China Business Blog and Podcast

I just returned from three weeks in the Motherland.  For those of you unfamiliar with global geography – most likely my fellow Americans – the Motherland would be “Minneapolis, Minnesota, USA”.  Minnesota is the land of Scandinavians and Germans exported from their European homelands generations ago who, once deposited unceremoniously at Ellis Island where their history-drenched family names were summarily butchered, journeyed west.  They came to a part of the country that reminded them of home – flat, lake-filled and, in the winter, colder than President Bush’s mojo.  Mosquitoes the size of hummingbirds and the Mall of America were just gravy, joys to be discovered by their over-indulged progeny in later generations.  Ah…paradise.

I love being from Minnesota.  I love returning there to visit family, friends and clients.  I never tired of the common greeting in the form of a rhetorical question: “So…cold enough for ‘ya?”  I tick people off by actually answering it – “Yes, it is more than cold enough for me.  You guys ever heard of territory nearer the equator?  There might even be daily flights to someplace warmer!”  From my Shanghai office, I check the temperature in Minnesota each day during the winter and experience a guilty Shadenfreude (which, my old high school German dictionary defines as “a sense of nyah-nyah-na-boo-boo.”).

But this trip back to the Motherland was different from Holiday Retreats of past years.  When I got back there, I found myself uvula-deep in a pile of angst brought by the U.S. economy, just starting to gain momentum ringing the bowl.  Election post-partum depression could not lift the spirit and, seemingly, every day brought yet another statistic of how crappy things were (I think economists used a more technical term than “crappy” but, as I have neither MBA nor CPA, the term works for me).  But it was not just the reality of our economy bleeding out all over our nice, clean New Year … there was a psychological element as well.  Lest I fall into the Graham Trap (Phil, not Teddy) and call this just a crisis of confidence, a pseudo-meltdown of American chutzpa and the can-do spirit, I do believe that emotional state of the average American is not helping matters. I have more faith in Tim Geithner than Norman Vincent Peale to find a way out of this crisis, but a little feel-good wouldn’t be unwelcome now.

So when I got back home to Shanghai, I was still in that “mood” and was fully prepared to find the same in China.  The statistics here would certainly validate such a feeling – exports are down, thousands of factories have reportedly closed and, though no one knows for sure, GDP growth is going to hover in the mid-single digits in 2009.  Bring on the Pity Party, baby … welcome to my economic nightmare … jump in, the water is warm.

But I don’t get that same feeling here.  Sure, I could very well be clueless and, typical of many foreigners in China, the true undercurrent of what is happening here could be passing me by (it has only happened 40 or 50 times before), but the local friends and colleagues I talk to are simply not depressed.  They are cautious.  They are wary.  But they are Chinese … they have survived 5,000 years as a basically intact culture simply because they are not given to wild fits of euphoria, even in – or maybe particularly in – the good times.

So what did we learn today, class?  To be wary? To be Chinese?  No … I think it is much simpler than that (and does not involve, for many of us, a change in skin pigmentation).  Two things come to mind…

First of all, don’t rely on statistics to set your mood and vision – don’t be too happy when they are good; don’t be looking for a Paxil hit if they are bad.  In the first place, the market data could be wrong – part of what got us into this mess is that we were actually encouraged by statistics on the increase in U.S. housing sales and highly leveraged global deals.  And statistics, at best, tell us what might have already happened – it takes seriously flawed humans to interpret that data to tell us what will happen.  Again, I reference the so-called experts’ recent poor track record.

Secondly, your company is not necessarily a statistic.  Yes, there are thousands of factories closing down in China … but have you seen what those are like?  Many of them are shoddy Taiwan- or Hong Kong-owned enterprises making commodity junk of questionable quality and pushing it into the market at dangerously narrow margins.  If this is you, then yes, you are a statistic and should take immediate action to remedy this situation – I suggest quickly removing yourself from the commercial gene pool.  But since junk companies are not this blog’s key demographic, I need to assume you are smarter than this.

We can all be cautiously optimistic about China in 2009.  Yes, 8% GDP growth is lower than the 12% we have been experiencing in the past few years, but it is about 9% greater than what most of the rest of the world is experiencing.  So find your happy place, and dig down to locate your opportunity in China.  Its here.  It is not going to be reaching out to grab you; you’re going to have to look for it.  But I am guessing that your opportunities among the native Minnesotans – as nice as they may be – are going to be limited.  They are too busy looking at their 401(K)s that are sliding quicker that a Lutheran in Sunday-go-to-meeting-shoes the morning after an ice storm.

No, your opportunities are here.  And with caution aplenty and wariness radar on full blast, you will find them.

This entry was posted on Thursday, January 15th, 2009 at 5:21 am and is filed under China. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.