Packaging required

A producer of rice wine in Zhengzhou, China wanted to protest against the elaborate packaging of bottles on the occasion of holidays. In the culture of gift giving (and corruption), the packaging is sometimes as luxurious and costly as the content.

To protest against packaging, the Jixiang Ruyi Tobacco and Alcohol Company had planned a mass Christmas Eve nude run through the streets of Zhengzhou, offering the 284 prospective participants 10,000 yuan in cash and prices (around 1,000 euro). The streakers had to be under the age of 30 with 'healthy bodies' and 'regular features', Reuters reported.

But the police didn't like the idea of no packaging at all and prevented the run and the naked publicity of the liquor company.

In more secluded quarters, nudity is however becoming more accepted, as shown by the girl with the braille script written all over her body (see picture on the left). It is not known whether the blind were actually allowed to touch the script...

Gang of 8 in Beijing

One of the most high-profile U.S. government delegations visited Beijing this past week, headed by Treasury Secretary Henri Paulson and including Federal Reserve Chairman Ben Bernanke. In all, eight American ministry level officials. Their demand: revalue the yuan!

“Oh no, we won't”, the Americans heard the Chinese say, down from President Hu Jintao to Supreme Negotiator Madame Wu Yi and further down the ranks. The U.S. should know by now that pressuring the Chinese won't work. Sure, Beijing will let the market play a bigger role in determining the exchange rate of the currency. It will promote consumerism and better protect intellectual property rights. And the U.S. government promised to advise its people to save more money.

All promises which are rather difficult to fulfill by Christmas. The high-powered 'strategic economic dialogue' ended without tangible results.

And still, for both parties, Chinese and Americans, it was a win-win situation. Paulson can tell Congress that the Chinese listened to the American point-of-view. Th Chinese can tell their people they didn't give in to American pressure. And they can continue talking next year in June in Washington.

Better to talk than to make war. Let the markets sort out the economic problems. 

China 5 years in the WTO

Yesterday, December 11, China marked the fifth anniversary of its accession to the World Trade Organization (WTO) and the end of a five-year transition period.

In the past five years all economic indicators showed a remarkable rise. GDP-growth, imports, exports, foreign direct investment, foreign exchange reserves and per capita income all increased substantially. GDP nearly doubled in the past five years and China became the world's fourth largest economy and third-largest trading nation. The average tariff rate has dropped from 15.3% to 9.9%.

As Cary Huang wrote in the South China Morning Post “China has gained more than it has lost and paid much less than had been feared five yeas ago”. Director Deng Hongbo of China's WTO Affairs Center commented that “no country has benefited more from WTO membership than has China” and that “WTO membership had changed China dramatically”.

But now that the transition period is over, China also faces still more pressure from its trading partners to open up even more and to make it ever easier for foreign companies to penetrate the Chinese market or to set up production facilities for export. Protectionism is rising especially in the U.S. The past five years better prepared Chinese businesses to face the global competition while it becomes more difficult to stop or reverse China's further integration into the globalized world economy.

It is time for the European Union and its member countries to grant China market economy status. 

A labor of spin

Yesterday Chairman Serge Janssens of the European Chamber of Commerce in China called a press conference in the Kempinksi Hotel in Beijing, prior to organizing a glittering Charity Dinner where a seat at the dinner table set you back 850 to 950 yuan (92 euro or 121 dollars). Sure, proceeds will go to a good cause, but it's also another occasion for the rich to wallow in luxury. Wearers of jeans and sneakers will be stopped at the door.

The Chairman didn't show up at the press conference and no apology or explanation was offered for his absence. And so it fell to Secretary General Giorgio Magistrelli to explain to the 10-odd journalists that the chamber was fully supportive of Chinese lawmakers' efforts to draw up a new Labor Contract Law. The Chamber also advised the Chinese government to better implement its existing laws.

That's it. Finito. Spin spin spin...

The Labor Contract Law has not been finalized yet, so nobody knows what the final text will say. But some commentators had suggested that the European Chamber was not happy with the way things were turning out because better labor protection would endanger the competitiveness of companies producing in China.

Magistrelli wanted to set the record straight. European companies are supportive of the new contract law, they are not in China because of the cheap labor, but because of the market, he lectured.

Well now, that is at the very least only partially true. The Chinese government is trying to ban Dickensian child labor, infringements on work safety rules, withholding of payment of salaries and other unlawful practices. Most European companies operating in China are indeed not guilty of those practices, which may be found at some local companies or companies with Taiwanese, Hong Kong, overseas Chinese or South Korean investment.

But going so far as to say that European companies don't really care about there competitiveness in China because they are in it for the market is spin that nobody is going to believe.

Inviting foreign correspondents to a press conference to only spin the spin is disingenuous. 

The debacle at VW Vorst

Another social drama unfolds in Flanders. The car plant of Volkswagen in Vorst is doomed. Three to four thousand employees will lose their jobs, thousands more working for suppliers of VW will also become unemployed.

The management of VW clearly doesn’t know how to manage. In China they ‘managed’ to lose market share in a big way, from around 50% a few years ago to 18% today. VW is a loser.

So what can the hapless employees do? Well, find a dynamic car manufacturer to take over the factory. Where do you find them? In China! Chery, Geely, FAW, SAIC, they all want to expand beyond the Chinese border. Sure, manufacturing is cheaper in China than in Europe, but they all want to conquer the European (and American) market. They can’t do that by only exporting. They will want to produce in Europe.

Flemish politicians, workers of VW Vorst, get on the Hainan Airlines red-eye flight to Beijing and start talking to the car manufacturers of the future. And damn the Germans! 

Something to Crow about

I have recommended Carl Crow’s book “400 Million Customers” to many of my friends. It is an extraordinary book about doing business in China, written in 1937 and still relevant today. It is certainly in my personal Books Top 20.

British author Paul French has written a book about Carl Crow and presented it tonight at Beijing’s The Bookworm. Paul is a gifted and witty speaker. He introduced his research on Crow, how he found out about the existence of the Crow Archives at the University of Missouri and about trying to invent a possible excuse to justify a trip to Missouri. Until a casual acquaintance planned a trip to Missouri anyway and copied valuable material for Paul French.

What I didn’t know was that “400 Million Customers” is the most widely read book on China, translated in several languages. It was reprinted in 2003 and is still available at Amazon. When I read it two years ago, I didn’t know it was such a famous book, but felt it was indeed remarkable.

Now I can’t wait to read Paul French’s book “Carl Crow – A Tough Old China Hand”. If French’s writing is as good as his talking, it’s going to be a hell-of-a-read. 

“Do your homework”

A delegation of Flemish businesspeople arrived in China to look for business. Most represent small and medium-sized enterprises in the environmental sector. Flanders Investment and Trade (FIT) organized a lecture at the Belgian Embassy with Gilbert Van Kerckhove of Strategy4China. Gilbert is one of a hard core of Flemish ‘old China hands’. He knows what it means to do business in China.

His major recommendation is “do your homework” before coming to China. What exactly does that mean, asked somebody in the audience. A very good question indeed.

Gilbert replied with a series of questions of his own. Ask yourself what is the unique selling proposition of my company? In precisely what aspects am I better than the competition? Why exactly should the Chinese buy my products or services? And, can I still make a profit? Asking yourself those simple but crucial questions may prevent a lot of problems.

Good advice doesn’t have to be expensive. In this case it was free.