64 | CHINESE RENMINBI WORDS | Smart Currency
The Chinese invented paper money. Now they are collecting huge amounts of it! How are they adjusting to their new-found wealth - and what does the future hold? If you are thinking of doing business in or with China, how will you get paid and how will its unusual way of doing things impact upon you?
China is now such an important “player” in the world’s economy. A good friend of mine describes how, when he first did business in China over 20 years ago, he used to travel for miles through countryside, seeing
China: Another Dawn I
t is truly remarkable the change that has happened in China since the turn of the century and how
only the occasional building. Each night he had to eat at the Communist Party headquarters. He now does the same journey and there isn’t a blade of grass to be seen, as buildings cover every yard from the airport to where his partner firm has its operations. He also has a wide choice of places to eat.
My father often quotes to me the statistics on how much power capacity the Chinese have been adding each year for the last 15 years and how the annual addition exceeds the total UK capacity. Truly amazing and frightening as it highlights their commitment to industrialisation on a mind-boggling scale and to a level never seen
Daily Exchange Rate USD/CNY March 2013 6.32 6.3
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anywhere previously.
Last month, I wrote about the dawn of democracy in Russia and how this changed them from being a backward country lacking in commerciality into a very key and signifi cant emerging market. What has happened in China dwarfs that which has happened in Russia, and China has at the same time maintained its one-party state. Is this likely to change any time soon? I think the general feeling is that this is unlikely, so long as the authorities can maintain economic and employment growth, and the population continues to see improving living conditions. So how can a communist state achieve such a thing? I think we have to take account of the Chinese’s commitment to hard work. I remember reading the book by billionaire Jim Rodgers, the former business partner of George Soros, called Investment Biker, where he recounted his tales of travelling through Russia and then China, and how he contrasted the differences
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“What happened in China dwarfs what happened in Russia, and it has maintained its one-party state”
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in work ethic. He had no doubt that China was the place that would succeed. And this work ethic is still very much to the fore today. US President Barack Obama
identifi ed how education was one of the key “battlefronts” in world trade and how the US had to take up “arms” in its battle against the Chinese and their commitment to education. Again, the friend I noted earlier has told me that his Chinese partner would only employ people at a middle management level and above who had at the very least a masters degree if not a PhD. Wow! So why did Chinese growth take
off? The catalyst seems to have been the availability of cheap money in the Western world in the early 2000s. This created huge consumer demand for goods worldwide and the Chinese set about supplying most of these goods. They ensured that they were the lowest cost provider and as such
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www.opp-connect.com |MAY 2013
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