Harbin Business Exchange In Brief
  A weekly email update . . . March 15, 2005  


Retail Markets Up For Grabs

Beefing Up Coal

Snow Lantern for the Tsunami Victims

   Dear Friends:

WILL THE AMERICAN BUSINESSES AND INVESTMENT HOUSES MISS OUT ON THE CHINA BANDWAGON??? After almost six years of doing business in China, I have come to the conclusion that America may well lose out on the China boom. Certainly, many large American multi-national companies have gone to China - Motorola, Amway, KFC, Boeing, Anheiser-Busch, etc. The critical mass of small to medium enterprises have not, and the investment community seems oblivious to the opportunities. During my years in China, I have seen U.S. investors pass up on extraordinary opportunities because of biases, ignorance and fear. This was not the result of careful consideration and due diligence, but more the knee jerk reaction to China as they perceived it. To some extent it was arrogance. Other Asian nations and East Europe have not been so foolish. I have seen those nations swoop up one hot deal after another, while the Americans stood on the side lines - not even caring to watch the game. In a few years, these other nations will be part of a world supply chain that will leave America at an enormous competitive disadvantage in many business sectors. These other nations will be accessing the growing China market, while the American will be seeing their "local" investment dollars producing inferior returns. It seems that what America responds to China out of anachronistic perceptions, not realities. The future will belong to those who know . . . not those who think they know.

Having gotten that off my chest, let me move to a kinder and gentler subject. My associate and I just returned from Harbin. This time we were able to participate in the amazing Ice and Snow Festival. I suggest you check out our website for some more photos of that event. It was even more amazing in person. Our trip also coincided with the Chinese New Year. It was quite a time to be in China. Of course, we were still doing business. Our major mission was working toward the launching of a unique restaurant concept . . . one the could have us setting up fast- casual food courts in several Chinese major cities. We also reviewed some other excellent investment opportunities . . . a very much 5-star boutique hotel for sale or management, a national cosmetic company looking for a joint venture partner or investment capital. Another restaurant to be incorporated into a dynamic nightclub district. A chain of miniature golf courses. A number of excellent ski developments. Power plants and generators. The common message in the two topics of today's epistle is my hope we Americans still have a sufficient level of that old entrepreneurial spirit to venture to the leading edge of business development. Have a productive week. Larry Horist - President HBE

  • Retail Markets Up For Grabs
  •   Many overseas retail giants (such as Carrefour, Wal- Mart, Parkson) are on the path of expansion now that they are allowed to operate wholly owned stores. The restriction was lifted on December 11. The twist is that the focus is not just on metropolises and cities in affluent provinces. Second-tier and smaller cities are now the center of focus for many foreign enterprises. Yu Shuhua, vice-director of the Zhongshang Commercial Economy Research Centre, says foreign retailers' moves to expand into second-tier cities were based in part on the limitations in first-tier cities, where the markets are becoming saturated after a decade of frenzied growth. Operational, land and labor costs are also lower in second-tier cities.

    Yan Ligang, spokesman for the Beijing Commerce Bureau, said that given the characteristics of the Chinese market -- a large population base, vast territory, different income levels and various cultural backgrounds -- joint ventures might still be the most practical and efficient model for overseas retailers' long- term development in smaller cities. "China is a collection of markets, not just a single market. So, I don't think foreigners will just go it alone, especially when they want to penetrate the second- and even third-tier cities."

  • Beefing Up Coal
  •   The Heilongjiang Longmei Mining (Group) Co Ltd, a conglomerate of four major State-owned coal-mining companies in the province, was recently launched in Harbin, the provincial capital. The new group is composed of Jixi, Hegang, Shuangyashan and Qitaihe coal companies, all giants of the province's coal industry.

    With proven coal reserves of 22.4 billion tons, Heilongjiang is one of China's provinces rich in the resource. The province's annual coal output has exceeded 80 million tons. The four coal companies account for more than 60 per cent of this figure. This strategic restructuring of the four coal companies marked the province's first step in building itself into one of the major coal production bases in China, Hu Xiangding, director of the Heilongjiang State Assets Regulatory and Management Commission, said at the group's inauguration.

  • Snow Lantern for the Tsunami Victims
  •   Artists add the finishing touches to the snow sculpture "Lanterns" at Sun Island Park in Harbin, capital of Northeast China's Heilongjiang Province, on Tuesday. The carvings have been made to commemorate the victims of the disastrous Asian tsunami. Drifting small lanterns on flowing water is a traditional Chinese way of expressing wishes. (Source: China Daily)

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