07/05/2008 - 22:00

China’s short march to modernisation

07/05/2008 - 22:00

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As an economist I have closely studied the rise and rise of China for a number of years, but it was not until I set foot on Chinese soil that I truly understood the enormity of what’s occurring in this rapidly developing country.

China’s short march to modernisation

China is a country of seemingly endless riches. As an economist I have closely studied the rise and rise of China for a number of years, but it was not until I set foot on Chinese soil that I truly understood and appreciated the enormity of what’s occurring in this rapidly developing country.

I had the privilege of seeing this first hand last month when I joined the  Chamber of Commerce and Industry WA’s sixth trade mission to China.

What I saw can only be described as a modern day industrial revolution.

Despite being under communist rule, China has embraced capitalism, and the results have been the most remarkable growth and development in history.

That said, communist rule is still quite obvious in China, particularly in relation to the media.

One story that remains at the top of the minds of Chinese citizens I encountered was the speech delivered in Mandarin by Prime Minister Kevin Rudd – a first for a foreign leader. To the Chinese, the PM’s address spoke volumes to them about Australia’s understanding and willingness to embrace the Chinese culture, including the importance of building relationships when looking for business opportunities.

The CCI’s trade mission started in Guangzhou in the Guangdong Province – the industrial heart of China and home to the Canton Trade Fair, the largest import and export fair in China. Held twice a year on the banks of the Pearl River, everything about this event is big. To put this in perspective, the thousands of stalls take 600,000 square metres of floor space – enough to house 38 Perth Exhibition and Convention Centres. And they are currently building an identical centre next door.

For five days, thousands of potential buyers flock to the trade fair to inspect, try and buy the latest consumer goods – everything imaginable. At the end of the five-day period, all the stalls are packed up, the exhibition hall cleared, and two weeks later a second event is held showcasing a whole new range of products and suppliers. Truly China is the the workshop to the world.

What was also apparent, however, is that abuse of intellectual property rights is still evident in China, and in some cases quite blatant.

There are other downsides. The rapid growth in Guangzhou’s manufacturing base has brought with it some significant environmental challenges, with the smog so thick that I didn’t see the sun or sky during the four fine days I spent there.

Notwithstanding these significant issues, you have to admire the can-do attitude in China. To cope with the growth seen in the city and region, there has been significant infrastructure development. New highways, some running 10 to 15 storeys above the ground, assist with the movement of people and goods in a city of more than 13 million people.

While Guangzhou had all the hallmarks of a city on the rise economically, it remains a city based around heavy industry, and well off the tourist map. In contrast to Guangzhou’s heavy industry focus, Shanghai, our next stop, is a city of truly global significance.

Transformed over the past 20 years –  more than 300 new high-rise towers built – Shanghai’s vision, energy and attitude allows it to lay claim to being one of the world’s most impressive and dynamic cities.

Shanghai is China’s financial and services centre, and clearly the most logical gateway for aspiring businesses looking to enter the Chinese market.

China’s rapidly emerging middle class is on display in Shanghai, with the increasingly wealthy population of more than 200 million people seeking greater choice of consumer goods – from mobile phones, to motor vehicles and designer clothing and accessories.

Our third stop, Beijing, was different again. Since being awarded the 2008 Olympics, the Chinese political and cultural capital has also undergone rapid modernisation.

A talking point in the lead up to the Olympics has been Beijing’s air pollution. A heavy downpour during the first day there cleared the air and made for sunny days for the remainder of the time. No wonder Chinese officials are investigating cloud seeding as a way to clear the air before the start of the games.

On the other hand, traffic congestion – the other key issue facing Olympic organisers – was endemic, despite the construction of up to 12-lane highways throughout the city.

The developments in Beijing will certainly showcase China to the world, with impressive transport infrastructure and state-of-the-art buildings all complete, with the Birds Nest and Water Cube Olympic stadiums particularly impressive.

While China’s transformation was certainly evident in the growth and development of the three tier-one cities of Beijing, Shanghai and Guangzhou, outside these key locations, significant development is still required in an estimated 700 cities with a population of more than 1 million.

This provides a wealth of opportunities for WA businesses. While mining and energy exports are likely to continue to be in high demand, other opportunities are also evident – including  expertise in water, energy and the environment, which are increasingly important in China.

There are also consumer goods and services like premium wine for an increasingly affluent consumer class.

While there are always dangers in relying too much on one market, in this case there is little to be concerned over.

China may be one country, but it is made up of 30 different markets, and the majority of these offer significant potential to WA business.

•John Nicolaou is the  chief economist at CCIWA

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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