Changing China

chinapalace

“Chinese Trade: What Changes Have There Been In the Last Ten Years” is a paper by Chen Liu, Marketing Manager for an American oil company.

The paper is reproduced here, with the permission of Chen Liu, who also talked to BYM editor, Marian Martin, about life in China and the potential for recreational boating.

What Changes Have There Been In Chinese Trade in the Last Ten Years

Nowadays, it is more and more common to see the words “Made in China” stamped on a product. This is particularly true of electrical items and clothing. Chinese goods are good quality and cheap. Imports and exports in China are rising. Developed countries such as America are importing billions of dollars worth of Chinese made products. Inside the country, people’s lives are getting better and there is a demand for a good quality of life. That is also a factor for the increase in Chinese trade.

IT (Information Technology) is also a hugely profitable and competitive market. The last ten years has seen a rapid increase in competition as well as a drop in cost for the consumer. Recently, Lenovo (a Chinese computer company) bought IBM for $1.75 billion. This was an important moment in trade history for China as it marked a new approach of expansionism for Chinese trade. It will use this famous brand to develop new products. The Open China and innovation policies are good opportunities for Chinese Software Companies. In the past, the Chinese government thought that software was a risk in China, so India got this good chance. Ten years ago, many developed countries were worried about giving their business to China. That is why China did not join the international community until recently. Now, however, Chinese IT firms are market leaders in some areas. They do not need to copy as they now invent.

The Chinese market potential is immeasurable. In the last five years, other countries have invested $260 billion in China. The biggest markets are real-estate and the car industry. More and more people’s lives are getting better as Chinese society develops. Chinese people finally have money to spend on luxury goods to improve the quality of life. Before, people were happy just have a small flat. Now, many consumers want to have big houses and good equipment. Some developers are even building houses with “hot springs”. Normally, if you want to have a “hot spring” you should go to a public place and you may share with people. When people buy a house with a hot spring, they can enjoy their “hot spring” at home. These luxury pastimes are a new thing in China and are another sign of the development of Chinese trade. People have money to spend on luxury items.

Regarding the car industry, China has begun to enter the age of mass car consumption. This is a great and historic advance. China will overtake Japan next year and become the second biggest car market in the world. Currently, there are 8 car owners for every 1000 people in China, whereas in  America there are 940 car owners for every 1000 people. This shows the huge potential for expansion in the market in China. In 2002 demand for cars In China soared by 56%, far more than even the rosiest projections. But in a sluggish global market, China’s demand remains mesmerizing. Few expect this year’s growth to dip below 10%. As long as the economy goes on galloping at its current high single digit clip, many expect car sales to increase by 10-20% annually for several years to come. Different people have different needs from their cars and all the major car manufacturers are building plants in China to cover this rising demand. The quality of people’s lives is getting better now. Growing losses in the industry, as fierce competition squeezes margins, are not deterring the manufacturers. As David Thomas pointed out, “people’s desires, people’s purchasing capability, the overall economic fundamentals of the country haven’t changed that much.” China has fallen in love with cars; and despite government efforts to cool the passion down, it burns as hot as ever. Everyone wants to own a car to show people their standard of living. China has entered a new era of neighborly jealousy, which is a very western phenomenon.

The WTO (World Trade Organization) replaced GATT (General Agreement on Tariffs and Trade) in 1995 and has 147 members, with the China and Cambodia being the latest to join. From this point we can see China was the latest country to join WTO. Ten years ago, it was not common to see western people in China. When China joined the WTO, developed countries became more interested in this hugely profitable market, and they invested a tremendous amount of money in China. The improvement in trade in China has also made China more cosmopolitan.

Hitherto, China still had many problems before joining the WTO. For example, China was an internationally “famous” copier and forger of DVDs, famous brand clothes, shoes; handbags. Now, all of the world’s people are watching China, and feel unhappy about this bad behavior. The Chinese government realized they were not qualified to join the WTO. They had to stop copying others products. Now the police are very tough with forgers. They want to show the world that they respect the rules of the WTO.

The Olympic Games 2008 are to be hosted by Beijing, China, the most populous nation in the world. This is a good chance to publicise China and the city took on a completely new look as it entered the new century. More people will come to visit this memorable and modern country. In 2000, more than 6.7 million tickets were sold for the Sydney Olympics and generated US$551 million in revenue. This time the world will focus on China, and it is a great opportunity  for Chinese economic development. Chinese governments are using this opportunity to promote the beautiful parts of China to get people’s attention. Then the whole world will be able to see that China is no longer a third world nation.

Chinese trade had changed a lot in the last ten years. Economic growth has been amazingly fast. China has been a sleeping giant, but is now awaking. The Chinese government and people now seem more confident and willing to do business with the rest of the world. World experts expect the growth in Chinese trade to continue for many years to come. Chinese trade will continue to grow for the benefit of the Chinese and it will meet the people’s needs around the world.

Chen Liu

MM. Most large yachts are bought by men; do you think a typical rich Chinese man would want to own such an obvious symbol of wealth?

CL. Definitely, a rich man would buy a boat, even if he never used it, just to show he is rich. Most rich people in China already have lots of cars, large houses and a few have planes, so boats will be a desirable possession when the facilities are there for them.

MM. Chinese architecture is “different”, does this mean that Chinese boat buyers will be looking for something “different”, when choosing a boat, or will they be happy with the current models on offer from the west?

CL. Chinese people love English culture, clothes, football, fashion etc and want to buy English and American. China is always ready for new things, so yes they will like current models of boats.  

MM. China is a beautiful country, with many waterways, so recreational boating is an obvious pastime. Do you think it will be popular with a many Chinese, not just the very rich? 

CL. Yes, if they have enough money. China is a developing country, this is all new and people will enjoy it for being new.

MM. China’s beautiful coasts could make it an ideal place for charter bases, but how safe is it to cruise regarding piracy etc?

CL. I think the waterways and coast would be safe for visiting westerners. It is true that because China has no welfare system, the rich are very rich and the poor very poor, so there are many criminals. Many rich Chinese would have a bodyguard for protection, but the criminals may not attack western people, because they have no idea about western people and would be too wary. They would not want to attack because they would not understand what the westerner was saying, nor what they are.

MM. Can you see any reason why boating should not become popular with the Chinese?

CL. Everything in China is government controlled and its up to them to decide what people can do, so people will only be able to boat in China, as you need a visa to travel to any other country, but there are many places to go boating within China, so this should not be a difficulty. If you were boating some way from home, you might be mistaken for a drug runner, or transporting something illegally. That could be a difficulty, but I don’t really think so, because rich people are really powerful in China and and can buy anything they want, including government employees sometimes.

One problem could be that many Chinese people do not have much confidence and they worry a lot, so many will be worried about driving a boat. The very rich people will employ a skipper to drive for them, but the people who are affluent, but not so very rich maybe cannot afford that, so may not buy a boat. Or perhaps this will be an opportunity for western companies to open schools for people to learn about driving boats.

MM. Do you envisage future problems, due to resentment and unrest caused by the vast difference between the rich Chinese getting richer and the poor getting poorer? A difference that the presence of large yachts will draw attention to.

CL. I don’t think so, the Chinese are a different people from, say, the Russians. It has always been accepted that rich people are really powerful and can do what they want and have what they want.

Also, many western people have a very poor idea of people in China. They think all Chinese people, except for the relatively few very rich, are badly dressed, uneducated peasants and that perception is very wrong. There is a middle class in China and this will grow, especially now that the Olympic Games will give China a benefit over India. Because China will host the Olympics, more and more people will focus on China and there will be a lot of investment, which will be good for developing the country. Also more people will visit for the 2008 Olympics and China will be more open to the world. All this will be good for Chinese people, because the economy will get better and better and more and more people will enjoy better salaries and more comfortable lives.

MM. In the west, a wife often has a great deal of say in a couple’s boat buying decision. Is that likely to be the case in China? Is a woman likely to buy a boat herself?

CL. China has been mostly for men because, for a long time, China was Emperor controlled and men have been considered higher than women, but women are getting a lot stronger now and there are lots of successful women. Once women stayed at home, but now a woman with knowledge, qualifications and experience and a relationship with rich people or governors can find it easier to be successful than a man. Relationships in China are very, very important and men in China love to help and listen to a pretty woman, who is also educated and knowledgeable, so yes I think women will influence the sort of boats that are bought and there will be women in business who buy their own boat.

Beijing

MM. How do you think westerners will find life in China? Will there be restrictions on what they can do? Will they have to live in designated “foreign quarters” for example?

CL. There is complete freedom for westerners, they can go anywhere they want, live anywhere they want. It is a very good life for foreigners in China because they have lots of money and a western face is good, because China is a developing country and it wants westerners to put investment in.

MM. What about tax?

CL. The government doesn’t impose tax on foreign businesses

chineseopera

MM. A businessman who is transferred to China might wish to bring a wife with him. Do you think western women will enjoy life in China? Can you, for example, explain how the wife of a western businessman might pass her time?

CL. She would have the money to do what she wants and the country will be new to her, so there will be plenty of new experiences. China has many beautiful places to visit and there are many cultural things to enjoy, like the operas and theatres.

Of course, most women like to go shopping and if someone wants to buy western things, she will find them in the shops of towns, but she can also enjoy buying Chinese things.

MM. How has the internet changed China and the Chinese people?

CL. For a developing country, China has a very high level of technology and Chinese people use the internet a lot, especially business people and young people. It is a convenient and fast way to get more information.

MM. Any words of caution about investing in China?

CL. There is an obvious danger in the Chinese economy racing up so fast and a lot of people are worried it’s going to crash. Certainly, it is growing too fast, with too many buildings going up and too many cars being produced. Already, the price of steel is rapidly increasing, because China is consuming 40% of world steel production in new buildings, new cars and other uses. Whether the economy will crash, or slow down to a sustainable level is very hard to predict.