Chinese 'Boom Town' Attracts U.S. Finance; despite Cultural Differences, Opportunities Are Unlimited for the Adventurous
Krafft, John, American Banker
Conjure visions of Hollywood "boom town" moves of the 1930's and '40s. Pciture bustling streets, new buildings in every direction, busy hotels, newcomers intrigued by the natives and local customs. Rapid economic growth. People who had been total strangers banking together in a sense of camaraderie because they are all new to this lifestyle.
The difference is that the scene is an Eastern -- not Western -- culture.
The "Boom town" is Beijing, capitol of the People's Republic of China. The language is Chinese; the culture is completely foreign to a Westerner. The decade of the '80's marks the renaissance of the China Trade, between the U.S. and China, that once Flourished in the seventeenth and eighteenth centuries. Opportunities Abound
With the modern day "reopening" of American/Chinese relations by Richard Nixon, the "normalizing" of those relations by Jimmy Carter, and the recent visit of Ronald Reagan -- during which the President lauded Americans in Beijing for futhering U.S./China business realtions -- opportunities abound on the China mainland for U.S. companies and financial institutions.
On September 26, 1983, First Interstate Bank of California opened a representative office in Beijing, making it one of only two west coast banks with representation in China. The objective was international finance -- the expansion of trade, investment, and technology exchange between two sovereign powers with vastly different cultural values.
In ceremonies befitting an event of this magnitude, the reception marking the opening was held at the Great Hall of the People. It brought together the cultures of East and West.
With full correspondent banking relations with the Bank of China instituted in Januray 1979, First Interstate viewed the opening of the Beijing office as a natural step in further expanding two-way trade between the two nations.
Trade between the United States and the Asia-Pacific region has grown 16% each year over the past five years to an annual volume of $130 billion. First Interstate's corporate customers now do business with China through its Beijing office. Bank officers can effectively service their customers' banking needs, help facilitate foreign exchange, achieve prompt payment under letters of credit or collection documents, and serve as personal financial representatives. Participation in Modernization
Most important, First Interstate has the opportunity of participating in the modernization of China Today's Chinese government is committed to rapidly updating the nation's business and economic base. Despite a strong financial position with home $14 billion in hard currency, plus $4-to-5 billion in gold reserves, government leaders recognize the advantages of and the need for infusing foreign capital and technology.
They are encouraging investment, purchasing equipment, and establishing joint venture production corporations. The Chinese are seeking high technology products and services with an eye toward effective utilization of electronics and computer-related equipment to aid the modernization.
Major areas of investment in the immediate future are energy and natural resource development and transportation. Many government-sponsored projects are of such magnitude that they require external financing and the expertise of financial institutions with international experience.
For example, the agreement on peaceful uses of nuclear energy, signed by President Reagan, will give american firms the opportunity to bid on billions of dollars of supply contracts for planned Chinese nuclear power generating plants. …