I recently returned from two weeks in China participating in a cultural mission organized by the Washington State China Relations Council. Our visit included Beijing, Guilin, and Yunnan Province, providing a wide perspective on a large country. The China of 2011 is a dramatically different place than the China I first visited in 1985 both in the major coastal cities and in the interior.
The visit, my 15th over 25 years, left two impressions worth noting. First, China Inc. has become the world’s greatest sales and marketing machine. Second, the country is a center of entrepreneurship, from the multitude of individual street hawkers who surround every tourist attraction, to $5 Rolex watches and Apple stores (both real and bogus), to the Chinese-manufactured clothes, automobiles, and computers found in stores worldwide.
The tour included a number of factory, museum, and shopping visits. I concluded that the Chinese character must be the same for factory, museum, and gift shop. For example, when we visited the South China Pearl Museum, we found the “museum” to include a small room of exhibits followed by a fashion show of attractive models wearing pearls and then a massive room of pearl sales. We found similar examples at a jade factory, cloisonné factory, tea museum, porcelain museum, and an art museum where everything was on sale. If it were to borrow the Chinese model, the new MOHAI would be 80 percent gift shop with a few exhibits to justify the museum name.
Our tour operator had us rush through the Forbidden City and jog through the Summer Palace so as to allow time for the unscheduled “museum” and factory visits. My favorite was the Chinese Pharma, where our two-hour visit exceeded the time we were allowed at the Summer Palace. After a brief introduction to Chinese medicine, a group of doctors and nurses descended on the delegation to ask our ills and to prescribe the correct medicine. It was a hard-sell technique, similar to buying swamp land in Florida. Still, the purchases would remove the need to be a member of Group Health.
Bu Shen Yi Zhi capsules for only $100 per month came with these promises: “invigorating spleen and tonifying kidney with effects of anti-aging and lengthening the life. Indicated for physical weakness, presenility, premature whiteness of hair, breathlessness, debilitation, memory decaying, insomnia, soreness and weakness of waist and knee, dim-sightedness, deafness and diplacusis, and diarrhea before dawn caused by splenic asthyenia and sexual debility.” Joe Borich, president of the WSCRC bought a six-months’ supply when he was advised it would help his golf game by 10 strokes.
Chinese leaders call their system capitalism with socialist characteristics. While much is said about the number of engineers that graduate in China compared to the U.S., it would seem that everyone else has a MBA in sales or marketing. The result of this drive is that Americans select cheaper consumer products while complaining about the loss of domestic manufacturing jobs. For China, the result of this never-stop-selling effort is rapid growth, dramatic impacts on the environment, and the need for massive infrastructure investments.
If you think rush hour on I-5 is challenging, experience Beijing's traffic. Since 2000 the city (pop. 24 million) has grown by 700,000 persons a year. This is like adding the combined populations of Bellevue and Seattle every year. Our tour guide said 700,000 new cars were added to the roads in 2010, nearly 2,000 additional cars every day. Beijing now has five ring roads. The fourth ring road, with eight lanes, was jammed at 7 pm as our bus crawled to the hotel.
As reported by The China Daily, China is now the largest auto market in the world, having tripled in size over the past ten years. A conservative estimate is that the industry will be able to produce over 50 million cars a year over the next decade. “Vehicle production and sales in the country surpassed 18 million units last year, a 38 percent increase over the 13 million sold in 2009.” China will become the world’s largest auto exporter. The industrial policy is to both produce domestic products and attract foreign investment.
Our tour guide said that the rich wanted to live further from the downtown because of the air pollution. So air pollution drives people out and more cars are added. The growth has also impacted the availability of water. The result is a city that is a forest of 30-story buildings.
The marriage of engineers, marketing, and government support means there is a Chinese car in your future. You will be able to fly on a 919 Chinese airliner to a city, rent a Chinese car, turn on your Chinese-produced TV and watch the American Congress discuss raising the debt limit.
But China also has to confront many challenges. It has a rapidly aging society and a male/female imbalance. There are many environmental problems and growing mal-distribution of wealth. The changes in Asia are not limited to China. India, Vietnam, Korea and Japan are all undergoing dramatic change.
As you visit the factories, museums, art galleries, ancient villages, monasteries and other shopping experiences, you will see why China has become the workshop of the world. Not surprisingly, it is now also home to the most graduates of the marketing program from the UW’s Foster School of Business.
A visit to Asia arms you with information and also a wealth of questions to ask the next time your state legislator or Congressional representative calls asking for money. The leading question: Given what's happening in China, what is their strategy for America to remain successful?