12 Lessons

This is for real. The pace of development is overwhelming, and while it might appear that over-building is the order of the day, we have to appreciate China is integrating 100 million new rural people into its large and mid-sized cities by 2020. Vast new airports, high-speed rail networks, roads, office towers, concert halls, apartment blocks – the hundreds of cranes you see on brief drives – are all about where the country is going, not where it is today. China is like Gretzky – skating to where the puck is going to go, not where it is.

This is working. Yes there are the poor. Yes the VIPs are REALLY in a special category. But the rising economic tide is raising living quality for hundreds of millions of Chinese. You just need to walk a street or ride a subway. People like to dress well – and they are doing so. The young business people could be crossing the same street in New York or London. The couple with the single child are lavishing as much on that kid as you or I do.

The past really is the past. If you grew up poor in cramped old Chinese apartments and houses with the toilet shared or in the back yard your idea of quaint is pretty different from mine. To the Chinese the towers, the highways, the wholesale revamping of cities, the demolition of old neighbourhoods – this is progress. And this is good. Most of the cities I saw preserve one older district – for tourism purposes (ie business). Everything else gets modernized.

This country is looking outward and is soaking up everything there is to learn. Every government sign is in Chinese and English – the most rudimentary traffic cop’s badge is in English even if he will never speak one word of the language. The Shanghai subway system – the world’s largest – offers its self-help screen in Chinese and – English. All highway signs are bilingual. Street signs too. The daughter of the President of the PRC is going to university at Harvard – in English. This is not about the US or the UK or any historic link. This is just a smart and unhesitating assessment that English is the international language of business – and China needs to master it to move forward. So if you are going to get ahead in China you speak at least two languages – and probably three if your first language is Cantonese (which includes just about everyone from Shanghai south to Hong Kong, which includes much of the Chinese leadership).

Drop your preconceptions about cleanliness, environment, efficiency and management. Chinese cities (we were in six) are cleaner than any I know in Canada or the US. Hotels are run as well or better. The highways are better organized and smoother. Shanghai built a 30 km stretch elevated highway running out of the city centre in – one year (including land acquisition). Air quality is on everyone’s mind – including the President – so you know this is going to change rapidly.

China is not cheap. Yes there are bargains in the stores that will negotiate. But all the major brands are here and they sell at the same price they do in New York, London or Toronto. People will save to buy quality – and quality clothing is certainly on the top of the list for anyone under 40.

The opportunities are, quite literally, limitless. If you have an idea and are prepared to develop it, you will do well. The Chinese are very, very good business people – that is obvious to anyone spending time here. But take this as one example. Young professionals are travelling to Europe to – get this – bring back milk powder for their kid(s) because they do not trust local food products. For a while they would go to Hong Kong – but Hong Kong put a cap on how much milk powder you could take out of the city (2 kg) in ensure prices did not run amok at home. There is no limit to the opportunity.

Political or not, the people are genuinely proud of what is happening. Beijing is the political centre, whilst Shanghai is all about making money – quickly. You might hear jokes about the central government or the bureaucracy but it better not be a westerner telling them. The national economy was 2.2% of the US GDP in 1980. By 2020, it is going to be larger. This has been done under Chinese direction. What’s not to be proud about.

China will succeed. Too much has been accomplished already for the transformation to fail. The next step will indeed be more difficult than the previous – the change from an economy driven by massive infrastructure investment and capital spending to a more balanced, western-style economy where the consumer is an equal driver of jobs and growth. This change has to come at the same time as the population balance becomes significantly more urban – so the transition is complex. But I would bet a lot of money it will happen successfully.

About that democracy thing. Yes, it is important – for us. And for the Chinese middle class too. But vastly more important in China is social stability (just remember your history of China from 1840 through to 1980 – 140 years of more or less constant conflict and economic collapse). Democracy is trumped by the need to achieve some measure of economic fairness for 1.3 billion people – a task that is only half-done. We westerners find it hard to understand but the well educated and prosperous Chinese is under no illusion that this transition (which involves vast change: consider just job creation let alone schools and improved food) requires strong central direction. Increasingly it will be done by a competitive private sector, but it will be planned and shaped by a strong central government more or less immune to political partisanship (and those central government planners will be among the world’s best educated and best performing bureaucrats).

If you do not understand what is happening in China today you cannot understand your world. I cannot emphasize this enough. And I am ashamed to say it took so long for me to get here. The context in which you see the future of the US or Europe or the Middle East is, I believe, meaningless unless you can factor the advance of China. China is not the future, but its impact on the future has to be understood. Here is one more example: There are 30 million people in prosperous Shanghai and just 8,000 licenses to purchase a car were put up for auction this month. What will happen when the 25 million consumers without a vehicle can purchase the electric car of their dreams when they want?

The 12th lesson will require a bit more thought – I am still digesting a most remarkable experience!

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