Friday, August 27, 2010

The thing about China...'s full of Chinese people!

When people ask me about my trip I always start with that line. It's great to see people's bright and expectant face transition into a patronizing mocking look that just screams "Oh, Erik. Of course it is." Then I give them a little anecdote: NYC gets 36 million tourists every year. That's a lot of people, and people love NYC right? Beijing gets 504 million tourists every year. And 500 million of them are Chinese. The vast majority of which live in their village all year long working on their family's farm, or toiling away in factories in the coastal cities. And once a year they pack into buses and visit Tiananmen square, the Forbidden City, The Template of Heaven, and the city's various other sites.

That little tidbit usually shuts them up. To actually understand China you really need to go there and see it for yourself. It operates at a scale that even Americans, in the third largest country in the world, cannot comprehend. Beijing has a permanent population of 16 million people, but the officials don't even know what the actual population is! There are between 4 and 6 million migrant workers living temporarily in China at any given time--that's almost the entire population of NYC moving in and out of the city every year.

The streets are choked with people, bikes and cars. We didn't even see the sun for 11 days because of the smog. The entire country truly is a world unto itself and you cannot comprehend it just by reading the drivel produced by the Western news media. And certainly not the Western business media. If you believed the Wall St Journal or CNBC you'd think that China had already "won" and everyone is driving around in a new car talking on their iPhone. The reality is that 2/3 of the population still lives on about $800 per year. They are fouling their air and their water in the name of economic growth. They then take their paychecks and lend it back to us so we can buy more of their stuff.

My first significant experience with China happened on the flight from JFK to Beijing. I sat in the last row of the Air China 747 in the middle row aisle seat, with two empty seats between myself and a Chinese woman. The doors closed and I quickly realized I'd hit the jackpot: a 13 hour flight in a four seat row with just two people. As soon as this realization hit me the woman to my right had proceeded to stretch herself out, taking up both empty seats and securing herself almost a full sized bed for the duration of the flight. I'd read that the Chinese are aggressive, and seek to fill the rare empty spaces that they find in their cities, but this was too funny. If the plane had been headed to Frankfurt I feel confident that a glance and an unspoken nod, exchanged with the polite German to my right, would have been all that would be required to negotiate the splitting of the seats between the two of us. Not so with this particular Chinese woman. I was too slow to react and she took full advantage of it. Perhaps I am over generalizing, but I see an interesting analogy with the state of the world today. The developed world is fairly static: America, the UK, Germany, Australia, and the rest of the world all have their established roles. We know how Germany fits in to it, we know how the US fits in to it. Where does China fit in? We don't know how China's role in the world will develop, and I'm convinced that China doesn't know either -- yet.

After the trip the incident was given context: China isn't playing by the rules that have been established by the developed world because China is still very much a developing country. 800 million people live on less than $800 a year. Their cities and countryside are polluted and no one, not even the Chinese, can drink the water. But everyone is excited about China these days and no more so than the Chinese.

For every factory being set up by a Western multi-national it seems that there are three being setup by a Chinese company, doing the same thing, with an even lower cost structure. Jack Perkowski sums it best: A Westerner in China looks at a 100 Yuan bill and sees $14; a Chinese looks at that same bill and sees $100. That perception, while simple, colors how both sides do business in China.

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