My visit to Yantian port, Shenzhen, seemed to confirm a lot of stereotypes about China’s industrialised economy. The first sight was an endless sea of containers stretched into the distance, waiting to be lifted onto ships and carried away to spread cheap Chinese goods across the planet.
I was staying in a region made famous by scandals in working conditions at Foxconn’s flagship factory, the largest producer of electronic components in the world. This was an area, I thought, of cheap labour and countless exports.
However, the more time I spent living and working in the region, the more I realised how over-simplistic this traditional view of China as a poor manufacturing and exporting nation is.
China is enormous. It feels more like a continent rather than a country. The city of Shenzhen, which barely existed before it was designated a special economic zone in 1979, now has an official population of 10m people. But it’s no glorified shanty town, filled exclusively with factory dormitories. It’s a city of glass and concrete office blocks punching up into the skyline, of marble shopping plazas and a public transport system that puts Transport for London to shame. Most of all, it’s a city of relentless, unstoppable growth.
The scale of development and the speed of the physical change here is something unimaginable in Europe. Local government in China does not hamper new buildings with planning regulations; it builds them itself, then berates businesses when they can’t keep up. This model doesn’t always breed stability, but it delivers opportunity.
On the back of all this expansion rides a wealthy Chinese middle class, spread across the great coastal cities – no longer nascent, as it has so often been described, but established, assertive and incredibly numerous by European standards.
China has been importing oil and raw materials for construction for a long time, but now economic growth and middle class tastes are promoting new kinds of imports; particularly from Europe. European original equipment manufacturers, for example, have found a burgeoning market, filled with growth and surprisingly little domestic competition.
Malcolm Staff of Halifax Fan Ltd, a UK-based industrial fan supplier, told me how his company faced a challenging environment six years ago, and he took the risk of expanding into China. Today the problems he faces are no longer getting enough orders in, but expanding quickly enough to keep up with rising demand. Buying goods from China to UK
For Halifax Fan and other mid-sized British businesses, the advantage of moving into China has not just been cheaper labour costs – that great stereotype of Chinese manufacturing – but also access to a mushrooming Asian marketplace and a speed of growth not seen in Britain since the industrial revolution.
The prevailing Chinese middle class, both in business and as consumers, associate European goods with quality and prestige. It’s not uncommon here to hear of Chinese companies insisting on paying extra to import products made in European factories, even when identical products made by the same company are already available in China.
The same applies to consumer products. Roy Liu, a regional sales executive for Globe Express Services Ltd, an international logistics company, showed me the impressive volume of fine wines his clients in Europe import into Gaungdong province alone. The rural Chinese poor cannot afford these products, but the sheer size of the country means that opportunities are always available for those willing to look.
The Chinese government does not promote imports into China in the same way that it encourages its own export sector, but nor has it gone out of its way to obstruct the recent growth in inbound trade. If current trends towards economic liberalisation continue, a more favourable political context in the future could present even more opportunities.
Too often, when we talk about business in China, we imagine the workshop of the world and using Chinese labour to bring cheaper goods to consumers at home. But from a business perspective China offers so much more than this.
The interaction of these two trends has the power to create some glaring new opportunities for European business; the question is, who’s going to take them?
Dan Hully is an associate at one of the “Big Four” accountancy firms, specialising in audit for SMEs. He returns from a summer spent working in Shenzhen, China.