7 Days in Shanghai
by
I must admit that after 7 days in Shanghai I do think differently about China. And that’s a good contradictory statement to begin with as it is like saying your can make you mind up about the Netherlands after visiting the red light district in Amsterdam.
But what I concluded without a single doubt in my mind was that the West is in trouble: these guys are clever, they are big and they have no emotional attachment to equality. All arguments about human rights and equal rights have been placed aside for the achievement of the greater long-term goal; i.e., it’s better to pay people a little than to pay them nothing; it’s better to give people no rights than to risk the positions where they might have too many rights. These are the factors that are “weakening” the West in this very cold business world. And these are the factors that make China absolute. And what is worse is that the West falls for this “Hook, Line and Sinker”. The West gets suckered into the position of “we need to help them, because if we don’t the ‘people’ will suffer even more.” And you can clearly see that this becomes a self-fulfilling prophecy.
The thing that struck me during the entire trip was that these guys are in-charge. I always got the feeling that these guys think big and they are going at the problem in a big way. I just had to look at the roads and the hospitals and the buildings to see the “invisible” hand of the state. And I think this was the crux of the matter. It’s not as though the West does not have the same problems. It is that the West attempts solutions through market forces and at least attempts to get everybody to think the solutions are a good idea. In China the government decides and it executes. There is absolutely no worry about the next upcoming public elections.
On the flight back home I had the following thoughts. I think this might be how many people leave China. I hope people leave taking a bit of everything but I fear that most people leave with a very focussed point of view. And looking at the number of very large global corporations that have invested and failed miserably in China, the latter point of view might be closer to the truth.
As an introduction I started out
thinking:
There are four types of information activities: the first three have no information; incorrect information or too much information. None of these first three types gives you the right answer but they do tend to keep you very busy. I thought that this would be the major similarity between the West and China. In China they believe in providing no information or incorrect/tainted information and in the West they believe in providing too much information. In both cases you are left with a feeling that you don’t have the right information. And in no case do you have the feeling that you have the fourth type of information: that is, the correct information.
Based on the above I had the following
thoughts:
I believe there are four types of visitors to China. (And I specifically exclude the coach travellers):
€ The Pessimist
€ The Romanticist
€ The Idealist
€ The Realist
Firstly: The Pessimist: This is the person who makes a couple of quick calculations. He soon discovers that if you want to give 1,3 Billion Chinese a quick Western “upgrade” you’re going to be needing a lot of wood, paper, petrol, roads, water, etc. He quickly jumps to the conclusion that there are only a few ways to get these resources and not all of them are peaceful. He also quickly makes the jump to thinking about all the people in China currently watching TV and seeing the Western news and all the things that you can have in the Western world. He thinks about all the people getting older and the fact that on average every working Chinese would need to support four pensioned Chinese. This person is scared and leaves China buying long-life milk and building bomb shelters.
Secondly: The Romanticist: This is the person seeking the unknown. The person that wants to get to know the unknown (for example, that you can get much much more than just a massage from the massage lady in the hotel). This is the person that sees 1,3 billion people and thinks that with that many people you MUST be able to trade profitably. As the recent past has shown this type of person is not very successful in China and the number of global companies burning their fingers are many more than those who are making some money in China. And here again I see the very clever ways that the Chinese have gotten the West to pay for hospitals and schools and environmental projects. And always the West just gives because this type of person believes the returns will eventually arrive. This is also the type of person buying apartments in Shanghai with the believe in long-term growth while not knowing that property rights always remain in the hands of the government and property usage rights expires after a maximum of 50 years. This person leaves China very poor and with the idea of writing a book about his Chinese dreams.
Thirdly: The Idealist: China is a big country. It did not just get this big. And believe me there are some people (Ask the Tibetans) who would like to see China a little smaller than it is today! During my visit I asked a number of people “What about the workers?”. What about the people and the human rights of people? When will they get a say in events? And believe you me that every time the answer was very clear. The people in China are the machine or the engine, which keeps the current economy running. When China says it has “Cheap-Labour” to provide to the West they are talking about “cheap-labour” and they have no intention of ever improving or changing the fact that the labour will always remain cheap. Again you see the hand of the government in every SOE (State Owned Enterprise). They might only have 54% of Chinese business, but it is a very fixed line from the government through management to the employees. This person clearly also buys long life milk but it spills on some big square in China when he walks in front of a tank.
Fourthly: The Realist: (And I think I might be in this section.) It is the person that thinks China is different. It’s the person who sees and knows China has problems and that the problems are big. He sees that the problems are rooted into the fundamental structure of the country. He also sees that China has potential. He sees that there are clearly many people with cash; people who have had nothing else to do with their money than just save it. He clearly sees that there are people who want to buy (if they may) However this person also sees that China has as much to give the West as the West has to give China. (And we are NOT referring to cheap labour!) China has the opportunity to prevent the problems that the West is currently struggling to resolve. This person enters China to learn and to trade. And this person leaves with just as much goods/knowledge to sell in the West as what he arrived with in China. And he makes lots of money on both sides.
Thus in closing I have to leave China holding onto the thought that at the end I am still a humanitarian. I truly believe in the right of man. I truly believe in the equality of people. I believe that it is the fundamental right of every person to think and do as he wishes… as long as it does not influence the other persons rights. I truly believe that if you are doing business in the West and you are applying one set of standards you cannot go and do business and apply a different set of standards. I believe there can only be one way. I do not think companies can get away with the exploitation of cheap labour and justify it by saying “It’s China, so it’s ok”.
Maybe the crux of the matter is the fundamental difference in our basis of logical thought. In the West (I believe) our thoughts and logic are rooted in our Christian past while in China it is rooted in the Confucian principles. And I know now, after visiting China that these two fundamentals differ substantially.
Thus as I am flying back to Amsterdam my impression is that China is just another country with potential and with problems. And just as you do not rush an Italian during lunch you do not give your business card to a Chinese with only one hand. Basically respect is what it is all about. And respect counts everywhere. (And if you can count it you need accountants.) My visit to China just helps me realise that respect and understanding are human factors and cannot be hidden under Western laws. And China has helped me realise again that if you want to be a businessman you have to think and act like a true entrepreneur.
And so in closing I would think it very important for everybody to visit China. After all, it’s not bad; it’s just different.
Gerard Bredenoord works for an international accounting firm. He was born in Cape Town, South Africa. A qualified chartered accountant, he has lived and worked during his professional career in the US, Canada and Belgium. He currently lives in Belgium and is completing his MBA at the Rotterdam School of Management.