Ask anyone who has been to one of China’s big economic centres – Shanghai for example – and they will tell you that they are bustling, energetic places that overwhelm the senses with a tangible aura of progress.
That was the impression Chris Parr, partner at KSB Law, got when a previous employer handed him the job of establishing a regional base in China. The company, chemicals group Solutia, required him to visit the country on a quarterly basis between 1997 and 2001.
“Shanghai was going crazy,” he remembers. “I was travelling there every three or four months and it was changing dramatically: getting bigger and bigger and more polished, more crowded and yet more hungry every time I went back.”
Parr’s analysis chimes with the experience of Tony Caldeira of cushion manufacturers Caldeira, which last autumn established a partnership with a manufacturing business based in China’s textile homeland, Hangzhou, two hours’ drive from Shanghai.
Caldeira’s one of a plucky group of pioneering entrepreneurs to have plunged headfirst into the land of the dragon. He developed a theory that the innate Chinese culture of trade and invention was suppressed during the Maoist days to such an extent that when the shackles came off, the latent tradition erupted in a flurry of enterprise.
“I was immediately grabbed by the work ethic of the Chinese people. There’s no 35-hour week in China, more like 35-hour days,” he says. “Imagine a spring that has been coiled for 50 years suddenly being released. There’s so much entrepreneurial energy here. Most people do not realise the impact this will have on the world economy.”
And it’s not just energy that the Chinese have to offer. Caldeira estimates that on average staff cost a tenth of their UK equivalents and are prepared to work hard for their money. Employees have a thirst for overtime and are happy doing ‘menial’ jobs, he says.
But the benefits do not end there: the workforce is upskilling at light speed. Parr admits that he underestimated his business partners and was stunned by their sophistication, which he believes surpasses Western standards.
“We imagine ourselves to be superior because we have an average degree from a passable university. Many people I dealt with in China not only got exceptional grades, but had also gone to Europe or the US and aced MBAs,” he says.
Other plus points include China’s missing national insurance contributions and the fact that from a day-to-day perspective, at least, employment red tape is less burdensome than in most Western countries.
Caldeira says staff turnover is relatively high in the populous commercial regions, but with millions of people spilling into cities from the countryside every year, there is a plentiful supply of labour in most areas.
And while the Cultural Revolution stunted an entire generation of learning, younger blue and white-collar workers are more than making up for it by striving to attain ever-higher standards.
Add to this China’s vast stock of natural resources – which drive down the cost of raw materials – and the fact that demand for consumer goods is rocketing; and you have the ideal components for business, whether you’re an exporter, importer or outsourcer.
Great leap forward
With its geographical enormity, enthusiastic work ethic and pockets of already advanced industries, China now consistently ranks among the top 10 fastest growing economies in the world.
With 1.3bn people and gross domestic product growth approaching 10% last year, it adds up to a lot of potential; potential that is already being realised by entrepreneurs like you who have dared to peer beyond its borders.
Yet China is not uniform. It is a vast, variable land mass with regional dialects, currencies and multifarious methods of doing business. It has huge sprawling cities, shantytowns, seemingly endless rural wastelands; astronomical wealth juxtaposed with terrible poverty.
As a modern commercial entity China was off the world’s radar until 1978. Even now the country’s questionable political, legal and human rights record continues to dissuade many from venturing in.
Those contemplating business there must consider that principles deemed fundamental in the United Kingdom – the right to own property, for example – are new concepts in China and can undermine legal agreements as well as business relationships.