China: The Pearl of the Global Business Chain

Yes, I love Chinese food and especially like visiting Chinatown in New York during the Chinese New Years. I love those paper lanterns, the swirling dragons and a cold glass of Tsing Tao beer. In spite of all these positive feelings, I still couldn't figure out why my colleagues are so excited about the prospect of doing business in China. I mean, they don't speak English over there, they have no money, no infrastructure and are a true third world country, right? Like most Americans, what I thought I knew about China couldn't be farther from the truth.

China is about 9,596,960 sq. km. (slightly smaller than the USA) with about 1.3 Billion people compared to our 290 million people. I always knew China was much bigger than the USA in terms of population, but discounted China as a potential market due to what I felt must be a weak infrastructure, another common misconception. China currently has over 161 million computer users and that number is forecasted to grow to 300 million by 2010 according to NPES. China also currently has over 80 million internet users expected to increase to well over 150 million users by 2010. The population of China even becomes more dramatic when you consider growth rates. According to the United States Central Intelligence Agency, China has a birth rate of 12.96 compared to that of 14.14 in the USA and a lower death rate of 6.74 to 8.44 in the USA. This simply means that the Chinese population is growing at about seven times that of the United States making it the largest evolving marketplace on the planet.

Ok, so China is big in terms of population, I always knew that and they seem to be developing a strong infrastructure but do they have a Graphics Communications Market? Yes! Emphatically Yes, and it is growing at a GDP of 7.3%! Not only is the Chinese Print marketplace growing in terms of GDP, it is also growing in terms of sites with over 100,000 sites and 2 million employees in 2003. That's quite a difference from the US Print Marketplace where the number of establishments and employees is shrinking.

Why now?

So they have a lot of people and are growing a nice infrastructure, but why should I care especially when business and competition is getting so tough domestically and in Europe? That is exactly why you should care. In 2001, China imported over 6,900 pieces of Graphic Communications equipment ranging from computer to plate to web offset presses. From a technology standpoint, they are still behind the "bleeding edge" in the United States and will continue to import equipment, software and skills to support an expanding graphic communications market. They have over 9000 magazine titles, 2200 newspapers and publish over 150,000 book titles a year.

It's not all a pretty picture however, while the market numbers may be attractive, they represent the affluent Chinese society which is only a small percentage of the overall Chinese population. Today, the affluent population of China is centered in the political and commercial centers such as Beijing, Shanghai, Tianjin and provincial capitals of Guangzhou, Hangzhou, Nanjing, Chendu, as well as special economy development zones such as Shenzhen and cities throughout the south China coastal region. However, according to Asian Demographics Ltd, between 2003 and 2012 the total number of households earning over Rmb 80,000 (about $10,000) is projected to increase at an average compound growth rate of 17.9% per annum, (assuming China's total GDP grows at 5.7% per annum for the same period) but based on historical trends (1992 to 2001) this growth will be faster away from the eight dominant cities. As such by 2012, even though the number of affluent households in those eight cities will have more than doubled, those cities are expected to decline to be accounting for just 33% of the affluent market. As this trend develops, the rest of China will join the key cities in demanding the products that affluence delivers: newspapers, magazines, televisions and computers.

The growth rate is astounding and although they have a GDP of just $4,400 per capita China is the second-largest economy in the world after the US (measured on a purchasing power parity basis. There are more than economic reasons to consider involvement in the Chinese market, there are fantastic cultural changes happening in China that make involvement urgent. Since the birth rate is controlled by the government (only one child per family, although is not strictly enforced any more in many areas of China) and they have a very low death rate due to medical and agricultural advances, they are faced with an aging labor force and a shortage of skilled labor in the foreseeable future. Bringing technological advancement and developing advanced technological skills is vital to their growth as a nation.

How can I get involved?

Now that the United States Government has developed a position of detente with China, it is possible for organizations and individuals to do business in China. There are many obstacles, however, as there are with anything worthwhile. There are languages and cultural differences, not to mention the great distance between our two countries. Yet the Chinese need our support even though their infrastructure development , graphic arts vendors and printing companies have a lot to offer. There are always lots of reasons not to do something, but some US companies and organizations are already involved. For example, printing giant R.R. Donnelley & Sons Company has announced a joint venture with the Shanghai Press and Publications Administration to build a new $30 million printing plant in China, employing about 300 people.

One way to get involved is to become a technology partner with the NPES, Greater China Project. The project, was started in 1997 with a grant from the US Department of Commerce which was matched by generous contributions from NPES members. Since education is frequently the first step, one of the first functions of the project is to launch an e-commerce distribution, training and service portal in conjunction with the US-China Printing, Publishing and Converting Technologies Training Center later this year. You can find out more about the project and opportunities in China on the NPES web site at www.npes.org and NPES China Representative Office web site at www.npes.com.cn.

Becoming involved with NPES as a Technology Partner puts you on a Chinese fast track with other global thinking companies like, Adobe Systems Incorporated, Apple Computer, Baldwin Technology, Kodak, Dupont and Xerox just to name a few.

Whether you choose to partner with NPES or do it alone, don't let this opportunity pass you by. China is a self-contained economic explosion that is in process, so open that oyster and grab that pearl, you won't get another chance like this in the foreseeable future.