Harbin Business Exchange In Brief
  A weekly email update . . . March 31, 2005  

HEADLINES

Surprising Harbin - Rent a Granny

China Largest M & A

Organic Food Cultivates Cash

Axis Needed to Boost Economy



Surprising Harbin - Rent a Granny

A Harbin resident, Ren, "rented" a British granny, taking her on as a family member to improve his daughter's English. Ren's daughter plans to study in Britain in the fall after completing high school. But she needs to improve her spoken English skills for an upcoming IELTS exam. He decided to place an ad for an English tutor and received a reply from an elderly British woman in Beijing. The woman said that her son works during the day, which left her feeling lonely at her home.

She was immediately hired and traveled to Harbin for her new "position". Since the family acquired a new live-in granny, his daughter has improved her oral English well worth the US$217 he is paying, according to the Harbin Daily.

   Dear Friends:

We are in the process of establishing an American food operation in China . . . a 500-seat food court. I mention this because it is typical of everything that is great about China investments, and all the challenges of making the business cultures match. No doubt, it is more complicated to create a business in China because of differences in laws, tax policies, regulations, language and culture. It is easy to see why the feint of heart do not rise to the challenge, but it is more obvious why the true entrepreneurs aggressively seek the opportunities. For all the complications, the rewards are enormous. Once you get past the "learning curve", the American business leader will find so many advantages. Taxes are much more negotiable (if you know it). Liability laws are highly favorable. Labor rates are low, but employee loyalty is high. The regulatory excess that stifle so much of U.S. business are almost non-existent in China.

My advice to American business is to develop a China strategy and growth plan. Instead of being frustrated by initial difficulties, or those ubiquitous misconceptions spread by those without knowledge or experience, our U.S. business leaders should seek out those, like the Harbin Business Exchange, or even our firm, to provide the guide map. Too many American business leaders base their decisions on gossip from colleagues at the country club instead of getting the facts from those who know. This is especially true of the mid-sized enterprises that desperately need to be involved in China to survive. The global majors know how to get there, but for the mid-sized enterprises it is a do or die situation - and too many U.S. enterprises are choosing surrender and die. We are not loosing manufacturing jobs to China, we are giving them away. Have a productive week. Larry Horist - President HBE

  • China Largest M & A
  •   According to Donald Straszheim of Straszheim Global Advisors, LLC, China is going to be the biggest M&A boom in the history of the world over the next decade. "Now, we're seeing the second-tier companies go in. We expect this trend to reach down to small firms as well." The influx can work against buyers. Many Chinese managers know there is a limited number of companies worth investing in and has negotiate for a higher price.

    The number of mergers and acquisitions by overseas companies in China this year increased 35 per cent, to 73, as of February 23, compared with the same period in 2004, according to Bloomberg data. The value of the deals doubled to US$1.9 billion.

  • Organic Food Cultivates Cash
  •   As the most important grain-producing base in China, Heilongjiang Province has come up with a plan to develop its organic food industry to fatten the wallets of its farmers. Statistics from the provincial Agriculture Commission show that organic food account for almost one-third of farmer's income last year. "The organic food industry has already become an important way to increase the income of farmers," Wang Zefu, deputy director of the provincial Agriculture Commission.

    Organic food is seen as safe, being free of pollutants, rich in nutrition and of good quality. Therefore it is sold at a much higher price than regular food, and remains popular. The demand for organic food in both the domestic and international markets is still soaring. In February, Heilongjiang Province set itself the goal of expanding its organic food planting area to 1.87 million hectares this year, covering nearly 20 per cent of its total arable land. By 2010, the planting area of organic food will reach 3.33 million hectares, according to the plan.

  • Axis Needed to Boost Economy
  •   With the central government stepping up regional programming in its long-term development strategy, eleven CPPCC members submitted a proposal that calls for concrete regional programs to revitalize the nation's old industrial bases in Northeast China. Economic integration of Northeast China should be sped up as the three provinces have already witnessed enhanced co- operation in fields such as energy, transportation, tourism, logistics and information, the proposal said.

    "Northeast China will never revive without a unified regional economic zone," said Li Xiangping, vice- president of the Liaoning Academy of Social Sciences. Li said that the three provinces in northeastern China have unique industrial claims. But fragile inner economic connections have led to weak regional co-operation. Li noted that as neighbouring Japan and South Korea are planning to shift some manufacturing industries out in a move to focus on high-tech industries, Northeast China has the potential to become a new manufacturing base, thanks to its preferential geographic location, rich resources and a large number of skilled but low- cost workers.


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