B412 week 1 lecture - Introduction to China
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This document outlines an introductory course on China for business students. The course will provide an overview of China's history, culture, economy, politics, and society. It will also discuss opportunities and risks for doing business in China. Specific topics that will be covered include China's economic growth and transformation since 1979, its political system, the consequences of recent urbanization and the rise of a new middle class, and the nature of China's business environment and appeal for international business. The course learning outcomes are to give context on China and opportunities in the country for business.
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B412 week 1 lecture - Introduction to China
- 1. School of Business International Business Regions: China ENIGMA & REALITY - An introduction to China
- 2. Pearson College London XXXX 2 School of Business International Business Regions: China An introduction to China Course Learning Outcomes An introduction to China and the opportunities for business focussing on: • History & culture - Putting China into context • Regional and international interaction – China’s ‘soft power’ • Economy: Modernisation and moving up the value chain • Politics: China’s system of power • Society: Urbanisation & the middle classes • Business: Domestic and international; business environment, opportunities and risks
- 3. Pearson College London XXXX 3 School of Business International Business Regions: China An introduction to China Week 1 Learning Outcomes • An introduction to the course focusing on: • Your expectations of the course • Brief introduction to the Mandarin language • Economic growth: China’s phenomenal transformation since 1979 • Politics: China’s political system and international engagement • Society: Consequences of recent change • Business: Nature of China’s business environment, appeal and risks • History: Putting China into context – internationally and domestically Image source: www.telegraph.co.uk
- 4. Pearson College London XXXX 4 School of Business International Business Regions: China An introduction to China What does China mean to you?
- 5. Pearson College London XXXX 5 School of Business International Business Regions: China An introduction to China You can speak Chinese! SIM-ka SIM 卡 Cha 茶 Chao Mian 炒面 Ku-li 苦力 Fengshui 风水 Gong-ho 工和 Ketou 磕头 Li Zhi 荔枝 Tofu 豆腐 Yin Yang 阴阳 Ke-kou Ke-le 可口可乐 = SIM card = Tea = Chao Mian noodles = Coolie = Feng-shui = Gung-ho! = Kowtow = Lychee = Toufu / Tofu = YinYang = Coca Cola
- 6. Pearson College London XXXX 6 School of Business International Business Regions: China An introduction to China Introductions 你好！Ni hao! = Hello 我叫。。。Wo jiao … = My name is…
- 7. Pearson College London XXXX 7 School of Business International Business Regions: China An introduction to China 人 口 One China?...
- 8. Pearson College London XXXX 8 School of Business International Business Regions: China An introduction to China Cities
- 9. Pearson College London XXXX 9 School of Business International Business Regions: China An introduction to China Economy: Explosive growth Emerging Market Consumer growth Construction World Leader
- 10. Pearson College London XXXX 10 School of Business International Business Regions: China An introduction to China Politics: leading from the centre
- 11. Pearson College London XXXX 11 School of Business International Business Regions: China An introduction to China Society: urbanisation/new middle class
- 12. Pearson College London XXXX 12 School of Business International Business Regions: China An introduction to China “Harmonious Society” Between heaven & earth Between people Between nations
Editor's Notes
- [5 minutes] So much of what we know about China is borne out of ignorance. Much of the portrayal of China in the western media is negatively biased. Many people who travel to China for business or pleasure believe that once they have been there, they understand it. But China is an ancient civilisation whose interaction with the outside world has not always been welcome, easy, consistent or constant. Indeed, China was never a maritime nation as the Europeans were and kept its metaphorical doors closed and isolated itself from the rest of the world. The word for foreigner is “laowai 老外” or “da bizi 大鼻子” – neither particularly complimentary, namely “old outsider” or “big nose!” Outsiders were considered to be uncultured and uncivilised. These perceptual traditions continue to run deep. Its suspicions of the outside world still linger and trust of others is the over-arching characteristic that defines relationships between the Chinese and the outside world. How the West perceives China and deals with its cultural sensitivities is a very real issue for China, however. On a more serious note, with its dramatic appearance on the world stage in the last decade, China now plays a key role in international politics. Its engagement with countries across the globe is breath-taking and many are fearful of what China’s new-found power will mean in terms of the geopolitical status quo. However, China is keen to point out that it will not interfere in the affairs of other nations. Its stance is specifically non-aggressive according to its policy of peaceful co-existence and the non-intervention in the affairs of other nations. Consider this. Only 30 years ago, China was a backwater; isolated, impoverished and with very few people given passports to enable them to leave the country and therefore a population with a lack of knowledge and real experience of the outside world. Now China is the 2nd largest economy in the world China’s population is – eye-wateringly - larger than the whole of North America, Europe and Africa put together! 100s of 0000 of young Chinese people study at the best schools and universities the world over giving them an incredible resource in terms of understanding of how other nations tick China is as diverse as you would expect of a country that is continental in size. It is dangerous when talking about China, therefore, to stereotype. The language – so different from our own – makes it hard to comprehend situations visually or orally. But for these and so many other reasons I find the country a fascinating place; enigmatic, yes. Complicated, yes. Diverse, yes. Challenging, yes. Hard to decipher the reality, sometimes yes! Exciting, definitely! Over the course of this 10-week module, I hope to challenge some preconceptions and open some doors for you into the Chinese mind; into the complexities of its political and business systems and to inspire you to delve deeper into the land that encapsulates the ancient Silk Road and the most dynamic economy on earth!
- [2 minutes] I would just like to summarise what we hope to cover during this International Business Regions 1 course. We will give you an understanding of the business environment set in the context of China’s economic transformation and political might. We will take a broad sweep look at China’s history and civilisation We will look at China’s relationships with its many neighbours in Asia and also its alliances across the globe We will excite you with awesome numbers and statistics that reflect China’s upward economic trajectory We will look at China’s Communist Party politics with its own Chinese characteristics And we will see the impact on Chinese society of the multitude of changes in the last few decades.
- [1.5 minutes] Today we are going to get to know each other a bit and I will give you an overview into China’s fascinating landscape. We will look at your expectations of the course, give you a quick introduction to mandarin Chinese and then take you on a whirlwind tour of China to touch on the main themes of the course, namely Economy Politics Society and Business OK. Let’s go!
- [Image source: google images] [5 minutes] Invite interaction from the student group. Use whiteboard or Post-It Notes Get each student to write down 5-10 things they believe or know about China Invite a few to shout out these things and write them up on the board. Facilitate the discussion of these ideas in the class.
- [5 minutes] No module in Chinese business is complete without an element of the mandarin language. As with any language, mandarin provides a window into Chinese culture. The written form, known as characters, were originally pictoral representations of the object or concept. It is interesting to note how many characters have the element of fire, earth, water, wood or person in them. This gives a sense of the underlying Chinese psyche that recognises humanity’s intrinsic links with the world around us, a view that was developed by Daoism. Chinese traditional landscape painting brings this idea very much to life with its lofty mountains and gushing water with the depiction of a small person somewhere obscure in the picture. As difficult as it is to learn, you may nevertheless be intrigued to know that you already know a few words in Chinese. Let’s have a go! [INTERACTIVE GUESSING GAME = allow 3 minutes and for any discussion that might arise]
- [5 minutes] I’m going to teach you how to introduce yourselves! The word “Hello” literally means – “You well.” Ni hao 你好 The character for “well” comprises 2 elements, namely “woman” and “child”. Put the two together and you understand something significant about Chinese culture, their love of children and the notion of the importance of the family in Chinese life. Mandarin Chinese is a tonal language rendering it fairly musical when you listen to it. It has 4 tones and the tones, particularly if you do not have the written character to provide context, determines the meaning. For example, ma (1st tone – flat) 妈 means mother; ma (3rd tone falling/rising tone) 马 means horse and ma (4th tone falling) 嘛 means to curse! So, we’re going to learn how to say Hello and My Name is… INTERACTIVE ELEMENT: Teach the students to say these two phrases and to repeat to the person sitting next to them. If the class size is small, enable each of them to say it out loud to the whole class. If you are in a position to do so as the lecturer - give all the students a Chinese name. [ALLOW 5 minutes]
- [8 minutes] One of our challenges when we talk about China is all the conflicting things we’ve heard about “CHINA” and “THE CHINESE.” It is not sensible to generalise and to think in terms of there being a single Chinese market, for example, or a single Chinese cuisine. For starters, there are so many Chinese people - 1.3 billion in mainland China alone, comprising 20% of the population of the world. The Chinese word for population is 人口(pronounced ren-ko) and literally means “people mouth” or to put it another way, human mouths and the importance of food for survival. There are 55 different minorities and multiple languages across China living in 22 administrative provinces, special economic zones and autonomous regions. As this map shows, China has a similar surface area to Europe. China’s landmass is 9.6million square kms or 3.7million square miles. To give that a meaningful context, China is so large that you can fit 44 United Kingdoms into it. It is continental in size so of course there are many differences, including the following: LANDSCAPE - from mountainous regions including the Mount Everest range in Tibet to the beautiful karst limestone landscape around Guilin in the south; the desert of the Turfan basin in Xinjiang in China’s northwest CLIMATE – There is a massive difference in China’s climate from bitterly cold winters in the Northeast to the tropical climate in the south DEMOGRAPHICS – In terms of demographics, China is an ageing population due to the ‘one Child policy’ and there is a widening gap between the belief in tradition of the older generation and the Generation Y of today’s 20-something youth TASTES – vary hugely including from fashion to cuisine such as the spicy hot (or ‘la’ 辣) of Sichuan to noodles and bread (mantou 馒头) in the Northwest LANGUAGES too – There are huge regional differences in language that are mutually incomprehensible such as Hokkien, Shanghainese and Cantonese plus numerous dialects One thing that is common all over China is the time. In a strategy to control, the Chinese government maintains one time-zone in a country that would otherwise naturally span five time zones. China is a land of superlatives: * Its economic rise and transformation has been the success story unprecedented anywhere at any time. Within 30 years it has become the second largest economy in the world but it is still classed as a developing nation with a per capita income according to the World Bank that ranks it only at #84 in the world [Source: Wikipedia http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita] * Along with Russia, China has the most land borders and neighbours in the world . [Pause to ask the group – “can you guess how many?” ANSWER: 14] * China is the biggest consumer and producer of coal in the world and 2nd largest economy after the US * The Great Wall is the longest man-made structure in the world measuring 5,500kms * Three of the world’s longest rivers flow through here: Yangtze, Yellow and Mekong Beijing’s planned Daxing mega International Airport – to be opened in 2017 – will have the capacity for up to 8 commercial runways, and will be able to transport 130 million passengers a year. Eye-wateringly wonderful as a statistic is that the size of the airport will be comparable to one of the world’s smallest countries. Can you guess what it is? BERMUDA. http://www.dailymail.co.uk/travel/article-2216092/Plans-unveil-worlds-biggest-airport-Beijing-set-carry-130m-passengers-year.html 5 of the top 10 container ports in the world by volume are in China – Shanghai recently overtook Singapore to take the top slot Swiftest mass urbanisation of anywhere in the world has taken place in China with >300million people lifted out of poverty in the last two decades * …and so this impressive list of achievements goes on!
- [Allow 6 minutes] [100 Renminbi note Image from google images/spendmatters.com] China is an emerging market and a so-called “developing country” but so developed in so many ways when you go to some of China’s Tier 1 cities that you could imagine yourself to be in Milan, New York or London. Centrally planned command and control system requires where government takes control and all enterprises fall behind the Politburo’s political dictats. China is one of the economically dynamic nations of the so-called BRIC set. China first made a commitment to shift to a market economy when Deng Xiaoping, China’s pre-eminent leader, introduced the ‘opening up and reform’ policy in 1978. Between 2001-2011 the average GDP growth rate of 9.9% or 158% increase in total (almost twice that of India at total 80% in the same period) according to World bank data was amazing to witness and fuelled the growth of China’s economy. Incredibly, this growth rate continued despite the implications of the financial crisis in 2008 and the shrinking of the US and European economies and the consequent reduction in demand of exports from China. In an effort to continue the economic boom, the Chinese government has encouraged Chinese companies to go global and for consumers at home to increase their spending. One new coal fired power station opens every week in China to fuel the energy demands that accompany this growth Massive infrastructure projects to create tens of thousands of miles of road and rail and high-speed networks has built connectivity amongst the regions. In 1990 I remember heading from Beijing to Shanghai for New Year by train. It took 18 hours. Today, the high speed train, costing around £50 one way, takes only 5 ½ hours. This time saving creates efficiencies and incredible opportunities for the growth in business and travel. China is the leader in solar energy Some of the richest people in the world are Chinese and, remarkably, have achieved this level of wealth earnings in just a generation. Foreign Direct Investment is gathering apace. China’s “Go West” and “Go Global” policies are encouraging Chinese brands to internationalise. China is also hunting the world for commodities to fuel its voracious appetite for growth. The Chinese government has a key strategic priority to move China up the value chain from its ‘Made in China’ and factory of the world image to innovator and centre for Research & Development. Chinese companies are starting to go global, too, so commercial competition will only increase domestically and in the international arena.
- [Allow 6 minutes] [Photo: Copyright of H-J Colston] The “revitilization of the Chinese nation” and the achievement of the “Chinese dream” are the stated goals of the ruling Chinese Communist Party (CCP). The Chinese government is under the overall control of a small number of senior politicians in the Politburo. Their over-riding aim is to drive economic growth and to reduce poverty. Over the last 30 years, as we have seen, they have come far in achieving these aims. The long term strategy is to provide for its people both at source - within China’s boundaries - and outside from elsewhere. To feed its growing need for resources to fuel the nation’s growth, China is making strategic purchase of commodities including natural resources and land from as far afield as Peru, Nigeria and London. When you visit Beijing, you will see that Chairman Mao Zedong, who spearheaded the Chinese communist revolution in the late 1920s and 1930s and founded the People’s Republic of China, lives on; his portrait still adorns the Gate of Heavenly Peace in Tiananmen Square and the 100 Yuan note. His policies to collectivise agriculture and to strive for this over industry, however, have been overturned by the march towards industrialisation. Like other communist countries, China has a strong hold on the media and manages a huge propaganda machine. The role of party permeates all strata of society implementing control via hundreds of bureaus at national, provincial, city, township and village level. Party politics is intimately linked with business. 80 million people are active members of the Chinese Communist Party (CCP) and membership traditionally confers greater business opportunities on party members. Since its accession to the World Trade Organisation in 2002, China has had to take steps to introduce a more transparent and fair system of law. Formerly notorious for its extensive corruption, in more recent years, the government is adopting a strict anti-corruption approach. Many have fallen foul or have committed suicide in order to avoid disgrace and humiliation. You may recall the high profile demise of the so-called ‘princeling’ Politburo member, Bo Xilai, in 2013, associated with the murder of the British businessman, Neil Haywood, and who was sentenced to life imprisonment for corruption and embezzlement. Flexing its muscle beyond the economy includes the government’s concentration on the power of the military. Spending has increased in this area by more than 10% per year over the last decade and is now the 2nd largest military spender in the world – [Source: http://www.telegraph.co.uk/news/worldnews/asia/japan/10552351/China-risks-becoming-Asias-Voldemort.html] China is increasing its strategic alliances with the whole of the African continent, its neighbours in Southeast Asia and engaging with countries all over Africa. On 10 November 2014 Beijing welcomed heads of state, including Barack Obama, for the Asia Pacific Economic Cooperation (known as APEC) Summit. The rhetoric from Obama made it clear that his political clout is on the wane and that China’s is on the up. Obama said in his speech that the US “had wanted to accommodate China because not only is it in China’s best interests but also in America’s best interests and also in the world’s best interests…” [See http://time.com/3575422/apec-beijing-barack-obama-xi-jinping-summit/] Obama’s agenda relates to a US-driven 11-nation body called the Trans-Pacific Partnership (or TPP) designed to boost mutual growth. China, however, is pursuing its own pact called the Free Trade Area of the Asia Pacific (or FTAAP). It is clear that China is starting to flex its own muscle and to create a new paradigm based on new rules and a new game of international politics. And it will set its own agenda on what can be discussed and what cannot.
- [Photo: copyright of H-J Colston] [Allow 5 minutes] When I lived in Beijing in the winter of 1990, China was considered a “hardship posting” by the Foreign Office. We all owned bicycles and travelled around the city by bus or got swept along in the sea of bicycles. There was hardly a car on the road as ownership of private cars was illegal. No building, apart from the odd high rise office complex, was taller than 6 floors high; above that and legally the building had to have a lift so they were not designed any taller. No one owned fridges or freezers so the streets were literally lined with cabbages, stacked 2 metres high and about 3 metres deep; with Beijing winters being so cold no one needed fridges anyway! Now you go to Beijing and, whilst bicycles are still common, traffic jams are notoriously regular and serious due to the density of vehicles. China ranks #1 for car demand and mobile phone usage (2010 stat) with the latter equating to close to a billion owners) [Source: Dambisa Moyo Winner Take All - page 21]. An increase in infrastructure projects to build a nation provides jobs and the positive by-product is an increase in personal wealth which leads to consumer demand. China now ranks #2 in the world for electricity consumption. We are in the very exciting position of getting a ringside seat to witness China’s coming of age – and to marvel at this delicious first taste of possibility and aspiration for the self rather than the collective. However, social mobility comes at a price. China’s One child policy is putting enormous pressure on the younger generation who have sole responsibility for their parents and grandparents. There is a widening wealth gap and millions of migrant workers are denied access to healthcare and education. Incidences of social unrest are on the increase with 180,000 cases reported in 2010. Prior to the 1990s people were guaranteed state support from the so-called ‘iron rice bowl’ from the cradle until the grave. Economic reform has brutally brought an end to this which impacts on healthcare and education and social needs for many millions of people. Dietary change – Obesity levels Development at all costs has meant that output has been higher on the agenda than health and safety. Consequently many cases of environmental pollution and toxic waste scandals abound. According to The Economist, China is poised to become the next consumption superpower (Economist article – Feb 2014). Roughly £3.3tr in private consumption is about 8% of the world total, and it has only just begun. Boosting the desire to consume is a stated goal of China’s leaders. However, the mood in China now – for both the super wealthy and the average man on the street (or 老百姓 lao bai xing) – is optimism overshadowed by anxiety over what the future holds. Will there be a boom and bust scenario? Is new-found wealth safe? Is it best to emigrate overseas for those who can afford the emigration visas?
- [Allow 3 minutes] In most developing countries there comes a time when the transformation of the economy leads to democratisation. China is determined to steer its own course and is committed to its principles of communism with Chinese characteristics. Much of the Chinese way of doing things is enigmatic and with the pace of change so fast, it is often difficult to keep pace with a shifting reality. It is very difficult, however, to balance economic freedom with sustained social order and control. Consequently the stated priority for the Chinese government is Harmony. The dream of harmony was as relevant for emperors past as it is for the leaders of the Chinese Communist Party of today. Instituted as a State Council priority in 2006, this idea extended to encompass China’s international agenda in the Beijing 2008 Olympics slogan “One World One Dream” and with its strategic alliances with nations the world over since then. In the the last hundred years of the 20th century, China underwent huge economic turmoil, political revolution, social upheaval, natural disasters and ideological chaos, including the Cultural Revolution. Its recent 30 year history since Deng Xiaoping promoted the “opening up and reform policy”, however, has been transformative and unbelievable to witness. The big questions for us to contemplate during this course are: Will China continue to balance its economic miracle without any political change? How can it maintain social stability when the population goes from rural to urban and a widening wealth gap is emerging? Is China to be feared or embraced? How will China’s position as a political superpower effect the balance of power? How easy is it to do business in China when the pace of change is so fast?