Wine and economic growth..

One of the most fascinating buildings I have ever seen has become my compass since arriving in Beijing. It is visible from almost anywhere in the city, including my bedroom window and I have used it as a point of reference every time I visited a different part of the city.

Little did I realise that this building’s shape would help unravel some of China’s economic success secrets and that it symbolises how China has become one of the most enviable economies of the world.

Eager to find out why the economy is booming in China, I visited with much excitement Beijing’s financial district of Chaoyang. Immediately after exiting the subway, I was surrounded by gleaming skyscrapers with futuristic shapes and playful light displays. My treasured beacon stood proud in the middle of them all, reaching a neck-breaking height of over a half a kilometre into the sky.

The Zun Tower is the Beijing CBD’s newest and tallest addition. It is shaped upon an ancient relic of Ancient China called the Zun, a vessel used to store wine during ritual ceremonies. The Chinese see dining and drinking as an important part of doing business. Such merriment comes across as unstructured, but beneath the seeming informality, rituals are closely observed.

To understand how wine fits into Chinese business culture, there are two concepts worth understanding —  guanxi (关系 /gwann-sshee/ ‘connections’) and mianzi (面子 /myen-dzrr/ literally ‘face’). Knowing the right people and knowing how to honour those you meet are crucial when doing business in China. Baijiu (rice wine) is drunk at meals. It is served in shot-sized glasses and used during toasts to show respect and build relationships. In many places in China, especially Northern China, the more toasts bestowed with Baijiu, the more face has been conferred upon the dinner guests.

The skirting base of the Zun Tower, Beijing

Beijing is home to the headquarters of more than 60 companies on the Fortune Global 500 list, the largest number of any city in the world. More than 7,000 large businesses, including state-owned enterprises, large private companies and foreign-funded multinationals, have established their headquarters here. Small to medium enterprises (SMEs) make up about 98% of all registered companies in China and contribute to approximately 60 percent of the GDP and 70 percent of exports. SMEs employ 82% of China’s total workforce and are responsible for nearly 75% of new jobs every year. China’s SMEs are still growing rapidly with no end in sight. While several developed countries experience dwindling middle classes, China is enriching theirs.

The Zun Tower overshadows Beijing’s other famous landmark, the CCTV Headquarters.

What made this happen? In the 1970’s the government embarked on a major program of economic reform to awaken a dormant economic giant. It encouraged the formation of rural enterprises and private businesses, liberalised foreign trade and investment and invested in industrial production and education. The structural changes they implemented have paid off handsomely. The changes made have been accompanied by market-oriented reforms that introduce profit incentives to rural enterprises and small private businesses. 

Beijing business consultant, Richard Hoffman, sums it up:

“By encouraging the growth of rural enterprises and not focusing exclusively on the urban industrial sector, China has successfully moved millions of workers off farms and into factories without creating an urban crisis. Its open-door policies have spurred foreign direct investment in the country, creating still more jobs and linking the Chinese economy with international markets. Strong productivity growth, spurred by the 1978 market-oriented reforms, is the leading cause of China’s unprecedented economic performance.”

The Chinese do not widely use litigation to solve business disputes. Local government committees through an ancient royal court process known as petitioning solve more than 80 percent of cases, with no fees for the applicants.

Trying to import products from South Africa, I have discovered just how important it is to understand the principles of Guanxi and Mianzi – The Chinese people want to get to know you first and witness your true character, which, to me, is quite admirable. They are also very cautious. Business is cut-throat but does come with unspoken rules.

When trying to work out what makes the Chinese economy different, one must first understand the relationship between The Chinese People and The Chinese Government. There is a long history of submitting personal ambition to that of the community and state through Confucianism. It is said that officials put the people first, then themselves. Whilst I have only been in Beijing for 5 months, from what I have witnessed, I can bear testimony to this.

True character, strengthened bonds and collectivism all contribute to this fascinating culture, pulsating with innovation.

Beijing Greetings,
Mario

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