It was a country which I was eagerly looking forward to visit for quite some time simply for 3 reasons. One, Seeing is Believing. Around 1990, the GDP of India and China were almost similar. Today 20 years hence, China’s GDP is 2.5 times bigger than ours! Was keen to see this miraculous change. Two, my trip to China twice in the past got scuttled and hence that added to the eagerness this time around. Three, was keen to know how a communist country has successfully “manufactured” Capitalism?
It was a short trip that too on business to Shanghai with little free time to discover the city fully. Nevertheless that time was enough to feel spell-bound some times, amazed most of the times! The view of the city while landing reminded of Singapore with pretty views of symmetrical roads, tall buildings, and manicured golf courses –in short features of a planned city. Once out of the airport I could see a sudden rush of the local people to smoke and poor me I was engulfed in a chamber of Carbon Monoxide! With 350 mn. smokers, China is the smoking capital of the world. Later on I would read that smoking related diseases cost China up to US$47.6 bn. every year! (The Ministry of health was intending to include Anti-smoking drugs and related treatments in the nation’s public insurance system for this reason!) For a city which is supposed to be most populous city in China, what amazed me most was I never felt the city crowded and buzzing with people !!
The weather was absolutely pleasant at 18°C and coming from Mumbai which had already started to scorch with the advent of summer, it was indeed a welcome change !
In Shanghai I could see majority of cars on the road being Volkswagen (including the taxis). I was told that depending upon where the factory was, companies get tax benefits and so the prices of a particular brand is lower in a region and that brand dominates that region. So Shanghai was VW city. While on the subject of cars, it was interesting to note that China became the world’s biggest market for BMW in April this year overtaking Uncle Sam! By the way, China is already the largest market for BMW’s premium segment rival Audi. While on cars, must add that 15th April the day I landed at Shanghai was the day of the “Shanghai Grand Prix”. Nico Rosberg won the race – but I was told that the race itself was boring as he led the race from start to finish !
It’s not uncommon to come into China with one’s own prejudices like – “everything would be cheap”. Well, it was not to be. I was in for surprise when I saw in a Hypermarket like Carrefour things were either more expensive or at similar price points as in India. Also generally branded things in the malls/stores were expensive than India. Another myth which got busted during my conversations was that labour in China is very cheap. It seems that it is no longer the case. The minimum salary/month for a factory worker is fixed by the Govt. at US$ 200. And this is irrespective of the location within China it seems. What differ from company to company are the benefits like Overtime multipliers, housing,.. I’m sure there are cities in India/Indonesia/Vietnam where the labour costs are around US$80-US$100 /month. However it is the manufacturing ecosystem which is prevailing in China which makes it the factory for the world.
While on this “low cost ” issue I would like to share this article from “The Economist” which I just stumbled upon which almost reinforces my above finding on ” Low Cost China myth”.
http://www.economist.com/node/21549956?fsrc=nlw|pub|4-25-2012|1503018|73958874|AP
Similarly as I prepared for the trip, I also was mentally preparing myself for the gastronomic ordeal I will have to go through being a Vegetarian. Well, it was not so bad.
Throughout my stay I never encountered the familiar trappings of an emerging economy like fleecing taxi drivers, beggars in the streets, touts in the markets,.. which reminded me of the fact that China is no more an emerging economy but an economy which has arrived. But some old habits die-hard. So you could see drivers honking loudly, cigarette butts all around, aggressive lane cutting while driving,… And interestingly in some of the buildings one could see rods protruding out of the windows and were used for hanging clothes. It is my usual habit on foreign trips to engage in friendly conversations with the cabbies to understand the country behind the headlines/breaking news. However I couldn’t do this here due to the language barrier Great wall!
Since I couldn’t believe my eyes that things are so very expensive, I enquired at the hotel specifically for the market for cheap goods. Then they told me the existence of “Official” fake markets where the “Louis Vuittons” and the “Burberrys” of the world get hawked by enterprising Chinese salesmen/girls to hapless ‘Gora’ tourists at sky rocketing prices. These are the epicenters for “IP” violations! The general rule here is to offer 10 % of the quoted price and settle down somewhere between 25 – 30 % of the original quoted price!!! Shopping here could be a very unique and adventurous experience for many though I suspect not so much for us Indians!
“FDI down for 5th month” screamed Shanghai Daily, “Fifth FDI fall amid EU woes” said China daily on the 18th April both leading English newspapers. This showed the importance the Chinese were attaching to FDI as a means for propelling their economy. So here we are at China the capital of Communism expressing serious concerns of falling FDI while back home our communists and their ilk block FDI of any kind and treat it as a four letter word!
Time to pack up – I was told not to miss on the “Maglev train trip” experience to the airport. The Maglev (originating from Magnetic Levitation) trains have been operational in Shanghai from 2004 and connect the city to the Pudong International airport. A distance of about 29 kms. was covered in 7 mins. and 20 seconds flat! At 301kmph the loudest noise was not of the ticking clock! Not surprisingly it is a tourist attraction in Shanghai today!
Few years ago the CM of Maharashtra said that they would transform Mumbai into Shanghai in 5 years. Either he was blind or we the people who keep voting for their party are dumb, I don’t know. But the politicians who are running our country oblivious of the strides the world is making and failing our nation are certainly blind, deaf and dumb.
As I was waiting for the boarding call near the gate at the swank Pudong International airport at the end of my visit, I couldn’t resist a key question. If China has made such giant rapid strides which are visible and the Govt. has been an enabler in this transformation, why should it fear public opinion? Why should there be such tight controls on freedom of expression? Why should Facebook/Twitter or for that matter WordPress be muzzled??? A three-day trip that too on business was too short to find answers to such intriguing questions. Do you have any views on this? I would be keen to hear.
China never fails to blow me away. I have been visiting China now for 15 years and the transformation is visible and palable even in periods as short as one quarter. It will take a long time for many asian cities to catch up. Good article.
Hi Ajay, your are bang on. Thanks for your comments and feedback !
Anand
You are not alone, two weeks back I visited Dubai and Abu Dhabi for the first time. Coming from india and living in the US for majority of my life, similar thoughts like in your write up went through my mind. Our policy makers, appetite to invest in infrastructure folks who own the responsibility fo india better wake up soon or slowly may be left behind globally. Currently we are continuing to only snooze instead of waking up, planning and run faster without compromising on quality.
Anush
Hi Anush, Yes, Coalition politics, democracy, .. are the excuses we keep hearing for the apathy. The reality is a sense of complacency and taking 7% GDP growth for granted by the policy makers !!! Thanks for taking time to read and comment.
hi..a very nice account of the trip..!!!
Kannan, thanks. Our catchup is still pending ! Lets hope, soon !
Anand
Simply well written. One amongst the finest write up. Super like….
Madhuri, Thank you !!
Anand…Nicely written. Proud of you!
Hey Baskar, thanks a ton !!! Really encouraging !
Well written post Anand! Yes, China has arrived and no longer a growing economy as perceived by many. I had been there last year. Visited Shenzen which is a much smaller city but it felt good to go around. They are so westernized too. Crossed over to Hongkong from there and spent a day too. HK stinks of money and riches and you can see the arrogance in the people.
Hi Hema, Thanks for that feedback ! Appreciate !
Hi Anand
well written, I have not visited China, but always wondered whether the benefit of development reach the workers who produce for the world?
Apparently development of infrastructure has taken place has a mind boggling pace in China, whereas Indian cities have power cuts for hours together….
how does India compare?
Ramesh, it appears so,since communication is a problem one has to go by body language and it appears that adam aadmi is happy in China !
Ramesh, This piece in the Hindu is some indication !!
http://m.thehindu.com/news/international/article3412848.ece/?secid=2780
Ramesh, I read this piece which may answer your question on the chinese workers.
“Despite years of wrenching economic change in China, optimism about rising incomes has staved off social unrest and put the Chinese populace’s happiness level on a par with that of Croatia, says a team led by Paul Frijters of the University of Queensland in Australia. But China’s happiness could drop to that of Bangladesh if income expectations were to turn sour. If individuals began to expect incomes to fall, the proportion of very happy Chinese citizens would decrease 48%, with steeper declines among rural-to-urban migrants, the researchers say.”
Very nice Anand … seem to be developing a flair for writing … keep it up … let us catch up soon over phone
Hi DJ, Thanks for taking the time !!!
Will do that !
anna… i’ve been communicating with the chinese people for our business related purchases for the part 8 years and the same question arise in my mind everyday and i’m unable to find an answer for it – “A Communist Country” (ur 3rd point)… somebody has to change the meaning of the phrase “being communist” in the dictionary and exclude China… i wonder their skill to learn and respond fast, especially ENGLISH… i was told that when the nation opened up for world trade all the young kids started learning ENGLISH (mandatory). so when the grow up they become the “point of sale” for the existing manufacturers to communicate with the ROW… with more than 2.7 trillion US$ as deposits in their kitty they can shake the whole world… this red tsunami can sweep our whole nation…
Vijay, good point. Let me share in a lighter vein a cartoon on Hu Jintao’s visit to US :
Obama : (Showing off America ) There it is. From sea to Shining Sea ! As a visitor what do you think ?
Hu Jintao : ( says to himself ) What he doesn’t know is I OWN all of this !!!
No doubt the article is well written and is a candid description of what you came across. But a friend of mine recently visited Shanghai and was of the opinion that it’s very much like Bombay. Not sure who is correct, but i do know one thing that Chinese government’s investment in infrastructure has been one of the important drivers of GDP growth apart from from exports and consumption. They have invested so heavily that reports of oversupply and the possibility of an infrastructure bubble had flocked the news about an year ago.
Not sure if you were referring to luxury good items, but the tax structure is so, that Chinese consumers are forced to shop outside China because the same item could cost them as much as 1.5x in their homeland. Chinese tourists are known to be one of the key growth drivers for most of the luxury good companies. However, the government is considering reducing the import duty, which should be cause of worry for such companies.
About the min wage, yes indeed the min wages were increased significantly about an year ago. I think that was an obvious step for the government to boost growth from internal consumption, because other growth drivers like infrastructure are slowing and others like exports are dependent on the global economy which is anyway slowing.
Contrasting this to India, while the solutions are obvious, no one is ready to put them to action. I guess that is the price you pay for a democracy. Democracy is one of the main reasons, in my view, that compels politicians to adopt a populist approach (communism or capitalism is not relevant here) and stops them from doing what is actually required. I am not against democracy, but it must have a few flaws, as it is failing miserably in the largest democracy.
Hi, Thanks for your comments and detailed observations !!! Any process or system needs timely reviews and stock taking and changes if needed. Thats true for our democratic process/ institutions as well ! The world is changing but we seem to be stuck with whatever we decided in the 50’s and don’t want to tinker with the same !
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