For Feng Jun, the owner of a handcrafts shop in Beijing's sprawling Hongqiao Market, the July 13 announcement that Beijing had won the right to host the 2008 Olympic Games, should have come as manna from heaven. After all, 80% of customers to her store, called Rui Lin Xuan, are foreigners, and the Games will surely bring tourists in their droves to retailers such as her.
But Feng, in her thirties, is not so sure. "Of course we hope that the Olympics will bring more business, but maybe not for people like me. Usually it is not people like me who get rich."
Feng, though, has reason to be cynical. She was retrenched from her "lifetime" job as a teacher five years ago when the local education system was restructured. She says it was only her husband's income from his job in a refrigerator manufacturing plant that allowed her to try her hand at entrepreneurship. After four years in business, she is still scratching to make a living. "Spring and Autumn are not so bad. This is when the tourists come," she says, adding that in the non-peak periods, she barely covers the rent. Feng hopes the influx of visitors and investment will mean more business for her, but she's not holding her breath. "Of course, collectively, the Olympics will be a great benefit to the economy, but maybe not everyone will share that benefit. I think if more people come to visit Beijing, there will be more places for them to go. Already there are very big shopping centres. Why would they want to come here?"
But should there be an increase in tourists beating a trail to Hongqiao, Feng will be ready for them. "I have the advantage because I can converse in English," she says, explaining that she attended night school for five years while teaching during the day. "Foreign people like to come to my shop because I can explain the origins of the artwork to them. I can say this comes from Fujian. This is from Hunan. This is very old, Qing Dynasty."
Former PLA soldier, Big Brother Cheng, is much more excited at the prospect of an Olympic boom. But then Cheng already has a trail of tourists beating a path to his door - literally. Cheng, who lives with his extended family of seven in a courtyard house in the narrow hutongs (alleyways) near Beijing's Beihai Park, ekes out a meagre living by opening his home to tourists. He is paid a small amount for each visit by a Beijing tour group, the Hutong Culture Development Company.
At the mention of Beijing's successful Olympic bid, Cheng's eyes light up. "We have waited so long for this," he says. "And it will bring much more than honour to China. It will help everyone, right down to the poor people. There will be many jobs for people because there is so much to build, many roads, many buildings."
A Hutong Culture Development spokeswoman, who does not want to be named, says that over the past few years, the number of English-speaking guides employed by the company has increased from just a couple to 10. She expects the increase in visitor arrivals generated by the Olympics will see this number at least double again before 2008. "There must be many thousands of companies in Beijing and in other places in China that will benefit either directly or indirectly because of 2008," she says.
The National Statistical Bureau expects the games will boost China's GDP growth by a mere 0.3-0.4% per year from 2002 until 2008. US investment bank Goldman Sachs has similar predictions of a 0.3% increase every year until 2008 - a cumulative gain of US$32 billion at prices averaged over the period.
However the impact on Beijing will be profound, says Melinda McKay, senior vice-president of research for Jones Lang LaSalle and co-author of the report, "Reaching Beyond the Gold: The Impact of the Olympic Games on Real Estate Markets". She says that while three out of the past four Olympic host cities saw a net contribution to their GDP of just 1-3%, Beijing's successful bid would have a far-reaching affect. "The indirect impact in terms of boosting trade and further opening-up of the Chinese economy over the longer term is tremendous," McKay says, pointing to spending on the environment and telecommunications infrastructure as the main drivers.
The boom is already well on track. Just a few weeks after International Olympic Committee president Juan Antonio Samaranch's historic announcement in Moscow, the Beijing Daily announced that more than 600 foreign companies, mostly from Europe, North America and Southeast Asia had indicated an intention to invest in Beijing. The Central Government estimates that new foreign investment focused on high-tech, infrastructure and environmental protection will propel Beijing's GDP growth into double digits for the next decade and to per capita income of US$6,000 by 2010. (Beijing's per capital GDP was US$2,475 in 1999, according to the China Statistical Yearbook.)
While outside investment will play a major part in spurring the capital's economy to new heights, spending by the Beijing municipality over the next seven years will be the major growth stimulus. Beijing mayor Liu Qi has earmarked funding of 180 million renminbi (US$21.78 million) to be spent on basic infrastructure projects alone. It must be noted, however, that most of these projects were already slated for completion regardless of whether Beijing was awarded the Games. Liu has pledged a further 15 billion renminbi for the construction of sports facilities.
Citibank-Salomon China analyst Yiping Huang warns that heavy government spending - including 150 billion renminbi countrywide so far this year on infrastructure projects and a 30% pay rise for public servants - may not be conducive to efficiency and productivity.
He says that while difficult to quantify, the net contribution of the Games to national GDP for the entire period until 2008 will be about 1%.
Jonathan Noble, research manager for Colliers Jardine CITIC in Beijing says that both the residential and office markets will receive a boost from the Olympics. However, he says "the influence of the Games on Beijing's office sector will be overshadowed by the impact of China's entry to the WTO. In the first five months this year, newly registered foreign enterprises increased by a year-on-year 6.9%, while FDI [foreign direct investment] jumped by a year-on-year 11.3%."
Noble says in a report in government-sponsored Business Beijing, that the Games may well offset some downward pressure currently being exerted on the office market from the global slowdown. He says slipping office occupancy rates may be turned around by increased take-ups from foreign firms invited to invest in redevelopment projects, infrastructure, and construction of the Olympic village and hotels.
"Moreover, viewing the Games as the ideal marketing arena, certain multinational corporations will leverage the games to expand business in China," Noble says.
Jones Day lawyer, Sharon Mann, who has practised China law for more than 20 years, says that the Olympics and WTO membership may bring some improvement in the area of intellectual property. "Olympics sponsors will push for enhanced protection and China will have additional obligations under TRIPS (trade-related aspects of intellectual property rights) once it joins WTO," Mann says.
She also warns that Chinese companies may have difficulty competing with foreign firms over the next few years unless they become more service-oriented. They also need to focus on rationalising staff and social service burdens, Mann adds.
For their part, Hong Kong-listed companies are keen to catch some of the Olympics action, and first among those expecting a slice of the pie is the utilities sector. Wang Yusuo, chairman and executive director of Xinao Gas says the company, which distributes natural gas, expects to see some rewards from the Beijing Municipality's emphasis on the environment in its planning for the Olympics. He says the company, which is listed on Hong Kong's Growth Enterprise Market (GEM), already has a branch in Changping, near the site planned for the Olympic Village. "Some of the stadiums and venues... will be built in Qingdao City, Shandong Province where the group has operations. We believe the gas penetration rate in these locations will further increase thereby contributing encouraging return," says Wang.
Hong Kong-listed casual wear designer and distributor U-RIGHT, is also planning to leverage its business off the Olympic boom. Company chairman Leung Ngok says he expects the group will expand significantly over the next few years as more franchisees set up shop in mainland China.
"[The Games] will accelerate the economic development in the PRC substantially and stimulate domestic consumption, particularly the demands for quality casual wear at competitive prices," he says, adding that the company will open 100 more franchise stores in China over the next 12 months and seven more retail outlets in Hong Kong.
Lam Sai Wing, the chairman of gold giftware and homeware manufacturer, Hang Fung Gold Technology, is also confident of a boon from Olympics fever. He is planning to expand the group's retail business in both mainland China and Hong Kong, and with the China market in mind, he says the group will adopt a more cost-effective production mode.