Harbin Business Exchange in Brief
A Weekly Email Update . . . February 13, 2006

In This Issue

Surprising Harbin - Music Scene

Personal Income On The Rise

Pepsi Expansion in China

Public Relief For Public Inconveniences

Ski Makers Eye China


Surprising Harbin - Music Scene

Did you know . . . a museum featuring music culture and its development in China (the first of its kind in China) has recently opened in Harbin. Miao Di, curator of the Heilongjiang Music Museum said that the museum has a collection of 100 valuable musical instruments, 400 potraits of notable Chinese musicians and manuscripts of a dozen of famous Chinese composers such as Wang Luobin, Fu Gengchen and Zhang Peiji.

Positioned as one of the major music centers in China, Harbin is not short of musical talent. Chen Lin is just settling into her new hometown, as assistant professor of conducting at the University of Cincinnati College-Conservatory of Music. Born the daughter of two physicians in Harbin, China, she started playing piano at age 5. By 15, she was admitted to the renowned Central Conservatory of Music in Beijing as a composer, and 10 years ago, she took up the conducting baton. Chen Lin beat out more than 120 applicants from around the world for that position.

Also in the Midwest, the newest addition to the School of Music faculty at Northwestern University is Zhang Daxun, who is the newest lecturer in Double Bass. Zhang, a native of Harbin, attended the Central Conservatory of Music in Beijing and completed his post- graduate studies at Indiana University. He can be heard on the soundtrack of a 10-part documentary series on Yo-Yo Ma’s Silk Road Project and on the companion CD that will be released by Sony.

Dear Friends:

It appears that the Chinese economy is in hyper overdrive. The reported 9.9 % growth rate in the fourth quarter of 2005 seems to have triggered a round of analysis that has put all previous projects out the window. China now has the world’s fourth largest economy, and is producing more than 25 percent of the world’s economic growth – an amazing achievement despite it daunting size. These are statistics not usually associated with so-called emerging countries. Is China still emerging? Looking at the statistics and the import/export figures, it is hard to characterize China with such third world language.

A lot of concern is being expressed in the western world. Is this the “China Century” as some predict . . . or fear, as the case may be?

Too many in the U.S. are still thinking defensively. How do we slow down China? How do we protect previously dominant U.S, manufacturing industries? How do we maintain America’s world economic lead? All good questions. However, we will not succeed unless we understand that the real answers lie in very different questions. How do we develop new industries? How do we bring investment from China to the United States? How do we benefit from U.S. investment in China?

If we look to dominate an economic based on our political borders, we will fail to stay in the race. The new global economy will be based on the two-way flow of investment and product (services). The situation is similar to what our colonies faced more than 200 years ago. Instead of economically autonomous colonies or states, we created a universal economy embracing now 50-plus political jurisdictions without destructive tariffs and trade wars. We should anticipate that same outcome on the global level.

For the forward thinkers, cities like Harbin are the golden gateway to a strong economic future based on proven free market principles. Contrary to the myopic thinking of unions and isolationists, investments in China (and other nations) will create a healthier economy for all. Funds flowing to the U.S, from successful U.S. enterprises overseas produce wealth and jobs for Americans. The growth of the Chinese economy produces wealth that can be invested in America – and that flow is already happening.

Enough for now. Next time, I will expound a bit on a concept I call “localizing investments.”

Have a productive week! Larry P. Horist - HBE Chairman

  • Personal Income On The Rise
  • The per capita disposable income of urban residents in northeast China's Heilongjiang Province reached over USD 1,000 last year, a rise of 10.7% year on year. The income rise is attributed to the increases of wages, business incomes and incomes from properties, according to the provincial statistics bureau.

    The per capita net income of rural residents in the province surged 7.2% year on year to USD 400 last year. The bureau attributed the increase in farmers' income to better sales of grain and increasing incomes from labor services.

  • Pepsi Expansion in China
  • Pepsi (China) Chairman announced that Pepsi's first canning plant funded with USD 20 million is due to begin production in two months. Pepsi further adds that over the next three years, Pepsi would spend USD 850 million in China.

    In 2005, Pepsi opened three plants in China. Till now, Pepsi has set up 40 businesses and projects with a total investment of over USD 1 billion. It currently employs 10,000 people in China.

  • Public Relief For Public Inconveniences
  • Alongside food and fire crackers, Chinese are adding a new item to their lunar New Year shopping - Adult diapers. No, you did not misread.

    Sales have soared ahead of the holiday as travelers prepare for long trips home aboard trains so crowded that even the toilets are jammed with people. A southern industrial city with a large migrant population, stores report diaper sales have risen 50% since the main travel season began.

    The problem arises from the need to sell twice as many tickets as there are train seats to accommodate the crush of travelers. Those without seats must find some place — any place — to put themselves, including in overhead racks, between cars, and in the usually stinking toilets. Just purchasing a ticket can mean lining up for hours.

    Despite such inconvenience, the deeply rooted concept of a family reunion prompts people to undertake such journeys, at all cost.

  • Ski Makers Eye China
  • The world's largest ski makers have seen the future, and it begins at places like Nanshan Ski Resort in China, where the snow is man-made and each of the 12 runs lasts less than a minute. Nanshan and China's 204 other ski areas may be the hottest market for ski makers.

    "China has all the ingredients: mountains, snow, people, and economic enrichment," says Jean- Francois Gautier, 51, president of Skis Rossignol, which is based in Voiron, France. "It would be a big mistake not to be there."

    The Winter Olympics, which opened on Friday in Turin, Italy, may give China its first skiing gold medals, helping ski makers to lure more of the country's 1.3 billion people to the slopes. Skis Rossignol's local agent last month sponsored the 2006 Youth Cup slalom competition near Beijing to pique interest in the sport ahead of the games.

    The number of Chinese who went skiing last year rose to 3 million from 300,000 in 2000, as economic growth created a middle class with money to spend on leisure.

    Skiing will take off in China when investors improve its resorts, especially in the mountains near Harbin, says Michael Schineis, president of Atomic, the world's largest ski maker. The Harbin Yabuli Ski Resort, China's biggest, is 74 miles from Harbin or a two-hour flight from Shanghai. Opened in 1996 for the third Asian Winter Games, its highest peak is 3,200 feet. Opportunities at other ski resorts in Heilongjiang are also seeking investors and joint venture partnerships.

    "They ski on hills and the only real mountains are difficult to get to," says Eric Guilpart, director of marketing at Paris-based Compagnie des Alpes, Europe's largest manager of ski areas, including the Chamonix resorts in France. "It's not the sort of quality we look for."

    Many companies, including Vancouver-based Intrawest Corp., the largest ski resort operator in North America which also manages Whistler in British Columbia, have begun scooping out opportunities for expansion into China. Boosting the popularity of winter sports is an important part of China's Olympic sports strategy, says Duan Shijie, a deputy director of the General Administration of Sport in Beijing.

    For more information about Yabuli or other ski resorts in Harbin, please contact us.

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