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As the tiger approaches

  • Jan 9, 2010
Rating:
+5
China is coming out of its shell like a snail is. What it is not is moving at a slow pace.
 
My first entry into China was back then in August 1993. We were in Hong Kong for a short weekend but then I decided to extend it to Beijing for a week. That’s some 16+ years ago. Long before anyone would have known China was going to host the Olympics Games in August 2008!
 
So, now that it had, what’s the prognosis?
 

I had written travelogs on countries I’ve visited, from a traveler’s view of point. This is not one of those. It is one from looking at a country in its position as a global trade partner pending on some understanding of it historically & culturally. I’m not a person into politics and I don’t dwell in that faction of life. Having said that, everything that influences business in China is in some way politically rooted. No one can deny that, including China itself. It coexists. Nothing good or bad about it, it just is. When you have accepted that, then you are able to do business with less stress involved. Otherwise, it’d be a lot easier for you to stay on the other side of the turf.
 
Let’s look at China from the position of a guest. When visiting a country, one is always a guest like you are in a friend’s house for a party or function. That translates to looking at what is unique and trying to understand that; not criticizing or expecting it to be the same as at home. One doesn’t teach a friend how to educate his/her children nor does one tells a friend how to relate to his/her spouse. We may try to 'meddle' but any of us who’s wise know we shouldn’t.
 
Politics & Business
Every major policy influences the business arena one way or another. Look at it this way, it is not a government-people relationship in this country that predominates. It is parent-child relationship. In a good way. Readers from western world often disagree with this; decided against giving government that much power. Yet, China is not the only country that’s operating as such. Singapore functions as such. No one had problem with that and I don’t see why others should with China as well. Other than the fact China is now so big in its trade volumes that many partners are not comfortable. True, human rights may be a problem but it is not as big an issue as the media had been claiming. Fear will distort the reality of one’s perception and I suspect a lot of this pressure on China is rooted in the word fears.
 
Religion & Business
Another matter that has been alarming to the western world at large is the lack of religion influences on its people.  While a tiny faction in the Muslim world had skewed to the extent they terrorized the world, the lack of religion influences also is a concern to the democratic world. I’ve heard people claiming that without believing in God, a human may be immoral and won’t be constraint in his actions. Thus, you see substandard products which may harm consumers. Yes, there is a tiny fragment of that being observed but that’s because the regulatory authorities are not doing their jobs properly (the same happens occasionally in the U.S. too). It has not so much to do with religion!!! People in China are influenced by Confucianism rather than by Buddhism (which majority of the population opted as their religion). I shall not dwell on this too long as the same could be argued in the other side of the world. A few bad cases don’t make an entire nation evil. Same for Muslim countries as well as for other countries like Germany (which once was the world’s enemy), Japan and Russia (both were involved in World War II).


 

Growth
What foreign businesses and governments could not deny or find fault with is the growth of its GDP. Like it or not, the world has to contend with more than 8% GDP growth annually for the last decade or so. That means Walmart cannot afford to not be there as with all other big businesses in the world. I read some time ago Walmart’s trade alone (if Walmart is classified as a country) with China is bigger than Canada’s & Australia’s (trade with China) combined! Now, that’s something to think about! ;-)
 

 
 
Currencies & Economics
The Yuan (元) or RMB (Ren Min Bi 人民币, aka people's currency) is the official currency of the People’s Republic of China.  It is not floated (but managed with reference to a basket of foreign currencies) in the world and is now convertible at less than ¥7 to a $. What does that mean to the world at large? Well, although it’s not floated yet, it’s expected to in future. When that happens, the RMB is expected to appreciate by quite a bit, how much, God knows. For now, the government has been holding it stable albeit its appreciation yearly. So, if you are adventurous, it pays to keep some of it and for travelers, visit while it’s still cheap. It won’t be in future!
 
For those who keep their reserves in US$, it’s unfortunate. In more ways than one, it’s China’s central bank’s tough luck to be flushed with the US$. China hasnow the world’s #1 foreign reserves with over US$2.273 trillions in saving (Japan at #2 with US$1 trillion while Russia at #3 with US$448 billions). So, that’s not so great for China if U.S. cannot paid its debts and ended up devaluating its currency!!! A risky situation to watch out for.
 
The reason why Gold has been appreciating and houses in other parts of the world, especially China, Singapore, Hong Kong, Australia and Canada are doing so great is this… the fear of stagflation is dominating world investors’ mind. To protect their assets and to safeguard against hyper inflation, they have been investing in properties and Gold with a vengeance!

 
Law & Business
Last but not least, the law governing its population and businesses in China are very different from the rest of the world. It’s not similar to countries with the British Commonwealth at its root nor is it similar to the American ones. Hence, when in China, be more conscientious about what is legal and what is not. There are distinct differences. Be prepared for them. Be forewarned too. Do not expect something that’s common sense to those in the democratic countries is in this country. China’s main language and official language is Chinese. Not English. That should be clear enough but many people expect to be understood in English when in China. That’s pretty silly and fruitless. Do not talk about your rights as individual to the Chinese either. From the beginning of history, Chinese as an individual does not figure prominently in this society. Its value as a person per se is not the same as those of the foreign countries. Chinese people operate as a clan, or a group, or a society. Society dominates and anything against the good or stability of a society is frown upon. That’s how it is. This poses a major problem for Americans especially. Well, if you cannot accept that, it’d be better that you don’t venture to this part of the world, else you get into big trouble without even knowing why or how! Respect others’ house rules is something many had problem dealing with, unfortunately.

 
The Prognosis
So, are you ready for the journey? Is it too late to enter a market as large as China?
The answer is pretty obvious from many countries’ standpoint. It is a market filled with consumers, one that cannot be ignored or trifled with. What each and every individual does is up to him/her. But for businesses, there isn’t much of a choice any longer. Unless you want to keep it small and exclusive only to some individuals or countries, it is no longer possible to leave China out of your itinerary. China is here to stay… for another century if not longer. It has emerged from its cultural revolution a tiger, ready to leap! Yes, in the new decade, the Chinese will begin the Chinese New Year on February 14, the year of the Tiger. A lot to look forward to after the toiling and hard work of the Ox year.
 
Time to make that trip as all the other leaders had done so. If you have not had the chance to visit in the last decade, begin this decade to the World Expo 2010 in Shanghai. It’ll be quite a revelation! 
As the tiger approaches As the tiger approaches As the tiger approaches As the tiger approaches

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January 26, 2010
I think your analysis of China is plenty cool! I went to China for the first time around the same time you did, year of the rooster, I believe, and have been back many times since then, so I've seen all these changes as well! I was born in the year of the tiger, by the way, so I guess this is my year! :)
 
January 09, 2010
wow! impressive write up! I liked your paragraphs on religion and business, as well law and business. Great work!
January 09, 2010
Thanks, William! Wow, now that Val is no longer around, you are fast becoming my #1 fan, lol...
January 09, 2010
ha-ha. I just came across an interesting article in yahoo:
http://finance.yahoo.com/retirement/article/...ina?mod=retire-planning

any thoughts?
January 10, 2010
To be contrarian in a market like China is to be risking it without the deed. Afterall you can't really technically short the Chinese market and neither the Yuan either. China is not borrowing foreign exchange from the U.S. either, so you can't do what bankers & hedge fund did as with the Asian Financial crisis. When foreigners tried to short the Hang Seng back then in 1997, China came to rescue and hedge funds suffer huge losses. Stocks did crashed from 6000+ to 1600+ points in 2008. The guy is expecting the Chinese investors to behave like the Americans and the rest of the world; well, Chinese don't quite behave like most Americans ;-) Stocks and properties may retreat from its high but it won't crash as he claims. Not for now, not yet. If it does, there are enough people in China to fill up the gap as long as prices are low. Chinese households have savings, unlike the U.S.
January 10, 2010
Great commentary! Oh, as for me being a fan, you just figuring that out? ;-P Seriously, I like supporting the ones who have a 'zing' and passion about what they write about. The writings don't need to be perfect as long as they're coming from their 'strawberry tart'. You know what I'm saying? ;-P
January 10, 2010
Strawberry tart? Sounds delicious! Food, food, FOOD, lol...
January 13, 2010
Thank you! Hope you are enjoying your time here on Lunch! I've been to Turkey but where is Usak?
 
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More China reviews
Quick Tip by . January 07, 2010
Most populated country. Most notable architecture being the Great Wall of China. Lived here for 3 years and still loving it.
About the reviewer
Sharrie ()
Ranked #1
I'm a traveler at heart & have been nicknamed Travel Queen by friends & colleagues alike. Traveling has been my life passion for the last decade or so. As we enter a new decade, I'm excited … more
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Wiki

 China is a cultural region, an ancient civilization, and, depending on perspective, a national or multinational entity extending over a large area in East Asia.

In 1949, when major combat ended in the Chinese Civil War, two political entities emerged having the term "China" in their names:
  • People's Republic of China The People's Republic of China (PRC), established in 1949, commonly known as China, has control over mainland China and the largely self-governing territories of Hong Kong (since 1997) and Macau (since 1999).
  • Republic of China The Republic of China (ROC), established on the mainland in 1911, nowadays commonly known as Taiwan, has control over the islands of Taiwan, Penghu, Kinmen, and Matsu after losing control of the mainland in 1949.

China has one of the world's oldest civilizations and has the oldest continuous civilization. It has archaeological evidence dating back over 5,000 years. China had the largest economy for most of the last two millenia; until the 1850s when it missed the industrial revolution. Subsequently, imperialism, wars and civil wars damaged the country and its economy for most of the twentieth century. In the 1970s, economic reforms transformed the country and made it one of the major economic powers once again. China is viewed as the source of many major inventions. It has one of the world's oldest written language systems.

Historically, China's cultural sphere has extended across East Asia as a whole, with Chinese ...
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