I had the wonderful opportunity of attending the Olympic Games in Beijing, China.  It was a once in a lifetime experience that I will never forget.  I was able to attend several events, also including the Opening and Closing Ceremonies.  During my extended time in China, I was able to pinpoint several strengths of the Chinese people that has contributed to their economic successes.

1)  Strong work ethic - I was staying at an extremely nice hotel, and I swear that some of the workers were there 24 hours a day and 7 days a week.  I would often ask workers in retail stores what there work hours were like, and they often told me that they worked from 10AM to 10PM, seven days a week without a day off.  For you math majors out there, that is 96 hours a week.  Chinese manufacturing is not just advantageous because of the exchange rate, but also because of the amount of time that they are hard at work.

2)  Strength in numbers - I would often be eating in a restaurant and realize that I had more than one server assigned to my table.  They would often stand a few feet away from the table and just watch me eat. It seemed as if they had no other table that they were assigned to.  Everywhere you went, it felt like there were as many workers as there were customers.  This is one of the most important strengths of Chinese trade and manufacturing.  More hands make light the work, and more hands means more production.

3)  Payment based performance - If the person was a street sweeper, bellman at the hotel, server at the restaurant, or volunteer at an Olympic Venue, their work ethic was always extremely comparable.  For those of you that have been to China, you know that tipping is not accepted by almost all trades.  They do not work harder because they are going to get paid more.  Some often question the quality of Chinese products because they are made at such a “cheap” price, but I can tell you right now, the person on the floor is working just as hard (if not harder) as the manager that is probably making more money.

On July 21, 2005, the Renminbi’s(RMB) peg to the U.S. Dollar was removed.  The RMB now fluctuates to a managed floating rate based on market supply and demand with connection to a combination of other foreign currencies.  Once the peg was removed, RMB revalued to 8.11 to every USD.  Since then, the RMB has continuously strengthened against the dollar, now trading at around 6.85 RMB per USD.

The more the dollar weakens, and the more the RMB strengthens, the more expensive China Manufacturing becomes for U.S. companies.  The United States has continuously reaped the rewards of cheaper manufacturing costs in China, but if this trend continues, this market advantage will not be as great as it is today.  Many talk about the need to bring some of this manufacturing back to the U.S., but we absolutely cannot compete with Chinese manufacturing costs right now.  We must take advantage of China manufacturing while we still can.  The manufacturing cost in China has a great effect on the price of goods in the U.S.  The USD to RMB exchange rate is something that we must always keep a close eye on.

From the beginning, it was clear that the Chinese believed that the Olympics would have an enormous impact on the Chinese image, economy, and trade.  PRC Premier Wen Jiabao said earlier this year that the Olympics in China provided an opportunity to display to the world how “democratic, open, civilized, friendly, and harmonious” China is.  The monetary investment on the Games is staggering.  

Those investments include:

• $40 billion on the infrastructure alone from 2002-2006
• $1.1 billion on transportation improvements, including expanding Beijing’s subway system, completing the city’s light rail system, and constructing and refurbishing 318 km of city streets.
• $200 million to demolish old housing and urban buildings
• $3.6 billion to transform Beijing into a “digital” city
• $12.2 billion to improve China’s environmental issues

(Statistics found in The China Business Review, ”The 2008 Olympics’ Impact on China”, by Lee M. Sands)

This is obviously just a fraction of the major spending, but China’s investment cannot be overlooked.  Will this investment bring more tourists, more foreign direct investments, and higher trade volumes?  It is too early to tell, but my guess is YES.  The international viewing audience for the Games was enormous, and the consensus from those viewers was extremely positive.  The Chinese have never been looked at in such a positive light.  Expect China trade volumes, FDI, and tourism to continue to grow at exponential rates.