China Crisis

IMAGE_149As mismatches go, they don‘t get much more extreme than China and Latvia.

Latvia, with a population of 2.3 million, gross domestic product of 33 billion dollars in 2008 and the deepest recession in the European Union, played host on September 1st to China: population 1.3 billion, GDP 4.4 trillion dollars and still growing.

The Latvia-China Economic Forum, which took place in Riga, threw the two countries‘ economic prospects into sharp relief.

Following the global economic meltdown, China finds itself heralded as the world‘s economic saviour, and Chinese Vice Prime Minister Hui Liangyu wasted no time in trumpeting the role he said his country played in “stabilizing the global crisis.”

His address was curious. Speaking much louder than anyone else in clipped phrases, there was a hint of the party congress about his delivery. Maybe that’s not surprising given that he joined the Chinese Communist Party in 1969 when the Cultural Revolution was still in full swing.

None of the speeches were up to much. The Chinese bandwagon (or should that be ‘junk’?) had already paid visits to Slovenia and Lithuania, and I got the distinct impression that it was probably just a case of pressing “Find and Replace” for the Chinese texts, inserting “Latvia” for “Lithuania.”

Someone proudly claimed that Riga has over 800 years of history behind it. “That is not going to impress the Chinese,” I said to myself.

A brief moment of levity was provided when the “simultaneous translation” was revealed to be nothing more than a Latvian reading out a prepared translation. Halfway through one of the speeches it sounded as if he dropped his copy onto the floor. After a muffled curse, you could hear him scrabbling around collecting his papers, then launching back into his delivery at double speed – but still managing to overrun the end of the speech by a good 20 seconds.

Latvian Finance Minister (and acting PM for the day) Einars Repse told me there is “almost
unlimited scope for cooperation” and the long-distance rail link from Riga to China (part of which is currently supplying US forces in Afghanistan) emerged as a particular hope among a rather-too-long list of Latvian “priorities”.

But if the government side of things was a bit dull, there was real life among the businesspeople I spoke to from both China and Latvia.

Matiss Hermanis of building materials supplier JTS made what I thought was a crucial but often-overlooked point: that if you really want to do business with China, you have to make an effort to understand how the Chinese do business and not simply wave your products under their noses.

“This is a first step for me and my company. Everyone says they want to get into China, but not many people find out how to do business there. That‘s why I‘m here,” he said.

Hermanis’ approach was refreshingly open – he was there to educate himself, not to educate the huge Chinese corporations with which he would meet about the attractions of his company. Such an intelligent approach augurs well for JTS’s prospects.

Even though JTS already exports to numerous European companies, China represents another order of magnitude, Hermanis said.

“Somewhere like Denmark is no bigger than Latvia. It‘s just not China,” he said.

I heard a similar approach from another young entrepreneur, Dainis Lapins of Arcus Elektronika. He too was calm and inquisitive, reasoning that because his company actually imports some of its components from China, there could be an export market for finished products in the opposite direction.

I found myself wishing that people with the long-term thinking of Hermanis and Lapins were put in charge of Latvia’s economy as a whole.

Equally illuminating was a conversation with a Chinese businessman, who I’ll call Jackie Chin for reasons that will become obvious.

During the Lithuanian stopover, he said someone had sidled up to him and without any form of introduction whispered: “I can save you from having to pay any taxes here, know what I mean…” in a nod-nod-wink-wink kind of way.

He’d found Lithuania as a whole a little bit weird and backward compared to the first stop in Slovenia.

A very amusing conversationalist, Jackie and I were soon laughing as he told me a few more tales of strange encounters in Lithuania.

Throughout our chat, two young women a few yards away kept shooting slightly concerned glances at him. Eventually one of them walked over and whispered into Jackie’s ear before scurrying away with a cold smile in my dirction.

“Don’t worry about them,” said Mr Chin, “they’re just government people worried about what I might be telling you!”

Then he laughed some more, even louder.

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