Magazine article Management Today

The Dragon Comes Back to Life

Magazine article Management Today

The Dragon Comes Back to Life

Article excerpt

The Dongya Woollen Textile Mill in Tianjin (it used to be spelled Tientsin, like the carpets), had a visitor from Hong Kong recently. It was Song Yunhua, son of the mill's original proprietor. His father had fled to make a second fortune in the British colony when the Communists took over the mill almost 40 years ago.

The younger Song, now 64, is a toy magnate. Communist China is begging its old capitalists or their descendants to come back and invest in new free-enterprise, low-taxed joint ventures to revivify its flagging industrial sector. Toys are one of Hong Kong's labour-intensive industries seeking a second lease of life in countries like China, where wages are only a sixth of those in Hong Kong. And where should Song Yunhua more naturally look for a partner than at his father's old mill?

When he sipped tea with Deng Weisheng, the young director of the mill who had worked his way up from the shopfloor, it was just like old times. Deng recalled the elder Song with approval: |a very able man, he introduced a Western style of management.'

The mill today is looking to diversify in case raw wool gets priced out of the market. Toys are on its list, but it wants a foreign partner with technology and marketing know-how. So the wheel turns full circle.

The Xinhua Garment Factory, just along the river Haihe from the former Austro-Hungarian settlement in Tianjin, is also trying to find a Hong Kong partner. It makes a lot of shirts for Van Heusen, one of whose products is modelled in its reception hall, in a yellowing poster, by the youthful Ronald Reagan. Xinhua asked Wang Guangying, a famous Tianjin-Hong Kong go-between, to help. Wang is a brother-in-law of Liu Shaochi, late Chairman of the People's Republic and chief victim of the Cultural Revolution. Wang used to be Vice-Mayor of Tianjin before going to Hong Kong in the early 1980s to secure an entree for People's Republic businesses in that haven of capitalism. He retains his Tianjin connections.

Tianjin's go-ahead mayor, Li Ruohuan, visited Hong Kong a few years ago to rally investment from the small but now wealthy band of |Tianjinner' refugees there. One of them, a fur trader named Zhang Jiafeng, responded by investing in a new fur coat factory in Tianjin which made a US$3 million profit last year.

The over-regulated Tianjin industries much prefer to see a Chinese face behind the investment cheque. Even if it entails admission of ideological defeat, and loss of family |face', it at least means there are no cultural barriers to understanding. |Half of our investors from abroad are Chinese,' the director of Tianjin's Economic Development Area told me.

If you drive out of the city, past the modern yellow-tiled mosque of the Moslem quarter, into the prosperous countryside, you come to the new Wuqing Printing and Dyeing Plant. Here Hong Kong-financed textile equipment from Europe is being operated by young ex-farmers for an average 50 [pounds] a month (that is using the official exchange rate: a more realistic figure might be 30 [pounds]).

Some Hong Kong businessmen even operate an |office' (usually a tiny cheap hotel room) in Tianjin to exploit their new popularity. One Hong Kong Tianjinner organised Tianjin's new giant rubber tyre plant, costing 6 million [pounds], through such an |office' in the Friendship Hotel.

The |come-back' of the Hong Kong refugees has now progressed to the point where some Tianjin enterprises have been ripped off, finding themselves saddled with low-grade machinery and export introductions. …

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