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China Insight: Tempered Optimism

by on March 9, 2010

I have recently started following the China Law Blog which offers some interesting insight into legal, business and policy news in China.  It is often opinionated, but I think does provide some extremely useful information and links for people who are interested in following China’s development as an economic power.

One recent article in particular seemed very relevant since I often have discussions with expats who work for international companies or have been recruited by Chinese firms.  These conversations generally find my counterpart extolling the virtues of Chinese development and me taking the position of the skeptic.  A brief excerpt from the CLB summarizes nicely:

“whatever we [the United States] are making, China can make just as well as us for one tenth the cost and it probably already is. Last time I was there I was picked up in an SUV that cost around $5,000 and was every bit as good as a Range Rover.” What causes someone even to think that way? I don’t know and to a large extent I don’t care, but I do care that there seems to be a growing trend of people who seem to believe the US can do no right and China can do no wrong.”

There is no doubt that China is growing into a market with great long-term potential and it makes perfect sense for firms to increase their presence in the region, and law firms seem to be doing that on an almost weekly basis, opening or growing offices in China and other Asian markets.  The downturn in Western economies has sent thousands of job seekers East, in the hopes of taking advantage of the Chinese economic recovery.  However, I often get the sense that many companies forget that just 2 or 3 years ago, they were not as interested in China because of the legal and regulatory problems faced by foreign companies doing business here.  Further, almost daily, I meet people who have been living in Hong Kong for a year or two and who say that they’ve just overcome a bout of “Do I really want to live here?”  The answer, generally, has turned out to be “yes”, at least for another year or two.  But I think this has just as much to do with the fact that the job market is so depressed in their home countries as it does with the fact that China, and Hong Kong in particular, can be a great place to live.

In the end, I think most of the optimism surrounding business growth in China, and Asia in general, is warranted.  But on the other hand, I think businesses, law firms and individuals should be cautious before diving in head first.

Thoughts?

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From → Asia Insight

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