How to deal with China as a partner - Shaun Rein

Shaun Rein

Business analyst Shaun Rein author of The War for China's Wallet: Profiting from the New World Order defines three different relations China can have with other countries: hot, warm or cold partners. From Cambodia he reports how a hot partner like Cambodia can deal with its powerful neighbor, according to the Phnom Penh Post. 

The Phnom Penh Post:

 I don’t think China is trying to forge alliances; instead, it is looking to use economic carrots and sticks to convince countries to either do its political bidding (a Hot Partner country like Hungary, Ethiopia or Cambodia) or to punish countries that cross it politically (a Cold Partner country like India or the Philippines and the Aquino administration). It knows it can never be truly close with any country in the long-term, so instead it tries to dole out low-interest loans and infrastructure investments to countries to make them open to China’s political aims in the short term. Meanwhile, countries that cross China politically, as South Korea did by installing Thaad missiles, get punished. China blocked Chinese tour groups from visiting South Korea last April, causing a 40 percent drop in annual tourist visits and crippling the South Korean economy. 

If Cambodia is a ‘hot partner’ with China, what does this mean for Cambodia’s economy and development? And what does China gain from the relationship?  

Cambodia’s [Prime Minister] Hun Sen has been quite savvy in his dealings with China over the past decade. He has supported China’s views on the South China Sea during summits of Asean. Having a supportive country in Asean like Cambodia is to counter criticism of China’s policies by countries like Vietnam or the Philippines, and causes China to look to invest more in infrastructure development in Cambodia and to give it low-interest loans. Moreover, the Chinese government uses its control of the state-owned media to tout the historical landmarks in Cambodia like Angkor Wat. Right now, Cambodia is one of the top destinations Chinese tourists want to visit. I am very bullish on Cambodia’s ability to attract Chinese tourists to its landmarks and high rollers to its casinos. This is all gained by being a friend of China in the “hot partner” category. 

One of the problems of becoming a “hot partner” country is that these countries often become too dependent on China economically and start to lose political independence. China’s economy is so large that if a country gets punished for crossing China politically, then it will have a real impact, as in the South Korean case. 

On the one hand, it is good to get close to China politically, as nations will reap economic benefits, but it comes at a cost of losing political independence so countries should try to be close to China but also distance itself at times, as the United Kingdom or France has done, so that they are not viewed as lackeys of the Chinese government.

More in the Phnom Penh Post.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch  or fill in our speakers' request form.

Are you looking for more strategic experts at the China Speakers Bureau? Do check out this list.

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Trend: Chinese tourists volunteer in poor countries - Wei Gu

+Wei Gu 

Chinese tourists diversify fast from the cattle-like crowds moved around by large coaches. Some are starting to join a global industry of volunteers, helping out in poor countries, and enjoying new experiences. WSJ´s Wei Gu recently joined with her family on a trip to Cambodia. Her report in the Wall Street Journal.

Wei Gu:

Looking out of the tour bus window, Cambodia looked like China did 20 or 30 years ago. People rely on motorcycles to travel around, just as we did with bicycles in China back then. I saw a family of four squeezed onto a motorcycle, which reminded me of my dad carrying my mom and me around Shanghai on a single bicycle. 

The roads in Cambodia are quite congested and it took 10 hours to make the 250-kilometer journey from Phnom Penh to Siem Reap. 

While Cambodia’s roads are bad, its electronic infrastructure is well-developed and accessible. People from monks to “moms” at the orphanage carried smartphones, and they talked on the phone all the time. The monks explained that they used cellphones for work and not entertainment, but they kept snapping pictures of us or talked on their cellphones when conducting a house blessing. 

Mobile connectivity is cheap and reliable. I got a local phone card for $5, for five gigabytes of data, enough for 35 hours of surfing on the Web. This kept me abreast of the Hong Kong protests during the whole time we were in Cambodia. In fact, the connection was better on Cambodia’s muddy roads than in my Hong Kong apartment. 

Cambodians are incredibly connected. A 17-year-old boy at an orphanage we visited quickly added me on Facebook after he saw the pictures I posted about the orphanage where he lived. Now I’m seeing his updates every day, and he has asked how to get in touch with one of the Hong Kong girls who went on this trip. 

When American and Japanese students visited our schools in Shanghai, we exchanged snail-mail addresses. The letters would come after a month or so and stopped after one or two exchanges. It was difficult to keep in touch back then. 

In some ways, Cambodians are more global and more informed than many Chinese, who are cut off from global media. YouTube, Google , Facebook and Twitter are banned in China. Even now, English is still taught mostly by Chinese teachers at schools, while in Cambodia many students learn from native speakers.

Wei Gu and family

More in the Wall Street Journal.

Wei Gu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you interested in more stories by Wei Gu? Do check out this regularly updated list.  

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Being cheap is not enough for Cambodia - Shaun Rein

+Shaun Rein 

China has been raising wages over the past decade, and many manufacturers have been contemplating to move to neighboring countries, like Cambodia. But being cheap is not enough for those ASEAN countries to attract production from China, warns author Shaun Rein of The End of Cheap China: Economic and Cultural Trends that Will Disrupt the World, in the Phnom Penh Post.

The Phnom Penh Post:

There are great opportunities for Cambodia and ASEAN in general to grab market share in the manufacturing sector, especially in light industry. Many apparel and footwear companies are looking to relocate to ASEAN as long as they can find the proper infrastructure and stable government policies. Thailand is attracting more auto sector investment, Bali and other resort areas will benefit from more outbound Chinese tourism. 

Where does Cambodia fit in? Cambodia is well-poised to benefit from China’s rising costs. China-Cambodia relations are strong, so Chinese businessmen feel comfortable operating. Of concern, however, are the recent labour protests, which worry businessmen thinking about rising costs and low labour productivity. Lack of infrastructure is another issue. In today’s world, where brands like Zara release new clothes every two weeks rather than every quarter, the speed of getting product from factory to point of sale is critical. 

Is it all about low costs? I was speaking with bankers recently who are setting up branches in Cambodia in order to help finance the expansion of apparel manufacturers. Cambodia needs to provide low-cost yet skilled labour for at least 10 years to make it worthwhile for companies to relocate. In my book, I actually track a furniture company that relocated to Vietnam but eventually moved back to China because of too many defective products. Cheap is not enough – it needs to be good enough quality too.

More in the Phnom Penh Post. 

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.



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