described with superlatives -- from largest population to fastest growth to greatest potential. This week, the country also won its first top advertising honor with a Grand Prix at the Cannes Festival for a press ad created by JWT Shanghai for Samsonite luggage called "Heaven and Hell."

Although marketing may be one of the engines that will help China transition from a manufacturing-driven economy to a consumer-driven one, this surging nation now uses half of the world’s cement, a third of its steel and a quarter of its aluminum. It adds more gigawatts of power annually than India’s whole grid. China’s approach to business, trade, government policies, entrepreneurship, talent and innovation is of tremendous interest to all the world.

This week at the New York Forum, some of China's top business leaders talked openly with global policy makers and C-suite executives about how they'd like to work within their own country and how they'd like to work with the world. (The Forum counted 26 Chinese CEOs among its participants, including Lenovo CEO Yang Yuanqing.)

Moderated by Joseph Kahn, Deputy Foreign Editor of The New York Times, four CEOs discussed both China's potential and China's challenges with a candor and honesty rarely shared at business forums. The discussion participants included:

• Feng Lun, Chairman of Beijing-based Vantone Holdings, one of China's most significant real estate investment companies boasting the largest amount of paid-in capital.
• Klaus Kleinfeld, Chairman & CEO of Alcoa, the world's leading producer of primary aluminum and fabricated aluminum. Alcoa started doing business in China through a technology relationship with China Non-ferrous Corporation (now Sino Metals) in the 1980s and has invested nearly $800 million in China’s aluminum industry.
• Liang Xinjun, Vice Chairman & CEO of Fosun International, the largest privately-owned conglomerate in Mainland China. Its range of business includes pharmaceuticals, property development, steel, mining, retail, services and strategic investments.
• Wang Shi, Chairman of China Vanke Company, the largest residential real estate developer in China. Headquartered in Shenzhen, Vanke develops, manages and sells properties across 20 cities in Southern China.

Although all believed that China's extraordinary growth will continue, they touched upon the economic challenges that Prime Minister Wen Jiabao cited in calling the Chinese economy increasingly "unstable, unbalanced, uncoordinated and unsustainable." There was also acknowledgement of the contradictions between urban and rural China, the tension between growth at the local level versus central planning, and the separate ways of the private sector and government-run operations.

While the private sector has provided more than 70 percent of new jobs, state-owned enterprises continue to play a major role and are even becoming a stronger magnet for young local talent. One panelist credited this public-private “hybrid” model as one reason for China’s continuing success, calling it the "most competitive model."

The CEOs also agreed the development of China’s economy is still in its formative stages. According to Vantone's Feng Lun, "We are working toward maturity and have a lot of hope, but there are imbalances similar to a child’s growth. The US experience is over 200 years; ours is just 30." Vanke's Wang Shi admitted, "After 3 decades of liberalization, there is still room for to improve and raise our standards to an international level. We need to be more outstanding."

Fosun International's Liang Xinjun suggests that a major change is coming for capital investment as we’ll see an increase in the number of IPOs in China. This is not only a testament to increased innovation, but also a promise of a strong return.

Interestingly, Alcoa's Klaus Kleinfeld was asked a quick series of questions: Will the market continue to evolve now? Is China more open to investors like Alcoa? Or is the country becoming more self-sufficient? His answer: "A resounding yes, yes and yes."

Interestingly, Richard Attias, Founder of the New York Forum, commented, "People (outside China) don't understand what is going on in China, some only see the cliches about China".

During a recent trip to some of China's emerging cities, he noted that in Chongqing, 80 percent of the motorbikes in the street are electric. He added, "On a larger, national scale, China is now the world's top investor in alternative energies, and nearly every new industrial project in the country integrates green technology."