CHINA’S ECONOMIC HISTORY AND GROWTH
From 1980 until our current days, China has been the country with the biggest economic growth in the world, with an average of a 10% yearly growth but, how did they get to this point?
There’s no denying that China has one of the oldest and most ancient cultures in the world.
Some of the first things that come to mind when we think about ancient China are some of the biggest economical events in history. The Silk Road, for example, was a road network that started around the year 130 BC when the Han’s Dynasty opened its doors to Western trade. China exported many different goods like silk, tea, ink, porcelain dishes, paper, rice, perfumes or gunpowder, which helped boost its economy. However, Imperial Britain’s boom and the Opium War meant the decline of this commercial network around 1453.
We can also trace China’s agricultural history back to the year 8000 BC, but there are a few critical points that helped this mainly agricultural country become the World’s second biggest economy, and made industry be the sector that contributes the most to its GDP.
While dictator Mao Zedong had big plans for an industrial transformation of the country, his drastic measures that included the prohibition of private agriculture and intense labor projects, resulted in a huge failure in which it’s estimated that somewhere between 15 and 55 million people died of hunger.
After Mao’s death, in 1978 there were a number of important reforms that are considered the start of China’s political change and opening to the World.
The main reforms were the collectivization of agriculture, the opening of the country to foreing investment and the allowance to create private companies, which skyrocketed the outside market, specially within the exportation. Moreover, the local consumption that had been regulated and restricted until that date, started to energize the country’s internal economy.
Between 1990 and 1997, China’s GDP had an average of 10% yearly growth which was mainly sustained in an intense capital accumulation and an improvement of productivity. These two factors that stayed permanent in the following decades, were related to the reassignment of agricultural to industrial work and the public to the private sector.
While in 1980, agricultural production represented 36,2% of all production and 67,9% of people worked on it, in 2007 it only meant 10% of the country’s GDP and 41% of its employment.
HOW TO DO BUSINESS IN CHINA AND TO DEAL WITH CULTURAL DIFFERENCES
In order to do business in China, with Chinese people, there are some singularities to keep in mind in overcoming the cultural gap regarding western countries.
First of all, you must make it very clear with your Chinese partner because any decision you don’t make, he or she will make it for you. If they can economize costs, they will make that choice and won’t ask you so make sure everything is understood.
Besides this, they are used to never saying no to business. If they can’t afford the deal´s conditions, they won`t tell you, and they will do the impossible to make it happen, despite failing to meet deadlines. Because of the Ying-yang pattern, they think everything can be fixed so they are more flexible in these terms than western people.
Furthermore, there are two relevant cultural concepts when doing business in China, the first one is called “miànzi” that means “face” and refers to the honor of people, which is very important to have it in their culture. The second one is ”guanxi”, and means “network”, this constitutes a central concept of Chinese society.
Finally, it is curious that in Chinese, crisis means “danger-opportunity”, which makes Chinese people see these situations in this way, as an dangerous opportunity, but not as a threat.
OUR EXPERIENCE
Finally, we wanted to dedicate a space to talk about our experience in this Business Study Tour.
It has been a great experience, analyzing, studying and understanding Chinese economic models and systems, has been enriching. Everything we have experienced this week has made us understand how Chinese citizens negotiate, different cultural curiosities that differentiate us from them…
In addition to different lessons that we have taken throughout this week on very diverse and interesting topics, we have been able to make different visits to Chinese companies and different cultural visits that we have loved.
One of the best things that we take away from this experience is the trip with all our colleagues, the opportunity we have had to meet 70 new colleagues, all with the same common interests and each with different interests than we have been able to learn from each other.
From this experience we take with us a lot of new knowledge and, above all, many more contacts that we are sure will enrich us throughout our professional lives.