MARKET FORCE

Following the worldwide economic downturn, China, with its export-driven market, may have to change its business tack. Brandon Zatt looks to the future.

Ai Lin rolls a six, landing on Beijing’s Central Business District, at her boyfriend Benoit’s hotel.

“Give me 4,000 yuan,” he demands.

“Why should I pay you?” huffs the 25-year-old from Chongqing.

“You’re my boyfriend, I should stay for free!”

“That’s not how it works,” he laughs.

So when Benoit passes “Go” and asks for his salary, Ai Lin, the bank, holds out her hand and says, “Where’s my hong bao [bribe]? That’s how it works!”

At 27 years old, Benoit de la Langalerie is sales and marketing director for EuroAmerica Woodwork in southern Chinese boomtown, Shenzhen. From the vast windows of his designer furniture-decked apartment the lights of Hong Kong, across the border, twinkle as the players set about buying up Beijing.

Forty years ago this exercise in pure capitalism would have been banned; 20 years ago it would have been incomprehensible. But in today’s China, where everyone at the table is a potential business partner, Monopoly might just as well have been invented here.

Amid volatile global markets, China’s stagflationary fears and Premier Wen Jiabao’s recent prediction that 2008 would be China’s “most critical” year, people are still playing to win. Ask Henry Winter, the Shanghaibased founder of SmartClub, an online loyalty club whose members earn points by patronising specified online merchants, converting other points from other loyalty clubs into SmartPoints, and completing market research surveys, which they redeem for physical or virtual prizes. Earlier this year, Winter became the first foreigner on CCTV’s smash-hit reality show, Win in China. Celebrating chuang ye (entrepreneurship), the show is The Apprentice hybridised with old-school communist struggle sessions and big cash prizes.

“Chuang ye is the buzzword,” says Winter. “It’s synonymous with cool. There’s an excitement, an almost mystical aura around those who chuang ye.

“Most Chinese don’t become entrepreneurs for the lifestyle. It’s not about freedom or being your own boss. It’s about making money and most don’t care how hard they have to work to do it. They fully accept that toil is part of the deal.”

The past ten years have witnessed a radical transformation of the Chinese mindset. “We all grew up so poor,” says Zhang Dongjin, an independent contractor from the south-west Yunnan province. “Now, everybody’s crazy for money. Crazy!”

But there are many more people who have a hard enough job just to survive. Most of China’s rural population, an estimated 70% of the official 1.3 billion, depend on low-income factory jobs or subsistence farming; many can’t even send their children to school. “There’s a huge difference between urban and rural,” says investment banker-cum-traditional Chinese medicine practitioner, Xiao Hongchi. “In the countryside villages are empty. All the young people are working in cities, leaving behind only children and elderly. It’s a big problem.”

For an ancient civilisation revering harmony, the discord is real. It’s exactly 30 years since Deng Xiaoping’s Reform and Opening movement opened the gate to foreign investment and loosened the grip of state-owned work units, allowing China’s pent-up entrepreneurialism to bloom. But now, as growth and prosperity race head-to-head with soaring prices, social tension and environmental destruction, China must find a new way forward.

In 1978, many doubted the impoverished communist backwater could attract investment. But as Deng Xiaoping swapped dogmatism for dynamism, saying, “It doesn’t matter if a cat is black or white so long as it catches mice,” history has proven them wrong. A similar opportunity may present itself today.

“China’s economic focus used to be cheap exports,” says Kevin Zheng, managing director of Shenzhen’s Vision Finance Group, “but the profits are relatively small and there are lots of problems, like pollution and the growing wealth-gap. We need to diversify. This is a chance to turn a bad situation into a good one.”

It’s this kind of optimism that has attracted people from all over the world and underpinned China’s growth. “At the moment things are booming,” says Rwandan Festo Sengabo of Guangzhoubased Arop International Trading. “The cost of living is rising but there’s still lots of opportunity. Anyone can do business here.”

While this is true, and may be for some time to come, China is changing fast. To date, foreign investment has fueled China’s export-driven economy, enabling China to establish its industrial base while yielding large profits for foreign companies and cheap Chinese goods for the world. But even with rising demand from the EU and developing nations, China’s export growth began to slow in early-2008 in the face of both slowing US demand and tough new policies, introduced by Beijing from mid-2007, removing incentives for non-value-added polluters.