China’s economy continues to advance at breakneck speed particularly in the development of its manufacturing base and the extraordinary growth of its exports. While the exact size of China’s economy remains a topic of debate among various economists owing to how it is measured (whether in dollar terms based on its gross domestic product or in purchasing power parity terms as is more common in studies of developing economies wherein purchasing power based on comparable products is evaluated), by any accounting system, China’s economy is now one of the world’s largest and certainly one of the most rapidly growing. Problems remain in the banking and fiscal systems, yet policy makers are addressing these issues. Real progress has been made in recent years to clean up the inadequacies and to create a modern economic system required to participate fully and effectively in the WTO and other world organizations that require accurate accounting and statistical systems and records.

On the political front the signs are not so clear. First, the leadership succession that is supposed to be part of the reformed system has not completed its transition. This has become increasingly evident in the signals emanating from the past party general secretary and president, Jiang Zemin, who now officially only occupies the top military position as Chairman of the Central Military Commission. As Joseph Kahn of the New York Times wrote on July 16, 2004, Mr. Jiang is reported to have told National Security Advisor Condoleezza Rice in a meeting two weeks ago that he was “handing over more and more power” to Mr. Hu. This is a clear signal that Mr. Jiang is still in power and calling the shots.

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Chongqing, on the eastern side of a mountain range separating the two nearby cities, benefits from its new autonomous status (since 1997 directly under the central government) and its position as a Third Front military-industrial stronghold. Dual use products in the motor vehicle and pharmaceutical fields attest to its transformation, along with massive infrastructure changes and a large new development zone on its northwest side. Red tape, brown air, and muddy waters complicate prospects for the aptly named “mountain city” at the tail end of the Yangtze’s new accessibility for deep water ships. To the west of Sichuan’s two anchor urban areas, Qinghai signals both the transition to the Tibetan highlands, and attempts of Chinese penetration. Major roads, tunnels, and bridges remain very much still under construction. Both high tech communication towers and traditional wind banner poles dot the heights; Chinese soldiers share buses with nomads and monks. Clearly, “developing the West” carries multiple meanings, and is a project continuing to play out.

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Recently, I interviewed Mr. Edward Grund, the President and General Manager of Markor Home Furnishings, the Retail Division of Markor International Furniture. The following is part of the written interview:

GUO: Can you tell me a little bit about your company?

GRUND: Markor was established in Urumqi in 1990, and entered the furniture manufacturing business in 1992. Markor is one of the leading furniture exporting companies in Asia producing quality products, which enjoy high acceptance in Europe, the Middle East and the United States. Markor International Furniture became a publicly traded company on the Shanghai Securities Exchange in November 2000.

GUO: What is Markor’s business strategy in entering China’s domestic furniture retail market?

GRUND: In 2001, Markor formed a partnership with a well-known American furniture company Ethan Allen to establish a chain of furniture stores throughout China. The agreement calls for the two companies to collaborate on the development of a retail format that will market two retail concepts: the Ethan Allen retail program and the Markor retail program. The first store opened in December 2003 in Tianjin. As we speak, there are currently six stores being opened or under construction in China.

GUO: Can you describe to our readers the current business environment in China?

GRUND: The emerging middle class and upper consumer market in China represents one of the highest potentials for retailers that exist anywhere in the world in my opinion. Personally I have been well received by business and governmental individuals wherever I have gone. The country is eager to develop and embrace “western” approaches and practices to business. While certain requirements to open a location are tedious and require patience and understanding, they are not insurmountable. Business and government leaders are proud of the progress being made but anxious to move forward at an ever increasing pace. The amount of new construction and development occurring is remarkable. Private consumption, home and automobile ownership growth is seen in every city I have visited. I have been fascinated to witness and experience this remarkable period in China’s development and advancement to a world power.

GUO: What are some of the notable cultural differences in doing business with Chinese?

GRUND: Personal relationships and contacts are an important part of conducting business in China. Business Entertainment is important. The ritual of exchanging business cards is never overlooked regardless of the level of the individual. Co-operation is an often used terminology for business dealings.

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