Money lessons from China

I was privileged to visit China for work a couple of years ago. I had a chance to visit different factories in different cities. I also got to do some down town shopping in the sprawling markets in Guanghzou. China has successfully positioned itself as the World’s factory. They make almost anything you can think of from toothpicks to satellites. 

We visited small factories which make solar panels, lights, batteries, and cables, and other electrical equipment. In one of the complexes apartment like structures sprawl up behind a gated wall. Each separate building is fitted with three phase power and water on all the floors. Different spaces are sublet to various companies making all sorts of things. Most of the factories were cottage like with very minimal equipment and personnel.

The solar panel factory I saw simply assembles the solar panels. The solar cells, aluminium frame, glass, and cabling are all sourced from other factories throughout China. Same thing with the battery factory. The owners of these factories are all relatively young men and women who don’t speak any english. They have young graduates to do the translation. 

Most of these factories are dedicated to the export market. The Chinese government has heavily incentivized export production through tax rebates. For instance at the time of our visit the battery factory was processing one million batteries for an order from Brazil. Africa is a huge destination for Chinese products as well. No wonder the Chinese government has heavily invested in relations with African governments.

Most of the marketing is done online through popular e-commerce sites like Alibaba. The marketing teams are usually made up of young ladies who know english and can chat with potential customers online.

The Chinese have built their own online infrastructure and have their own versions of Google/ Gmail, Facebook, etc. All these apps and websites were blocked in China. This idea of imitation and replication plays strongly in the Chinese economy. They have simply replicated and customized all the available products/services in the western world. This blockade has helped to spur local ICT innovation. Africa can pick a leaf here. We can build our own versions of these things here.

In Guangzhou we met a thriving community of Ugandans and other Africans trading in all sorts of things. China has strategically opened itself to the world. International brands like KFC and McDonald’s were spotted in all the cities we visited.

To address the high population, China has heavily invested in huge apartment blocks. It was not unusual to find a whole street lined with these apartment blocks. To move this volume of people around super highways and fast trains have been put in place. Despite the congestion traffic flowed smoothly.

We experienced a culinary culture of exotic foods as well. Street food is a big thing here as well. Plus there is a culture of taking tea with meals. We witnessed groups of families seated along the the streets enjoying dinner.

The markets are a shoppers delight and everything from fake to genuine goes. It all depends on what you’re willing to pay for. In one shop we ordered customized suits which were delivered to spec the following day. In another mall all sorts of gadgets were on offer.

Exchanging dollars is a bit of a hustle. In a local bank we had to explain what we doing with all these dollars and copies of our passports were taken. This particular area didn’t have many foreigners and the bank manager was quite excited to take a selfie with some black people.

China has figured out how to  mint money and lift millions of its citizens from poverty through manufacturing. Interconnected supply chains for different products have been set up. For instance a certain city will only make solar cells and another will assemble them and another will make solar street lights.

They realized that subsistence farming wouldn’t take them far. So they embarked on an aggressive industrialization campaign. They deliberately supported both large and small enterprises to make things for the world. Through this process China has developed such competence in manufacturing that it’s now home to large manufacturing plants for big companies like Apple and Tesla.

The expanding rich and middle class in China has boosted demand for local and international brands.

The politics is a bit sensitive and few people were willing to discuss it. A local curb driver intimated that the government deliberately kept people busy in factories so they wouldn’t have time to agitate for better politics.

My trip to China was quite eye opening and expanded my understanding of the world. It also revealed a world of opportunities.