Warmack says booming residential construction as well as construction related to the 2008 Olympic Games in Beijing and the 2010 World Expo in Shanghai are all driving the demand for high-quality paint. But he takes pains to point out fundamental changes in personal earning and saving that could be tipping points.
      Even more important than the higher incomes of the 400 million people along China's east coast may be the 16-percent rise in rural incomes that occurred in 2004, along with the repeal of China's farming acts.
      "If the masses cross income thresholds where they become consumers, that would become far more significant," he says. "In Shanghai, you already see reasonable savings rates. If you look at personal consumption, the next wave will be rural income thresholds. Look at a typical bell-shaped curve, with the 'Y' axis being population and the 'X' being average income. In the U.S., anyone not a street person can buy a Coke or diapers, so the threshold would be at a very low income [level]. In China the threshold income is still far on the high side of average incomes. As that curve shifts, a 10-percent shift can increase market demand 20-30 percent."

'Pitfalls Facing Potential Investors in China'       The advice below comes to Site Selection courtesy of an unpublished paper by Prof. Emeritus Dr. Marcel De Meirleir. De Meirleir, 82, is currently the CEO of Business Location International. He founded Plant Location International in Brussels and led it from 1960 to 1989. He was a director of Director of International Location Advisory Services (ILAS) of Ernst & Young from 1989 to 2004. "American and European businessmen now face this economic giant with awe, admiration and doubt, but many are ready to give it a try," he writes of China. "Many will lose money, some will gain."       Be prepared. Remember, China is a continent about the size of the USA with more then three times the population: 1.3 billion. If China was a mysterious, oppressed, closed country until recently, it is now a mosaic of cultural, ethnical and social patterns. It is no longer mysterious but has a variety of differences, which has an impact on its economic development.       Understand the Chinese way of thinking. The family ties, the beliefs, the living habits, the language and the cultural variety all have an impact on the labor force and its productivity.       Understand the current political, human relations and administrative set-up and its influence. Prof. He Chuanqi of the Chinese Academy of Sciences pointed out recently in an interview that the largest obstacle to the creation and development of the market economy is the lack of a well-functioning legal system. Hence the closeness of the Chinese to their authorities, who not only hold the strings of the legal system but also of the information. Information is hard to obtain in China and like all statistics is difficult to verify, interpret and generally already bypassed.       Study the workplace. The contrast between medieval and modern workplaces is enormous. So also are the work approach, the work ethics and regulations, or lack of them. Visit the work floor if you like to learn what needs to be changed to improve efficiency. But discuss it in advance with the local management. Their influence in obtaining results is enormous.       Don't force your ideas down their throats. Don't humiliate your host or potential partner with exaggerated statements like "I can do it so much better." The Chinese sensitivity is not always visible on their faces, but believe me, it is there.       Be sensitive to regional and local differences. The gap between developed urban plants and the rural places is very big, the infrastructure different or lacking. Don't be critical, but cooperative and adaptive.       Site selection for new plants on greenfield sites is possibly the most dangerous exercise and most likely to cause a lot of problems immediate or later. Nearly nothing is well defined.       Banking is not as easy as you are used to in Europe or the USA. Remember, banking is a recent economic feature and still very much tied to the controls exercised by the authorities.       Beware of take-overs and joint ventures. Fifty years of experience have taught me that of all joint ventures and aquisitions in Europe, less than one-third were a complete success. The others either failed, were very expensive or took a long time to bring to an acceptable return of investment. Think of this: What you see or hear is not what you think you see or hear.       Beware of assistance either by local Chinese or enterprising foreigners. Every one who has visited China calls himself a consultant.