Visit to China – Government Relations Update 3/26/2010

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The following is a rundown on my trip to china last week, which was courtesy of the American Chamber of Commerce Executives, Ford Foundation Fellowship on Regional Sustainability, and Citslinc.  I hope you fine it worthwhile.

Kristi Smith Wyatt, Chamber Interim President and Senior Vice President, Government Relations & Policy Development

China is a place I never expected to visit.   But last week I arrived in the vast country, a guest of the American Chamber of Commerce Executives (ACCE) and Citslinc, a firm that works with Chambers in the U.S. offering tours of China.    My group consisted of Chamber executives from the U.S, graduates of the “Regional Sustainable Development Fellowship” sponsored by the Ford Foundation.

I couldn’t resist.  It was nearly an all-expense paid trip rich with programming, presentations, and discussions with Chinese and American officials.    

And what a trip it was!  We learned a little about China and how American companies engage there.  Here’s a short re-cap of my visit to Beijing, Shanghai, and Hangzhou, but first a few background points about China.  

Background

Population: 1.3 billion; estimated growth rate of 0.6%.  Only one child per family, second child carries a penalty of $US 10,000.

Government:  People’s Republic of China-founded in 1949.  The 73 million strong Chinese Communist Party (CCP) dominates government.  Chinese government is subordinate to CCP.

Economy:  Third largest in the world; expected to surpass Japan within a year and will become the world’s largest economy within 20 years; preferred relocation site of global manufacturing; 40% of the labor force engaged in agriculture; self-sufficient in grain production.  GDP has grown from US $1trillion in 1999 to US $4.5 trillion in 2008.  Most Fortune 500 companies have locations in China. 

Housing:  Huge high rises as far as the eye can see give new meaning to the term Chinese laundry….most residential buildings had varying amounts of laundry extending from windows on poles, a colorful and revealing visual.  It was said that though buildings have dryers, the Chinese prefer to dry their laundry in the fresh air.  Few single family homes.   High-rise apartments and condominiums rule in the cities.

Infrastructure:  Evidence of growth and infrastructure investment is everywhere.  I heard that half the giant cranes engaged in construction globally are in China.  In fact, there’s a joke that the national bird in the crane.  According to an article in The Economist, between 2001 and the end of 2005 more was spent on roads, railways, bridges, and other infrastructure than was spent in the previous 50 years.   The same article points to an expansion of the highway system, which is second only to the U.S. in length.              

Workforce issues:  Hewitt and Associates, a large international human resources firm, provided vital information about workforce considerations in China that deserve to be mentioned.  Among them are:

National  GDP distribution-57% in coastal China/490 million population;  38% inland/720 million population;  5% in the west/80 million population.  

A booming economy – 225 million out of poverty since 1990; rapidly growing middle class 

Life expectancy is 73 – up from 67 in 198 

Health system is poor by western standards 

Paradoxes of the Chinese workforce:

1)       Large population vs. limited talent pool, i.e. demand greatly exceeds supply

2)      Low cost country vs. an expensive workforce

3)      Abundant opportunities vs. limited career opportunities

Younger citizens are highly educated.   70% of workforce in foreign-owned companies is under age of 35.  

Training Methodology-Chinese have not been trained or oriented to work as teams – problems for international companies doing business in China.  Chinese workers want to be told what to do. 

Beijing

The 14-hour flight from JFK Airport in New York was long!  Landing in Beijing, population 17 million, we entered the most beautiful airport I’ve seen.    Shaped like a dragon, with sparkling lights resembling stars along the ceiling, it’s a work of art and 1.8 miles in length.     

In Beijing, we met with Doug Whitehead of Global Environmental Institute and Zheng Wei of Corporate Social Responsibility–Asia on the topic of environmental sustainability and corporate social responsibility in China, practices gaining in acceptance by the government. 

Legal advice

The next day, a panel of lawyers from Reed Smith, LLP, one of the top ten law firms in the world, enlightened us about China’s legal climate and challenges for foreign companies.   The panel discussed the fact China has spent $650 billion on a stimulus package and it appears to be working.  “China’s Communist Government has a much better idea about how to stimulate economy than does the United States,” one of the attorneys said.    The funds appropriated were spent quickly, mostly by expanding infrastructure projects already underway, like subways and roads.     Banks lend to business because the government requires it.   Substantial interest exists in China for investing in U.S. key technologies, particularly appealing is investing in the southern U.S. because of labor climate and tax incentives.  China would like global brands, but as of now it does not have them.  Private enterprise, as opposed to government-owned companies, accounts for 60% of economy. 

Challenges for foreign-owned companies:

1)  Nothing happens without approval. 

2)  Companies have to have own people in China to monitor product.

3)  Trust but verify for quality control assurance.

4)  Capable, experienced legal representation a must.

5) China’s intellectual property laws need to be strengthened.    

The sites of Beijing

Hotel was a five-star Marriott located at the city wall in historic Beijing.  We visited the Forbidden City and Tian Am Men Square for which we were not prepared.   The Chinese Congress was meeting in the square, so access to much of the square was off-limits.   We visited the Ming Tombs and of course, the Great Wall…..despite freezing temperatures and blowing wind and snow..  It measures up to its billing.      

Shanghai

We landed in Shanghai on Wednesday morning, yet another sparkling new airport.  In fact, our group was the first to arrive in a new terminal of the recently-built Pudong Airport.   Shanghai is one large city – 20 million call it home.  It is also beautiful, really beautiful.    Some refer to it as New York City on steroids.    We drove through densely developed (more high rises) parts of the city and our guide told us it was farmland just 10 years ago!  The new buildings are stunning, contemporary structures alongside more than 1,000 old buildings city-wide that reflect not only old China but also European and American architecture. 

The Shanghai Urban Planning Exhibition Hall

Inside the incredibly beautiful building in the center of the city is a high tech model of how Shanghai will continue to grow in the future.    The model of Shanghai is vast and impressive.  Viewed from above, it is so large, I couldn’t possibly get it lined up in a photo.  Our guide lit up various parts of the model to show early development and plans for future growth, including an expansion of Maglev high-speed rail, new housing, parks, bridges, an underground tunnel, and the site of the 2010 World Expo which begins this summer and is expected to attract 70 million visitors to the city! Lights, high-tech effects, and a 360 degree theater featuring the Shanghai of tomorrow ….this building highlightings Shanghai’s urban design is pure fun.  

Delphi-Packard Electrical Systems

A short drive outside Shanghai to the Delphi plant was a real eye-opener.   Extremely clean, modern, and sleek.  This plant employees more than 1,000 employees and is located in China in part to be near the auto manufacturers and others who purchase their products.  The plant is expanding and the company’s motto is “safe, green, and connected.”  Employees appeared happy but intense – all wore handsome uniforms and company jackets.    Oh and engineers there make about US $7,000 a year.  The plant manager, originally from the Detroit area, enjoys living in Shanghai – he said he and his son are in Boy Scouts and his children attend an English -speaking school.

Final thoughts:

Never have I been in a foreign country where communication is so easy.  And I don’t speak a word of Mandarin.  But nearly everyone under 30 speaks English well.     And the Chinese are excellent at signage and of course, signs are in English as well as the native language.  The Chinese citizens, by and large, are friendly and helpful. They are obviously used to seeing Americans and other foreigners.   They dress in western style and young men and women of China look like any you might see in the streets of any major American city.  We patronized numerous Starbucks – they are everywhere –  providing  a reliable source of coffee and restrooms.  We were aware of a heightened military presence   – especially in Beijing.  In the midst of soldiers, we were careful to do what we were supposed to do and keep our thoughts to ourselves.  Some on the trip remarked that younger Americans should visit China to see firsthand what the competition of the future is. 

A related article “It’s China’s World”; Newsweek, March 22 located http://www.newsweek.com/id/234928?tid=relatedcl

Thanks to Todd Shimkus, President and CEO of the Adirondack Regional Chamber of Commerce for sharing his abundant notes from the trip.

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2 Responses to “Visit to China – Government Relations Update 3/26/2010”

  1. Go to China with The Chamber! « The Greater Kansas City Chamber of Commerce Says:

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