Vodafone chairman gives China perspective
Joseph McMahon | Friday, September 14, 2007
China, a country he has lived and worked in most of his adult life, will develop an economy the size of the United States, predicted Sir John Bond, chairman of the Vodafone Group, the world’s largest mobile telecommunications company.
Bond spoke about China to a mixed group of undergraduates, MBAs, professors and entrepreneurs from the South Bend area Thursday in the Jordan Auditorium of the Mendoza College of Business.
Bond first traveled to China when he was 21 to take a job as an international manager at HSBC Holdings, one of the largest banking and financial services organizations in the world. He said he fell in love with the people and the culture.
His interaction with the people and his time in the country, he said, support his view that the country’s economic growth will continue.
“China is in the middle of a steady period of growth, much like the 40-year period seen by Japan after the end of World War II,” he said.
Bond spent much of the seminar reviewing the history of China.
“For 18 of the last 20 centuries, China was the preeminent economy in the world,” he said. Pointing out that China is by no means a backwards society – they did invent steel and the alphabet hundreds of years before Westerners, he said – he painted a portrait of a people who are finally recovering from 100 years of revolution and oppression.
But, Bond said the transition has been hard.
“It is a very difficult thing to move a state-planned economy to a free-market one,” he said.
Unemployment is a pressing problem for the country, Bond said. Many people that work at state-run companies do not do anything at all, but are simply employed as a way to keep them off the streets.
“The government remembers what happened last time people were left sitting on the curb,” he said. “It doesn’t want to see another communist revolution.”
Bond said people are migrating in droves from the rural inland to the coast, where they can see profits in much higher numbers.
“You may not think it’s a lot, but to a farmer that makes one hundred dollars a year, fifty cents an hour sounds very good,” Bond said.
Despite China’s problems, he said, the country has shown great progress since the days of Mao’s cultural revolution. They have made trips into outer space, explored the South Pole, are planning to hold the World Fair in Shanghai in 2010 and are finishing up preparations for the Olympics next year – an event that Bond says “will be staged in an incredible way.”
China has also become much more involved in world trade markets, something that is necessary for a country that has 21 percent of the world’s people and only 7 percent of the world’s arable land.
But China’s economic boom is not only due to its people making cheap gadgets in crammed factories for extremely low wages. Rather, technological innovation is moving at an incredibly rapid pace in China.
Bond recounts one time when, as chairman of Vodafone, he went around the world to see who could produce headsets for only 20 dollars. The only factory that was able to manage the task was in China. Vodafone immediately placed an order for 600 million.
For a country that has 1.2 billion people and only manages to rake in 4 percent of the world’s GDP, it’s natural to see this kind of competitive growth, Bond said.
Although the dispute of currency inflation continues to flare up, Bond assured the audience that China’s growth will not diminish America’s power.
“America will still be strong,” he said.
Many wonder about what the future will hold for China.
“Either you believe China will overcome challenges and become a superpower,” Bond said, “Or you think China will find it impossible to hold it together and implode. “Personally, I believe China wants peacefully to return to a state of stability and regain the place it occupied for eighteen of the previous twenty centuries.”