Two important events occurred within the past 24 hours, triggering our theme for this article of both nostalgia for the past and common sense to save America today.Two important events occurred within the past 24 hours, triggering our theme for this article of both nostalgia for the past and common sense to save America today. The first event was the message we heard recently from the AmCham Door Knock Committee on the attitude in Washington toward business between the U.S. and China.
Second, I just read the latest Forbes magazine article, “The Next Decade’s Fastest Growing Cities”, and found two of those cities, Chengdu and Chongqing, being where I first lived in China when I moved here 11 years ago. My very first trip to China back in 1999 was to Chengdu and Chongqing in Sichuan Province. When told that, most people would ask, “Uh, where?” and the conversation grew progressively worse from there.
That very first night at dinner I was eating duck tongues and chicken feet, had a full massage with TCM cupping treatment on my neck and shoulders for four bucks, local apartments were $100/month and the entire population of Chongqing was staring at me incessantly anywhere I roamed, which was everywhere. Bottled water or beer was less than a dime and the U.S. Consulate Foreign Commercial Service office was making business appointments no charge on my behalf to develop business with local companies. How’s that for experiencing my taxpayer dollars at work? It’s quite a nostalgic stroll down memory lane as I decided a few short months later not to use the LAX return air ticket in my hand and officially start an expat life in China, sensing the opportunity with China’s impending entry into the WTO.
Today at Forbes, I found Chengdu and Chongqing, along with Suzhou and Nanjing on the just released Forbes magazine list of the world’s fastest growing cities and deeply appreciate my fate as one of the very few people right here in China at the creation of an unprecedented pivot in our generation of world economic history. Even sensing the opportunity back then, we didn’t know its expanding dimensions far beyond what our entrepreneurial minds could imagine or any management consulting firm research report would accurately predict. Working closely with Lu Tian Yi in the Chengdu Foreign Affairs Office I edited the English version of the program materials for the 1st Western Forum of China 2000 event. Here’s the photo below and I feel as though it’s like a rare collectible.
Representing the Phoenix Chengdu Sister City Commission, I joined the event’s Round-table discussion with then Sichuan Provincial head Zhou Yang Kan, I’m told he’s an even bigger boss now as head of the main PSB up in Beijing. The next day my photo ended up symbolically head to head with Governor Zhou himself, like Frazier and Ali in Zaire, as the front page headline of the Chengdu Daily.
I remember being stuck under protective quarantine for 3 days at the SunJoy hotel two blocks down from the U.S. Consulate because of the protests after the U.S. accidentally bombed the Chinese Embassy in Belgrade. Meanwhile, my friend David had done his thesis on the Falun Gong movement and was invited to speak about it at Harvard a few months later and we conducted our first corporate training program ever in China for Chengdu Securities. When I asked the participants to share ideas and discuss they all looked at me blankly and basically said “You want our ideas? We don’t have ideas. We do what our boss tells us.”
Save America: Export To China?
It is easy to understand that in the same way the Asia Pacific region will continue to enjoy growth on the strength and momentum of China’s economic growth, China’s second tier cities like Chengdu and Chongqing are following in wake of Shanghai and the other mainland powerhouse cities like Guangzhou, Shenzhen and Beijing. A glimpse into how that trend will play out notes a few economic factors including the comparative advantages those cities now offer of comparatively lower wages, property prices, and startup costs, local government officials being more generous in their efforts to attract new investment, plus the benefits of the greatly expanded highway and train system making travel between cities in China easier and easier as time goes on. No matter which angle we analyse it from, the country is booming and expanding with new found wealth, happiness and freedom beyond the dreams of hundreds of millions of Chinese citizens. Whether it’s in Chengdu or Chongqing, we find average Chinese workers enjoying higher salaries than ever and families who own two apartments each purchased for USD $25,000 less than 10 years ago now worth $150,000, mortgage free. Multiply that state of affairs by a hundred million or so and maybe you get the idea. The same thing happened in fact, in the United States starting in the 1950’s, but it took 40 years, not 10 years, to reach this similar point in the economic growth cycle which has now been attained here in China.
Here in Shanghai, we’ve recently enjoyed the feedback of the American Chamber Door Knock Committee after returning from their annual trip to Capitol Hill. They met with over 30 groups and departments in Washington and came away with the sense that the attitude there toward China is still persistently negative, where it is popular going into elections to take the “get tough on China” road, to blame China for America’s problems. In terms of economic opportunity, China could and should be higher on their list of priorities, yet here we are as American businesses with the advocacy of the American Chamber in Shanghai, the busiest Chamber in the world I am told, making real business happen here in China. I mentioned during the Q&A that even just in China’s lower and middle class strata, there is over USD $15 trillion in untapped, mortgage free home equity. It is reported that the German, Japanese and South Korean export to China initiatives far exceed the current American commitment to increasing exports to China.
Astounding. As was pointed out last night by AmCham Shanghai Chairman Robert Roche, politicians are narrowly and naturally focused on votes. Ok, we can understand they want to be re-elected but they can’t see that China’s new found wealth creates the best opportunity for them to get those votes? The Door Knock Committee’s message was that it is good for America to build, for example, on the National Export Initiative program, to focus on exporting more American products to newly wealthy China, that there is an enormous opportunity for them to get votes because Americans need jobs, and exports to China will create 70,000 jobs and jobs gets votes. Does anyone have a sledgehammer handy to knock the common sense into and Chinese bias out of their heads?
Here are two facts; add them up and let’s see what we have. First, we have China; wealthier than ever, swimming in cash and home equity, and boy are they out spending. Second, we have this perhaps little known fact: that Chinese love famous brands and products including America’s finest brands and products. If they could buy more American, they would. At the consumer goods level, companies like KFC, Coke, Pepsi, Budweiser, Pizza Hut and many more are achieving phenomenal numbers. At the personal brand’s level for companies like L’Oreal, Converse, Adidas, Kimberly Clark, and so many more, the story is the same. In automotive, GM and Ford are two more examples of brand quality and status Chinese love to buy.
And so, let’s be smart, American smart, and follow the money to solve America’s problems, to create jobs, to show some common sense by embracing what is now the world’s behemoth economic powerhouse that in fact, wants and has more money than ever to buy American products, no matter the cost. Take the latest clue on China from Forbes’ latest report and put two and two together to recognise how one very smart and reasonable way to save America is to export more of her great products to China.