Riding the tiger or riding the waves?

Barbara Krug

New Knowledge ClubFebruary 3rd, 2011

Riding the tiger or riding the waves

Correcting Cliches about China Proposition: why Rotterdam should welcome

Chinese investment and entrepreneurship

New Knowledge ClubFebruary 3rd, 2011

Riding the tiger ?

1. Without the undervalued RMB China’s exports the world would not be flooded with cheap Chinese goods.

Between 2006 and 2008 the RMB increased by 20 % in value and yet Chinese exports did not decreas and volume or value

Riding the tiger or riding the waves

2. China’s economic performance was achieved to the detriment of the environment

China is the largest exporter of new technology, aiming at increasing the use of sustainable energy. The new Five Years Plan stipulates heavy investment into the environment.

Riding the tiger or riding the waves

3. Chinese FDI represents the strategic interests of the political regime. State firms and Sovereign Wealth Funds do not acknowledge the economic well being of people living in host countries in particular in Africa

China provides work places , local business opportunities and a better infrastructure, something the host countries and the International Organisations failed to achieve in the past. China ranks 22 position of FDI in Africa.

Riding the tiger or riding the waves

4. China will change the rules of the game in international business via its membership in international organisations. It aims at ending US economic supremacy.

Chinese private sector exports successful business models and market designs. The interaction between the non-state sector with the Chinese diasporas and firms in host countries will lead to new forms of cooperation and competition. t.

Riding the tiger or riding the waves

5. China’s economic performance is accompanied by a dismal record in human rights question as exemplified by the arrest of the Nobel Prize winner Liu Xiaobo.

The contested point is not the Nobel prize but whether we think it right to put somebody into prison who asks for the kind of political reforms he advocates. – Whenever have human rights violations impeded trade?

Riding the tiger or riding the waves

Allow for a more complex and realistic picture of China:

China is more than her political regime Chinese entrepreneurship offers a chance for the rest of

the world Cooperating with Chinese firms offers more benefits

than trying to ride the tiger.

Proposition

Rotterdam should welcome the Chinese

their capital their entrepreneurial spirit

their families their social competence

Why would Chinese come to Rotterdam?

• Against– Increasing anti-Asian discrimination?

• In Favour– Technical infrastructure– No better alternative?

• Keep in mind– the century old memories of anti-Chinese

discrimination by ‘Western’ powers

Why would the Chinese not come to Rotterdam?

• Inability to integrate other Asian population• Forced integration into inhospitable society• Discrimination against non Dutch speakers• Discrimination of wealth and conspicuous

consumption• Discrimination of social ambition• Political discrimination (Human rights, mixing

business with Government)• Lack of access to networks, parochialism

Why would the Chinese come to Rotterdam?

• Good Business opportunities– Access to markets– Access to networks– Access to local investment

• Good social opportunities– Large Chinese community– Non discriminatory education system– Positive social environment and positive popular

attitudes

How the Chinese attract Chinese (Taiwanese) investors

• The Kunshan Experience• Business infrastructure– Access to networks– Local government support– Integration in local economy

• Social infrastructure– Restaurants– Housing – Schooling

The Australian Experience

• Long history of Chinese settlement• Domestic investment opportunities• Non-discriminatory local business environment• Established Chinese community to integrate

newcomers• Social environment: Chinese community building,

Chinese social and communal infrastructure• Educational environment: Little discrimination

against Asian immigrants, access to social mobility

Rethinking the proposition

• Questions to answer– Does Rotterdam provide business and social support?– Does Rotterdam have any track record to show?

• Balance– Lack of competition strongest point

• Likelihood– Are the Chinese likely to put all eggs in one basket?

Do they need a single basis in Europe? Hamburg?– Chinese are likely to diversify

Questions

• Who benefits from the proposition?• Is it one Hong Kong company absorbing public

investment and support? Li Kaixing• How many different parts of China are

involved in negotiating with Rotterdam?• How much up front investment is needed?

Returns to private households and local community. Can we expect: • Improved or sharply priced household goods of

Dutch/European producers in competition with Chinese imports or more utilizing Chinese products.

• Improved infrastructure and better (reliable) public services• Improved local revenue thanks to Chinese tax payers• Improved consumer spending indirectly boosting small –

medium sized enterprises in service sector.• Improved schools and university thanks to an increasing

number of students.• BETTER FOOD!

Approaches

• Big Bang versus Gradualism?– Put large infrastructure in place first– versus gradual expansion

• Infrastructure versus projects?– Pay first (Free Export Zone) and wait for customers– Build up on the basis of successful projects (e.g. how

many countries will actually committing to channel their trade through Rotterdam?)

• How serious are we about the social investment and social impact?

Rotterdam?http://www.nma.gov.au/collections/collection_interactives/harvest_of_endurance_html_version/