Tag Archives: financial times

China’s Rural Areas Show Potential To Drive Future Economic Growth

“Seeds Of Change” Starting To Appear In Formerly Destitute Areas, Motivating Entrepreneurs To Develop Remote Countryside

China's rural areas remain far behind the wealthy east coast in terms of economic development. If entrepreneurs have their way, this will change over the next few decades

China's rural areas remain far behind the wealthy east coast in terms of economic development. If entrepreneurs have their way, this will change over the next few decades

For years, China’s hinterlands have benefitted little from the huge economic growth that has transformed the country’s prosperous east coast, remaining underdeveloped and relying mainly on agriculture mainly as a result of their remoteness and often harsh terrain. If an article in today’s Financial Times is accurate, though, the next few years may be seen as a turning point for the mainly rural provinces in China’s interior. As much of China’s future growth will (or should) depend on domestic consumption and investment rather than foreign exports, the country’s interior — with its plentiful and comparatively cheap land and labor and delayed development (making it something of a “blank slate” for business) — should, if development is done correctly, make it one of China’s main engines of economic activity for decades to come. While this is obviously easier said than done, a number of motivated Chinese entrepreneurs have set out to do everything possible to make rural China prosperous, and — given the right mix of time and incentive — they might just be successful.

From James Kynge in today’s FT:

Reforms in rural finance, the monetisation of agricultural land and social welfare appear poised to turn China’s countryside from an indigent backwater to a driver of national economic growth over the next five to 10 years…Goldman Sachs has invested successfully in a leading sausage-maker. Wahaha Group, China’s biggest beverage company, owes its buoyant earnings performance largely to the rural market, where it commands a 60 per cent share. Rural China has also been a main force this year behind the surging sales of cars with a capacity of under 1.6-litres.

The fact that China’s second- and third-tier cities are the country’s major hope for sustainable business is well established. But what about the country’s fifth- and sixth-tier cities? With the sweeping changes already brought about by land privatization (perhaps downplayed by Chinese media, but a revolution in itself) and rapid commercialization of rural areas like Hubei, Zhejiang, Jiangsu, Shandong, Henan and Shanxi (as designated by the FT), still relatively impoverished and underdeveloped areas, the next 10 to 20 years could prove a windfall as companies invest in large-scale infrastructure projects (wind & hydro power plants), rail, housing, farms and heavy industry. The effect on common people’s lives could (hopefully) be dramatic.

Much like America’s continued economic strength was built largely on the development of its interior, China’s best option for growth based less on exports will be to lift its central and western provinces out of the centuries-old poverty that remains a plague in many areas.

Chinese Tap An Inner Dynamic To Drive Growth – FT

The Chinese Consumer Looks To Be One Of The Biggest Engines Of Global Growth In The Long Term

China's inland consumer is rapidly becoming the country's engine of change and growth

China's inland consumer is rapidly becoming the country's engine of change and growth. Image © New York Times

The Financial Times has an excellent article today about the rise of the Chinese consumer, once a virtually non-existent market but now the darling of the world’s multinationals.The article details how the Chinese government is trying to get consumers to make the shift “from export-oriented growth to a greater reliance on inner dynamism,” much like the United States did in the 19th century. Going along with observations I have made before, much of China’s current growth and transition is comparable to the same events in the US roughly 100 years ago — from the problems with quality control and political issues, consumer reluctance to spend, and business “grey areas.” The article is well-researched and focused, and includes many valuable insights into the monumental task ahead for the Chinese government — transforming the spending habits of over a billion individuals, who have been accustomed to high savings rates (for cultural reasons as well as China’s lack of a social safety net) and a lingering distrust of less established domestic brands (particularly since the reforms of 1978-79).

But the key to this article is its surprising (and incredibly significant) observation is its figures about the exponential growth of the inland, third-tier city consumer. This consumer segment has only now come to light, and as we have discussed before, inland Chinese cities look to be the future; not only for individuals, but for businesses and marketers as well.

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The Pearl River Delta Rises On A Tide Of Art Developments

The Influential Trio Of Hong Kong, Shenzhen, And Guangzhou Roar To Life For Events Like The Guangzhou Triennial

ART HK 09 takes place from May 14-17

ART HK 09 takes place from May 14-17

Art collectors and lovers are looking to Hong Kong to become Greater China’s devoted art epicenter. The region’s already-enacted duty law reforms, smooth business culture, and unique blend of Asian and Western culture have made it, and continue to make it, the world’s meeting ground. In the arts, this is no exception. Taking place in the heart of China’s wealth factory, the Pearl River Delta of Hong Kong, Shenzhen and Guangzhou — where the Mainland’s first experiments with capitalism took place in the late 1970s — annual events like the Guangzhou Biennial and the upcoming Hong Kong Art Fair (ART HK 09) are big draws for China’s emerging art consumer, the wealthy, investment-savvy “New Chinese Collector.”

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