In the latest CNBC (China Connect) segment, McKinsey put forward a counterintuitive view: the massive advantages that many Western companies once enjoyed in China may now be coming to an end. This is not because the Chinese market itself is shrinking; rather, it means that the era when foreign firms could easily win just by leveraging technology, brand, or management know-how is passing.

This assessment echoes recent market sentiment in a subtle way. Although there is a lack of specific market data, it can be observed that multinational companies in China are facing intensifying local competition, changes in the policy environment, and shifting consumer preferences toward domestic brands—all of which could compress their profit margins. If this trend continues, the earnings expectations of these foreign companies may be lowered, which in turn could affect their stock valuation multiples.

However, McKinsey’s view is not entirely pessimistic. It may imply that foreign companies that can adapt to new environments and deeply localize still have room to grow, while those sticking to old models will face challenges. This serves as a reminder to investors that they should not simply extrapolate a company’s future prospects linearly based on metrics such as “the proportion of business in China” or “brand awareness,” but instead should focus on its ability to adjust its strategy.

Next, worth studying is this: which foreign companies have already announced restructuring their China operations or increasing local R&D? Do changes in their market share align with McKinsey’s description? At the same time, it may be useful to compare the financial reports of China-based competitors to see whether their growth truly erodes foreign companies’ market share. If, in the future, foreign firms’ revenue growth in China rebounds or policies clearly loosen, this conclusion could be overturned.

Risk notice: This article is for informational interpretation only and does not constitute investment advice.