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China’s New Bullet Train 10/29/2010

Traveling in China just got quicker. A new high speed rail opened for business this week, connecting Shanghai to Hangzhou. October 26  marked the first official trip by the train, recording speeds above 245 miles per hour. The new bullet train which set speed records during the previous trials runs allows citizens to travel the 200 km distance (almost 125 miles) in 45 minutes; twice as fast as the old train’s speed.

Video courtesy of Wall Street Journal and Reuters.

Wall Street Journal Article

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China Map 10/27/2010

China Map

After many years of doing research on China, and finding a lack of quality maps out there, 1ChinaBlog and Understand-China.com decided to put together our own collection of maps. This map is of all of the Provinces in China (gray areas), the Autonomous Regions (yellow), Municipalities (green), and Special Administrative Regions (Red). For a larger map, please click here: China Map

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Guangzhou and Guangdong: What is the difference? 10/21/2010

Guangzhou and Guangdong: What is the difference?

In today’s post I will demystify the difference between two similar-looking words, with two very different meanings. Guangdong (pronounced Gwong-dong) is Southern China’s economic center and one of the wealthiest provinces in China.  Guangzhou (pronounced Gwong-jhoe) is the largest city in the Guangdong province and has been China’s leading international commercial port for over 2,000 years. Guangzhou is the political, economic and cultural center of the province. (See map below)

Guangdong Guangzhou
Type Province City
Location Southeastern China Coast Guangdong Province
Population 95.44 Million USD (2008) 7.6072 Million (2006)
GDP 572.12 Billion USD(2009) 133.5 Billion USD (2009)
FDI 19.2 Billion USD (2009) 11.244 Billion USD (2009)


How did Guangzhou become so strong?

Guangzhou, also called Canton or Kwangchow, is one of the biggest economic zones in China (3rd to be exact), thanks to its proximity to the extremely successful regions of Hong Kong, Macau and its premier access to the Pearl River Delta. The success of these regions began spilling over into Guangdong when labor rates began to increase with the cost of living in Hong Kong. Guangdong’s labor wages are about half of the average monthly wage in Hong Kong.

Guangzhou has grown quickly by offering investment incentives that have helped to attract over 170 of the world’s top 500 multinational companies. The foreign enterprises contributed 11.244 Billion (USD) in foreign capital in 2009; which is over half of the entire province’s FDI. Guangzhou is now the main manufacturing core of the Pearl River Delta region.

Building strength over time, Guangzhou earned 133.5 Billion (USD) GDP in 2009. That is nearly 25% of the entire province’s gross domestic product! With this accomplishment, Guangzhou became the first city in Mainland China to have a per capita GDP of over 10,000 USD.

There is so much going on there!

Guangzhou is also home to the China Import and Export Fair (aka the Canton Fair) which takes place every October and April. The Canton Fair is by far China’s largest and oldest trade fair that been running for over 50 years. Each fair now stretches over three days in order to fit in all of the participants and exhibitors.

Some impressive stats about the Canton Fair:

>200,000 Buyers
>200 countries in attendance
>23,000 Exhibitors
>55,000 Booths
>200 Football Fields in Area (>1.1 Million Sq. Meters)

Some helpful resources I found:

Guangdong Manufacturing & Investment Guide

Guangzhou Government Resource

Invest Guangzhou

Canton Fair Resource

Another China Resource

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When is the Chinese New Year in 2011? 10/11/2010

Based on the lunar calendar, the New Year is always the first day of the first lunar month (this coming year it is on February 3, 2011) and lasts two full weeks ending on the fifteenth day with the full moon. Most people get at least one week off of work to spend time eating lavish meals and welcoming the new year; which means factories are usually closed during the first week of the new year (from February 3-10). The Chinese New Year celebration is actually the single largest annual migration of human beings, when China’s nearly 150 million migrant workers return home from the big cities to see their families. Be sure to take this into consideration when setting up production schedules and shipments as the New Year will have an impact on your factories. In addition, if you happen to be traveling in China during this time, you will find extremely crowded airports, train stations and hotels.

Seeing as how I was already doing the research, I decided to include a little history on the background of the holiday and where you should go to celebrate just in case you do happen to find yourself in China that week.

While Americans celebrate winter with turkey, sleigh bells and mistletoe, the Chinese celebrate their most important holiday with dumplings, fireworks, lanterns and parades. The New Year, also called Spring Festival, is arguably China’s biggest, most important celebration that has been celebrated for centuries and is deeply rooted in myth, legends and traditions.

The main focus of the celebration? Family and prosperity. A few days prior to the first day of the New Year, it is customary to clean and prepare for the celebrations, in efforts to “sweep away” the bad luck of the previous year and make room for the New Year’s good luck.

New Year’s Eve in China is full of parties with family and friends, firecrackers and lots of food. It is customary to serve dumplings to symbolize the coming of wealth and a new year replacing the old. Children are often given gifts of money and fireworks are often set off all over the cities.

Over the next two weeks, people spend time visiting families and catching up with relatives. Spring Festival ends on a high note on the fifteenth day, with the Lantern Festival, or Yuanxiao. Lanterns are typically made by children who march through the streets beneath the full moon. Lantern shows, games and dancing take place all over China, but a few of the most notable celebration spots are in Hong Kong, Beijing ,and Shanghai, where the “lanterns” look more like huge, brightly lit floats.

Chinese New Year in Hong Kong

If you are going to be in China, Hong Kong has a spectacular parade and fireworks show on the second day of the Lunar New Year. Starting at around 8pm in Victoria Harbor, the streets are lit up with colorful costumes, music, performers and floats. Following the parade is a magnificent fireworks show that continues into the night throughout the cities.

Chinese New Year in Beijing

Beijing’s impressive Lantern Festival is held every year in Longtan Park. As China’s capital, Beijing has extensive experience with putting on world-class Lantern Festivals, including the many performances for the Olympics Games in 2008, so you are in for a good show.

Chinese New Year in Shanghai

If you are going to be near Shanghai, head out to the Yuyuan Garden for a festive atmosphere with traditional sticky rice balls (the round shape represents wholeness and unity) and lanterns of all shapes and sizes.

You don’t have to travel to China to celebrate though; Chinatowns all over the world have celebrations as well. Here is a list of Chinatowns all over the world.

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China's Canton Fair – October 2010 10/7/2010

Personally I’ve never been to the Canton Fair.  I’ve heard its quite an event and i have always wanted to attend.

Therefore, I’m excited that later this month I am going to attend the 108th Canton Fair  a.k.a. “China Import and Export Fair” in Guangzhou.    I’ll be there during Phase 2 for the Consumer Goods, Gifts, and Home Decorations show.

The Canton Fair takes place twice annually; once in the fall and once in the spring.  The first fair was held in April of 1957 and it has become a major international event over the last 50 years.  With 11 million square feet and more than 55,000 booths, it is China’s largest trade fair.  I’ve heard it’s quite impressive, attracting more than 200,000 overseas buyers every year.  I’ll be sure to provide a trade show review after attending…..stay tuned!

If you are headed to the fair, I thought it might be helpful to list out a few resources that might help with travel to Guangzhou, etc.:

Hope to see you there!

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Do I need a visa to go to China for business? 10/1/2010

If you are a U.S. citizen the answer is Yes.  The good news is that visa requirements have been relaxed some in recent years, and you don’t necessarily need a letter of invitation to obtain a China Business Visa.

A comprehensive list of requirements and FAQ’s are available on the Embassy of the People’s Republic of China in the United States of America website (yes this is the longest name of any embassy in the world).

How much does a China Visa cost?  According to the embassy website:

Number of Entry

American Citizens

Citizens of most other countries

Single Entry

$130

$30

Double Entry

$130

$45

Multiple Entry for 6 Months

$130

$60

Multiple Entry for 12 Months

$130

$90

Multiple Entry for 24 Months

$130

$90

I personally recommend using a Visa service – I have been using Perry Visa for years and have always had a great experience with them.  As with most countries, I recommend giving yourself ample time to allow for any unexpected delays in the Visa Processing process.

Another Important note:  Other minimal processing, notarization and passport fees may apply. Rushing services are also available at an additional cost. Visa policies and procedures change regularly so be sure to check back if it’s been a while since you last looked.

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Understand China Official Launch! 9/29/2010

Today marked the Official Launch of Understand-China.com.  If you are reading this, you have already realized that the site is up and running, but we were excited to make the announcement nonetheless.  After more than nine months of ongoing development, twelve hundred hours of research and over 250 pages of detailed information, Understand-China is the leading authority on doing business in China.

The site is intended to assist business looking at investing in China by providing a one-stop resource for all of the information they need to be successful in China. The Understand China site breaks down pertinent manufacturing and investment information by major investment region. The site includes detailed information on Beijing, Shanghai, Shenzhen, Tianjin, Hong Kong and twenty other provinces, special economic zones and Chinese special administrative regions.

Enjoy!

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Flying Coach to China is your Competitive Advantage 9/12/2010

So you are starting a business or doing business in China.  The opportunity to leverage cheaper labor costs, address a market with a middle class the size of the population of the entire United States, and expand your global footprint has presented itself and you are now ready to make the leap.  This leap, like most things in China is big.  That’s because the only thing separating you from endless possibility and success is 6,000 miles of the deepest ocean on earth.  Or, if you’re one of our friends joining us from Europe, 6,000 miles of daunting terrain, including the world’s largest mountain range and some of the most dangerous places in the world.

I am writing this post from United Flight 889 from San Francisco to Beijing, cruising at 598 mph some 38,089 feet above a sea I cannot name.  But that’s likely irrelevant – I’m pretty sure no one ever swam there and lived to tell about it anyway.  Seat 23E today – a seat that wouldn’t excite most people (including myself).  It’s an economy plus seat.  A seat in front of the “Main Cabin” that provides slightly more legroom than my friends in the way back of the bus.  They don’t charge me extra for this “luxury” because I fly with them so much, but they charge an extra $200 or so for those “not-so-frequent” fliers to sit here.  I paid about $1500 for my ticket today.  A pretty good price considering I was flying on Sunday with many of the other businesspeople headed to Beijing.  The average price I pay seems to be about $1700 per round trip from Southern California to Beijing.  I make this trip quite often – usually between 8 to 12 times per year.  Some of you are going to read that lest sentence and cringe.  At an average of about 12 hours each way, that means that I spend 24 hours per trip, up to 290 hours per year on this exact plane criss- crossing this ocean.

The first question I get, without fail, every time someone new learns about my travelling, is “Well, at least your company probably pays for you to fly business class….right?”  The answer, unfortunately, is no.  But I’m not complaining!

I don’t buy business class fares to china, because our company has a travel policy.  A travel policy that was adopted from day one.  Our travel policy reads:  We fly coach.  We fly coach because we make smart business decisions.  Please let me explain.

$8,000 USD.  This is the average cost of a business class ticket from the United States to China.  That’s a $6,300 difference from the average coach ticket that I purchase.  $6,300 USD CASH.  [numberquotes.com].  When you take into consideration my average 10 trips per year, that’s an annual savings of $63,000.  From another perspective, let’s say that I was a manufacturing company with average margins…say 12% operating profit.  Under this scenario, $63,000 is approximately the same amount of profit that I would generate on about $484,000 in sales.

Let’s look at it from another perspective.  Let’s say you are targeting to hit $2 million in sales from your new venture in China in year 2.  You achieve above average operating profit margins that hover around 15%, or $300,000 in this case.  You hired a local Chinese General Manager, but you, the CEO/COO/President expect to be there 4 times next year.  Your #2 also plans on attending the quarterly meetings.  Your engineering and quality groups also need to make trips (let’s say a total of 8 over the 2 year period), and your customer asks you to meet them at the facility next June, and you do so along with your head of sales.  In addition, in order to get them the proper training, you flew your production lead, head of engineering, and head of Quality to your USA facility for training (8 trips in total).  This represents a total of 26 trips to China over 24 months.  You were smart, and before you opened your office, you made sure that everyone understood one thing – that you, and your staff fly coach to China.

The 26 business class tickets to China would run you a total of $208,000. During year one you weren’t expecting to make money anyway, and had accounted for this expense.  However, in year 2, let’s say that approximately one half or $104,000 was spent on business class airline tickets.  Looking at your 15% standard operating profit number above, you gave 1/3 of your profit to the airline companies.  Had your team flown coach, your total costs for airfare for the identical trips would have been about $20,000.  That $84,000 you could have saved by flying coach would have represented a 25% improvement in operating profit.

I won’t get into further details about the opportunity cost of the money that was wasted above, but I will tell you why I wrote this post today.  I am currently sitting next to a gentleman who works for a Fortune 500 Company.  He actually got “Down-Graded” from business class…..yes that is the opposite of business class, and it happens when they are oversold.  He and 6 or 7 others from their company are on this  flight, all booked in business.  Our company is spending $2,500 for me to be here this week, which means that for every trip one of these Fortune 500 employee takes, I can take about 4.

I know that many of you will bring up the age old argument that it’s tougher to sleep in coach and if you fly business you will wake up more prepared for your meetings, etc.  I completely agree with you.   It is much easier on the body to fly in business.  That’s why I try to get upgraded (at no cost to me) as often as I can.  And that’s why I am a little angry about being in seat 23E today.  It’s been almost a year since an upgrade didn’t go through.  I’m not used to coach anymore, but I’ve still got a big smile on my face.

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