Earlier this week, I asked Ge Honglin, the mayor of Chengdu, what incentives his city had to offer foreign companies wishing to relocate here. Can companies get subsidies? Low-interest loans? Tax breaks? His answer surprised me. I expected a few vague promises, maybe some obfuscations, some exaggerations. I got none of that. “Frankly, Chengdu can’t offer the same kinds of incentives as some other cities are offering,” he told a room full of visiting foreign journalists. Yang is a technocrat. He started out his career as an engineer, and seems not to have learned the art of hype and public relations. Instead, he tells it like it is. At the Bookworm the next night – the town’s favorite gathering place for expats – a local business executive told me that Ge was the best mayor in … Read entire article »

At a dinner over hairy crabs a few days ago, I was discussing Chinese taxes with a group of visiting Italian logistics managers. A Chinese manager at the meeting complained about high taxes and fees but after the Italians heard what the tax rates actually were, the conversation took a different tack entirely. Sure, an increase from 15 percent to 25 percent is big jump high. But compared to the tax rates in other countries – especially Europe – the 25 percent starts seeming like a pretty low number. And, as Sherisse Pham explains in this week’s article about Aoxing Pharmaceutical, some foreign companies are able to lock in the previous 15 percent rate for a little while longer. For Chinese companies, the tax rates are falling – from 33 percent to 25 … Read entire article »

I love fast food, and I love celebrity marriages. Better still, I love celebrity divorces. This week’s announcement about the tie-up between KFC and Mengniu Dairy has everything I need. In June, Mengniu also pushed out Nestle in a deal with Starbucks. Mengniu is the largest milk producer in China, a country not traditionally known for dairy products. But today, Xinhua reports, China is the third-largest dairy producer in the world – following the United States and India. In part, it was foreign brands such as KFC – which has over 2000 outlets in China – that helped change that. I’m thinking of KFC’s soft-serve ice cream, for example. Or Starbuck’s lattes. Or the slices of cheese on McDonald’s hamburgers. According to the state-owned China Daily, the deal is a demonstration of faith in … Read entire article »

Last week the China Daily explained a new labor law – due to come into effect on January 1 – that ostensibly protects women from job discrimination. Ironically, the way that it does this is to list jobs that are “unsuitable for women.” These jobs including working in mines, cutting lumber, installing and removing scaffolding and carrying heavy weights. On the heavy weights issue, there are plenty of burly women – and plenty of weak men. Those jobs might have physical strength requirements, but should be based on ability, not based on gender. The other three restrictions are based not on physical ability as much as physical danger. And, it is true, mining is not a safe environment these days in China. But it’s not safe for anyone, whether male or female. Rather than forbidding women … Read entire article »

Historically, there have been two ways for a software outsourcing industry to develop in a country: through domestic demand, and through foreign demand. The US, Japan, and other developed countries are prime examples of the first option. Large domestic customers – financial services firms, manufacturers, retailers, government organizations, the military – slowly turn to outside vendors to fulfill steadily more comprehensive technological functions. At first, outsourcing firms are brought in as consultants for specific projects, such as the roll-out of a new software system. Or they come in to handle a specific task, such as email management. Some outsourcing companies started out as primarily hardware vendors, and initially their technicians only visited customers to help them set up new equipment. Other outsourcing companies were business or accounting consultants that moved into providing … Read entire article »

It’s not easy to sell computers outside of the big cities, with logistics one of the main challenges. I was at a logistics conference a year ago, where Carrefour president Jean-Luc Chereau showed slides from a typical loading dock (Carrefour has been in China since 1995, and has over 100 hypermarkets in dozens of cities around the country). The reason I mention them is because one of the slides he showed is still stuck in my head. It was of a loading dock somewhere within China. A nice modern truck was pulled up, unloading cardboard boxes. Next to it was a bicycle, piled sky-high with computer boxes. I’d hate to see that fall over in the middle of a busy street. I also had a quick chat with Ying Wu, executive director of … Read entire article »

Outsourcing – services, not manufacturing – is one of the most appealing industries to get into. It doesn’t pollute, and provides white-collar jobs to college graduates. It’s no surprise that China has been enviously looking at India’s progress in services outsourcing and looking for ways to emulate its success. Now the government is putting some money behind it. On Sept. 12, the AsiaPulse news service reported that the China Development Bank (CDB) will provide up to 5 billion yuan (US$665 million) in loans to services outsourcing projects. The CDB is one of China’s three policy banks, and has signed an agreement with China’s Ministry of Commerce to this effect. Late last month, India’s IT trade body, the National Association of Software and Services Companies (NASSCOM), issued a white paper about China’s services outsourcing … Read entire article »

When things stay the same, you do things the same way. When things change, that’s when life gets interesting. Fortunately for businesses in Central and Western China, things are starting to change. For companies that keep up, this is good – more customers, more suppliers, more business partners. Companies that don’t keep up will see the new customers go to their competitors. After all, if your sales and marketing efforts are focused on taking the same three guys out to a fancy dinner, then your business will be limited to those three guys – unless a competitor comes in and sweeps them away. There are two main avenues to change: education, and networking. Your sales and marketing staff need to learn new techniques for finding and developing customers, for example. Both education and networking … Read entire article »

This past April, Chinese regulators started giving permission for foreign banks to incorporate locally. Incorporation means that the bank can do business in yuan and issue credit cards. Previously, foreign banks were only allowed to handle foreign-currency accounts, and were only able to offer credit cards through partnership deals with local partners. Before, the foreign banks pretty much stayed in the coastal cities, going after the high-value, foreign-currency customers. Today, those same banks have become much more appealing to China’s middle class consumers — and they have started moving to where those consumers are located. In other words, throughout China. ABN Amro is now only one of foreign banks with branches in Chengdu and Chongqing, for example. HSBC, as today’s story by Mai Yi demonstrates, goes even further, with a branch in rural … Read entire article »

Three years ago, work took me on a trip out of Shanghai, and my colleagues and I stayed at a decent-looking hotel — one of the best in that area. We were the only people there. When we checked in, the staff acted surprised that we needed things — like room keys. Nobody showed us where to go, and for a little while we stumbled around in the dark, looking for our rooms in the multi-building complex. The rooms were chilly, and badly supplied. None of the amenities I’m used to seeing in even the worst hotels in the US or Europe were present. The hotel was located on a road lined with industrial enterprises — but the road was strangely deserted every time we were on it. The hotel managers had trouble getting … Read entire article »