SHANGHAI - APRIL 22 2013

Shanghai is the largest city by population in the People's Republic of China (PRC) and the largest city proper by population in the world. It is one of the four province-level municipalities of the PRC, with a total population of over 23 million as of 2010. It is a global city, with influence in commerce, culture, finance, media, fashion, technology, and transport. It is a major financial center and the busiest container port in the world.

Located in the Yangtze River Delta in East China, Shanghai sits at the mouth of the Yangtze River in the middle portion of the Chinese coast. The municipality borders the provinces of Jiangsu and Zhejiang to the north, south and west, and is bounded to the east by the East China Sea.

For centuries a major administrative, shipping, and trading town, Shanghai grew in importance in the 19th century due to European recognition of its favorable port location and economic potential. The city was one of several opened to foreign trade following the British victory over China in the First Opium War and the subsequent 1842 Treaty of Nanking which allowed the establishment of the Shanghai International Settlement. The city then flourished as a center of commerce between east and west, and became the undisputed financial hub of the Asia Pacific in the 1930s. However, with the Communist Party takeover of the mainland in 1949, trade was reoriented to focus on socialist countries, and the city's global influence declined. In the 1990s, the economic reforms introduced by Deng Xiaoping resulted in an intense re-development of the city, aiding the return of finance and foreign investment to the city.

Shanghai is a popular tourist destination renowned for its historical landmarks such as The Bund, City God Temple and Yu Garden, as well as the extensive and growing Lujiazui skyline. It has been described as the "showpiece" of the booming economy of mainland China.



Shanghai is the commercial and financial center of mainland China. It was the largest and most prosperous city in the Far East during the 1930s, and rapid re-development began in 1990s.This is exemplified by the Pudong District, which became a pilot area for integrated economic reforms. By the end of 2009, there were 787 financial institutions, of which 170 were foreign-invested. In 2009, the Shanghai Stock Exchange ranked third among worldwide stock exchanges in terms of trading volume and sixth in terms of the total capitalization of listed companies, and the trading volume of six key commodities including rubber, copper and zinc on the Shanghai Futures Exchange all ranked first in the world.

In the last two decades Shanghai has been one of the fastest developing cities in the world. Since 1992 Shanghai has recorded double-digit growth almost every year except during the global recession of 2008 and 2009.In 2011, Shanghai's total GDP grew to 1.92 trillion yuan (US$297 billion) with GDP per capita of 82,560 yuan (US $12,784).

The three largest service industries are financial services, retail, and real estate. 



The manufacturing and agricultural sectors accounted for 39.9 percent and 0.7 percent of the total output respectively.

Located at the heart of the Yangtze River Delta, Shanghai has the world's busiest container port, which handled 29.05 million TEUs in 2010.Shanghai aims to be an international shipping center in the near future.

Shanghai is one of the main industrial centers of China, playing a key role in China's heavy industries. A large number of industrial zones, including Shanghai Hongqiao Economic and Technological Development Zone, Jinqiao Export Economic Processing Zone, Minhang Economic and Technological Development Zone, and Shanghai Caohejing High-Tech Development Zone, are backbones of Shanghai's secondary industry. Heavy industries accounted for 78% of the gross industrial output in 2009. China's largest steelmaker Baosteel Group and Jiangnan Shipyard, one of China's oldest shipbuilders are both located in Shanghai.

Auto manufacture is another important industry. The Shanghai-based SAIC Motor is one of the three largest automotive corporations in China, and has strategic partnerships with Volkswagen and General Motors.

WIKIPEDIA / PHOTOS MARC DELBART

IMPORTANCE OF GUANXI

“Guanxi” literally means "relationships", stands for any type of relationship. In the Chinese business world, however, it is also understood as the network of relationships among various parties that cooperate together and support one another. Therefore, it is an important concept to understand if one is to function effectively in Chinese society.

The importance of "Guanxi"

Regardless of business experiences in ones home country, in China it is the right "Guanxi" that makes all the difference in ensuring that business will be successful. By getting the right "Guanxi", the organization minimizes the risks, frustrations, and disappointments when doing business in China. Often it is acquiring the right "Guanxi" with the relevant authorities that will determine the competitive standing of an organization in the long run in China. And moreover, the inevitable risks, barriers, and set-ups you’ll encounter in China will be minimized when you have the right “Guanxi” network working for you. That is why the correct "Guanxi" is so vital to any successful business strategy in China.

Although developing and nurturing the "Guanxi" in China is very demanding on time and resources, the time and money necessary to establish a strong network is well worth the investment. What your business could get in return from the favors for your partners are often more much more valuable, especially in the long run, and when you’re in need. Even domestic businesses in China establish wide networks with their suppliers, retailers, banks, and local government officials. It is very common for individuals of an organization to visit the residence of their acquaintances from other organizations, bringing gifts (such as wine, cigarettes, etc.). While this practice may seem intrusive, as you spend more time learning the Chinese culture, it will become easier to understand and take part in this practice that is so central to successful Chinese commercial activity.

How business is conducted

The Chinese culture is distinguished from the Western culture in many ways, including how business is conducted. For example, the Chinese prefer to deal with people they know and trust. On the surface, this does not seem to be much different from doing business in the Western world. But in reality, the heavy reliance on relationship means that western companies have to make themselves known to the Chinese before any business can take place. Furthermore, this relationship is not simply between companies but also between individuals at a personal level. The relationship is not just before sales take place but it is an ongoing process. The company has to maintain the relationship if it wants to do more business with the Chinese.

How relationship is established

First of all, it does not have to be based on money. Treating someone with decency while others treat him/her unfairly could result in a good relationship. Second, it starts with and builds on the trustworthiness of the individual or the company. If a company promised certain things and delivered as promised, the company is showing trustworthiness and the Chinese would be more inclined to deal with them again. Third, being dependable and reliable definitely strengthens the relationship. It is like being friends, and friends can count on each other in good and tough times. A good example is related to the 1989 political instability in China. Companies that stayed found their relationship with the Chinese strengthened as they were viewed by the Chinese as friends who did not abandon the Chinese when they needed friends. Fourth, frequent contacts with each other foster understanding and emotional bonds and the Chinese often feel obligated to do business with their friends first.
"Guanxi" or relationship with high rank officials are still important for doing business in China, though declining to some extent. Political and administrative interference in business have declined. More and more companies have found themselves on their own surviving without government subsidiaries. If they are not getting any help from the government they are more reluctant to be influenced by government officials. So government "Guanxi" may have less influence with these companies.

Since "Guanxi" and relationship could function as an information network, companies with wide "Guanxi" and relationship networks often have much higher performance than companies with little or no relationship with the Chinese.

Final Words on "Guanxi"

Keep in mind that "Guanxi" can take on many forms. It does not have to be based on money. It is completely legal in their culture and not regarded as bribery in any way. So, there is no need to feel uncomfortable about it. Trustworthiness of both the company and individual is an important component. Following through on promises is a good indication of this. Treating someone with courtesy while others treat him or her unfairly is another aspect. Frequent contact fosters friendship as well. Chinese feel obligated to do business with their friends first. There are risks with this system, as well. When something goes wrong, the relationships are challenged, and friendships quickly disappear. "Guanxi" can also be very one-sided. When "Guanxi" is involved, there is a risk of obtaining an invoice of twice the amount that you bargained for.

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CHINA LABOR FORCE

Behind the Chinese spectacular growth of the last 25 years is the size of it population, maybe 1,5 billion people. (more than the 1.3 billion official number)

Contrary to common thinking, CHINA has not the cheapest labor force in the world.

China has transformed into the largest factory of the world, which offers companies a workforce which is docile, courageous and competent, result of strong discipline imposed by the government.

The other great influence lies in the migration of hundreds of millions of farmers to the cities. This migration was justified by adoption to capitalism rules and the end of subsidies for the farmers. It is the largest migration in history, which a number which goes between 90 to 300 millions people going to live in the cities. It is now estimated that 50% of the population live in urban areas

China has 400 million people between 20 e 39 years (only 110 millions  in Europe)

The immense productive power of this workforce has transformed the Chinese workforce into the major labor resource of the planet.  The way they will use this workforce will determine the future of China and the future of the world