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Inside the Dragon's Nest March 2000 The "new" China. China was the fore-runner in the agricultural age, but wrestled with the industrial revolution. How are they set up for the information age? How China approaches the new open market and how they are changing to meet the changes.
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 The Swinging Pendulum
"During the past decade, Chinese cities and the rural areas have taken alternating leading roles in development like the pendulum of a historical clock", observed "Economic Outlook", a magazine published by an economic research institute in Shanghai. "Whenever the momentum swung to the rural farming sector, great changes took place." For example, Deng Xiao-Ping started his economic reform experiment with farming families in remote rural farming areas. That flicker of light instigated a wide and far-reaching economic development that China has never experienced before - unprecedented and unimaginable.
Now the tidal wave of economic development has led the cities into a mess of unbalanced development, oversupply, unemployment, idle stocks, bankruptcies, bad debts, and pollution. The pendulum inevitably will return to the rural agricultural sector once again. "The Big Show is just about to begin!" trumpeted that same magazine. This time, the recent revolutionary Life Science Development, and new Biotech development together with change in the agricultural enterprising systems will bring, yet, a new wave of wealth to the rural agricultural sectors in central and western China. "Go to the west, go to the frontier..." That familiar slogan of decades ago is ringing again, except this time the motivation comes from the attraction of the new economic opportunities.
"No (more than) three inches of plain (flat land), Never three days (in a row) without rain." That's how the people in China's Southwest, such as Guizhou and Chongqing, describe their living environment. Chongqing, the capital of China during the Sino-Japanese war, has only 0.5% of flat land. As I traveled in Eastern Sichuan from Chongqing, the sight of rural farmers trying to make the maximum use of land amazed me.
The river level rose after several days of heavy rains covering the rows of corns along its banks to barely reveal their tops. "If they knew the river level would rise and drown the corns, why did they still grow them there?", I asked my local staff. "If they don't grow there, other people will and they will lose the use of the land to others, that's why they must take the chance" was the answer. Since Deng Xiao-Ping laid down the "new system" with farmers allowing farming families the concession of the allocated farm land at a fixed return to the state and letting the families keep the surplus themselves, China immediately changed to become a surplus producing country in the agricultural products sector from an importing country.
Another sight that also amazed me was the farmers working on their very "thin" cornfield up on the stiff hillsides. The rocky mountain's stiff face had only patches of soil barely wide enough to set one foot on or to grow one single row of corn. Yet, those farmers treated those soil patches with the greatest respect imaginable. Some grew corn, others - cabbages. The sight of these people working on the mountain face high above the road resembled a massive group acrobatic show. In this populous country suffering a series of famine and grain shortages throughout its history, it is not surprising to see how hard these rural farmers try to assure themselves of sufficient food.
Being in a permanent state of fear of food shortage, and as a result of the motivation to increase outputs under Deng Xiao-Ping's new reform policy, surplus grains have filled up all of China's "reserved food storage". Now, having gotten out of the fear of shortages, China faces the problem of plenty in it's grain outputs. It is estimated that the store grains will lose billions due to spoilage while in storage to say nothing of annual storage costs. The high guaranteed buying prices that the government paid to the farmers, 30% to 100% higher than international market prices, have also made it very difficult to export these grains. Opening up subsequent to entering the WTO, will certainly add further to the problems.
Contrary to the original policy of encouraging the population in the poor western China to fight against nature by turning waste land into fertile farms, the new policy calls for the return of the farmlands to the forest in order to decrease the farming acreage and to reignite re-forestation. Thus, very soon, many of those in western China where many main rivers originated will be working to increase the forest instead of the farming land.
China fell far behind the rest of the world in the more recent Industrial Age and had made a slow start in the Age of Information Technology, after it took leading roles in the Agricultural Revolution a long time ago. Facing yet another crucial historical turning point, the Life Science Revolution, China is hoping that it will not fall as far back in this one. In fact a great amount of work has already begun to give it a significant chance to lead in this Biotech Revolution, especially where agriculture is concerned.
Having made the development of the central and western part the country's top priority, with Biotech development and new industrialization of agriculture, China's next economic boom will undoubtedly be centered in it's Golden West. Comparing to America's movement "West of Mississippi" to California and then Alaska, the Chinese Gold Rush to the West is now just beginning.
The unusual warm sun and clear day in Shanghai's early spring today made me change my plan to return to the office after another busy day. As I passed by the grand People's Plaza, the seat of Shanghai City Government, I decided to pay a revisit to the famous "walking street" of Nanjing East Road.
It was with great hesitation for me to write on this a subject. However, I simply couldn't help it! What caught my eye was an elegant one-story white building with a thick curtain wall glass front and frameless 15-19 mm thick glass doors. On the top of it was an oversized golden colored name plaque. Inside was a beautiful wooden paneled reception counter with a small plastic sign: "0.50 RMB per person each time." Without that name plaque, I would have thought it was a high-class fashion boutique house!
It could have been the wide spread knowledge and infamous reputation of Chinese public restrooms during the early days of the opening up years that have led to some special attention and extra efforts being made to reverse that reputation. Now in most of China's cities and important tourist spots, this kind of public facility has often been built in a near architectural monumental proportion! In one of Shanghai's new shopping complexes and international food center, I discovered that the public restrooms were equipped with very fine over-sized noiseless-flushing facilities - the kind you would only expect to find in the grand suites in the five-star hotels. The grandest one that I have seen in China is probably the one under the historic hill of Zhao-Bao-Shan, in Zhenghai, Ningbo, across the bay from Shanghai. I took several pictures of that palace-like monastic white structure with dark grey trimmings. Intentionally, I positioned my model's body to conceal the name sign. 20 out of 20 people whom I asked to guess what the complex building was told me it was either a palace, a temple, a mansion, a museum, or some kind of a monumental tourist attraction. So much for one of the most important necessities of life that we are least willing to talk about. Yet, it is one of the small things that indicate how much and how radical things can be changed for the better in China in these first 20 years of opening up.
On the "walking street", replacing the space that was provided for motor vehicles, are now fine ceramic and marble tiles. In the middle of the street where the double line that regulated the traffic used to be are now flower plots punctuated by marble seats for the tired strollers. Again, I could not resist allowing myself the small pleasure of taking one of those seats.
Across the street were a row of shops and stores. A twin 10-story building that houses the Shanghai First Department Store, an Itokin specialty boutique department store, and an Omega watch specialty store. A little further down are more specialty stores for various internationally branded brands. Mixed in between are also some specialty stores displaying China's own brand names. Specialty stores are one of the more popular marketing methods in China used to fight imitation, fake, unauthorized or smuggled products.
In an extension of their global rivalry, Coca-Cola and Pepsi Cola have tried to make a better impression on Chinese consumers by making themselves more visible. One of the methods employed is to buy up all the side-walk neon-advertising spots of the selected streets. Travelling down one of these "bought" streets, one would see practically nothing else but the advertising of one of these top brand beverages. Thus, one of these roads is called the "Pepsi" Street, whereas the other the "Coke" Street. Now we also have the "Seven-up" Street, the "Sprite" Street, etc.
While most Japanese products stick to their original names written in Chinese characters - for example: "song xia" for National Panasonic, "feng tian" for Toyota, and "dong ze" for Toshiba, most of the American and European products opted for more localized translated names. OMO, a detergent by an American manufacturer is "Aw-miao" meaning "surprising wonder." Avon adopted a Chinese name called "ya-fang" meaning "graciously pretty." Amway is "An-li" meaning "Secure (safe) and Good (profitable)". Pizza Hut is "Bi-sheng-ke" meaning "must win customers" (or the customers' must win!). Coca Cola is "ke-kou-ke-le" meaning "delicious and enjoyable" Pepsi Cola is "bai-si-ke-le" meaning " everything enjoyable". Volkswagen is "da-zong" meaning "the people." Suntory is "san-de-li" meaning benefits to three parties (buyers, sellers, and the others). Naming products with locally adapted names is very important. Chinese are especially keen about names. One of the local ginsengs is called "bao-ling sheng" literally meaning "the ginseng that will ensure a long life". It is selling like hot cakes amidst the over-crowded ginseng markets. Of course, part of that success was due to the millions spent to make it the top spender of TV advertising in Shanghai during the first quarter of this year.
The artistic script of this Chinese name made it difficult for me to read, - then I saw a row of English characters under the Chinese name. It said "Zhenpu Tongxun." Again, it gave me no hints whatsoever about what that flashy shop was selling. Then, as I took a closer look at the merchandise inside the glass displaying cases, I learned it was selling mobile telephones, pagers, faxes and telephone sets. "Tong-xun" means telecommunication. Why they just didn't say so, I do not know! In a small food shop in Nanchang City in the Jiangxi province, I was surprised and glad to see a bilingual white sign with red characters. "Not bad" I thought, even this small shop in this faraway city has bilingual signs. At a closer distance, the English characters read: "QINGWUSHUIDIDUTAN" That got me because I was not quite good yet at the roman character spelling system used in China. Taking a peep at the Chinese characters, I finally realized it said: "qing wu shui di du tan" which means "Do not spit at all the places (at will)." Entering a brand new superstore in Shanghai, I was looking for the boxes to deposit my baggage before entering. As the computerized deposit boxes were full, I had to look around for an alternative. Then I saw a counter with wooden pigeonholes behind which a bi-lingual sign hung overhead. The English character said "Fu Wu Tai," and the Chinese characters read "Service Counter" - (that is pronounced "fu wu tai") We arrived late in a rural town trying to find our customer when we came across a large factory with it's front gate closed. The bilingual name plaque carried these English characters: "SCSRCXDYNYJGC." My sales manager was from Thailand, could speak Mandarin, but could not read Chinese. That sign, thus, told him nothing. Coming to his rescue, I read out the Chinese characters on that sign. It said "Si Chuan Shen (Province) Rong Chang Xian (District) Di Yi (the first) Nong ye (Agricultural) Jia gong cang (processing factory)." Why did they bother putting up those incommunicable "English" signs, I don't know.
As a result of the market slow-down due to the tightening of the purse strings by many consumers, many of China's factories are tied up with mountains of unsold products. While some of these are either outdated or becoming unsaleable, others had to be kept away from the market so as not to disrupt their own "established" markets. Recently, a friend from one of the men's shirt companies told me about their excess stocks. Millions of their products must find a foreign market to sell to at a small fraction of their domestic prices in order to recoup a small fraction of the costs while not affecting its "named brand" status in China. For example a shirt that was given a price tag of 300 to 400 RMB would go for only 30. There are many other opportunities like this, if you can get by the quotas and those anti-dumping laws. Anyone? Piset
Wattanavitukul | Piset Wattanavitukul is Managing Director of P. W. Consultants specializing in Investment, Management and Trade in and with China and Human Resource Development in Shanghai and Ningbo.
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