Beijingers in New York weather the storm

Beijing’s evening Mirror engaged in a little bit of local pride journalism this week when it profiled four members of the Beijing Association of New York who have so far been unaffected by the Wall Street meltdown.

The four business-people offer their thoughts on how to weather a financial crisis. The need for sound fiscal planning (“spend withing your means” comes up a few times) and the importance of being part of a supportive community are two of the most obvious lessons.

Amazingly, as the Mirror tells it, no Association member has felt much of an impact from the crisis:

A crisis has been raging on Wall Street recently, setting off one financial concussion after another. New York, whose economy relies to a large degree on Wall Street, has been buffeted, and the financial sector and real estate markets are on the brink of disaster…

Have Beijing business-people who live in New York, America’s biggest city, been caught up in the wave of salary cuts and layoffs?

With this question in mind, we spoke to the Beijing Association of New York, which has more than 400 members. To our surprise, not only had these Beijingers felt little impact from the crisis, some had even been able to harness the market downturn to do good business.

The paper then profiles four members of the BANY, who explain why business is still good:

Hou Jianli

Age: 50

Position: President emeritus of BANY

Time in America: Came from Beijing in 1986

Occupation: Runs New York’s only Chinese-owned fire safety company

When the financial crisis hit, ten or more of Hou Jianli’s clients went bust every month. Their outstanding accounts were relatively small, and he didn’t have any bank loans, so his business volume only declined 10%. Compared to others in the industry, “there was some effect, but not very large.”

“Our industry is semi-governmental; we have to work with the government for all jobs, so it’s like an iron rice-bowl.” Hou said that according to US regulations, every restaurant must contract with a private company to provide periodic fire inspections and service before it is allowed to open. His company provides fire safety ratings.

In addition to the special nature of the sector, Hou believes that another reason that the financial crisis had only a small effect on him is his consumer mentality: “Chinese people like to save money. If I have ten dollars, I certainly won’t spend ten dollars.” But for Americans, “before they get their hands on that ten dollars they already have plans about how to spend it.” “Anyone who is able to weather this situation has a rational consumer mentality.” Hou said for individuals and countries alike, expenditures need to be calculated against income to avoid over-consumption.

Perspective

Hou Jianli believes that what is most necessary at this point in the crisis is to restore confidence. The situation does not represent the overall collapse of America’s economy; life goes on, and after a slow recovery, things will gradually get better.

Jiang Jian

Age: 46

Position: Vice-president of BANY

Time in America: Came from Beijing in 1988

Occupation: Currently in building construction and owns his own construction company

It was already 10pm local time when the phone interview with Jiang Jian began. He had been working all day and was still busy. He said, “We’ve been working until midnight lately. The client keeps asking us to work overtime.”

America’s subprime crisis was rooted in its home mortgage market and has had a sizable influence on the closely-linked construction sector. Jiang said that for some companies, business volume has dropped 40%.

But oddly, his own company has remained busy, and has even had to hire a few more Chinese workers. Volume has remained roughly the same as before the crisis hit. This is a highly unusual achievement in the American construction industry.

What’s the explanation? Jiang said that it’s because he has good word of mouth. “We Chinese place a lot of stock in a good reputation and high-quality service.” The excellent reputation he built up over the years gave him a stable of old clients who, when the crisis hit, chose to continue working with him.

Jiang said that many Americans have lost their jobs and are unable to make loan payments, investment has dried up, households are unwilling to spend money, and retirement funds are unavailable, forcing people to put off their retirement. But in the Chinese community, “I’ve never heard of anyone’s home being auctioned off, or of someone going bankrupt,” so he recommends that in the future, Americans should learn from the Chinese how to “tighten their belts.”

Perspective

Jiang describes the current financial crisis as “a hole” that the government can’t fix simply by pulling out a few hundred billion dollars. People have no confidence in the economy right now, and he estimates that “it’ll be at least five years before it’ll get better.”

Zhang Xiaokai

Age: 49

Position: BANY Member

Time in America: Came from Beijing’s Haidian District in 1990

Occupation: Real-estate, serving the Chinese community

Zhang Xiaokai said that American real estate has suffered a stinging blow in this financial crisis, with housing prices dropping 30%. But in Chinese communities in Flushing, Queens, prices have remained stable: “And the business I do is in Flushing.”

As prices have not fallen, Zhang’s business has naturally not been affected. On the day we spoke to him, he had just closed a few deals and had made back his investment for the year. From the look of things, given the time remaining before year-end, he could even turn a profit.

Zhang said that Flushing is an area where ethnic Chinese live: “Although housing prices are falling all over America, they won’t drop in Flushing, because Chinese people are supporting them.”

The vast majority of the American real estate industry is based on bank loans, and companies seeking new loans today will find it hard to gain approval from banks.

Zhang’s company rarely has any contact with bank loans, so he has no issues with borrowing and repaying money.

Perspective

Zhang said that Chines people generally believe that the financial crisis is an excellent opportunity for scoring cheap deals, and Flushing is where they like to locate their businesses.

Zhan Anna

Age: 45

Position: President of BANY

Time in America: Came from Beijing in 1989

Occupation: Tourism, mostly aimed at Chinese tourists coming to America, and at Chinese-Americans.

Zhan Anna said that the financial crisis has shrunk Americans’ wallets: “If you’ve got 10,000 dollars in the bank, that’s a lot of money.” They have far fewer opportunities to travel these days, so the tourism industry has stagnated.

But Zhan’s business has been little affected by this: “The financial crisis hasn’t been much of an impact. I’ve been pretty fortunate!” She said that she hasn’t noticed much of a drop in clients over the last fortnight.

Zhan said that the specialized sector her company is in and traditional ideas about consumption are the main reasons her company has not been affected: “Our business in New York is fairly specialized.” By way of analysis, she said that her target consumer group was Chinese people, a self-contained unit.

And that group’s innate good habits of frugality and saving money are precautions against disaster. When a crisis comes, they aren’t caught unawares like Americans and consequently are not affected much at all. So the influence of the crisis on Zhan’s company has naturally not been large.

Perspective

Speaking about the Chinese consumer mentality, Zhan says with feeling, “The virtues of thrift and hard that Chinese people share are being carried forward throughout the world!”

She believes there is another benefit to the Chinese love of saving money: they are able to seize opportunities as soon as they appear. “People with cash in hand are ’emperors’ right now. Once the financial crisis hit, real estate and stocks could be picked up on the cheap. And it’s also a great time for entrepreneurs!”

Conclusion

Zhan Anna said that out of the BANY’s more than 400 members, about 50% are in business: “And 40% of those are in real estate and tourism.” Yet Beijingers have largely not suffered much in the crisis.

Jiang Jian said that the Beijingers meet once a week and everyone talks about their respective situations: “I haven’t heard of anyone going bankrupt yet, or of anyone’s house being auctioned off. At most, they’re just not going on trips or buying luxury items!”

Jiang said that New York is home to several hundred thousand ethnic Chinese, but Beijingers are relatively uncommon. However, many of them have high levels of education and training, and are relatively well-off. “Why haven’t we been affected?” They all believe it’s because Chinese people are cautious with their finances and spend within their means. This has allowed them to weather the financial crisis on firm footing, and will continue to govern their financial activity in the future.