Tour Brings China Capitalism Into Perspective

by Jeff Hankins  on Monday, Oct. 11, 2010 12:00 am  

Long known as an isolated nation, China is beginning to embrace the Western world with Arkansas companies ready and happy to help.

China and the U.S.
Ignoring or dismissing China over objections to its government, lack of freedom and other politically charged issues seems like antiquated thinking. It's a rapidly evolving society that will continue to grow as a major force in the world economy and present opportunity to U.S. companies.

However, U.S. companies also need to prepare to compete with a country — and government — that is still getting its first taste of capitalism and is hungry for much more.

Shanghai: The Modern City
With so much new development in a concentrated area, the most modern and stunning city we visited was Shanghai, especially its Pudong district.

Just as the 2008 Summer Olympics served as Beijing's reintroduction to the world, Shanghai pulled out all the stops for World Expo 2010. The expo is attracting an amazing 400,000 visitors a day during its six-month run, but the crowd we saw was decidedly Chinese, and the event doesn't command a world television audience so it can't have the same impact as the Olympic Games.

The expo opened in May and had attracted 59 million visitors by the end of September. Chinese residents clamored to tour the individual pavilions built by countries from around the world, most of which showcased their cultures through photos, art, entertainment and food. People lined up for a couple of hours to enter the pavilions of larger countries. The U.S. pavilion was dreadful — a commercialized mess of three movies that touted the sponsors but delivered little flavor of America. Wal-Mart was the only Arkansas-based company with a display, and it emphasized its green initiatives.

(Slideshow: Click for a photo tour of Chinese culture, including the Terracotta Army and the Great Wall of China.)

Shanghai is the second-largest city in China and has the same latitude as Houston. The city is exceptionally clean, and the streets and sidewalks are well manicured with gardens and parks scattered throughout to provide limited green space. At the Yuyuan Garden, we were struck by the juxtaposition of historic architecture, an old slum-like apartment with clothes hanging on a line and a soaring office building with reflective glass.

Government-owned apartments lured residents to the Pudong area and then were sold to them for just $3,000. Many of those apartments were then sold to investors to be torn down to make way for commercial development, thus creating nice financial returns for those residents.

Luxury carries a hefty price, with the government charging an 80 percent tax on vehicles, not including the $6,000 license to own an auto. Shanghai's officially reported $8,340 median income is the best in China, but some say it's vastly understated because of the cash economy.

A 3,000-SF apartment in one of the new luxury high-rises fetches more than $6 million in a market economy that began in 1992, but the more typical 500-SF apartment is far less and typically houses three people. Foundation work is under way for a 135-story office building called Shanghai Tower, which will become the second-largest structure in the world.

Locals are just now beginning to accept supermarkets such as Wal-Mart as an option to open markets. They escape the pushiness, merchandise returns are allowed and the air-conditioned buildings are comfortable.

(Slideshow: Click for a photo tour of business in China, including shots inside Tyson Foods' and Acxiom Corp.'s Shanghai operations and scenes from the 2010 World Expo.)



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