On Friday afternoon, the Lundquist College of Business hosted business journalist Ted Plafker, an expert on contemporary China and a Beijing Bureau Correspondent for The Economist. Plafker is also the author of “Doing Business in China: How to Profit in the World’s Fastest Growing Market.”
China is in the midst of transitioning from a social to a market economy, Plafker said, but the country’s unmatched population prevents existing economic models from being used as guides in China’s economic transformation.
Despite its unprecedented consumer population and teeming business possibilities, China is not simply an open playing field for international entrepreneurs, Plafker said. The Chinese government still exercises an immense amount of control over the country’s economic infrastructure.
As a result of recent governmental moves toward a more international and economically liberal perspective, said Plafker, “there is so much more that people can do” in the China of today.
This shift, however, both benefits and hinders foreign engagement in the Chinese economy, as the rapid changes taking place in the legal system and economic structure have resulted in a “destabilizing” effect. He said ever-changing regulations have made business in China “unpredictable,” and new firms must invest a significant amount of money in lawyers in order to keep up and be successful.
The Lundquist College of Business has in recent years placed heavy emphasis upon Asian business and preparing students to work in a global economy.
Randy Swangard, Managing Director of the Lundquist Center for Entrepreneurship in the Lundquist College of Business, said the Center works in conjunction with the Center for Asian and Pacific Studies to expand business students’ exposure to Asia and specifically to China. Currently, the Center’s Asia program is geared toward graduate students, but Swangard and others hope to open similar opportunities to undergraduates in the future. As a testament to the importance of China in the business world of today, Swangard’s business card is printed in both English and Chinese.
Plafker said a substantial amount of corruption exists within the Chinese regime, and the government continues to hold an omnipotent position over the workings of the nation even beyond the economy.
“People don’t challenge the government,” he said.
Consequently, one obstacle facing international entrepreneurs and investors, said Plafker, is the unreliability of the Chinese press and China’s shoddy standards of transparency, particularly with regard to the stock market. Plafker said although more information concerning the Chinese economy has been made available to outsiders, the “willful distortion of information” by Chinese individuals, corporations and the government has created a conundrum for foreign economists where “the bigger challenge is not accessing, but assessing information.”
In general, said Plafker, many of the numbers in Chinese economic reports don’t add up, but the trends they reflect are accurate.
During his lecture, Plafker examined specific economic sectors he sees as having great potential for future growth in China, including the health care industry; energy and green technology; and the water supply system.
The health care industry, said Plafker, is currently in shambles, inaccessible to most Chinese. He said the government is pushing to expand the medical sector and is even debating its privatization, but remains unsure as to whether this expansion should be foreign or Chinese.
Plafker called energy and green technology “one of the most promising sectors.” He said “unfettered, unrestrained pollution” has become a serious problem in China that could potentially lead to economic instability.” Already, he said, pollution has begun to negatively affect housing prices.
Plafker focused specifically on the water supply system as a major possibility for foreign investment. He said that China’s national water supply is far below a safe level with regard to the population size of the country, yet water remains severely underpriced. The Chinese government “gives it away like it’s free,” said Plafker, “so people use it like it’s free.”
The answer to China’s water woes, said Plafker, is to raise water prices, thus encouraging conservation and providing an incentive for foreign investment. The fact of the matter, he said, is that foreign companies have been working with regulation of water supplies longer and those companies are better equipped to confront the Chinese problem. Currently, the government views the water supply as a strategic holding and is therefore resistant to foreign involvement in that sector.
Despite the Chinese government’s somewhat “brittle approach” to economic dealings with foreign businesses, Plafker said he sees global companies as “a real force for positive change” in China. China’s huge demographic scale awards the country a “built-in advantage” that other emerging markets do not have, and “any multinational corporation today has to have a China strategy.”
Paul Swangard, managing director of the Warsaw Sports Marketing Center in the Lundquist College of Business, discussed “Engaging China,” a joint venture launched in 2006 by the Warsaw Center and CAPS. Its purpose, said Swangard, “is part of an overarching effort by the University to find ways to develop programs with an Asian theme” in order to make UO a leading Pacific Rim university.
The Warsaw Sports Marketing program requires all first-year students to take an academic trip to Beijing and Shanghai to learn about Chinese culture and business. Dan Pivirotto will join 18 fellow Warsaw students to travel to China this September, where they will visit Chinese companies and Beijing 2008 Olympic Games facilities and attend the International Paralympics. In preparation for their trip, Pivirotto said he is taking a spring term seminar in which he’ll explore Chinese culture and business, in part through contemporary readings and guest lectures such as Plafker’s.
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Business journalist discusses China’s transition to a market economy
Daily Emerald
April 6, 2008
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