Required Report - public distribution

**Date:** 6/12/2007

**GAIN Report Number:** CH7409

CH7409

**China, Peoples Republic of**

**Market Development Reports**

**Business Travel in Beijing**

**2007**

**Approved by:**

![](media/image1.wmf)LaVerne E. Brabant

ATO Beijing

**Prepared by:**

Wang Tong; Nargiza Salidjanova

**Report Highlights:** Beijing, China's political and cultural capital
for nearly 800 years, is home to over 9,000 diplomatic missions,
international companies, organizations, research institutes,
universities, municipal-provincial offices, and countless historic
landmarks. One of the largest and wealthiest cities in China, Beijing is
in the midst of a major makeover in preparation for the 2008 Olympic
Games. With a population exceeding 15 million, high per capita income,
and significant influence over the rest of the country, Beijing is a
place few should ignore when doing business in China. The report
provides a brief introduction to the city, and useful suggestions for
visiting Americans planning or doing business in Beijing.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Beijing ATO \[CH4\]

\[CH\]

I.  INTRODUCTION

![](media/image2.jpeg){width="1.25in" height="0.9375in"}Beijing, the
political and cultural center of modern China, was established some
3,000 years ago, and served as the Middle Kingdom's capital through more
than 800 years and 4 dynasties. The city is home to over 9,000
diplomatic missions, multinational corporations, international
organizations, and municipal-provincial offices, as well as over 15
million residents. Beijing is one of the largest and wealthiest cities
in China with a per capita GDP of \$6,210 and an urban per capita
disposable income of over \$2,595 in 2006; these figures represent
significant increases from previous years, making Beijing one of China's
fastest-growing cities. Beijing is also home to countless historic
landmarks, five of which are on UNESCO's World Heritage List: the Temple
of Heaven, the Forbidden City, the Summer Palace, Ming Tombs and The
Great Wall. Today, the large and bustling city is in the midst of a
major makeover in preparation for the 2008 Olympics, and some visitors
have described Beijing's emerging skyline as a never-ending landscape of
construction cranes. With its large population, upcoming 2008 Olympics,
and its significant influence over the rest of China, Beijing is a
market few should or can ignore when doing business in China.

I.  THE CITY OF BEIJING

![](media/image3.png){width="3.1666666666666665in" height="3.0in"}

Beijing is a municipality directly under the control of China's Central
Government. Consequently, Beijing enjoys the same status as a province
and its mayor has cabinet-level rank. A booming metropolis in northern
China, the municipality of Beijing covers an area of about 18,000 square
kilometers which is currently divided into 16 districts: Dongcheng,
Xicheng, Chongwen, Xuanwu, Chaoyang, Haidian, Shijingshan, Fengtai,
Shunyi, Changping, Mentougou, Tongzhou, Fangshan, Daxing, Huairou and
Pinggu. Many major trade, banking and commercial businesses, including
the Agriculture Trade Office (ATO) Beijing are located within the
Central Business District (CBD) in Chaoyang District. In general,
Beijing is structured with Tian'anmen Square at its center while the
city's main thoroughfare, Chang'an Boulevard, runs 38 kilometers
east-west. Located 1.5 hours by car due west of Beijing is Tianjin,
North China's largest costal city. Tianjin is on the Bohai Sea and
serves as the major industrial base and water gateway to Beijing and
Hebei Province.

# THE ECONOMY

Beijing serves as both the nation's capital and as the economic center
in the Northern and Western China. The city's economy continues to
develop at a rapid pace, and for the past five years Beijing's GDP grew
12.1% on average, hitting \$100.52 billion in 2006. Beijing's per capita
GDP was \$6,210 in 2006, placing it just behind Shanghai in terms
purchasing power in China. Infrastructure investments and consumer
demand continue to grow in Beijing, driven largely by preparation for
the Olympics, and are estimated to reach 3 trillion Yuan by 2008.

II. THE CUSTOMER

> ![](media/image4.wmf)

Beijing is one of the wealthiest cities in China, and the per capita GDP
has been increasing rapidly in past five years. By the end of 2005,
Beijing had 15.38 million permanent and some 4 million temporary
residents. The residents' per capita disposable income has continued to
grow with the rising per capita GDP, reaching \$2,595 in 2006. By 2006,
Beijingers owned 9.3 automobiles per 100 people, with nearly 2 million
private cars on the road. Unfortunately, the gaps in income, education,
earnings and access to the market continued to widen between social
groups.

Additionally, Beijing is home to more than 400 research institutes and
140 institutions of higher learning, including the most prestigious
universities in China such as Beijing and Qinghua Universities, The
People's University, and Beijing Normal. There are approximately 65,000
foreign and 1.2 million local professionals in the city, comprising more
than 20% of the nation's total. The primary target consumers for U.S.
food and agricultural products are the large and growing population of
well-educated, urban and affluent middle class. Whereas in the Untied
States the key consumers are aged 40 -- 55, in Beijing they are teens
and young adults, between ages 18 and 34, increasingly seeking
high-quality, safe, diverse and fashionable food products. Expatriates
and overseas Chinese, living and working in the capital in great
numbers, are also an important market segment.

III. THE FOOD MARKET

> ![](media/image5.wmf)

With the recent increases in expenditure on cars, organic products and
travel it is evident that Beijingers are paying more and more attention
to the quality of their lives. Their disposable income has continued to
grow alongside GDP, reaching \$2,595 per capita by the end of 2006.
According to government estimates, by 2010 that number will reach
\$10,000, greatly enhancing individual consumption. Consequently,
Beijingers, like most urban Chinese, are consuming more meat, dairy, and
fruit, but less traditional cereals and grains than ever before. As more
consumers have the ability to dine out, the hotel and restaurant sector
is also developing rapidly. According to U.S. Department of Commerce
data, residents of Beijing are expected to spend around \$149 per capita
on dining out in 2007. The food service market will continue to grow at
17%, and annual retail sales are expected to reach \$157 billion in
2007. Compared with \$1,600 per person spent on dining out in the U.S.
and \$1,050 per person in France, Beijing still has a lot of room for
growth.

A decade ago most Chinese bought their groceries from open air "wet"
markets, as supermarkets were few, uncompetitive, and overpriced. Since
the opening of China's first Carrefour in 1995, numerous supermarkets
have opened their doors to consumers eager for quality food items at
competitive prices. Carrefour, with seven stores, Wal-Mart, with three
stores and one Sam's Club, are among the many grocery stores in Beijing
with special aisles dedicated to imported food, which the supermarkets
usually arrange by the country of origin. Imported goods like cheese,
butter, and other dairy products, cereal, cookies, coffee, candy,
beverages, wine and snack food are represented in wide variety in these
supermarkets, with products from U.S., Spain, Germany, Switzerland,
France, Canada, Italy, and Australia among them. Expatriates are still
the main consumers of imported goods, since eating habits are hard to
change, both for the foreign and the Chinese consumers.

Nonetheless, young middle class Chinese are becoming a major consumer
force and are not as price-sensitive as their elders. Ever since the
launch of the "One Child Policy" in 1979, children became the center of
the family, and the primary drivers of demand for imported, high quality
food products and merchandize in fancy packaging. For the young
customers, conspicuous consumption has become both a status symbol and
something that is hip and fashionable. U.S. food products enjoy an
excellent reputation for quality, safety and attract the wealthier
consumers. For now, local people purchase imported products mainly as
gifts, both for their novelty and cultural appeal, but that is changing.

With China's accession to the WTO, tariff rates for imported food have
declined, and the Yuan strengthened, making imports more affordable and
attractive. American manufacturers, importers and distributors should
take active steps to put their products on the shopping lists of Chinese
consumers. In courting potential buyers, American businesses should pay
special attention to the teen and young professional segments, which
often control the family's purse strings when it comes to the purchase
of foreign goods. Both promotion and advertisement are good ways to
develop this market. Once the market has been tapped, Chinese consumer
interest in U.S. goods can create a considerable, dynamic market with
strong demand. Consultations for interested suppliers can be organized
through the ATO.

IV. ![](media/image6.jpeg){width="3.75in"
    height="2.4895833333333335in"}OLYMPICS 2008

The Games of the 2008 Olympiad will serve as an information and economic
gateway to Beijing and China for the world community. Effects of Olympic
spending and development have already manifested themselves in the
Beijing economy. The Beijing Municipal Statistics Bureau estimates the
city will see no less than a 2% increase in GDP. Moreover, national
gross output for China as a whole is expected to grow an additional
0.3-0.4% as a result of the Olympics according to the National Bureau of
Statistics. Beijing expects nearly 600,000 international visitors during
the Olympic Games, in addition to more than 2.58 million domestic
tourists, and the Beijing municipal government is hard at work to cope
with accommodation needs. By August 2008, Beijing is expected to have
800 starred hotels, providing approximately 130,000 rooms. Seven starred
hotels opened in 2006 and 10 are expected to open this year. Overall,
Beijing has seen a more than 35% increase in the number of 5 star hotels
opened over the last thee years in preparation for the 2008 Olympics
Games.

In preparation for the Olympics, the Beijing Government is working on
several construction projects, as well as developing cultural and
environmental programs. Construction of major Olympic Game venues,
including the National Stadium and National Aquatics Center, as well as
expansion of Beijing's Capital International Airport continue to make
smooth progress, adhering to timeline and quality standards. The total
length of the subway in Beijing will increase to 300 km by the time of
the Olympic Games. The Beijing Speaks Foreign Languages Program and
Office for Standardization of English Translation of Beijing Public
Signs are running several campaigns to ensure that the city has enough
foreign language speakers in time for the Olympics. Currently, some 4.87
million Beijing residents can speak English at different proficiency
levels, close to the government objective of training 5 million
speakers. Meanwhile, more than 280,000 Beijing residents have applied
for volunteer positions during the Olympics. The Olympic motto, "One
World, One Dream", serves as a unifying theme for many of the projects
and campaigns undertaken by the municipal and central governments as
they strive to prepare and bring Beijing to the international arena.

![](media/image7.jpeg){width="2.6666666666666665in"
height="1.325in"}Tickets to the Olympics have been available for order
online since April 2007 at the Beijing Olympics official website,
[http://www.tickets.beijing2008.cn](http://www.tickets.beijing2008.cn/).
Over one million tickets have been ordered already, with tickets for the
opening and closing ceremonies reportedly being the most popular,
followed by tickets for basketball, diving and other competitions.
Seventy-five percent of the tickets will be sold in China, with the
remainder available for overseas sales.

V.  TIPS FOR DOING BUSINESS IN BEIJING

    1.  BUSINESS ETIQUETTE

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    a.  Chinese Names

Most Chinese have two or three syllable names; however, the most
important to know is the family name. Normally, family names are
pronounced or written first, before given names. When you address
someone in China it is better to avoid using their first or given name
unless you know them extremely well. It is usually a good idea to use
salutations such as Mr., Mrs., Miss or title such as Director or Manager
when addressing Chinese people.

b.  Tipping

Usually, tipping is not required in China, and in some hotels and
restaurants it is forbidden. However, it is not inappropriate to tip
hotel staff that help with luggage, etc. Tips are rarely given in
restaurants and taxis are never tipped.

c.  Bring Plenty of Business Cards

Exchanging business cards is essential in conducting business in China.
It is a very important custom to use both hands when presenting and
receiving business cards, combined with a slight bow of the head. It's a
good idea to have your name cards printed on both sides with one side in
English and the other in Chinese. This can be done fairly quickly after
arrival in China, but if you have the time it's probably best to arrange
this beforehand if you are on a tight schedule. Nearly everyone you meet
will want to exchange or have your card so it is important to bring or
prepare an ample supply even for a short visit.

d.  Banquets & Receptions

When invited to a business meal, the Chinese like to share dishes
together, family-style. The Chinese like to celebrate with food and will
order more, often much more, than can be eaten, to express their
appreciation. It would not be unusual for someone to refill your plate
or bowl if it is empty, especially if you are a fast eater. Eventually,
you will be too full to move. Sometimes, the host will give a toast at
the meal. Often a choice of drinks, both alcoholic and non-alcoholic, is
offered. Beware of the Chinese toast "Gan Bei" (bottoms up or literally
"dry glass"), especially if you are drinking Chinese Bai Jiu (white
liquor). It is polite to use both hands when offering or receiving
anything, especially a drink. And remember, white rice sometimes has to
be ordered separately; fried rice, noodles and soup come last in a
traditional Northern Chinese meal. At meetings, seating will follow
strict protocol, so let your host seat you. Start with a few
pleasantries before discussing business.

e.  Bring Small Gifts

Small gifts are a good idea and always welcome in Beijing and China.
They can be small and inexpensive things such as food, pens, books or
items with your corporate or organizational logo. A book with pictures
of your country or region is also a good bet. However, some gifts are
better avoided, such as clocks, chrysanthemums, shoes, green hats, and
turtles, which are all considered in some way to be negative. Also, be
sure ***not to use*** white paper for wrapping gifts; red would be a
much better choice for nearly any occasion.

1)  LEARN A LITTLE MANDARIN

Your Chinese clients or hosts will be flattered and very impressed if
you show a little initiative and try to learn some basic Chinese. Try to
learn a few simple greetings as below:

Ni Hao (Knee How): Hello/How do you do?

Xie Xie (Shay Shay): Thank you!

Zai Jian (Sy Jen): Goodbye!

2)  WORKING HOURS

Business and Government hours vary according to individual work ethics,
but normally the government is open 8:00 am to 5:00 pm, Monday through
Friday, with closure for lunch during the period from 11:00 am to 1:00
pm. Visits are better scheduled at times neither too early nor too late
in the day, and particularly not at or near lunchtime. China observes a
number of national holidays but there are three major ones you need to
keep in mind. The first is Spring Festival (Chinese Lunar New Year) that
falls between the second half of January and first half of February
(dates change year to year based on the lunar calendar). The second is
International Labor or May Day holidays normally observed May 1-7. The
third is National or Establishment Day holidays, which fall on October
1-7. Travel during these periods should be avoided if possible since
almost all government offices, businesses and organizations will be
closed during these times for a week, or more. Most hotels and
restaurants are open during these holidays, but are usually fully booked
due to domestic tourism and travel.

> ![](media/image8.jpeg){width="2.3958333333333335in"
> height="3.1979166666666665in"}4) CURRENCY

The RMB (Renminbi) is the official currency of China. The basic unit the
Yuan is sometimes called "kuai" (in the same way a dollar is sometimes
called a "buck"), and is divided into 10 Jiao or Mao (dimes). One Jiao
is further divided into 10 Fen (cents). Chinese currency is available in
100, 50, 20, 10, 5 and 1 Yuan denomination notes as well as 5 and 1 Jiao
notes. These notes can be distinguished by their relative size, unique
colors and, of course, the Latin numbers printed on them. Most major
credit cards---American Express, MasterCard and Visa---are accepted at
major hotels, restaurants and shops in Beijing. Many ATM machines will
also accept most American ATM cards. However, when traveling outside of
China's major cities, it is best not to rely on credit or ATM cards.

5\) BARGAINING

In the larger shops in Beijing, bargaining is no longer necessary.
However, in many of the tourist markets and back-street shops, the buyer
is expected to bargain before making a purchase. The seller's initial
price is often at least 50% higher than the item's actual market price,
and can sometimes be much higher. The best option for foreigners in
Beijing is usually to bargain by countering the seller's initial offer
with a big smile and a much lower price. For example, if the seller
offers an item at 60 RMB, the buyer might counter with 10 RMB, and so
on. Also, during the process of haggling, it may be a good idea to walk
away once you've offered your final price, and if you are called back,
the price is right!

> 6\) USEFUL BEIJING CONTACT INFORMATION

American Embassy Beijing Police Dial 110

3 Xiu Shui Bei Jie, Chaoyang District Ambulance Dial 120

Tel: (86-10) 6532-3831 Fire Department Dial 119

Local Directory Assistant Dial 114

Agricultural Trade Office (ATO) Beijing

Kerry Center South Tower

24^th^ Floor, Suite #2425

No. 1 Guanghua Lu, Chaoyang District

Beijing, People's Republic of China

Tel: (86-10) 8529-6418

Email: <ATOBeijing@usda.gov>

**Appendix A:** Beijing Subway Map with Planned Additional Lines

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height="8.368055555555555in"}