Zhang Wei

"Doing Business in China"
(Program Information)

A presentation by

Mr. Zhang Wei
Vice Chairman, China Council for the Promotion of International Trade (CCPIT)
and
Vice Chairman of the China Chamber
of International Commerce

March 18, 2004
World Trade Center of New Orleans

Distinguished guests,
Ladies and gentlemen,

It’s my pleasure to visit your country with a delegation composed of prominent Chinese business leaders on the 25th anniversary of the establishment of diplomatic relations between our two countries.

Please allow me, on behalf of China Council for the Promotion of International Trade and all the Chinese delegates present here, to express our sincere gratitude to our American friends who have for years contributed to the development of Sino-US business cooperation.

The business exchanges between our two countries enjoy a long history. Over the years, bilateral trade has experienced a tremendous expansion of forty times, from merely 250 million US dollars in 1979 to over 126.3 billion US dollars today.

With over 40,000 US-invested enterprises, the paid-in value of the total US investment in China has reached 43 billion US dollars. Over 400 out of the top 500 US companies have established themselves in China, and most of them are making a handsome profit. McDonald’s and KFC chain stores are found everywhere in China. American big brands like Microsoft, Intel, Motorola, P&G, Kodak and GM are popular names in China. Of every ten rolls of film sold in China, seven are Kodak. Wal-Mart and other US retailers are also doing very well in my country. According to the statistics from the American Chamber of Commerce in China, its member companies have gained a much larger profit margin from their China business in the past 4 years than their global business. In the meantime, many Chinese products have been well received by American consumers. Chinese-invested companies in the U.S. have amounted to 756, which is also an applaudable progress.

Though 25 years is just a blink of the eye in history, the inspirations they have brought to Chinese and American people are indeed profound in the following two aspects.

Firstly, economic relations have firmly become the foundation of bilateral relations between our two countries. A healthy economic relationship is mutually beneficial, conforming to the fundamental interests of both peoples and also conducive to the regional prosperity and world economic growth at large.

The reason for such a rapid growth of Sino-US trade ties, in the final analysis, is the high complementarity of the two economies, which, to a large extent, stems from their big differences on economic resources, industrial structures and consumption levels. China is the largest developing country with a huge market, fast growth of demands and low cost of labor, but short in capital and relatively backward in technology and management. On the contrary, the US is the largest developed country, big in economic size, abundant in capital, and advanced in science and technology. We believe there is still a great potential to explore in the Sino-US business cooperation. China is already a big market importing more than 410 billion USD annually. China’s further development will create lots of business opportunities for all the countries including the US. We are going to strengthen the comprehensive cooperation with the US in various sectors such as hi-tech, agriculture, environmental protection and supporting small and medium-sized enterprises. We are going to explore new areas of cooperation and establish a stable partnership.

During our visit to Washing D.C., I stayed in the Hyatt Hotel. There is a store in the lobby selling products, most of which are made in China. I asked the salesman why. The reply I got was: because Chinese products are cheap and of high quality. He took a T-shirt for example and told me that the price was 15 dollars but he got it for only 7 dollars. Therefore, Chinese manufacturing competitiveness not only benefits Chinese but also American business people and consumers.

Secondly, we both gain from collaboration but lose from conflict. The Sino-US business cooperation has made great progress in terms of both size and quality. It is natural and understandable to have divergences or even disputes between us. We believe the business communities on both sides should maintain the healthy bilateral relations with a fart-sight vision. Problems can only be tackled through fair negotiation and dialogue. Unilateralism or trade war does not help solve problems but hurt our common interests. The development and prosperity of the American economy is in the interest of China. We are more than happy to see the constructive role played by the US in the world economic cooperation. On the other hand, China’s development and prosperity will also bring new business opportunities to American businesses. We hope the US could maintain a fair and objective view of China, and constructively handle bilateral relations.

Last October, we were very pleased to launch the first dialogue mechanism between Chinese and American business communities in cooperation with the US Chamber of Commerce. We sincerely hope we could work with all American friends for a better US-China business relationship through our equal exchange and cooperation.

From 1979 to 2003, with 25 years of continuous efforts, China’s social productivity has been improved dramatically. The market economy has taken shape while the average living standard of the Chinese people on the whole has met the features of a well-off society as we targeted long time ago.

We are confident of maintaining an annual growth rate of around 7 percent for a long time, aiming to reach a GDP of over 4 trillion US dollars by 2020. In the next three years, China’s import volume will amount to 1 trillion US dollars while its service sector will open wider. The Chinese government will continue to encourage foreign investment and protect foreign investors. With the improvement of its consumption structure and industrial structure, China needs more advanced technology, services and expertise. The southeast coastal region of China, in particular, is an ideal manufacturing base. Moreover, while the western development program is progressing smoothly, the restructuring of old industrial bases in Northeast China is under way too. American companies are welcome to seize these opportunities and expand their business in the Chinese market. We would like to see more large American companies working well with Chinese enterprises and small and medium-sized US enterprises get involved in as well.

We are proud of China’s economic achievements and the progress we have made in our bilateral business relations. I’m confident that the Sino-US economic cooperation will enjoy a bright future. My argument lies in 5 aspects.

First, the further development of both economies will produce a more reliable cooperation environment. China will seriously honor its WTO commitments and vigorously implement the policy of reform and opening up. With a safe environment of investment ensured by more transparent and strict execution of laws, China is willing to see more American companies to operate in China. On the other hand, we also strongly encourage Chinese companies to invest in the US and establish themselves in the vast American market.

Second, the continuous improvement of Sino-US political relations will secure the new development of Sino-US business relations. Last year, Premier Wen Jiabao paid a successful visit to your country, which has further improved the mutual trust and will definitely facilitate economic exchange and cooperation.

Third, stronger ties between China and the US will definitely be favorable to the expansion of US-China economic cooperation. Before diplomatic recognition, contacts between the two countries were few. Today, personnel exchanges total more than one million persons / times a year. Over 180,000 students from China have studied or worked in the US, with 60,000 still studying right now. China also receives 3,000 American students per year. More and more Americans hold a realistic view about China by touching the real China and communicating with the Chinese people. The Chinese are attaching more importance to the Sino-US relationship with bilateral economic ties at the core. Strengthening communications will definitely be conducive to the solution of many problems, particularly those on the business arena.

Next month, Vice Premier Mme. Wu Yi will lead a Chinese government delegation to the US and attend the US-China Joint Commission on Commerce and Trade (JCCT). The governments and business communities could continue their candid and in-depth discussions, which will create a better environment for the future development.

Fourth, great potential of the bilateral economic cooperation will give an impetus to the new development of Sino-US economic relationship. From 1991 to 2002, the US made a total direct investment overseas of USD 870 billion, only 4.3% of which or USD 37.5 billion went to China. This figure is not compatible with the economic scale of China and the continuously enhanced economic cooperation between the two countries. It should surely be further increased. Today, the US still retains some unreasonable restrictions on the export to China of such products which are used in the peaceful utilization of nuclear power, electronics and satellite technology. Besides, China’s tertiary industry only takes up 34% of the total GDP and its insurance penetration rate is only 3%, which is not suitable for the rapid economic progress. Furthermore, the economic cooperation between our SME sectors is still wandering at a low level. If both sides make efforts to deepen cooperation in the fields cited above and abolish unnecessary restrictions, we will absolutely better overcome the trade unbalance and realize mutual benefits in a win-win situation.

Fifth, the two business communities share the same desire to strengthen bilateral cooperation, which will become a driving force for the sounder Sino-US business tie. Take our CCPIT delegation for example, our delegates include the first listed bank in China, Shenzhen Development Bank; one of the largest grain corporations in China, Jilin Grain Group; a leading construction contractor and equipment supplier, International Harbor Equipment Company. They are all giants in China. And we also have some representatives of SMEs in our delegation: they are pharmaceutical agent, paper maker, textile industry representative or furnace manufacturer, etc. Most of them maintain good cooperation with US companies. They have either imported advanced equipment or purchased grains and industrial materials from the US. This time, we would like to further enlarge our purchase. It is our sincere hope to enlarge cooperation and push our bilateral business ties to a new high.

China’s development will go ahead without the world; the world cannot without China either. With the opening of the Chinese market, we will face more fierce international competition. We hope to see more and more US companies successfully establish themselves in the Chinese market. In this regard, as China’s biggest international trade and investment promotion organization, the China Council for the Promotion of International Trade (CCPIT) will continue as always, to cooperate with our counterparts to facilitate the US business in China. We will continue to help dialogues and exchanges between our two business communities via the US-China Business Dialogue as well as other mechanisms and channels. We will take concrete measures to encourage more cooperation among SMEs. We welcome any efforts made by American friends to strengthen our bilateral business ties. CCPIT has a representative office in Washington D.C. and two offices in Minnesota and Dallas respectively. If there is anything CCPIT could help, please don’t hesitate to contact CCPIT representative offices or the headquarters in Beijing.

I sincerely hope our ambitious business people could grasp the historic opportunity and have a stronger representation in the Sino-US partnership which will ensure the mutual benefits of our two countries.

May I wish today’s seminar a complete success.

Thank you.

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