Compare that mindset to India and the Mideast, and you quickly understand why China is so predominant, and these other areas are lagging behind.

　　I have just returned from an eight-day trip through central China with the purpose of establishing a partnership with a hotel management company there owned by the former partner of Goldman Sachs, who established Goldman Asia, and a high-end boutique hotel company here in the U.S. The result will be a branding and management company that does not own any assets nor invests capital.

　　The trip took me across the industrial parts of central China where Americans generally do not yet travel. One city had a population 12 million, and the other has a metro area of 32 million. We met with a series of developers and high-level government officials, as well as looked at development sites and rebranding opportunities of existing hotels.

　　First, there is no possible way in words, or even pictures, to describe what is going on in these major cities. Construction cranes cover the landscape to an extent unimaginable in the U.S. So does the smog. In one city they already have 21 bridges over their two rivers and are building 11 more; each is like the George Washington Bridge in New York or bigger.

　　There is no entitlement process in China, so it comes down to a developer’s “relationship” with the top officials who have a very detailed five-year plan and who are in position to sell land to the developer at huge discounts so long as he agrees to completely fund construction and get it done quickly. So what could take years here to get approved and built in the U.S. might take 18 months all-in there.

　　Society in transition

　　These major cities are far more modern and well-functioning than any American city. Much of the building is 7-years-old or less, and the architecture in many cases is better and more daring than any I have seen anywhere in the world. The roads are generally new and in perfect condition even with heavy traffic, and all of the freeways and main city roads have the most beautiful and well-maintained landscaping you could imagine. There are no more bicycles, and everyone has a new car or a motor scooter. People look very healthy, clean and well-dressed, and they move about with purpose—similar to what one sees in Manhattan.

　　There are brand new club districts with the exact same quality nightclubs as you see in Manhattan and the same American music. It is perfectly safe in the main areas to walk at night, and they genuinely seem to really like America and Americans. The young people often aspire to come to the US to get an education.

　　One thing stands out as indicative of society there: The young women all seem to wear miniskirts or very tight American style jeans and the latest fashions—a sign that women feel free, self-confident and modern. Some of the top developers are women in these middle country cities.

　　Compare that mindset to India and the Mideast, and you quickly understand why China is so predominant, and these other areas are lagging behind.

　　There is no way to describe the incredible energy and determination of the Chinese to get ahead and build a successful economy and society other than it is like Manhattan in the good days of 2006 when everyone in New York was making big bucks and rushing around doing deals. All they talk about is wanting to learn all they can. The middle class is growing by tens of millions a year. They are transitioning to a domestic economy at breakneck speed, and it is clear the government is scrambling to develop the central and western parts of the country to spread the same standards of living and quell the threat of another revolution in 10 years time, which they really are concerned about.

　　Pulling ahead

　　China is racing ahead of the U.S. and in five years surely will surpass us economically.

　　They do everything they can to support business and growth—exactly the opposite of what the current U.S. administration does.

　　However, China is not without its own set of challenges. You never want to invest hard dollars in China, or you likely will never see them again. Everything is corrupt to a degree that is hard to fully comprehend; nothing happens on top of the table and everything is relationship-driven. They do things very differently in all aspects. Face matters a lot.

　　There is a giant demographic problem of caring for the aging because with the one-child policy and the economic opportunities now available to all, the kids are spoiled rotten just like American kids. Instead of staying home and caring for the parents, they leave for the cities to seek their jobs and a better life, and the parents are abandoned. There is no Social Security or Medicare, so China is reaching a point where 400 million people will be retired or retiring and have no, or limited support. With only one child, there is not the replacement population to fiscally support two parents. It is a massive liability they are starting to face.

　　While there are a huge number of hotels being built in China now (more than 2,000), there is a population of 1.3 billion and tens of millions entering the middle class each year. Tourism by foreigners also will increase. The central and west of China is where it all will happen for the next five years or more.

　　American brand fatigue

　　In one conversation after another with developers and top government officials involved in tourism, they consistently said they were tired of the big American brands and are seeking an alternative.

　　They, like many U.S. developers, want a boutique design approach with flexibility to better fit a location and region, and they want more flexibility in managing to better fit regional differences. They especially want people who will do what they believe is a better job of staff training, which is severely lacking in China in the hotel industry. It is why we are considering opening a hotel school there.

　　They object to the U.S. big-brand uniformity of design, standards and the regimented style of managing and staffing. While they do not seek loose management, it is a belief the regimented approach no matter the region or province, is not the best approach in all cases. There are huge regional differences in China, just as there are in the U.S., only much more pronounced. One area might have an entirely different culture, language and food, kind of like Arkansas versus Manhattan.

　　Chinese developers are also tired of having brand-managed hotels overstaffed with trainees at the cost of the owner. The only reason some of them choose a big brand is the higher leverage a familiar flag will yield when seeking construction financing; they get 20% leverage with no brand, and much higher with a known brand. If they had an alternative acceptable to the banks, they would take it.

　　The government feels the big brands do not train hotel staff well, and do not demonstrate flexibility in management that is more likely in a well-run boutique brand. This is the opportunity my team is seizing. I am only reporting what was told to me and have no way to know myself what is the situation.

　　If you think you can just go into China on your own, or with just any local partner, you will get into serious problems. The Chinese have their way of doing business, and the corruption and lack of transparency is terrible. Success in this country requires the right local people—preferably westerners who have been on the ground there for many years and who already have local staff and partners.

　　While the opportunity is bigger than anything you can imagine, the risk is likewise. China is not for amateurs or for trusting people.