First Impressions Of China10/4/2007
“Without India, the world is doomed to the poverty of materialism.”
The above quote is from a man named Andre who was interviewed by Edward Luce, the author of “In Spite of the Gods: The Strange Rise of Modern India.” Andre is a Frenchman who fell in love with India and remained there for the rest of his life. I have been thinking of this quote as I enter China for the first time. Although I arrived in Hong Kong, this Special Administrative Zone is now a part of the People’s Republic of China. The British gained Hong Kong during the Opium Wars, but returned it to China after their 99-year lease ended in 1997. Hong Kong developed a democratic and capitalistic system while under British rule and its economy thrived. It was a thorn in China’s side since it was used by many in the west as an illustration of how democratic principles are superior to communism. Things changed when China’s economic system began to slowly open up under Deng Xiaoping, who took over after Mao Zedong’s death in 1979. Communism under Mao had failed to work as he tried one disastrous program after the next. One example was the Great Leap Forward, in which Mao tried to industrialize China by forcing peasants to operate backyard blast furnaces to create a cumulative steel industry. Unfortunately, the steel was very low grade and it failed to materialize as a successful solution to the poverty that most people endured. As a result, widespread famine occurred since the men who should have been farming were manning the blast furnaces. A shortage of crops caused the death of 30 million people in 3 years time.
Since the reforms of the 1980’s, China has become the “Workshop of the World.” Its average income per person has doubled in only nine years, something that took the U.S. and U.K. 50 years during their transformation. During the 1990’s people often said that China’s national bird was the crane, not the one that whoops, but the one that builds skyscrapers that now dominate every large, medium and “small” coastal city. The east coast is where the government allowed the reforms to take place and the gap between the Rural West and Urban East is striking. You just don’t see this when you arrive in China for the first time. This is why I kept thinking of the quote by the Frenchman. I had prepared myself for this, just as I prepared myself for the many sites I would eventually see as I traveled. Knowing that I would travel to China after India, I forced myself to avoid the instinctive comparisons that one immediately notices upon arrival. I have to say that it took a lot of effort. I enjoyed the cleanliness and order of the airport. The influxes of people competing to carry my bags or drive me to the hotel were noticeably absent. The bathrooms were clean and the ride to the hotel was filled with scenes of a highly developed system of elevated highways that looked like a maze of efficiency, carrying a low level of traffic to their destinations. Hong Kong is a wonderful city, one of the finest in the world. It is bright, cosmopolitan and sits amid the peaks and valleys of various islands that are surrounded by the South China Sea and Victoria Harbor. The public transport system is one of the best in the world, and Hong Kong’s only true export. It is one of the financial hubs of the world, where multinational companies invest in one of the fastest growing, and soon to be largest, economy in the world. I have to admit this was a wonderful experience for a traveler ending a two-week trip to India, with nine more days in China on the agenda. However, because I knew about the engine that was driving this shiny, luxury vehicle, I kept reminding myself to be cautious. There are just as many poor people in China as in India. They are just less poor and less visible, unless one looks for them. China began its reforms 15 years before India and the level of poverty has improved. Because China is communist, the government has a firm control over society and its capital. They can build what they need, when and where they need it. One doesn’t necessarily see the people that were forced out of their homes to build the new highway, skyscraper, and luxury mall or high tech port facility. These people are not always fairly compensated, or given any payment at all. China has its warts. They just lie beneath a diamond studded band-aid. This is important to note when one is enjoying all of the wonderful luxuries the country has to offer. It is also important to be careful how one describes the experience in an online journal, which many people may use to make their own impressions of each country.
Obviously with over a billion people, there are bound to be many who have the talent to do this type of work. A country can’t be the low cost producer forever and China realizes that with increased demand, wages of factory workers will increase, just as the United States and every other country that developed on the back of manufacturing discovered. Eventually, these countries have to move up the value chain towards services, like finance, and software development. India will also need to adjust and, if they plan accordingly, may trade China for their manufacturing jobs - if the Africans don’t beat them to it. In short, patterns of development tend to repeat themselves and low cost advantages move around the world as one country develops in one area, losing their cost advantage, while another country acquires the ability to compete in that area. Successful people, organizations and nations adapt their skills and knowledge sets and find new ways to compete effectively. Tom and I had a wonderful dinner at the China Club, a high-class traditional restaurant that is a member’s only establishment. I found out later that Naomi Campbell, the supermodel, was being entertained there that night. I must have been facing the other way. Tom is one of few Americans who chose Asian Studies and moved to Hong Kong, where he has stayed for 25 years. He is an intellectual who attended Harvard in the same class as Bill Gates before getting his M.B.A at Stanford, where he graduated with honors. Of course, everyone does not have the capabilities of Tom, but one thing that we all can do is to learn more about the world, and then go see it, which is not a common characteristic of many Americans. This is going to be a prerequisite for working successfully in the more integrated world in which we will live in the near future. We sat there discussing Asia and the experiences he has had as he traveled and headed various companies like Cap Gemini Ernst and Young, a world-renowned consulting company, before starting his own investment and consulting companies. One thing that struck him as he worked around the world is that for the most part people are all very similar. This has been a common point of conversation during my trip and I have also found it to be true. Rather than focusing on our differences, we should focus on our similarities. Once we’ve connected and built a relationship, navigating our differences can be relatively easy. So I will do the same for India and China. I’ll enjoy the difference in lifestyle, relishing in the comforts of a more “developed” economy. However, I look forward to meeting the Chinese. If they are anything like the Indians I have met, I’m sure I’ll enjoy them. Chances are, they will be very similar. |
However, after Deng began his “Communism With Socialist Characteristics”, which is the Communist Party’s name for allowing capitalism to enter parts of China, things began to improve. In fact, Chinese Communism has caused the greatest transformation of any country since the Industrial Revolution changed Great Britain and the United States. It may be the greatest transformation the world has ever seen. 
I met my uncle, Tom Manning, for dinner after meeting some partners in a company he helped start called Next Horizon. The two owners, Tom Reilly and Mickey Austin, are part of a group of five entrepreneurs who began outsourcing finance operations for multinational corporations. That’s right, China is an outsourcing destination for more than low cost factory labor. This is not a well-known fact, and although I knew this was a goal of the Chinese government to improve in this area, it was still surprising to hear that these guys had been doing it for years. 