Foreign Investors And China Maket Reviewed by Momizat on . How do you see the China market? What’s the real potential? How does it comparing to the US in terms of statistics? Dr. Alan Phan, Chairman of Hartcourt, gave s How do you see the China market? What’s the real potential? How does it comparing to the US in terms of statistics? Dr. Alan Phan, Chairman of Hartcourt, gave s Rating:
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Foreign Investors And China Maket

How do you see the China market? What’s the real potential? How does it comparing to the US in terms of statistics?

FOREIGN INVESTORS AND CHINA MARKETDr. Alan Phan, Chairman of Hartcourt, gave some insight on this interview
By “Shanghai Daily”

How do you see the China market? What’s the real potential?
Right now, China is consisted of two distinctly different markets: the major urban populations along the East coast of China and the rural mass of the Western provinces. The differences in lifestyles, income and spending habits are so big that you might conclude they are from two different countries. The government is doing its best to close the gap; but this effort won’t see any real measure of success until 10 or even 20 years from now. But eventually, they will close the gap. We all know that China GDP has grown over 10% per annum for the last 12 years straight. Even in 2001, when the world is in recession, China recorded a 7.3% growth. However, this result mostly comes from the urban market of about 22 percent of the population. When the rural mass catches up with the rising standard of living, you will realize the true magnetic of the size of China market. It would be at least 5 times bigger than all the present projections based on current growth rate.
How does it comparing to the US in terms of statistics?
The total GDP of China is about 1.3 Trillion USD in 2001. That’s only 20 percent of the US. However, they are catching fast. Remember, their GDP was only 200 Billion in 1980. If you look at the Eastern provinces alone, the GDP per capita here has gone from $700 in 1980 to about $3,000 now. If they maintain this growth rate, they will hit the present size of the US economy in 2025.
So the speed of the growth is even more impressive than the size?
Exactly. Twenty five year ago, I used to go to Guangzhou from Hong Kong. Our car would stop at a small village next to the border so everybody could relieve themselves in the surrounding rice fields, after hours struggling with immigration and customs officers. Today, that village, called Shenzhen, has a population of over 5 Million, uncounted five-star hotels, traffic jam and a night life that makes Hong Kong blush. Anyone who came to Shanghai 10 years ago would not recognize the skyline of all these new high-rises. Rome wasn’t built in 7 days, but make no mistake, the Chinese is creating a world record.
What’s the major challenge for foreign investors?
China is still a semi-capitalistic economy. WTO has forced them to re-write a lot of rules and regulations, but the application is still haphazard. There will be countless of delays and frustrations in setting your business here; as well as dealing with a very bureaucratic tem and mentality in your daily management tasks. Many lucrative business sectors are still protected for local enterprises until 2015.
Other challenges will be finding the right local partners, understanding the unique characteristic of different market segments, protecting intellectual properties, doing due diligence in transactions, and working in a strange environment and culture.
What’s your suggestion for these foreign investors?
First and foremost, find the right local partners. Your business plan should be prepared and adapted with participation from local people. An American idea could be employed only after modifying it with Chinese character.
Second, all operations must be monitored closely by your own utives. A hands-on management style is a must. There should not be any remote control, especially with financial matters.
Third, be flexible, considering the fast-moving nature of China market and its business environment.
Finally, be patient. Very patient. China has huge potential, but it is full of obstacles, problems and deceptions. If you take a long-term view, then you could eventually realize your goal. China presents an opportunity of historical proportion, so if you hang on long enough, your success should be unparallel in size and satisfaction.
Dr. Alan Phan, Chairman of Hartcourt

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