Download Title: China Rising Part 1: The Boom

Title: China Rising Part 1: The Boom
China’s Rising Economy
Discussion Questions and Answers
1. China’s economic boom is extraordinary. What does this boom mean to companies in
other parts of the world? How can companies such as Ford or Microsoft capitalize on
China’s growth? What problems does China’s economic growth create for these
companies?
Answer: For companies such as Ford and Microsoft, China’s extraordinary growth could
probably be considered exciting, yet scary. Exciting because purchasing power for the
average Chinese citizen is up significantly creating tremendous market opportunities.
Scary because with labor rates at $1.25 an hour including benefits, China can undercut
just about anyone in the market. Many students will probably suggest that to level the
playing field somewhat, American companies should shift their manufacturing to China.
Others may suggest that American firms should begin to view China as their number one
market and develop their products with the Chinese in mind rather than the Americans.
Still others may argue that the best way for American companies to succeed in China is to
take the “if you can’t beat them, join them” approach and establish alliances with Chinese
companies as a first step in their effort to build a presence in the market.
2. What role does the personal ambition of Chinese citizens play in China’s economic
boom? The U.S. has often been considered the land of opportunity. In your opinion does
the name still fit? Does it apply to China? Why or why not?
Answer: The sense of optimism and energy in China has been called infectious, and if the
individuals shown in the video are representative of the population, it would seem that
this is a fitting label. Certainly it would seem that if China is to continue on its path of
high growth personal ambition on the part of many will be a necessary part of the
process. Most students will probably agree that China does seem to be a land of
opportunity at the current time. Purchasing power is up, and there is a significant
migration from the country to the city. Both of these phenomena are helping to create
even more opportunities for both individual success and corporate success. Some
students may even suggest that the notion of a land of opportunity fits China better than it
does the U.S.
3. China’s major cities are receiving an influx of people each year as peasants seek a
better life. Consider the problems associated with this form of migration. How should
the Chinese government respond to the situation?
Answer: With some twenty million people moving into cities from the countryside each
year, China is scrambling to keep up with the demand for housing. By 2020, there will
be more newcomers in China’s cities than the total population of the U.S. Already there
are plans in place to essentially double the size of Shanghai. Students should recognize
that to successfully manage this type of migration the Chinese government cannot wait to
react to the situation, instead it must move in a proactive manner to ensure that there is
adequate housing, food, healthcare, and so on available to the new city dwellers.
Students may also point out that the potential for labor abuse will be high as newcomers
with limited skills seek employment.
4. With its red-hot economy, huge population, and movement into higher-tech exports,
China is becoming a force to be reckoned with. What will China’s role be in the global
economy over the next ten years? In twenty years?
Answer: For the last thirty years, China’s economy has been on fire. Purchasing power is
significantly higher than it was just a quarter century ago, and the economy is doubling
every eight years. The country’s huge population keeps labor costs low allowing Chinese
exporters to be very competitive in foreign markets. Most students recognize that with
trends like these, and China’s recent foray into higher-tech exports, the country will have
to be recognized as a key player in the global economy. In just twenty years, purchasing
power in China will be equivalent to that in the U.S. In thirty years, it will exceed U.S.
levels giving the country greater clout as an economic superpower. Still, students will
probably note that to be taken seriously, China will have to clean up its act in areas such
as intellectual property theft, pollution, and corruption.