Messages from Northeastern China (Part Two)
April 1, 2011｜China
Former Chief Representative of Shenyang & Harbin Liaison Office, Itochu Corporation
In opening, alongside expressing my deepest condolences to all those who fell victim to the Great Tohoku-Kanto Earthquake, I hope from my heart for the earliest possible recovery.
Recent Comprehensive Overview for China
- In 2010 China passed a major milestone in terms of its economic indicators. This was that its GDP overtook that of Japan and became second globally. In addition, its energy consumption overtook that of the United States and became the global number one. Conversely it can be said, that, solely by reason that there was a stable supply of energy, China was able to continue high economic growth. Other economic indicators, such as the amount of trade, foreign exchange reserves, crude steel production, and the car market, also boast number one world rankings.
- China’s National People’s Congress (NPC) was held in March 2011, and Premier Wen Jiabao firmly laid out the shift from an export-driven high-growth path to a demand-led economic model. The economic growth rate was set at a modest 7%. They are aiming at a shift from volume to quality.
- 2012 will be a time for politics on the global scale. As well as in the United States, presidential elections will also be held in the neighboring ROK and Taiwan. In China the transfer of power from President Hu Jintao to Vice President Xi Jinping is scheduled. For China which has various problems internally, economic stability itself is an urgent issue for staying in power.
- In February this year I attended the New Year Seminar jointly staged by the Hong Kong Trade Development Council and the Kansai Japan Hong Kong Society. I sensed the rapidness and great swell of people, goods and money between China, with Hong Kong in the role of engine, and Asia. In 2003 the amount of trade between China and Japan stood at twice the amount of trade between China and ASEAN, but presently they are practically in equal contention. China’s GDP will overtake that of the United States in 2030, and it is estimated it will be four times that of Japan. If Hong Kong and Taiwan are added to China in One Country Three Systems (consolidated accounting if we were talking about companies) then that realization would be moved still further forward.
- In addition, China is in the midst of developing multilateral diplomacy from the viewpoint of the securing of resources. Partners in the economic sphere are also expanding, centered on Asia. For Japan too this may announce that the time where it could leisurely ask “How should we continue engaging with China?” is already over. It is necessary to largely recognize that its position has been changing from one of choosing to one of being chosen.
Case Examples of Expansion into Northeastern China
- As was mentioned above, China’s economic growth has been supported by the Huadong [East China] area centered on Shanghai and the Huanan [South China] area centered on Hong Kong and Guangzhou. Both areas have borne a great deal of the country’s output quotas. Well Northeast China is progressing in the present tense. It has been rated as having exceptional potential for a future great transformation. As a result of the Northeast revitalization policy a great number of state-owned enterprises have succeeded in an improvement away from their metabolic syndrome of laid-off workers and toxic assets. They have also been nurturing up-and-coming private-sector firms. For Japan, trade and business partner companies have been steadily increasing. Referring to the examples of expansion into Shenyang by medium-sized Japanese-affiliated companies, I hope that you get a sense of the key to success.
- Shenyang, as expressed in the phrase “Dong qi, xi zhong, nan gao, bei nong [East, cars; West, machine tools; South, high-tech; North, agriculture and food]”, has nailed its colors to the mast for the direction of development in its peripheral development zones. Major and medium-sized Japanese-affiliated companies have expanded constantly centered on manufacturing industry, whereas service-industry companies are still few. I shall introduce two Japanese-affiliated companies from among them which are expanding their operations as a result of trial and error.
- Shenyang Feiniao Yunshu [Shenyang Asuka Transport]
With business having topped out in Japan, finding a way out by going abroad was a first for the company. Knowing that getting authorization for business as a transport company would be difficult, first they registered as a trading company, and in the form of a capital injection from it, launched a transportation company. The development of customers was mainly with Japanese-affiliated companies. The general manager sent from Japan became a member of the Shenyang Japanese Association, and was active in the creation of a network of people and supporters. The Japanese-affiliated company also has a feeling that it must get orders placed by Japanese companies whatever the cost. Accompanying the increase in orders the number of vehicles in its fleet has also increased, they have become able to offer a precise response and the level of customer confidence has risen. They have also focused on the cultivation of local staff. The attitude and effort to try and blend in locally and the understanding of China and the Chinese has led to firmly-grounded development.
- Shenyang Shi Gongzuo Kongjian [Shenyang City Work Space]
The spur for expansion was hearing from Japanese-affiliated companies which had completed their initial expansion that: “We want to build a new factory in Shenyang, but we are looking for a good business which can undertake the design and construction of the interiors and fixings work.” At the outset it started with a business trip to Shenyang with one bag, and borrowing a desk in the office of a contractor. Through getting permanent resident status in Hong Kong and being treated as a domestic company investing from Hong Kong, the company registered as an individual person. With the expansion of business in Shenyang they also registered as an interiors construction company and a sales company. In Northeastern China there have traditionally been many Japanese-speaking personnel and securing high-caliber staff is possible. The ethnic character of the people of the Northeast is sincere and good-natured. Currently, through being the only Japanese interiors business holding a license for design and construction in Shenyang, its customers are increasing. The burning motivation for the managers to start a business comes first of all, and then goes on to a success story closely reminiscent of heaven-sent chances, the advantages of location, and harmony among people.
[Translated by ERINA]