Check out the section entitled, “Provincial Investment Environment,” which is industry independent. The overview of the section in particular is a well-written, succinct and insightful piece that maps out the economic and social fissures that make it a challenge for foreign companies to move from investing in first-tier cities to x-tier cities. Localized city and region reports follow the overview, with specific issues written up by company representatives on the ground.

“The net result of the FDI inflows, as well as government investments in fixed assets throughout the country, is that cities across the Chinese landscape are becoming wealthier, with double-digit annual growth rates that match the nation as a whole. With increased growth, though, comes a host of nuanced policy-development and enforcement issues that administrators at every level of government in China need to address.”

“A friend building a factory in the deep interior of China recently called me with tragic news. One of his Chinese operators had been killed in the machine the worker was tending. It seemed it all happened within ten minutes: the victim’s work partner had gone off to get some materials; when the partner returned the machine had eaten the operator’s shirt, and strangled the operator; twelve minutes later, they were in the hospital, doctors in attendance, but the operator could not be saved.

My friend could not understand how the accident had happened. In the twenty years the machine had been in use in the West, there had not been one accident, leave alone a fatality.”

Read more of the column here.

As I headed back to the hotel after venturing out a bit more than a couple kilometers I passed by an extremely clean and well-kept avenue. I decided to take a jaunt down the side road and soon after discovered a bright, whitewashed building with two stern looking guards at the entrance. A bright blue sign hanging over the entrance asked the question, “Do you want to work in a Call Center?” I had been reading of late that the Filipines had become a destination for Call Center Outsourcing: nearly every Filipino under the age of sixty seemed to speak English; and nearly every Filipino singer in China I had ever heard sing seemed to have flawless American accents in performance. Why when suited with a white collar wouldn’t they be able to perform in the same flat, nasal-pitch of the most pedestrian American from the Midwest?

Just behind the Filipino call center was a small complex of adobe-style banks and Western-style venues: a bar-b-que shack, a café, a small Western-style supermarket. Three young Filipinos – a man and two women – dressed in business casual ware with security nooses round their necks strolled back to the Call Center from their break. It was all rather inspiring to find, really, amid the clamor and pollution of the main street.

And therein lays the rub: China is fast-developing its infrastructure, but the English-language skills as well as Western acumen are woefully behind that of a country as small and fragmented as the Filipines. The Filipines has the people with the language talent and cultural affinity, and it certainly has the economic desire to develop IT-based industries. However, the Filipine government is severely afflicted by in-fighting, nepotism and corruption, with no clear plan to develop the economy of its country to the same degree as China. The Filipines, in a way, is an India in the miniature: talented but constrained by self-serving systems of governance.

Who knows, instead of Filipine singers, China might one day be importing Filipine speakers with American Midwestern twangs to work in its Call Centers.

Monday, 12 May 2008, Hangzhou, Hangzhou Services Outsourcing Forum. Topic: “Hangzhou Pioneering Spirit and the Development of China’s BPO Industry”

Monday, 19 May 2008, Shanghai, George Fox University EMBA program. “China Society, Economy and Business.”

Thursday, 22 May 2008, Shanghai, China Supply Chains Go West. Topic: The Challenges of Investing in China’s Interior - Case Studies.

What my friend said though put me in mind of double-think of the modern Chinese in his perception of his relationship with the rest of the world. And I don’t just mean THE WEST. It’s pretty much with anyone not of Mainland China.

David Shambaugh in his opinion piece in yesterday’s International Herald Tribune, China’s Competing Nationalisms, discusses this schism precisely.

“Chinese society embodies both types, reflecting a deeper dualistic set of identities: one xenophobic type rooted in past indignities experienced by the Chinese people, the other more cosmopolitan version taking shape along with globalization and China’s integration into the international community.”

But, Shambaugh points out, lets not place on the blame for China’s double-think about the world just on history:

“As a Chinese colleague recently pointed out to me, the current hyper-nationalism is also fueled by the deep feelings of discontent and resentment currently gripping large sectors of Chinese society - wage arrears, stagnant incomes, unemployment, inflation, corruption, severe class disparities, environmental deterioration, moral vacuum and a deep sense of losing ground in China’s Hobbesian economy.”

Something the Powers That Be in China seem not to get yet as make their entrance onto the world stage of opinion is that the audience is taking notes:

“If Chinese nationalism continues to show its insecure rather than its self-assured side, other nations will adapt their China policies accordingly, and instead of winning the world’s respect, China may bring upon itself exactly the kind of “containment” policies it regularly denounces.”

Check out the piece: well worth the read.

His first encounter with security precautions and the lazy attitude of administrators was at the Wuxi airport, where the check-in attendant discovered one letter misspelled on his plane ticket. Despite the passport number on the ticket matching that in his passport, the attendant would not issue him a boarding pass. Arguments with security and with airline management got him nowhere. He missed the flight.

Eventually, the party arrived in Guangzhou to have the Chinese accompanying him denied entry to the Trade Show. “They need to show their passports,” Security said blankly. Orders had come down from the Ministry of Defense. This was no drill, either. So, not just my friend’s Chinese staff and associates were unable to get into the Show, but neither were thousands of other irate Chinese who had traveled to the Show to wheel and deal. My friend tried to incite a riot by arguing in public with Security that the Chinese government itself Chinese people were not deemed worthy enough to enter the Trade Show; only the foreigners, which, of course, was wholly unfair. He told me the crowd’s righteous indignation got them nowhere. Eventually, he relented, and chose to sit out the Exhibition.

Of course, the Chinese government in the run-up to the Big-O wants no slip-ups. They’d rather see the GDP dip a bit over the next months than to have another attempt at Separatization [sic]. Witness the new visa policies that make it very very difficult for travelers – on business or not – to receive multiple-entry visas. Even out of Hong Kong. Businessmen that typically travel to the Mainland through Hong Kong are no longer able to gain their visas to China as easily as they had been in the past. One businessman who had recently been in China told me the office was even closed when he had gone to renew his visa – a sort of impromptu bank holiday.

And further abroad: a British friend told me his girlfriend in London was one of the few lucky applicants to receive a visa to China, to travel here in May. People had been waiting in the line for five hours before the application window opened. The girlfriend had broken down in tears in front of officials and was able to convince embassy administrators she was not a terrorist. I know of other westerners who have put their holiday plans for China on hold for after the Olympics. I guess they figure they have better things to do than jump government sponsored hurdles.

In reading his Carl Crow book, it’s easy to see why French eschews anything that would seem to be a time drain. Carl Crow is one of the most detailed biographies and histories of China I’ve ever read. I asked him, “How did you manage to gather and write so much detail? Well,” he told me once, “I don’t play silly games like golf and I don’t watch TV; huge waste of time, TV.”

Carl Crow was a prolific author and successful businessman based in Shanghai for 35 years, during some of the most tumultuous scenes in Chinese history. Born in 1883, Crow made landfall in Shanghai in 1911, with the fall of the Qing Dynasty. With the exception of a couple years spent back in the States, he would make China his home until the Japanese attack on Shanghai in 1937 would force him back to America, with little more to show for his twenty-five years than a suitcase of clothes.

Crow was author of the famous book 400 Million Customers, about the consumer habits of the Chinese people. Part cultural odyssey, part business book in the modern vein, 400 Million Customers was given to American troops that made landfall in China at the end of World War II. “Crow’s book is still the best book about China there is,” French said matter-of-factly. Crow also wrote other books: an automobile guide in the AAA-mold for driving through 1920s China; a book about Philippine culture and geography; The Great American Consumer; Japan’s Dream of World Empire; and the popular The Chinese Are Like That, another cultural odyssey.

Crow was also founder and manager of a highly successful and lucrative advertising business based in Shanghai. Indeed, it was Crow that promoted the image of the modern, cosmopolitan Shanghai woman through the posters and calendars that proliferated through the day. He worked for the American government as an intelligence agent, writing reports on Japanese movements and strategy during World War II. He died of cancer just months before the Japanese surrender at the end of the War, in 1945.

I asked French about the proliferation of China books in publishing channels today. He answered, “The number of books that are on the market now about China are actually only about half of what was on the market during Crow’s time, [in the 1920’s and 1930’s]. Interest about China at the time was huge. And China’s importance in the world back then was even greater than it is now. Now, China is just an economic story. Back then, it was the focal point of all the major powers; what happened in China would affect the rest of the world.”

Long after the interview, I thought about what French said about China during that chaotic period in the early 1900s. Eventually, I preferred to think what happened during Crow’s time was really just the preface to a new era in China. Now, we’re just getting to the cruxt of the story.

Time to wake up and smell the coffee.

Magdalene Mok was one of a dozen core students. They all hung with me for the two years, from the first class to the last. They were middle-aged and elderly housewives, for the most part. From Hong Kong, Guangdong and Fujian. I was single at the time. They all became my mothers. Chinese mothers hate to see their children single. And hungry.

Magdalene started two trends. She would bring me a Styrofoam carton of fried noodles or buns stuffed with pork for me to take home after the night-class. Then another student would make sure I had fresh tea to drink at the start of class. Eventually, the competitions began to see who could get to class first with the most food to bring teacher. I finally had to tell them all to stop bringing me food; I had to lie I’d already eaten dinner before the night class – I wasn’t hungry, I insisted.

She was also the first to call me “Bill Teacher,” which other students caught onto and seemed to enjoy repeating just for the sheer oddness of the title. Secretly, I was both tickled and touched by the mantle.

Magdalene was a devout Catholic. I helped her moved house once, to an apartment complex near Chinatown for the elderly subsidized by the Boston government. I remember all the crosses and Jesus photos neatly packed in a box, ready to be positioned in sacred places throughout their new home.

I never thought of the heavy-set woman as old, really. Maybe it was her Beetles haircut that framed her thick, owlish eyeglasses. Clad in her uniform - baggy T-shirt, jeans and white sneakers - she was always active, always moving. In the few years we knew each other, she was always organizing events, always involved in the Chinatown community. Once, she came into our night class in earnest bearing a placard and wearing a banner across her ample chest. She apologized for being a little late to class; she had been protesting the development of a new high rise in Chinatown.

Magdalene had six children; all but one was still in Hong Kong. The two daughters notified me Magdalene had passed on. I am deeply grateful to them for letting me know. I met a couple of the other “children” in Hong Kong, adults all. I met her husband in Hong Kong, too; a spry elderly man who looked twenty years his junior who liked playing Mahjong.

Magdalene set out in the States to make her own life; she had given so much of herself to her family in Hong Kong. In Boston, it was time to devote herself to God; and to good works; and to her friends and neighbors. And to her English teacher, who learned so much from her about how to be a good person. Which isn’t as easy as it sounds.

I asked a Dutch friend what his impression of the transition was. I written about conversations with him before: he’s the fellow who hates Dongguan and figures off the top of his head at least 6,000 factories had closed down in and around Guangzhou alone.

In our latest conversation about his industry – textile exports – he explained to me just how dramatically the industry had shifted in South China. His company takes orders for clothing in Europe and farms assembly out to Chinese manufacturers. “In the old days,” he said, “textile companies would outsource parts of garments to smaller companies; essentially, the big companies were assembly shops. Now, with the loss of the smaller companies, the larger companies are once again becoming vertically-integrated, raising their costs of doing business.” And as the large companies are the last men standing after the industry and regional shake-out, they can be choosier, picking higher-margin orders, with profits they might not have dreamed of before.

“And let me tell you, it is a pain to have to start all over again,” he said. “We have to find new suppliers and start working with them for the first time.” I asked him if there was a problem with the quality of the goods they were producing. “No, not really,” he answered, “the quality of new manufacturers is so-so; but not like it was with those they had spent years cultivating.”

My friend said the family business has lost the priority they once had in getting orders done, to specification. “For example, with one supplier in Guangdong, we could communicate directly with the owner to get the time and attention we needed for orders. Over fifteen years, now, and we’ve made that owner very rich. Now his son – who was educated in the States - gives us a hard time on cost. So, we sometimes have to call the father to get the terms we need.

“We can’t even do that with new vendors, especially in a new region.”

I asked him what region was taking over from Guangdong in the textile industry. Without hesitation he answered, “Qingdao.” “Their costs are lower than what you’ll find in Guangdong; but we have to build those relationships all over again.”

At least, he’ll be able to enjoy a cold beer while he waits for his orders.

An IDC forecast bears out his tongue-in-cheek rumination:

“IDC forecasts that Chinese cities will overtake Indian cities by 2011 due to massive investments made ( e.g. infrastructure, English language, Internet connections, technical skills, etc) which are favorable towards offshoring.”

Here’s a snapshot from the IDC website of city standings globally: