Dispatches from China

Recession has different impact in China

A BizTimes Milwaukee reader recently contacted me by e-mail with a fairly simple question: “By the way, have you seen China coming back to life? I was in Shanghai-Suzhou-Wuxi in November, and things were already slowing.”

The answer is tied into the different perceptions we have of China vs. the reality of China.

China has an inverted misery situation in comparison with the United States. Large Chinese companies are doing better than small and medium ones, whereas our small and medium companies are doing better than our larger ones. This is a gross simplification which depends on whether the companies are centered on domestic or export markets and a host of other issues, but it is a significant distinction that underlines the differences in our economies.

In China, many of the larger companies tend to be focused on domestic markets, whereas many of their small and medium enterprises (SMEs), many of which are based in Shanghai (Long River region) and Guangzhou (Pearl River Area) tended to be associated with the export market. These areas have suffered the most and as a result often give visitors a slightly skewed vision of the economic impact on the current financial crisis on China, mainly because those are the areas we see.

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