Mark Mobius – Exploring Culture And Companies In Changsha, China

As you’ll know if you’ve been following my recent travels, my team and I have been touring various cities in China. We’ve been reporting about the economic conditions we have seen, exploring the culture and visiting companies in search of potential investment opportunities. Our next blog stop is Changsha, the capital city of Hunan Province.

Mark Mobius - Exploring Culture And Companies In Changsha, China
Source: Pixabay

My team and I departed for Changsha via high-speed train from the new (and huge) station in Guiyang. We started our journey at 200-plus kilometers per hour, traveling through mountainous countryside and traversing many tunnels and bridges.

We purchased lunch on the train but also received free drinks and snacks, including crunchy green, packaged dried peas with the Chinese characters translating as “American peas.” The snack reminded me of my short stint at an advertising agency on Madison Avenue in New York when I was a student. We were researching a sort of dehydrated pea product for a major food firm. The peas did not need refrigeration and could be soaked in water to reproduce fat, juicy peas that looked fresh. The brand name they picked was “Sleeping Beauty” peas, but the survey we did among potential consumers found that respondents got their fairy tales mixed up and associated that with the poison apple of Snow White and the Seven Dwarfs. That—along with the unappetizing look of the shriveled peas before soaking—killed the project. But my Chinese dried “American peas” along this particular journey were quite tasty.

Leaving Guiyang we made several stops on the way to Changsha including Zhijiang, the site of the final major battle with the Japanese during World War II, as well as Shaoshan, the birthplace of Chairman Mao Zedong. Finally, we reached Changsha and the eight-platform Changsha South Railway Station, which opened in 2009. The station is part of the Beijing–Guangzhou–Shenzhen–Hong Kong high-speed railway and it had an enormous garage conveniently on the same level as the arrival floor for regional travelers. Red and green lights above each parking space denoted which spaces were free and which were occupied. As with our train, the parking lot was packed. As we drove off, our driver was chatting with his hands-free cell phone, and I noticed a small Chairman Mao bust on the dashboard. As Changsha was the home of Chairman Mao for many of his formative years, it made sense to honor him, but the driver explained that it was also there to drive away any evil or bad luck.

Observing the heavy traffic on the way to our hotel, it was clear to me that despite the tremendous amount of infrastructure building that has already taken place in China, there is a need for more. Vehicle sales in China have outstripped those in the United States—some 21 million passenger cars were sold in China in 2015 versus 17.5 million light vehicles sold in the United States.1 Still, vehicle penetration is only seven vehicles per 100 people in China, versus 70 per 100 for the United States—so there is room for even more growth.2

Changsha is surrounded by three major rivers including the Xiang, the Liuyang, and the Laodao. The city has thus been a major distribution center for goods coming from all over China by river ships and barges. The Chinese characters for Changsha mean “long sand,” possibly because in the middle of the Xiang River, a tributary of the Yangtze River, there’s a sandbank.

Mark Mobius - China
River view in Changsha, China

The city is not only a strategic river and railway hub but an airline hub as well. The Changsha Huanghua Airport serves as the regional hub for China Southern Airlines and other local and international airlines with flights to many major cities domestically and internationally including Hong Kong, Bangkok, Seoul, Pusan and Osaka. In 2015, the airport saw an all-time high of 19 million passengers.3

In 2013, the “Sky City” skyscraper project broke ground promising to be the world’s tallest building at 838 meters and 220 floors, which would top Dubai’s Burj Khalifa. However, the project was halted by authorities citing lack of government licenses and experts questioning whether such a tall building could be built safely in only the seven months planned. The building is apparently now in the final approval phases, but according to local reports, the foundation is being used as a fish farm by local farmers—so its completion remains uncertain. Meanwhile, a mini Sky City project of 57 stories was completed in Changsha in less than a month.

In recent years, Changsha has become an important creative center for television and entertainment arts, with its many television stations producing some of the most popular programs in China. These programs have also fueled other forms of entertainment, including karaoke bars, dance clubs and theater shows, as well as related businesses like hair salons, fashion stores and snack shops serving hot and spicy nibbles in the evenings.

Our hotel, located in the North Star Delta area, had a huge shopping mall connected to it and was part of a mixed-use development with apartments, shops and a beautiful walkway and cycling path along the riverfront. Apparently the project was done at the behest of the government since it did not appear economically viable—at least in the short term. The four 30-story towers were completed but empty, the shops were empty and our hotel wasn’t fully occupied.

We started our company visits in Changsha with a call on a health care-related company. The founder of the company discovered that Chinese hospital treatments for eye problems were limited because of a lack of the required equipment. In cooperation with state-owned hospitals and other partners, he raised enough money to start eye clinics in hospitals using advanced, specialized eye-treatment equipment. The business grew fast and he expanded with more standalone eye-care facilities. A manager told us that the biggest challenge they faced was finding qualified staff, so they offer various incentive programs, including stock options for doctors. Treatments offered include Lasik surgery, cataract removal and correction of eyesight with glasses (optometry).

In our search for potential investments, we called on the financial office of Changsha Municipal People’s Government to meet the director and vice director. They welcomed us and explained that the office’s function was to help companies in Changsha gain access to the capital market and serve as the bridge between enterprises and investors by encouraging stock exchange listings. Specifically, they collect information about companies that could be eligible to list on the various Chinese stock exchanges and publish a list of such companies, now reaching 200 in number. The officers said that Changsha is relatively undeveloped compared with coastal regions, but has a good opportunity to catch up, because of its strategic location in the center of Southern China and as a hub for the exchange of talent, information and capital. Two high-speed rail lines cross Changsha, and a third one is under construction (connecting Chongqing and Xiamen), which facilitate the communication between

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