Supporting Article

The Future of Business as Mission in China


If we take a quick look at the history of the world, we will see the fastest transformation out of poverty was 750 million people globally since 1980 (Source: World Bank); this was not through any sort of significant not-for-profit business help but via for-profit businesses. In China, since 1981, 380 million people have come out of poverty. So, if we are looking to help people in China physically, then the best way to continue this is through for-profit businesses.

Business is critical for every nation because it is economically beneficial, can sustain livelihood and lift people out of poverty (or at least increase standards of living). Some Christians might not recognize that for-profit business is positive, healthy and necessary, and some may say that Christian business people's primary responsibility is to give to the church, so that the church can do the "real" spiritual work. However, we believe that as people are given jobs and are lifted out of physical poverty, Business as Mission (BAM) companies can also help lift them out of spiritual poverty as well. This is in contrast to a large multi-national company that would only lift people out of physical poverty. BAM is therefore a vehicle to benefit people economically as well as spiritually as believers share the good news at the work place, live out the Christian life through honest work practices, and give glory to God.

As China has one of the largest unreached populations in the world, there is a huge channel for Christians to effectively impact a lot of people and help more people to be set free from sin. With this in mind for the "mission" part of BAM, we also know that in China there are huge potentials for doing business due to the large amounts of foreign directed income that have been invested. Along with this is the great economic growth China has recently been having (eight to ten percent annually for the last twenty years). This makes China a great place for the "business" part of BAM as well.

BAM businesses do not solve all of China's problems, but if BAM is deployed with the right targets, such as Kingdom-focused goals, we believe China will benefit greatly not only in terms of foreign investment, economic growth, job creation, standards of living and so on, but more importantly in terms of spiritual growth and understanding of our great Savior and what true joy he can bring us in our lives.

We will next look at our predictions for the future of BAM in China. We hope that for those wanting to or already doing BAM in China, these will help make their efforts more successful and bring glory to God.

The Future of BAM in China

Economic and political predictions are very difficult to make, but from our twenty plus years in Beijing, China's political center, we believe we can come up with a macro analysis for the next ten years. However, we appreciate the fact that China is very big and is now looked at by many large multi-national companies as multiple varied markets; therefore, it is hard to make nationwide predictions.

Income gap to increase: The income/wealth gap will continue to widen (but more slowly than in the past) regardless of government policies.

Labor issues to grow: The labor issues will continue to grow in places where migrant workers come from Hunan and Sichuan, but east central (Yangtze Delta) and north China will not experience the same level of labor shortages. Through our many recent site feasibility studies, we are still finding that east central and north China have the most compelling business potentials in terms of labor, while trying to go west is really difficult. This is perhaps unfortunate because the considerably larger unreached population in the west will not benefit from large BAM-focused companies.

Inflation to increase: Over the next ten years, we do expect inflation to moderately increase, with the current Consumer Price Index (CPI) at three to four percent to increase to around six percent.

China to become the top electric car manufacturer: The World Bank, in 1990, said the biggest drain on China was government policy; since then, this has improved many times over. The second biggest drain was the inefficient use of resources, but in ten years China will be an efficient and global leader in alternative resources. The mobile phone market was in a similar situation in the 1990s, and China made a huge global impact and became the top supplier of mobile phone parts in 2000. We now believe that the same will happen for electric cars, and China will become the main supply and sourcing country for electric cars and car parts. We are currently working with a battery provider and several energy-efficient technology partners who also have recognized the prospects here in China.

Air pollution in China will improve: However, in areas where the rule of law is not enforced, water pollution will not improve and China will possibly have several big environmental issues; for example, mercury leakages and other large problems.

Oil shortage consequences: China, in the 1980s, was a net exporter in oil. However, over the next ten years it will become the world's second largest importer. This means it will become more prone to trade wars and skirmishes due to oil shortages.

Guanxi and rule of law: Business disputes are on the rise in China. Traditional methods of decision-making that would have been decided by guanxi, where relationships with the right government official would get you your approval or certificate, are now shifting over, more and more, to the rule of law. Slow steps are being taken towards business decisions being decided solely on the rule of law rather than solely on guanxi. This will affect decisions about doing business or not doing business. We believe relationships currently still make up seventy percent of the decision-making power compared to thirty percent according to rule of law. This will change as China's legal system matures. At the 50/50 level there will be a lot more disputes until the rule of law surpasses relationships, when disputes will decrease. A great business to take on during this time would be arbitration! However, many BAM businesses will need to continue to operate using both guanxi and rule of law practices in order to have both good legal representation and good government relations.

Non-nationals will find it more difficult to come to China: As China becomes increasingly selective in terms of what "foreign experts" it wants, visas will become increasingly difficult to get and visa requirements will become more stringent. There will be more opportunity for doing business in China, but it will be harder for "fake-run" or "cover" business. This is possibly due to the fact that many "home" graduates are now able to compete with foreign graduates. China does not need as many foreign experts as previously. Visa requirements will get harder (currently for a work visa, you need proof of two years related work experience and a graduation certificate; two years ago you did not need these). BAM businesses need to have successful visa-creating abilities to be able to get more BAM people into China. As many non-nationals increasingly want to make China their home, this will become more and more of an issue. In the 1980s, not many people thought of staying in China long term (five plus years), so this was not a problem. This also means there is an increased need for agencies and groups to have an in-country focus to look after their ever-increasing overseas workers and help them get valid long-term visas.

Labor force becoming more stable when working away from their hometowns: In the 1980s, many Chinese people were willing to work away from home for long periods, but in the 1990s, especially by the late 1990s, people were becoming less and less willing to do this for more than two years. However, with China building miles and miles of high-speed trains crisscrossing hundreds of cities across China, the increasing availability of cheap local flights, national phone calls becoming cheaper and the increase of Internet access (now approaching one-third of Chinese homes), many people are more willing to live away from their home towns for longer periods of time.

Local home-grown companies become biggest threat to foreign companies: With proper Human Resource management, foreign-owned companies can maintain their core advantages. The best equation for this is a foreign-owner with key Chinese leaders, which seems to be the most successful setup at the moment.

Corporate reasons for coming to China will continue to change: Over the past twenty plus years, we have noticed the weighting of these different factors and their changing positions which will continue to change as China develops.

Corporate Reasons for Coming to China
Factors Reasons for coming to China before: Reasons for coming to China now:
Cheap parts 1st 4th
Manufacturing for export 2nd 3rd
Cheap, low cost educated labor 3rd 2nd
Local Market 4th 1st

Summary

We are seeing more and more improvement in the rule of law, infrastructure development, educational development and resource development. We believe that over the next ten years rich areas will continue to get richer, while poor areas will get richer at a slower rate, regardless of government policy.

Doing well at BAM in China has always been hard work; twenty years ago it was hard too! For the business part of BAM, some of the old challenges exist, but there are also new ones, for example, higher taxes. The mission part of BAM has definitely changed. The new, younger, born post-1980s generation is less willing to ask questions and meet with you outside work. Twenty years ago, there was not the entertainment around to fill the spiritual voidso people would be quite willing to spend time with you chatting about life-changing issues. Nevertheless, today, their hearts are still very open.

We are doing Business as Mission in China initially to help improve the economic situation of the people; more importantly, we practice BAM so that they may know salvation through Christ Jesus our Lord and Savior.

So, if you are in China doing BAM and it's tough, be encouraged and keep persevering! We are doing BAM for the glory of Him who sent us and not our own glory. As for us, we cannot imagine a more exciting place to do BAM. At the moment, and for the foreseeable future, China has the greatest need and the greatest potential.

Dwight Nordstrom, B.A., M.B.A. is chairman of Pacific Resources International (PRI), a privately-held USA Holding Company for manufacturing investments in China, and a twenty year China BAM veteran. Ryan Muir B.Sc. is a consultant of PRI. He has an economics background and has lived in China for the last four years. For more information go to www.priusa.com or contact: ryan.muir@priusa.com.

Image credit: Tradition and Progress in China Town by Jensen Ching, on Flickr

Dwight Nordstrom

Dwight Nordstrom, B.A., M.B.A. is chairman of Pacific Resources International (PRI), a privately-held USA Holding Company for manufacturing investments in China, and a twenty year China BAM veteran. View Full Bio