Take me home, Chinese roads

By Ralph Jennings Via Asia Times BEIJING - In mountainous Miyun, a suburb of Beijing about 120 kilometers from Tiananmen Square, farmers have taken advantage of their location along a highway from the district center to where Beijing outdoors people like to scale cliffs on weekends. Farmers living along the road have converted their homes into guesthouses that charge 40 yuan (US$4.95) for a night's stay and meals, saving the economy-conscious climbers a more expensive stay in a hotel farther away. "The farmers understand the cliff climbers, so they've set up these guesthouses," said Zhang Qing, a grateful climber and equipment seller from Beijing. Mainland China's otherwise impoverished farmers aren't the only ones who understand traffic means business. Consultants and international development banks say larger companies, including multinationals, are looking at China's growing number of rural roads as places to set up shop. Most likely to succeed are agriculture-related businesses, bus stations, services for pass-through traffic and tourist facilities such as the ones in Miyun, the Asian Development Bank (ADB) has found. At the 2002 China Road and Highways Conference in Beijing for government officials, investment banks and construction companies, the Boston Consulting Group displayed a Power Point slide showing Chinese expressways lined with 7-Eleven, Home Depot and McDonald's outlets, said the management consulting firm's vice president, Giles Brennand. "Look at these images for examples of McDonald's and 7-Elevens already operating in China at the street sides in cities," Brennand said. "Why do you think roadsides on highways would be different?" Finding the highway is no issue. In an effort to reduce rural poverty, China has expanded its highway network from 1.16 million kilometers in 1995 to 1.86 million kilometers in 2004, an average annual increase of 6%, according to the ADB, a Manila-based lending institution for poverty-relief projects such as new roads in China. The length of Chinese expressways increased from a practically non-existent 147km in 1988 to 34,287km in 2004, the bank says, and common rural roads down to the village level totaled 2.9 million kilometers last year. The Chinese government added these roads to give villagers faster access to non-farm jobs, health-care services and markets. They also integrate villages into larger commercial and employment networks. Business growth is a welcome byproduct. Already, about every 50 meters along expressways, the government has laid the pads for off-ramp hotel-restaurant complexes similar to those in the United States. "Road projects will directly benefit road users, such as transport providers, bus and truck operators, passengers, traders, government officials, and the private sector in general," said Eunkyung Kwon, senior transport economist with the ADB. Business can start from road construction from private finance plans that could eliminate "unpopular" road tolls, Brennand said. Tolls discourage less well-off drivers, including truckers, from using the highways, sending them in some cases to more dangerous roads, said Graham Smith, transport sector coordinator with the World Bank in Beijing. Ultimately, roads can transform business far beyond the roadside, the ADB has found. In the Hunan province traditional ethnic-minority village of Fenghuang, for example, upgrades of bumpy, narrow single-lane roads will boost tourism from other parts of the country, Kwon predicted. Multinationals, meanwhile, are exploring the roadsides, said Charles Martin, president of the American Chamber of Commerce in Beijing. "I know the hotel chains have plans, as well as, of course, the gas stations if the oil companies ever get permission for downstream services," Martin said. "Auto service and repair [are] already off and running in the cities, for example Goodyear and Michelin." A bus trip through the Chinese countryside today turns up giant state-owned Petro China filling stations, auto repair shops, locally owned diners and prefabricated rows of stores that sell peanuts, paint and fake terra-cotta warriors. They typically serve truckers or busloads of tourists. But the likes of Home Depot and McDonald's - which opened its first China drive-through on December 10 in the central business district of Dongguan, just north of Hong Kong - normally do not appear in rural China. Road quality may be an issue. About 85% of the country's total road network of 3.3 million kilometers is "underdeveloped in terms of quality", Kwon said. Bumpy, muddy or narrow surfaces force traffic to move slowly, an impediment for schedule-conscious drivers or anyone without four-wheel drive. Design and construction problems plus damage caused by overloaded vehicles lower quality, especially in western China, the ADB says. It says the government does not systematically maintain rural roads. Lack of a market may also hold companies back. Foreign companies would look at rural expressway off-ramps before considering farm roads, said Smith, but neither offers much retail potential. "You're talking about out in the boondocks, and there's not a lot of opportunity for international services," he said. "Most of the traffic is not passing cars - it's buses and trucks. There aren't a lot of middle-class people who are using the highways." Difficulty getting clearance from local governments, which sometimes give permits only to people linked to local officials and ignore retail laws from Beijing, may further explain why non-local companies are not seen on rural roads, consultants say. Some local officials are picky about their own citizens. Farmers living near the four-lane Tangshan-Fengrun Road, in Hebei province east of Beijing, once tried to set up a row of stores to sell agricultural products when the highway opened in 1997, said local farmer Zhang Rong. But she said the free-trade district that oversees the road has stopped the would-be shop owners because they fear an increase in land value would require more compensation to tear the shops down later for redevelopment. "It's really complicated. You have to go through all sorts of government bureaus," Zhang said. "The free-trade district doesn't want the farmers to get rich."