Hua and I moved back to Guelph a few weeks ago after living in Shanghai for most of the year, actually since May 2010. It was a great experience as I ran many conferences in China and got to see what was really happening.
I have always maintained that one can never learn about China from the 20th floor of the Ritz Carlton in Shanghai. The same is true for keeping up with monitoring developments in China; you cannot do it effectively from a remote location.
News from China on trends for the most part is hindsight so when you are there, you can see ahead and if you are lucky you can see ahead of the curve.
As the year winds down, I would like to share some thoughts.
China is an expensive place for Chinese people to live now. We ex-pats did ok but so many costs there are the same as here and in some cases more. While going out to eat may be cheaper, cars, homes, medical care, is the same or more than we pay here and their salaries are much less than ours. They also operate at a quicker pace, which also adds to their stress levels.
The real estate market in many cities in China will correct in 2012 as a lot of money for both commercial and residential developments has already left and Canada is a popular destination for real estate investment from China. My guess is that you could see a 30-40% correction similar to Hong Kong in 1998. This will impact mainly in the tier one cities, which are the highest priced in China at present.
The days of cheap labour are gone and wage increases were double digit. People are making more money and the new 12th 5 year plan wants the people to consume more and save less.
So what does this mean to us in the Triangle? Well, now is the time to get into the domestic market in China. Think about not only making product there to ship back here but also make product to sell domestically in that market. As well, be prepared for higher prices on those DVD players, etc.
What are the boom industries? The auto sector is still growing and will for a while to come, the wine business is booming as more Chinese understand what good wine is and develop an appreciation for it and China is quickly ramping up their natural gas consumption as it is a tremendous source of energy for cars and trucks and for co-generation of power, much cleaner than coal. These are some areas but certainly there are many more. There is still a huge demand for western technology and innovation.
These are some of my year end thoughts anyway.
At this time, I wish you all a Merry Christmas and a happy and healthy 2012, the year of the dragon.
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