CHINA TRADE 2006 - How will the Chinese consumer impact logistics & trade?

By: | at 08:00 PM | Channel(s): International Trade  

Fifty years of pent up shopper denial could set off a spending spree of epic proportions in China. What they buy and from whom is an open question.By George Lauriat, Editor-in-Chief, AJOTVisiting Shanghai is an eye opening experience even for veteran travelers. It is arguably The Peoples Republic’s most cosmopolitan city, and perhaps the best economic barometer of the “New China.” There is an energy to the city that some “Old China Hands” liken to what Hong Kong was like in the late 1960s and early 1970s. Maybe Las Vegas could also be a valid comparison. Why? There is the prerequisite real estate boom, foreign investment, (especially from overseas Chinese interest in Taiwan, Hong Kong and Singapore), an adventurous stock market and the entrepreneurial sense that with money you can make anything happen.
It isn’t just about making money, but more importantly, spending money. The City has been dubbed a “Shopping Shangri La” or an “Oriental Paris.” Like the country’s massive factories dedicated to consumer exports, shopping is an indispensable part of Shanghai’s tourism industry that fills the coffers with foreign exchange. A vast majority of the shoppers frequenting “Four Streets and Four Cities” that compose Shanghai’s shopping quarters are Chinese. That isn’t quite as simple as it sounds. There are many Chinas. Urumchi isn’t Guangzhou, and neither is Beijing. China is “chow faun,” or fried rice, a State composed of an endless number of disparate ingredients, with the commonality of rice, the life-blood of the nation.
The urban areas of the South and Northeast have a much higher standard of living than the rural regions. The challenge for Beijing’s leadership is to balance development in rural areas with that of the industrialized coastal cities. (SEE CHART)
Shanghai draws from all corners of China. The City is the “land of opportunity,” and like a Yangtze flood it draws the nation’s youth, rich and poor alike, to the “economic miracle.” Shanghai isn’t alone in its power to draw youth from the far flung villages of the interior. Guangzhou (Canton) and Hong Kong have been doing this for decades. But Shanghai is by far the largest and most unique in that it represents a wider spectrum of what is really China than the southern Cantonese cities bordering Hong Kong.
Urban and rural residents’ income has kept up a fast pace. In the first quarter, the per capita disposable income of urban residents was 3,293 yuan, a real growth of 10.8%, or 2.2 percentage points higher than the earlier quarter. The per capita cash income of rural residents was 1,094 yuan, up by 11.5% year-on-year in real terms, or down by 0.4 percentage points.
This is not the “economics” that Beijing necessarily wishes to promote, but rather the economic tide that the leadership is riding, and is doing its best to control. Beijing recently embarked on a program to encourage development in the Western provinces in an effort to balance development between rural and urban areas. This has led to a tremendous increase in road and airport construction throughout China. The results are at best uneven. The roads often lead to no place…or at least no place yet. The people of the interior often come from different ethnic backgrounds and speak local languages far different from Mandarin (Putonghua is the “common language) the official language. This puts the Mandarin speaking middle management in the position of either trying to hire and train locally or importing labor from the coastal cities.
The development of the infrastructure has also yielded mixed results. Mark Ting, DHL’s VP, Strategy Planning and Program Management Greater China and Korea Region, pointed out that simply building more airports without the accompanying improvements in air traffic control isn’t enough to handle the increase in aircraft traffic. Ting looks at the airport construction as a glass half full or half empty scenario: “The lack of air traffic control is a potential problem that more airports in the wrong places will only aggravate, but i

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American Journal of Transportation