I came across a blog post by James McMullen back on February 16: China Is a Budding Business' Best Friend. I saved it. I intended to comment here on it, but I just never got around to it. Then a couple of weeks ago (April 6) I saw this piece by Mark Gilroy on the current state of the Chinese economy and it struck me that the two pieces provide an interesting contrast...

McMullen is almost bubbly in his excitement about the opportunities that China provides. And why not? The world's largest single market really is becoming more and more accessible at a time when its consumers are becoming increasingly affluent and increasingly interested in consumer goods. Sure, there's been some negative press over product recalls. Yes, America's attitude toward Chinese imports seems to be toughening. But McMullen's words ring true when he says that "...businesses wanting to make it with the big times are scrambling to file their paperwork and get their business relationship with China cemented."

Mark Gilroy's post is more analytical.


© clgregor





Gilroy begins by acknowledging that American firms trying to sell American products to Chinese consumers will find that the weak US dollar "should make buying U.S. products more attractive than ever" for the Chinese. He goes on, though, to say that "what U.S. businesses and consumers are really going to notice in the near and foreseeable future is that costs in China are on the raise and may increase at a more rapid pace."

Gilroy goes on to look at some reasons why the costs of doing business in China and the costs of Chinese exports to the US are going up - tax changes in China, employment law changes in China, the previously mentioned exchange rate, etc. And he examines each of those issues individually.

Gilroy's conclusions: "Two questions that I predict will become more acute for U.S. (and world) companies that do manufacturing in China in the days ahead will be: are we anticipating and ready for continued rising costs? and are the vendors we are currently relying on going to be in business for the foreseeable future?"

Gilroy says, in effect, to be alert; it's going to get harder to do business in China. McMullen says that if you're not there yet, the time is now! I don't guess I disagree with either of them. But they certainly provide a degree of contrast in their perspectives.

McMullen says "There is no doubt that China's economy will not only survive the recall related backlash but as a matter of fact it will most likely flourish!" And he's right, of course.

The question is, if you move into China, will your business survive and flourish with the Chinese economy? Even McMullen's optimism isn't completely unbridled: You will be wise to understand the tax codes, the expectations that the Chinese government will have of you...