Go for the services - The WTO column

"What do you think the WTO is going to mean for doing business in China?" Since I'm more of an expert on China than a journalist, I increasingly find myself in a position where I have to answer questions I did not think of myself.
So, I realized I had almost missed the 5-year anniversary of the event that lay the foundation for at least the name of this column. Since those early days many things have changed and I have even tried to find a more appropriate title for this column. But that effort failed and now I just hope the World Trade Organization does not collapse or changes its name.
I have noted it before: for the new government the WTO-accession is much less an issue than it was for former premier Zhu Rongji. It looks that apart from the international banks the opening up of the Chinese market is hardly an issue. When you hear the noises coming from Brussels and Washington you might actually think that both the US and Europe the opening up China is going a bit too fast for them.

So, my journalist was still waiting for a few useful quotes, while I was pondering what the WTO would mean for China this month. "Go for the services," I said. "It has not so much to do with the WTO, but when you want to see a really big change in the years to come, you will see more high-end services moving into China." It was partly a self-serving argument since I'm setting up a few new services here in China. One of them, a so-called speakers bureau, will retain professional speakers and place them for a reasonable fee in conferences, at the table of corporate boards, high-end training sessions and other meetings.
But I also noted the cheers of Jan van den Bergh of the European online marketing company I-merge, when one of his US competitors AKCQ announced they would follow his steps can come to China too. I'm not the only one betting on the services in China.

Where is the money for this kind of services coming from, you wonder? First, the foreign companies in China are doing pretty well. The large number of profitable ones are looking for ways to use these profits in a sensible way in China, since exporting profits is still not that easy. High-end services could of course in the end mean they make even more profits, but then - hey - we can solve that problem later too. Even when the preferential tax treatment of foreign companies is going to disappear, that is not going to hurt the profitability that much.
Then, have you noted the number of Chinese companies heading to a successful IPO? Apart from spending their capital on expanding their operations, they will have to work on their image, polish themselves before they go global.
Have you noted that China has become a bit larger than Beijing, Shanghai and Guangzhou? Other cities are very eager, and increasingly serious to put themselves on the map of foreign investors: Nanjing, Hangzhou, Chongqing, Tianjin, Chengdu. How can municipal governments compete? They will need a hand and increasingly willing to pay for it.

So, the money is there. The problem is of course, as others have noted the hard way, is to make it change hands, especially in China where saving the money is always an alternative. Now, that is the real challenge.

Fons Tuinstra

PS: And what do you think of this Calvin Klein moment ?