China In Your Hand

Here's an illuminating fact. In just one month, October of last year, the volume of Chinese products that were bought in Mallorca was double that for the whole of the year 2000. The Chinese invasion, that can be seen in the growth of the number of shops selling cheap products, shows no sign of slowing down. While crisis forces others out of business, Chinese businesspeople step in and snap up premises. The Chinese population in Mallorca, now just over 4,000, is only around a quarter the size of the British, but it is also growing and is different in one respect - the Chinese do not come to Mallorca to retire; they come to work and to run businesses. Period.

What has brought the Chinese invasion about? There is a commonly held belief that Chinese businesses enjoy tax breaks. Though you will find many a reference to tax holidays for five or seven years, there is also ample evidence to suggest that these are something of an urban myth. The director of the Spanish confederation of small to medium-sized business organisations is one who disputes the idea. The tax office has also denied that such assistance exists. Where help, of a governmental nature, is available, it is more likely to come from the Chinese Government in the form of a grant.

Why would the Chinese offer financial assistance? One reason lies with the need for a sort of economic "lebensraum", an acknowledgement of China's domestic inability to satisfy employment and business opportunities. Another is that it is a form of economic imperialism, which may not be far from the truth.

It is the fear, real or not, of an economic army marching on Mallorca and Spain, allied to the tax-break story, that helps to fuel some of the xenophobia directed towards Chinese businesses. Business organisations maintain that there is no "war" against the Chinese entrepreneurs, but complaints about their practices are rising as quickly as new shops open: complaints as to the legality of premises, as to proper licences, as to the quality of products and as to the hours that are worked.

Anxiety as to what is perceived as favourable treatment of Chinese businesses has been heightened by what might otherwise be seen as good news for Spain: ever closer economic ties between Spain and China, as evidenced by trade agreements signed last week. There is also the matter of the Chinese Government holding, via the Bank of China, some 10% of Spanish debt.

What should be seen as generally positive is not. Rather, it is looked upon in some quarters as Chinese expansionism, with Spain as its main foothold in Europe. It's the idea of economic imperialism again, and the Chinese bazaar or restaurant on the high streets of Mallorca's towns is the foot soldier for Beijing's imperial palace.

These fears and anxieties, the "denuncias" for alleged infractions and the rest can themselves be seen as disguising the fact that local businesspeople simply can't get their heads around how the Chinese operate. The suggestions of financial favouritism ignore systems of family support for arranging funding for businesses and for sharing debts and also what in certain instances can be a pyramidal system of investment. The charges as to low prices and therefore - perish the thought - aggressive competition overlook the presence of vast warehouses on the mainland that supply Chinese businesses and also the existence of some local networks of businesses co-operating in purchasing in bulk. The complaints as to long hours being worked, despite working-hours agreements in employment law and orders as to opening hours, are symptomatic of the unpalatable truth that the Chinese function according to a work ethic which is alien to many a Mallorcan.

There is more bad news for Mallorcan businesses which have laboured for too long not labouring long enough and being largely immune to real competition. This is the emergence of Chinese brands, especially in the clothing and footwear sectors. Mulaya is one such and it, along with others, is growing in terms of its outlets and taking on the likes of Zara.

For all the angst about high prices in Mallorca, the Chinese businesses are doing their part to dispel it. They should be welcomed, and increasing numbers of consumers are welcoming them, but xenophobia and lack of local competitiveness combine to try and put obstacles in their way. Not to me, and not, I imagine, to many of you, as we walk home with some China in our hands.


Any comments to andrew@thealcudiaguide.com please.