Deacons on international franchising

According to Deacons , the words of the unidentified US Army Major spoken of BenTre early in the Vietnam war – that “In order to save the town it became necessary to destroy it” – come to mind frequently in the dynamic and rapidly developing area of South China from which I am writing this column. Bulldozers and construction cranes are part of the landscape as entire villages are transformed into modern metropolises and existing cities are continuously reinvented.

The Pearl River region is one of the most dynamic in China. It is a triangle with Guangzhou, the old Canton, at the peak through which the Pearl River (Zhujian to the locals) flows down to the South China Sea, dividing Hong Kong and Macau at the base of the triangle. The Pearl River delta supports productive and intensive agriculture and a combination of factors fuel the massive industrial development of this region. The tens of thousands of factories have been a major contributor to China’s continuing economic growth and their products are displayed twice yearly at the famous Chinese Export Commodities Fair, better known as the Canton Fair. The Canton Fair was inaugurated in 1957 by the central government under Chairman Mao and continues to grow in size and status. It is the second largest trade fair in the world, which in April this year attracted over 175,000 visitors to over 28,000 booths covering over 250,000 square meters in two massive complexes. Deals concluded totalled over US$30 million.

Shenzhen, 2300 kilometres from Beijing but within sight of Hong Kong on a rare clear day, is perhaps the best-known example of the metamorphosis of this region. Thirty years ago it was home to a few thousand fishermen. Today it is a modern, thriving city of over 10 million. The name survives but there is little else to remind the visitor, or the resident, of its humble heritage. Shenzhen was one of the first cities to be granted Special Economic Zone status and provided China’s first experiment with market liberalisation and western capitalism. Little wonder that Deng Xiao Peng, the architect of China’s re-engagement with the west in the late 1970s, still presides, in spirit, over his accomplishments from massive billboards throughout the city. The Shenzhen experiment has been rolled out throughout China and will continue to be as the central government pursues a policy of doubling the percentage of urbanisation to 70 percent within the next 20 years.

All visitors to this growth triangle will have their own examples to illustrate the staggering development of the region. I have two. Three years ago Guangzhou city started the development of what is now Guangzhou University City – a 10-campus university of 18 square kilometres on an island in the Pearl River south of Guangzhou, which until the project commenced, was home to a small farming community. All 10 campuses will be operational for the start of the new academic year in September, although construction is not yet complete. Each is built in a distinctive, exciting and attractive architectural style and each campus incorporates not only teaching and accommodation facilities but a full range of leisure and sporting facilities. Guangzhou University City will be home to 200,000 students, all living on their university campuses in high standard accommodation. When completed it will be home to over 350,000 in total – students, academic and support staff and those working in the commercial city within the University City.

Within the island – connected to the mainland by a series of bridges (the smallest of which was built in one week!) and by underground rail to Guangzhou – are three ring roads. Outside the outer ring road there are 18 kilometres of landscaped gardens, walkways, and cycleways that cling to the edge of the island. Between the outer and middle ring roads are the 10 university campuses. Between the middle and the inner ring roads are the student accommodation and facilities attached to each university. And inside the inner ring road are a massive central plaza, parkland and some major shared facilities. The scale is simply staggering.

The other development of particular interest to me also involves a university. Although more modest from an infrastructure perspective it provides another example of what can be achieved only with a massive population. It also allows me to mention franchising for the first time in this column.

Despite its proximity to Macau (by bridge), Hong Kong (by ferry) and Guangzhou (by road or ferry) Zhuhai has until recently been relatively isolated. Hong Kong and Macau were not under Chinese control and Guangzhou was not within practicable reach until dozens of bridges were built across the intricate network of the Pearl River and its tributaries enabling it to be connected by expressway. Because of its relative isolation and, as a consequence, comparatively small size, (at least in Chinese terms) tertiary education was underdeveloped until Zhuhai invited leading mainland universities to establish campuses there. Beijing Normal University, a leading Chinese University, commenced development of a Zhuhai campus three years ago. Today, with two of the proposed five stages complete, it is home to 10,000 students on a very attractive semi-rural site nestled in a valley between wooded hills that has already won national awards for its campus.

However, despite the attractiveness of the physical campus the most exciting development for me is the establishment of the International Franchise Academy, which is a separate faculty within Beijing Normal University at Zhuhai. Currently 400 students have completed two years of a four-year business degree specialising in franchising. The degree comprises 20 core courses in disparate commerce disciplines, 10 franchise-specific courses, and an internship with a franchise enterprise.

The core courses include statistics, economics, accounting, management, organisational behaviour, human resource management, operational research, international trade, business law, management information systems, business communications, financial management, strategic management, project management and so on.

Franchise-specific courses include the basics of franchising, the basics of franchise law, the practice of franchise law, franchise training and supervision, franchise brand management, commercial real estate and site selection, franchise logistics management, international franchising and entrepreneurship.

The internship component of the degree comprises a research project on the particular industry sector in which the student will spend the internship with a franchise system and a thesis related to that experience.

As one who has devoted most of his professional life to advancing franchise education I am both delighted with and envious of this exciting initiative. There is a substantial private sector backing for the Franchise Institute and students are exposed to a range of external facilities to ensure that academic study is blended with real world experience. The Franchise Institute at Beijing Normal University in Zhuhai makes a strong statement as to the rapid growth of franchising in China, to its massive potential and to government and private sector commitment to its ongoing development. I am delighted that the conferring of a Visiting Professor position will enable me to have continuing involvement with it.

The Pearl River region of Guangdong province has had a substantial impact on Australia for many years. ‘Chinatowns’ throughout Australia, and indeed throughout the world, developed with early migration of the Cantonese from this region. Cantonese style Chinese food is simply the most obvious of the ways in which these industrious migrants influenced us. More recently it has been the factories of Guangdong province which have impacted so significantly on our, and global, economies as many of the products we wear, use and otherwise enjoy have originated there. This region provides the opportunity and the potential for Australian franchisors to, in a small way, reciprocate through the expansion of their franchise systems to a region which is economically, demographically and culturally receptive to the quality products and systems that Australian franchisors can deliver.

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