china

Why is China so important to HGR??

There are many reasons. Take the following for example:

1. The Chinese population (and potential drug testing market) is huge (and growing),

2. China has a massive and growing illicit drug problem

3. China wants to look squeaky clean leading up to the Olympics

4. China is post-Communist but still a ‘control’ economy (with the potential that provides for HGR to negotiate a ‘monopoly’ supplier relationship with the Ministry for Public Security)

5. China’s penchant for government-private partnerships poses interesting potential for the establishment of Chinese-based cheap production facilities for supply to other world markets (Russia, US, Mexico and any other new markets).

The following paragraphs provide some interesting background material to support the above.

The China section of the U.S. Department of State’s International Narcotics Control Strategy Report (March 2007) has some interesting things to say about the illicit drug problem and current initiatives to address it. For example, the following:

“According to the Chinese Government, drug abuse continues to rise. There were, by the end of 2005 (the most current statistics available), 1,160,000 registered drug users, down 440,000 from 2004, but officials acknowledge the actual number of addicts is higher, and there have been published reports that China might have as many as 15 million drug abusers. The majority of registered drug addicts, 78.3 percent (700,000 people), are heroin users. Youth between the ages of 17-35 comprise the largest percentage of addicts.

As China's economy has grown and its society has opened up over the last decade, the country's youth have come to enjoy increasing levels of disposable income and freedom. This has been associated with a dramatic increase in drug abuse among the country's youth in large and mid-sized cities. The number of abusers of new drugs is increasing and drugs such as crystal methamphetamine, Ecstasy, ketamine, and triazolam have become more popular. Synthetic drug use has surpassed that of traditional drugs in Northeast China's three provinces of Heilongjiang, Jilin, and Liaoning. Nightclubs and karaoke bars have become hotbeds for such recreational drugs.

China's Ministry of Public Security (MPS) is in the midst of its National People's War on Illicit Drugs, begun in 2005 at the initiative of Chinese President Hu Jintao. MPS has designated five campaigns as part of this effort: drug prevention and education; drug treatment and rehabilitation; drug source blocking and interdiction; "strike hard" drug law enforcement; and strict control and administration, designed to inhibit the diversion of precursor chemicals and other drugs.
As part of its National People's War on Illicit Drugs, China takes a multi-agency approach to educating people about drug prevention. This effort involved producing a film, "Memory of Black and White," on drug prevention and education; creating a drug enforcement hero character, Wu Guanlin, and promoting him and his deeds in five provinces; disseminating thousands of drug control fliers and pictures for prominent display on TV, buses, and in public spaces; designating five well-known public figures as "image ambassadors"; setting up training courses in schools in key provinces that reach millions of students; mobilizing 1,000 college students to go to villages during holidays to publicize drug control; antidrug training in discos and pubs, targeting high-risk groups and promoting drug awareness; special courses in re-education-through-labor camps; periodic placement of pieces in newspapers, magazines, and TV news programs including Focus Talk, Face to Face, Dialogue, etc.

China continued to give high priority to controlling the spread of HIV/AIDS in 2005. MPS also stepped up campaigns targeting young people in its fight against banned narcotics and created more drug-free residence communities and villages for rehabilitating addicts�.

It appears that widespread drug-testing is the Ministry of Public Security’s newest initiative in the war against drugs. Hence the negotiations (now at an ‘advanced stage’) with HGR over the past year.

The drug problems in China – with rising population and rapidly rising affluence (and purchasing power for drugs) - have only one way to go. Look at these statistics of growth – in both the population and private affluence:

China has 1,325 million people, or 20% of the world population. The population is expected to peak at around 1,452m in 2027.

Last year, the Economist Intelligence Unit projected that, in 2020, China’s GDP on a purchasing power parity (PPP) basis will overtake that of USA (it is currently 66% of it) and will be 4.4 times that of Japan (currently 2 times).

If the GDP growth rates of China continues to outpace that of USA after 2020, it is feasible to envisage a 2045 world where, on a PPP basis, China’s GDP is almost twice that of USA.