I just returned from our second trip to China. Dr. Yao and I timed the trip so we could attend the 2011 Asia- Pacific Conference of the Association for Consumer Research. Our goals, however, were to finalize a cooperative education agreement with Renmin University in Beijing, speak to students at both Renmin and Nanjing Aeronautics and Astronautics Universities, and interact with the nascent Chinese financial planning industry in Shanghai. Accompanying us were my three children (aged 19, 22, and 25) and a local entrepreneur. Here are my impressions
- China continues to impress me with their development. I could see changes from two years ago and much of it was for the better – except for air quality. Even the locals complain about the air. Believe it or not, there are mountains you can sometimes see from Beijing.
- The students in China are very interested in coming to the United States to study but it remains relatively expensive. With an average annual urban household income of $12,000, the price tag for US tuition and fees is quite high and providing another $20,000 for living expenses is daunting. Yet, the Chinese value education. As such, accomplishing an overseas education for their children is major goal for families. We have close to 700 students at MU from the Peoples’ Republic, our largest contingent of international students. We hope to have more students come to MIZZOU, given the memorandums of understanding we have signed with major Chinese universities. Likewise, Chinese universities would like for more US students to study in their country and many courses are taught in English. (By the way, I was so proud of my children, when they spoke about college life in the United States to the students of these Chinese universities.)
- Speaking of living expenses. Following economic reform, citizens of the Peoples’ Republic no longer receive a free college education, a secure job for life, medical care, or retirement income from the government. These are now the citizens’ responsibility.
- This time, due to my children, I visited some night spots for younger people. (Yes, I proudly anchored one end of the age spectrum.) In Beijing and Nanjing we went to loud techno dance clubs or Karaoke clubs, with tables that had a Y 3,000 (about $500) minimum. In Nanjing, we even sat at one, given that our host paid the tab. (Yes, I did sing at the Karaoke bar.) We were the only non-Chinese in the club and the club was packed with young Chinese professionals and other young adults. Note: If you go to Beijing, the subway closes at 11:00 pm! We took taxis back which are relatively cheap (about $3) but you can ride their subway for about $0.35 anywhere in the city of 19.6 million people! The subway is beautiful, efficient, and safe. It reminds me of the Metro in Washington, DC.
- Quality food exists in a wide range of prices, depending on the atmosphere you seek. You may find yourself enticed by some quite exotic dishes. Let’s just say that no part of a sacrificed animal goes to waste and no animal is immune to being sacrificed. I loved the barbecued duck tongues followed by barbecued snails, on our last night in Nanjing. My least favorite was turtle skin soup in Beijing. I ate it, though!
Financial Planning Impressions:
- There are 10,000 CFPs in China to serve 1.3 billion people, although 2 million financial professional work in China. We have 60,000 CFPs in the United States to serve 312 million people. Conclusion, the potential growth in the market for financial planning in China is staggering.
- There are an estimated 600,000 millionaires in China, while there are 9,000,000 in the United States. In China, 60% of the millionaires are business owners.
- When meeting with a large Chinese financial planning firm, we were told that their 18,000 clients have $5 billion in assets with an average age of 40! This is a much younger profile than in the United States and it points to an important dynamic within the younger generation of Chinese, following economic reforms. They are eager to work and take business risks to achieve success. The growth in business for the financial planning firm is about 200 new clients per week, implying they need an additional 2 advisors per week. Yes, they have need for English speaking planners to work with their international clientele – particularly in Shanghai.
Economic Development Opportunities:
- The bullet train from Shanghai to Nanjing was quite the ride. We topped out at 326 kilometers per hour, or slightly more than 200 miles per hour. A modern transit system exists in all the cities we visited. In Hong Kong, we were able to check our bags for our flight at the downtown train station – 25 kilometers from the airport. This was very convenient and the bags made it back to Chicago/St. Louis/Detroit/Philadelphia – wherever they were supposed to end up. Mass transit development and use in the United States is sadly lagging our Asian friends.
- Many Chinese want to expand their business with the United States and to have United States’ firms expand business development in China. Barriers to cross-Pacific economic exchange are rapidly changing but I caution investors to develop relationships of trust with those you are working, regardless of which side of the Pacific you reside. There are many people who desire to get-rich-quick in both countries. While many have, we seldom hear the bragging of those who fail. Regardless, we will see an expansion in our economic ties with China.
- Doing business with the Chinese is different from the United States. Think of the United States as being very linear from start to finish. The Chinese are much more deliberative and can take quite a bit of time to work with you in order to discover if you have guanxi – high level of trust. Thoughtful, meaningful relationships are the key to business relationships and, while eating together is an expectation, it is a time to eat. It is not a time to conduct business.
There are many more experiences and impressions. Our group would agree that we see China as an important partner for the future. China and the United States have much to gain from each other. We will be working with them. Certainly, issues exist with regard to labor markets and trade issues – which are outside of my area of expertise. There are also opportunities for financial success. Importantly, both counties have the primary goal of realizing financial dreams through the decisions of the family. That, alone, can provide the seeds for our growing ties.