Visit to China

I visited China with a group of Hope College students during spring break. We visited a number of businesses while there, learning a lot about business in China. In Beijing, we visited Amway Asia, Super8, Motorola, and Sinochem, a state-owned enterprise. In Shanghai, we visited Dow Chemical, GM Asia, Gentex, TRW, and JCI. Some lessons learned:

China's perspective on their history over the last 150 years is that they experienced several "humiliations" at the hands of western powers, including two Opium Wars, the Boxer Rebellion, and the Japanese invasion during World War II. China can use a "nationalistic card" at almost any time. China wants to be treated with respect and not as one subjhgated to the West. Face matters.

China is trying to develop faster than any country has ever done. This involves several strategies. The process began thirty years ago when China opened up to trade. They had about one billon people, but 900 million were farmers. Today they have about 1.3 billion with about 600 million farmers. Urbanization has taken place by cities expanding geographically some amout each year.

According to a historian we met, many service workers in Beijing are "illegals", i.e. they are from rural areas and do not have the documentation needed to live in Beijing. There is a huge disparity between rural and urban areas in terms of income and education.

China sets goals, involving a series of five-year plans. The want to achieve urbanization of 70% of the population by 2020 and are trying to achieve this at the rate of 1 percent a year. They set goals for economic growth, extending development to the western provinces, industrialization, and so on. They acknowledge that pollution is a problem but have the strategy of grow first and then clean up.

Many American businesses there are part of joint ventures. In some industries, a foreign firm cannot operate in China except as part of a joint venture. An important example is automobile production. An American firm has to be in a joint venture and the Chinese firm has majority control. Joint ventures are not required in auto parts so Gentex is not a joint venture, although TRW and JCI are involved in joint ventures.

I suspect much of the data coming from China is inaccuate. They set growth rates and always make them or surpass them slightly. On the train from Beijing to Shanghai we passed some cities that appeared to be largely empty of people. A lot of construction has been done that appears to be unnecessary. Still, great economic gains are clearly evident, especially in the number of autos on the roads. We were informed that about 2000 new cars are on the roads in Beijing every day. The scary thing is that most of the drivers are new drivers and don't have much experience. Rules of the road seem to be suggestions at best.

I lived in Los Angeles for four years, and the pollutoin in Beijing is much worse than any I experineced in LA. Shanghai was a breath of fresh air--literally and figuratively. It would have been intersting to get into a more rural part of the country, but we didn't have time. It was a fascinating trip, and one that impacted our students greatly.