We've arrived in Shanghai China! China is the world's most populous country with a population of 1.3 billion (with over 700,000 million living in rural farm villages) and one of the largest producers and consumers of agricultural products. Over 40 percent of China's labor force is engaged in agriculture, even though only 10 percent of the land is suitable for cultivation and crops. China is among the world's largest producers of rice, corn, wheat, soybeans, vegetables, tea and port. Industry and construction account for about 46 percent of China's gross domestic product (GDP).
China is the second largest producer of oil after the U.S. Coal makes up the bulk of China's energy consumption and is the largest producer and consumer of coal in the world. China is home to 7 of the world's top 10 most polluted cities.
China is now one of the most important markets for U.S. exports and in 2007, U.S. exports to China totaled $65.2 billion.
Shanghai is beautiful with many high-rise buildings and lovely architecture. It's approximately 200-300 years old, relatively new by Chinese standards. It's very cosmopolitan and has one of the world's largest buildings. The highways are elevated and the transportation system is very efficient with subways and lots of taxis, but traffic jams are not uncommon.
The average age of marriage is 25 and it's not uncommon for many generations to reside in the same household. This makes defining China's "middle class" difficult. A young adult will have low expenses because they live with their elders, but they have a large impact on spending.
We concluded the evening with a wonderful 7 course dinner. Keeping with tradition, we changed chopsticks with each course. Dinner consisted of many "firsts" for me including sautéed prawns in chile sauce, shredded chicken soup, steamed garoupa, pan-fired beef and mushrooms, and a sweetened almond crème with pastries for dessert.
During dinner many toasts were given, as is tradition in China. When a person receives a toast they must participate by taking a drink. Many high ranking officials and business leaders have people who help "protect" them from toasts so the leader isn't required to drink a large amount of alcohol. When receiving a toasting you should hold your wine glass below the glass of the person who is making the toast as a sign of respect.
Monday, Sept. 7, 2009
We had a briefing at the hotel by the U.S. Commercial Service and we talked a lot about China. We started off breakfast before the presentation with a combined traditional Chinese/American breakfast. On the Chinese side we had soups, dumplings, fresh seafood, salad and loose leaf tea.
China's GDP is about one-third of the U.S. and they have the third largest global economy. China has had 5 years of rapid double-digit GDP growth.
Shanghai is not representative of China as a whole. The standard of living between large metropolitan cities and farm villages is vast with marked differences in health care and education. It is very cosmopolitan and an important economic center. Like most countries, China has been impacted by the worldwide recession. Exports are down 7.8 percent as of last year and they have had over 100,000 factory closings. There are 26 million unemployed Chinese migrant workers.
China was the first major country to enact a stimulus package. They injected $582 billion in their economy with a majority of the stimulus funds targeted toward infrastructure (air, railways, highways and power grids) and earthquake reconstruction. They have had a 2009 economic revival with a growth rate of 7.9 percent, mostly due to the stimulus package and an increase in lending. Auto sales are up 25 percent and for the first time China has surpassed the United States. Home sales have also improved recently.
Daniels was the featured speaker at a conference hosted by Cummins, Inc. for representatives of some of Cummins’ top Chinese suppler companies and members of the Indiana delegation. Steve Chapman, Cummins’ group vice president for China and Russia, who lives in Beijing, introduced Daniels. The governor discussed Indiana’s business climate and encouraged conference attendees to visit the Hoosier state as they consider setting up operations in the U.S. The governor was the guest of honor at a luncheon hosted by Cummins at the conclusion of the conference.
There has been quick growth in U.S. exports to China since China joined a common trade union in 2002. There are many U.S. companies in China and a significant U.S. presence in human capital. China has surpassed Japan as the U.S.'s largest export market behind Canada and Mexico. U.S. companies with a presence in China tend to be profitable in their operations and include companies such as General Electric, 3M, GM, Boeing, Cargill, IBM and Caterpillar. The Chinese are less likely to have large corporate centers in the U.S. because they don't experience managing a worldwide work force and because labor is much more expensive in the U.S. compared to China. The average labor cost in the U.S. is $25/hour compared to $1/hour in China.
Shanghai has a population of 20 million and is the commercial capital and one of the wealthiest areas of China, similar to Manhattan. Shanghai is the economic powerhouse so an important area for Governor Daniels an our delegation to visit.
In the evening we met with the Shanghai Foreign Commerce Commission to discuss why Chinese companies should do business in Indiana. Governor Daniels discussed how businesses would benefit from working with Indiana including the fact that Indiana has higher capital and foreign investments than any other U.S. state and Indiana does not raise taxes to pay for unbalanced budgets. After we left the commerce commission, we immediately went to the Hoosier Club of Shanghai reception at the yacht club. Members of the Hoosier club are comprised of alumni from Indiana universities. The governor spoke and commented on the importance of student exchange programs.
To end the evening we went to an authentic Chinese restaurant featuring several courses including shrimp, soft shell crab, beef and avocado. The food here is incredible and made from many natural ingredients.
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