Growing your business in Tianjin

Spring is bustling in the port city of Tianjin. Investment seminars, trade fairs, business symposia, housing exhibitions and school tours ensure residents and long-stay professionals find all the necessary, demanded and desired comforts for themselves and their families.

This month, our experts in domestic law contribute their knowledge on beginning, growing and protecting your organization’s foray into China. Real estate and economy columns analyze the trends of the first quarter of 2011, and what to expect in the coming months. And two new leaders – one in education and one in hospitality – discuss their goals and approaches to successfully integrating with the local community.

To find upcoming business and leisure activities, or that vital business contact you’ve been seeking, review the reports from local chambers of commerce, the May calendar of events and our listings of the most frequented locations in town.

Business Tianjin, MAY 2011 (.pdf)

Disaster, cooperation and recovery

In mid-2008, the world came to the rescue during Sichuan, China’s catastrophic earthquake aftermath. Individuals, organizations and governments sent aid in the form of equipment, food, volunteers and monetary donations. The first foreign search-and-rescue team to arrive on the scene was sent by Japan.

Now eastern Japan stands in the wake of a massive earthquake and destructive tsunami that swept through on 11 March. This time, a rescue team from China was one of the first to arrive in Japan, pledging to help evacuate citizens from areas near damaged nuclear reactors.

China and Japan have been political, cultural and economic rivals – and bitterly so – for the better part of a century. Reports of one another usually entail disputes over sea borders, historical records and trade imbalance. As in 2008, it again took a natural disaster for these two nations to put differences aside and work together to rebuild.

The truth is, China and Japan are inextricably linked to one another through an extensive history, evolution of culture and (more recently) economic growth. Any great blow to one ripples across the sea, quickly striking the other.

It is and continues to be in the nations’ best interests to work together – towards rescue and rebuilding efforts as much as peacekeeping and industrialization.

In June 2008 we urged you, the reader, to contribute traditional and in-kind donations to the Sichuan relief effort. We again request that you and your organization assist in the recovery of our partners to the east. Please contact the Red Cross (www.redcross.org.cn) to see where help is needed most.

Your assistance assures the quickest possible recovery for the millions of people directly affected, and for the hundreds of millions more to whom they remain connected.

Business Tianjin, APR 2011 (.pdf)

Balancing salaries, inflation, currency revaluation and trade

Rising salaries outpace inflation. Yet the cost of living continues to be as great a concern for consumers as the cost of employment for businesses. Buyers lament regular increases in the pricing of fuel, household goods, and the autos and homes for which they’re purchased. Meanwhile, Tianjin’s minimum wage − set to increase by 16% this year − is just one of many causes for investors and manufacturers to consider establishing themselves outside the Great Wall.

While western trade partners proclaim that alleviating both currency suppression and trade protections will strengthen China’s global foothold – increasing the value of its currency and allowing tougher market competition – doing so may adversely affect both inflation and business expenses at home.

This month’s Economy and dual Feature Stories discuss recent developments in these areas, as well as their potential outcomes.

As always, we welcome your constructive input and inquiries. If you are interested in contributing to a future issue of Business Tianjin, or just have questions or comments on an article, please reach out to us at the contacts on this page.

Business Tianjin, MAR 2011 (.pdf)

President Hu Jintao visits the White House

President Hu just concluded his state visit with President Obama in Washington, DC as of this writing. Considering his first visit came prior to the global economic crisis, it is worth noting a few comparisons.

In 2006, Hu was invited by President George W. Bush for a non-state-designated lunch at the White House. The US-China trade deficit ran 234 billion USD that year, and China’s economy grew at around 11%. Hu reaffirmed a promise to lead a more consumer-driven economy, but made no concession on currency revaluation of a quasi-pegged CNY (then 8.02 per USD).

Yet CNY slowly appreciated. And China’s promised domestic demand developed. When the global crisis struck, domestic consumption helped China recover quickly.

This year Hu was welcomed back to a fully designated state dinner, complete with all the formality of a global political dialogue. Over the past 4 years, the two nations’ annual trade deficit has increased a relatively modest 8%, to 252 billion USD, though China’s GDP still grew close to 10%. China’s booming consumer-driven economy and strengthened currency (now 6.59 CNY per USD) suggest steady progress for both nations.

Obama quipped to Hu that the US still wants “to sell you all kinds of stuff”. And though obstacles continue to stand in the way of free trade, economic indicators point up.

For commentary on trade developments with China, please read through this month’s Economy, Feature Story on protectionism, Press Reviews and Legal Assistance columns.

As always, we welcome your constructive input and inquiries. If you are interested in contributing to a future issue of Business Tianjin, or just have questions or comments on an article, please reach out to us at the contacts on this page.

Business Tianjin, FEB 2011 (.pdf)

New Year investments

The end of a year draws out resolutions from businesses as much as from individuals. And the 2011 resolution of choice for many multinational organizations continues to be investment in China’s burgeoning energy industry.

In this first issue of the year, Business Tianjin reviews many of the options and investors taking advantage of these opportunities. Our Feature Story covers India-born/Tianjin-based Suzlon’s investment in the domestic wind power industry, and Dialogue talks with Crysalix, a venture-capital organization eyeing solar and nuclear energy investments.

Legal Assistance and Policy Explanation articles discuss China’s recent increase in foreign investment approval thresholds – which alleviate the application process for smaller investments – and the latest stance on government procurement of energy-efficient and environmentally friendly products from overseas.

Lastly, but perhaps of greatest interest to decision-makers, the January Economy article outlines China’s macro plans for 2011 and beyond, and how will they affect businesses operating within the country.

Business Tianjin magazine begins each year by reaffirming our commitment to supporting and promoting the pursuits of the local business community. We always welcome your constructive input and inquiries. If you are interested in contributing to a future issue of Business Tianjin, or just have questions or comments on an article, please reach out to us at the contacts on this page.

In this New Year, we wish you all the growth and success that your hard work deserves.

Business Tianjin, JAN 2011 (.pdf)

G-20 summit ends without resolutions

The most recent meeting of the Group of 20 concluded in mid-November without achieving many of the participant’s concrete aims.

The Seoul Summit Leaders’ Declaration included phrases on remaining “determined” and “vigilant”, to “pledge coordinated efforts” and “promote job creation”. There were even sections addressing (Chinese) currency valuation, (American) capital flows and (European) trade protectionism. Most notably, the G-20 leaders all signed that:

“We will move toward more market-determined exchange rate systems and enhance exchange rate flexibility to reflect underlying economic fundamentals and refrain from competitive devaluation of currencies. Advanced economies… will be vigilant against excess volatility and disorderly movements in exchange rates. Together these actions will help mitigate the risk of excessive volatility in capital flows facing some emerging market economies.

“We will refrain from introducing, and oppose protectionist trade actions in all forms… We reaffirm our commitment to avoid financial protectionism.”

Yet none of these statements clarifies any of the 20 nations’ specific commitments, targets or planned actions. As Newsweek reported, “The messiness of the negotiations was made clear by the nebulousness of the final press releases, which left enough wiggle room for all 20 nations to sign.”

China gave no ground on its controlled currency appreciation, which has hindered the ability of other exporting nations to compete. The US was unable to promise that the Federal Reserve would refrain from purchasing US Treasury bonds, which the Christian Science Monitor notes would consequently reduce interest rates, turning global investors onto emerging economies.

Even if the leaders had stuck their necks out and offered to make the first compromise, none of the G-20 declarations are legally binding for signatory nations.

Economies that were not too long ago a case of all action and no talk now seem to be a case of all talk and no action. Let us hope that the coming year will help these 20 major economies to strike a balance between the two.

Business Tianjin, DEC 2010 (.pdf)

The tortoise or the hare

Much like the rabbit in Aesop’s fable, China is racing ahead at full speed. Its economy has paced itself at an average 10% GDP growth for nearly 30 years, during which foreign investment, real estate and infrastructure have surpassed all expectations for sustaining their acceleration. All charts curve up. The hare seems poised to win.

Yet in many fields, China – like the methodical, determined turtle – slowly marches along. After a two-year pause, the CNY exchange rate again creeps upwards; the nation’s fingers grasp further over other lands in search of long-term secured natural resources; and worldwide the government pursues economic ties, staving off political ones with its steadily growing cash reserves. The tortoise is set endure.

Hare skeptics say it may be running low on energy. China’s one-child population will age and increasingly enter retirement over the next few decades, leaving an overreaching nation understaffed.

Tortoise skeptics cite the hurdles it has yet to jump. Nations around the world grow louder and more aggressive in their protests: they resist China’s increasing presence in everything from petroleum to movie production.

Although a finish line awaits somewhere beyond the horizon, the outcome is already known. By embodying both contestants, China has assured its own victory.

This leaves organizations working in China with just one business decision: whose back to ride.

Business Tianjin, NOV 2010