Saturday, September 11, 2010

China's Business Potential

There's been a common opinion in the past decade, especially within college graduates, about how China is the place to be to make money. Proponents of this claim that the ~1.3billion population of China represents a huge untapped market from which money can be made.

While doing business and making money do not necessarily go hand-in-hand, Forbes magazine has come out with their annual list of "Best Countries for Business." Notable countries and where they rank in the list are: Hong Kong (2), United States (9), Taiwan (25), and China (90). Forbes ranks countries based on several criteria, of which a few are:
Denmark scored in the top five among all countries in four of the 11 categories we considered as part of the ranking, including property rights, technology, corruption and personal freedom.Our ranking examines 128 economies. Other factors we looked at besides the above include red tape, investor protection and stock market performance. 
So what about China's potential? Forbes ranks China at 90, well outside of the Top 10 or 25, of which Taiwan managed to crack this year. This shouldn't come as a surprise to anyone who has been keeping up with news this past year. GE's CEO, whose company was once one of the top sponsors for the 2008 Beijing Olympics, is now openly criticizing China and their government for essentially taking GE's technology and proceeding to produce their own copy through their state-owned companies. And of course there is Google, whose exit from China was due to allegations of hacking and ultimately their censorship of Google's searches. These are a couple very large companies that have openly decried China's unfriendly business practices with foreign companies, and there are likely more to come - Toyota's production line was shut down earlier this year due to a strike in a factory in China.

Business opportunities don't look to be abound in China these days, especially long-lasting and positive ones. While I have no doubt there is money to be made there, China should no longer be considered a go-to-place for businesses. Along with these stories from large corporations, numerous personal accounts from relatives and relatives of relatives exist, especially within the Taiwanese community about their ultimately unsuccessful business adventures in China (these accounts usually end with them fleeing China due to ridiculous taxes or demands placed on their business, having to leave everything behind in an instant).

Besides China, Hong Kong makes a mark at #2 in the list. What strikes me the most about Hong Kong's high ranking is their decently high ranking (12) in the area of corruption. In comparison, Taiwan is #32 in corruption. I suppose it shouldn't come as a surprise as corruption has especially been recently highlighted within Taipei mayor, Hau Lung-bin's circle.

No comments: