Entries: Business & Economy

China: 30 More Years of Growth

One of China’s leading economists is projecting another 30 to 40 years of dramatic growth in a country already enjoying the world’s most improved economy.  David Li heads the Center of China in the World Economy at Tsinghua University.  He says China is driven by a strong human desire to improve living standards through hard work. “The typical Chinese worker now sees the possibility of a much better life,” said Li.  “They are willing to work hard to improve themselves.”

China’s gross domestic product—the total of all goods and services—in 2006 grew by a remarkable 10.6%.  Global domestic growth is at just 3.5%.  China’s 1.3 billion people have helped make China is the fourth biggest economy in the world.

Professor Li expects the double digit growth of recent years to slow to about the five or six percent range, but he says China is still on track to grow until perhaps 2040.  He says the only thing that might slow economic growth in China is major political problems.

The average Chinese worker currently makes less than $2,000 per year.  Li says he anticipated that may rise to $6000 per year.  Two Chinese workers at a American factory in Suzhou, China told me they can see their economic status is better than their parents. 

Illinois Business Growing in China

The number of Illinois based companies doing business in China has nearly tripled in the last five years.  The head of the Illinois Trade office in Shanghai, Zachary Zhao, told me there are now 300 Illinois companies operating in China.  In 2002, that number was slightly more than 100.  Zhao says it’s more than low labor cost that entices Illinois companies to move to China.  He says the opportunity to market their product to China’s 1.3 billion population is hard to pass up. 

One of those companies operating in China is Littelfuse, based in Des Plaines.  I visited Littelfuse’s biggest and first Chinese facility in Suzhou this week and spoke with the head of Asian Operations.  Dan Onken is a UIUC graduate who grew up in Piper City.  Littelfuse makes a variety of circuit protection products in Suzhou, west of Shanghai.  The fuses go into cars, trucks, consumer electronics, cell phones, and just about everything electronic.  Littelfuse makes one billion fuses a year in Suzhou.  Plant manager Galen Song says there are more than 10,000 western companies with facilities in the Suzhou area alone. 

Peoria-based Caterpillar is another company that’s been in China since the middle 1970s.  CAT has 18 facilities in China and just broke ground on a new one in Wuxi.  CAT’s CEO says China and its other Asian facilities are an important component in the company’s ability to produce profits.  China now accounts for about 2.5% of the company’s total sales.  By 2010, the head of CAT’s Asian operations says China will make up 10% of corporate sales.  CAT’s domestic sales have been sluggish lately.  China’s fast growing economy--at an average 10% GDP per year--and improvements in infrastructure have increased demand for Caterpillar’s earth moving equipment and diesel engines.  CAT is so big on China, it moved its Asian headquarters from Tokyo to Beijing this past fall. 

Caterpillar Building in downtown Shanghai

"Hit the Ground Running"

At the opening of our trip, between settling in and contacting sources, my woes of jet-lag and culture shock were overridden by a finger on the keyboard and another on my cell phone’s keypad. Overseas reporting can be a daunting task, as my peers and I have very quickly discovered, and travelling to a slew of locations throughout the city of Shanghai can make it rather easy for a student-journalist to become overwhelmed with his/her research goals. 

Over the last four days, I have been doing my best to arrange for daily interviews with experts, professionals, or students, in my attempt to examine the underbelly of what outsourcing of US labor markets to China means.  “Hitting the ground running” has been the journalistic motto at the opening of any new week, and we have all done our very best to adhere to this, and have.
Through a number of email and telephone exchanges while in China I have been able to speak with a handful of Fudan University students who have been more than willing to share there educated, and in some cases radical opinions of the Chinese government and other public concerns.  Other notable sources have included, lawyers, graduate professors, UIUC students abroad in Shanghai, Motorola reps, US reporters, and members of the Shanghai Overseas Returned Scholars Assocation, otherwise known as SORSA.

Understanding the engagement of the US and China in global labor and trade markets has closed many of the cultural gaps that we were once familiar with, particularly within each respective nation.  The cell phone has been the tool that college students are using to close these gaps, in a country like China where there are 32.7 mobile phones for every 100 people.  A student at Fudan University shared some thoughts on these roles of international social stereotyping,

“I am not sure what Americans want to believe about Chinese youth, but in many ways, we have become the same people.”

The statement followed a conversation of increased telecommunication and cell phone use on a college campus.

Many of my interesting encounters with Chinese everyday life have come before my interviews, in transit. Perhaps budding is the incorrect term to describe the technological developments in China over the last decade, as this country has been quick to assume it’s role as a pioneer in electronics.  On a taxi ride home from Fudan University riding in one of the standard-issued Volkswagen Santana cars, installed plush into the headrest, facing the backseat was a touch screen interface.  Through this interface the back seat patrons and I were able to surf a fixed set of web pages designed to cater to all tourist-like needs.  Myself and Sam Unger, put together an impromptu piece on this technology via digital camera video. 
It was moments like these that simply blew my mind, particularly when I thought about how far behind any taxi in the United States is behind it’s Chinese counterpart.

Tomorrow the group and I will take a day trip, to Zhouzhuang, one of the most famous water townships in China, located in Kunshan City.  Before the trip and all night following the trip, the group and I will be scratching our notes together and making the numerous phone calls and emails that will help us “hit the ground running” for the new week ahead of us.

Negotiating for Shanghai Bargains

Shoppers looking for real bargains in Shanghai often end up in the Fenshine Fashion and Accessories Plaza in the central part of the city.  The four story shopping zone features hundreds of small booths where vendors offer inexpensive items with brand name labels, such as Chanel, Prada, Boss, Rolex, Converse, Oakley, Coach, jewelry, luggage, etc.  Most shoppers know the items are poor imitations of the real thing.  The quest for shoppers is bargaining with the shopkeepers for the absolute lowest price.  It is this art of negotiation that makes the shopping experience unique.  For example, a shopper looking for a Chanel bag, might hear an initial sale price of 1,200 yuan, but negotiate with the clerk or shopkeeper to lower the price to 150 yuan ($91 US to $11).  Listen to some of the negotiating below.

Audio of negotiation with shopkeeper:
Click to experience this media file | Right-click to download

3 hours 36 minutes and counting until mission start

Better late than never - and so I finally scribble some words onto the blog. Haven’t slept much the last few days - no I didn’t party but I tried to get some additional things moving. So I went to Chicago about 23 hours before our departure from Urbana to meet some Chinese soybean buyers. They spent over $ 2 billion on their shopping spree through the midwest. But unfortunately most people were more interested in lunch than in talking to me. Yet in the end I got what I needed an interview during which my lunch got cold.