As economy globalizes, old practices are left behind

Opinion / Liang Hongfu

 As economy globalizes, old practices are left behind
By Liang Hongfu (China Daily)
Updated: 2005-12-06 06:09

At a business forum shortly after I arrived in Beijing last year, I was
surprised that many people there were talking about the need to encourage
consumer spending. To me, at least, such a move apparently would have
contradicted the government macroeconomic adjustment policy that was
introduced to cool off the then overheated economy.

My persistent questioning failed to solicit a convincing answer. After
many heated arguments, one penal member, a big balding man with a jutting
jaw, slammed his fist on the table in front of him and bellowed: "This is
China."

End of discussion.

Since then, I have been to numerous other meetings and forums and have
met many mainland business people, economists and stock analysts. Most of
the time, I happened to agree with what they said. If I didn't, they
could usually give me an answer I could understand.

But in the rare (or not so rare as some of those who know me would say)
occasions when I felt compelled to challenge their opinions, the
conversation would almost invariably end with them saying "this is
China," implying, of course, that my understanding of this fast-growing
economy was definitely limited, and probably non-existent.

They may be right. But that's not the issue. The real issue is that the
mainland business community and the many economists and analysts must
understand that China is moving more quickly than they might have thought
in globalizing its economy.

As China is becoming more plugged into the global marketplace, many of
the unusual and uniquely mainland practices that are either left over
from the past or introduced to cope with the monumental and unprecedented
move from a planned economy to a market-oriented one seem stale and
inapplicable.

More than two decades of economic reform have almost completely
transformed the mainland economic landscape. Most sectors of the mainland
economy have been opened to foreign companies under the World Trade
Organization arrangement. The remaining few, notably the financial
services sector, are scheduled to be open in 2006.

Meanwhile, hundreds of mainland enterprises, including the major
State-owned conglomerates, have tapped into the world's major capital
markets by obtaining listings of their shares in New York, London or Hong
Kong. In doing so, these enterprises have not only gained access to the
international capital markets to help fund their businesses, but also the
discipline to comply with internationally accepted management and
accounting practices.

Such preparation is necessary not only for future diversification into
overseas markets, but also for the more immediate challenge from foreign
competition on mainland enterprises' home turf.

The rapid opening of the domestic market has attracted a host of foreign
vendors of a wide range of products from heavy industrial machinery and
high-tech equipment to mobile phones and processed foods.

The speed at which foreign vendors have been making inroads into the
mainland market has shown up the inherent weakness of domestic
enterprises. Much of that weakness lies in the management mindset, which
has failed to catch up with changing market conditions.

The more forward-thinking mainland enterprises have recognized that they
have to do business according to the rules of the marketplace. To
succeed, they have to learn the global way.

Because of historical reasons, the mainland economy will no doubt
continue to retain some of its characteristics as it marches resolutely
down the path of globalization. But the characteristics that remain will
be those that can co-exist with, or even compliment, the free market
force.

Email: jamesleung@chinadaily.com.cn

(China Daily 12/06/2005 page4)

Hot Talks

 President's List of Do's and Don'ts for China

 How important is 'Face' (Mian Zi) to everyone?

 The Woeful Health of the Nation

 China, USA should be natural allies

 Beijing's leverage over Taiwan

Most Commented/Read Stories in 48 Hours

20071124 http://www.hellomandarin.net