Conducting Business in China

This is my first experience in blogging; I would like to start by thanking Federico and Dany for their comments and support.

 This week has been quite busy with lots of catching up to do since I have just returned from China, where I was invited to participate in a training course on "Conducting Business in China" organised by the Tsinghua University, one of the leading universities in China. In a globalised world, understanding the trends and changes are key to being successful. China is clearly influencing the world scenario. Being a UKTI Trade and Investment Officer is not just about knowing our local market but also about understanding global competition and being prepared for new challenges.

As the Dean of the Law School mentioned: people that visit China for a day could write a book, people that have stayed for a month could write an article but people that have lived in China for a year could hardly write anything at all. The deeper you go into China, the more complexities you see, making it almost impossible to describe. So, after two weeks in China, I would like to share with you a few of the things that helped me to understand the country better. The first aspect is understanding that there are 3 cultures with conflicts and convergences: Confucionism, Socialism, and Capitalism. After some days I realised that their economic model is a Capitalism-Confucionism mix. One incredible experience is the prevalence of bargaining. Coming from a country where bargaining is uncommon, after getting 50% off I thought I was getting a pretty good deal, but I was later surprised to get 90% off in other items.

 In China change is cyclical and harmony is a priority. Their way of thinking is circular: with everything having an effect on the next. This is a stark contrast to the linear thinking used in western countries, where an initial idea leads to a conclusion following a sequential path. As a result, their society is based on relations rather than laws and regulations. However, the high growth that they have experienced, 9% average growth in the last 25 years, has created significant gaps. The law has not been able to keep pace with the rapid social changes experienced. There are problems with law enforcement, local protectionism, and a government with a strong presence in all areas (even in private sectors). It is very interesting to meet people in their 40s - 50s who are participating in China’s process of growth and who also expecienced the Cultural Revolution. One professor from the University, PhD in Harvard, and ranked among the top 10 leading economists in China, grew up among peasants since, as a result of the Cultural Revolution, his family (distressed diplomats) was forced to live in the countryside. He commented that it would be very difficult for him to have a class reunion due to the huge disparities among his childhood friends.

China now represents 17% of the world’s economy and is an open economy. Imports plus exports represent 70% of GDP, while in the EU the average is 50%. However, there are tremendous regional disparities, little consumption and a high savings rate (25%pp). I think China will keep surprising the world and we need to keep an eye on it.

Posted at 16:56 03 October 2007 by Maria Pia Gazzella  |  Comments[2]