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Winter 1997 - Volume 2, No. 3

What Does China's Economic Growth Mean For Tennessee?
by Mr. Chih Wang

China's economic growth rate has been kept at above 10% annually for the last decade. The real growth, however, is concentrated in certain coastal provinces and urban areas where less than 25% of China's population resides. In these regions, the actual growth rate is more like 50% per year, or some 6000% during the last 10 years. The population of these regions equals that of the entire United States. This is something to think about.

While a U.S. couple spends on average 65.7% of their combined income on housing, transportation, and medical care (Source: Bureau of Labor Statistics), the Chinese couple receives these things for free or at very little cost. If growth patterns in China and the U.S. remain the same, in less than ten years, a Beijing accountant and her husband will have more real disposable income than a middle class couple in Washington, D.C. or Nashville.

The new economy in China will stimulate imports such as automobiles, entertainment, environmental protection devices, and quality consumer products which will bring about a better quality of life. This means more potential opportunities for Tennessee exporters.

Two-thirds of foreign investment in China comes from Taiwan and Hong Kong. Japanese businesses follow closely. They know the Chinese market best. What do they do? In the past, they leveraged as much state money as possible and utilized foreign investment incentives to speculate in real estate and small manufacturing facilities for quick returns. Today, more companies are making long term investments in China with their own money. They typically do not distinguish between an "international market" and a "domestic market." China is their primary market. It should be yours too.

Just as in the U.S., one cannot become successful without determination and commitment when breaking into the Chinese market. However, unlike the mature U.S. market, China is rapidly growing and there are still relatively few players and competitors in the ring. Your determination and commitment can bring exciting results for a long time to come.

About the Author:

Chih Wang, a registered architect and attorney, has recently completed a YMB $500 million resort and amusement park project near Beijing. He returned to Tennessee in late 1996 to join his wife, Dr. Paula Arai, who teaches comparative religions at Vanderbilt University. He consults on Asian business development and can be reached at Tel. (615) 833-4455, FAX (615) 333-1788, or E-mail: chihwang@aol.com.


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