Thursday, December 11, 2008

1984 by George Orwell.

"It was a bright cold day in April, and the clocks were striking thirteen".

While China is not straight out of the book, there are some rules there that we would growl at in the west. Particularly I'm speaking about my experiences in internet bars.

When I was in China in the late 90s, there wasn't a lot of concern over news getting to the populace via the world wide web, because not nearly as many people got online and there weren't many blogs or other sites out there that delved into China's political policy. There were a lot of internet bars, but they were primarily used to link computers together for mass warfare games with large groups of people. Starcraft, Warcraft, and Chinese knock-offs were played by groups of students who stayed up through the night trying to out strategize each other.

This time around, the internet bars (or "wang ba", wang meaning net or web, ba meaning bar) had gained popularity and sophistication. All were set up with high-speed connections, and all were air-conditioned. Many of the patrons were still playing games, but a great number were watching movies, listening to music, or chatting online.

I highly doubt there was one government monitor sitting in a dark room somewhere for each patron, watching his or her every move, but all entrants were required to supply an ID card in order to get online. I went to about ten different wang bas to post my blogs and check emails while in China, in all of the cities we visited. The process for locals was the same everywhere. For me, the process changed each time. I was required to leave an ID at the front desk in one case. They asked for my passport. I didn't have it with me that day, so I gave them my Washington state driver's license. When I asked if it would be sufficient, they said it was fine.

At one place, when I walked in and asked for a computer I noticed as I was asking that the room was full. As I asked a guy logged off and stood up. The girl at the front desk said that computer was available while simultaneously a girl who had been waiting her turn stood up to go use it. They made eye contact and she backed down. I put up a brief struggle, asking them to please allow her to go first, but they stood their ground and once I started realizing that continually refusing would cause me to lose face, I acquiesced and took the open table. There was a brief comment from the front desk girl to the girl whose spot in line I was offered about some local government policy, which made me feel slightly less shameful.

This brings up a couple of observations. One is that there is definitely a greater attempt at monitoring the activities of the populace in China than there is in the states. But I think it's emphasized as a larger violation in the US than it really is for the Chinese. Just like their news about the west tends to be skewed towards the negative and very nationalistic, so is ours. We hold our individual rights in higher regard than the Chinese, and I doubt if they were to suddenly become a democratic nation that this would instantly change. They also display a lower level of concern for equal rights than we do.

I heard a radio show on National Public Radio the other day about a woman in Hoboken who was furious about people who knew the parking police getting to park illegally without fear of penalty in a city where parking spaces are precious and limited. She spent a great deal of her free time wandering around the city publicly calling people out for their disregard of the law, in the interest of being fair. The show seemed to be on the woman's side, applauding her for going out and taking action to try to right a wrong. The Chinese people that I know would have either failed to understand what she was doing, thinking she might be mentally imbalanced, or would have thought the whole thing was supposed to be comedic in nature.

I myself found it a sad commentary on our society. She could have more effectively spent her time sleeping in my opinion than worrying about a low-level kind of corruption that has existed in every society throughout history. It formed for me a nice balance. The Chinese have what we view as "Big Brother" watching them, and we have what they view as nut-jobs going completely overboard at any perceived slight to their complete equality. They deserve a little more privacy, while we could use a little more acceptance of how things really work.

Tuesday, September 30, 2008

Another Note.

Something else that came apparent that I'm not sure I mentioned in any earlier posts is the incorrect perception that the Chinese educational system does not produce critical thinkers and that a systematic change is required before they will be common in China. I kept getting told, the whole time I was traveling around, that this was a fact. The way it was presented seemed to suggest that critical thinking can be taught, but will be extraordinarily rare if not developed in an educational system. While this is true, I believe the managers with whom we spoke are putting just a little less faith on the Chinese people than they would put on their own countries of origin and their own cultures.

When I got to Chongqing, I was again met with people like Professor Cao, Tong Zhi Hong, Yang Shifu and Yao Wei. These men are either well-versed professors in arenas like Chinese literature, where discussion is (gasp) occasionally promoted in class, or they are business men, artists, and photographers with the ability to constantly change and utilize the improvements in technology in China. They would not be as successful as they all, to the last person, have become over the past eight years.

There are plenty of critical thinkers in China. The problem is that many of them are also entrepreneurs. It is tough to live in a country that populated, with such an elevated number of opportunities (11% annual GDP increase for the past five years cannot be ignored) and posses the critical thinking skills companies want without realizing the heightened potential to be your own boss. But this is where I found all of these managers at fault. They kept talking about changing the educational system so that it will develop critical thinkers to hold key management positions. I posit that the need is not for critical thinkers, but for enough critical thinkers that they can be retained and won't leave either for higher pay or in the entrepreneurial spirit.

Monday, September 22, 2008

My foot in Chongqing.

So on our last night in Shanghai, Richard Yin from PACCAR, also a former SU MBA student and a very classy individual, recommended we all head out to a bar called the MUSE. He said it was popular with the upper-class local population and really an exciting place. He turned out to be right.

I think about half of the group went. I passed out cards with the name of the place and the address written in Chinese for people to show to the cab drivers and then went on a side expidition with a couple of classmates before heading over to the club.

The club was huge, and mostly populated by Shanghai's affluent. This was evidenced by the number of Porsches, Ferarris and Jaguars parked in special spots right in front of the club. There were a few different dance floors and a room where a professional from Camaroon sang numbers by Seal and other western pop stars.

Towards the end of the night, as I was heading over to the group to say goodnight in preparation for my trip to Chongqing, I stuck my hand back to my rear pocket as I habitually do every five minutes when travelling to discover that this time my wallet was not there. In walking through the throngs of people over the previous five minutes, someone had managed to get their hand into my pocket and walk away with my debit card and about $140. I was annoyed, but didn't get frustrated until I realized that my flight to Chongqing to see friends I had not laid eyes on in eight years might be in jeopardy due to my plane ticket being in my wallet. Without thinking I kicked a wall as hard as I could.

I often kick walls when I'm extremely annoyed, but usually when I do this I am wearing thick-soled boots that have impact-cushioning soles in them. This time I was wearing thin-soled feaux-designer shoes I had bought at Ross, a discount store in Seattle. By the time I got back to the hotel to call Bank of America and cancel my debit card, I could barely put weight on my right foot.

I resolved to go to the airport the next morning anyway, to see if I could either rescue my old ticket or buy a new one, but I had not slept the entire night due to the pain and had to hop all the way from my room to the elevator and then ride a luggage cart to the receptionist to check out. All I wanted to do at this point was get to Chongqing, where I would be able to find a hospital and get my foot looked at to see if it was broken.

I arrived in the lobby at 5:15am and was met by a lot of surprised faces, as a contingent of students that planned to travel with Dr. Rao to Xi'an was leaving for the airport at the same time. When they heard what had happened they all came to me with medicine and offers of help, which made me very greatful. You really learn about the true nature of people when something bad happens, and everyone on this trip, right down to the last person, rally cares about the Jesuit principals of education. I myself, had it been a close friend to self-injure themselves in such a foolish way, would have been thoughtful but full of wisecracks at the same time.

Megan Tormey, a former SU graduate who came with us on the trip, was travelling to Chongqing as well, so I knew I would have someone else to help me out if things got really tough. We got into the cab and I told the driver to take us to the airport in Pudong.

What followed was one of the most amazing drives of my life. This 45-year-old female cab driver had obviously missed her calling as a Formula 1 pilot, and was trying to make up for it by competing with all the traffic on the Shanghai - Pudong airport road. As she flew through traffic in a 10-year-old volkswagon Santana with no suspension and a loose steering wheel (Volkeswagon Santana: Think Volkeswagon Fox from the mid 80s, but way way lower quality), she constantly chatted away with me as if we were in the back seat of a New York horse carraige, getting a slow tour of central park in the early evening. I couldn't turn around to see how Megan was doing in the back seat, but she did mention that her trip to see a foundry the day before had been less frightening because they were at least in a BMW that was in perfect condition. The speed limit was 80 or 90 KMH, but at one point I think we were doing about 140.

When we got to the exit for the airport, I saw another privately-owned Volkeswagon Santana trying to back up the freeway to the exit that they had just missed. The cabbie mentioned something about the driver's life expectancy for trying to pull something so stupid off in fairly heavy traffic (just heavy enough to go nearly twice the speed limit without having to wait much), and I couldn't help but laugh. She was impressed by this, and asked me how I could laugh in so much pain. I explained to her that at this point, I really only had two options: laugh or cry. She seemed to think this was pretty funny. Mostly I was just looking forward to getting on the plane and on my way to Chongqing and a hospital.

The Shanghai airlines representatives were very understanding and helped out all they could to make me comfortable. Megan also found a first-aid station and bought me a couple of ice packs. We were able to resolve my ticket issues without much trouble, and even got put in first class, since it was closer to the entrance and I could keep my foot elevated.

When we arrived in Chongqing, we were greeted by Jon and Gianni, two foundry employees that were meeting Megan and I that turned out to be former Sichuan Foreign Languages Institute students at the same time that I had been there teaching English. I swear I recognized Gianni, but he said he didn't know who I was.

The ride into Chongqing from the airport was just as stunning as every other part of China I had visited. It had expanded exponentially. The airport trip used to be a 45-minute drive through farmland, and now we were on the outskirts of the city. There were high rises all the way in.

The driver for Megan's company contact took us to lunch, explained that the hospital didn't open until 2pm, and then took me to a hotel right next to the hospital. I had them help me drop my bags off at the front desk to bring upstairs later, got my room key and got back in the minivan for a 50 meter trip up the street to the Chongqing Municipal Hospital.

I was dropped off at the foot of the front steps, where two Bang Bangrs (Chongqing laborers who carry bamboo sticks, or "bangs" too help, or "bangr" people carry things up steep inclines) offered to help carry me up the 15 stairs to the entrance of the emergency room for about $7 US. I immediately agreed to the consternation of Jon, who wanted to bargain a little more, but I explained to him that at this point they could just refuse to carry me and leave me out on the steps. Plus, I grew very quickly weary of them using my weight as a bargaining tool: "You want us to carry this fat guy up the steps for 10RMB apiece?? He's even fatter than Buddha!"

Once I got to the emergency room, I spoke with the doctor and told him what happened. He also thought it was pretty amusing that I had hurt myself in such a way. He sent me over to another building (in a wheelchair, thankfully, with an old guy who I would later pay some money to in gratitude for his help) where I got my foot x-rayed. The total cost of finding out that my foot was not broken but merely an "impact sprain", buying crutches, paying off a wheelchair-pushing retiree and two bang-bagrs: about $50 USD. The service was also excellent, and the equipment they used for the x-ray pretty high-tech, from what I could tell.

As I was waiting for the x-ray results to come out, a Chinese guy came up close to me and tried to stick his hand into my pocket to take my cash. I looked up in utter surprise because nobody in China is this forward saw the face of my old friend Tong ZhiHong. I don't think I've been so happy in years. I had not seen him since 2000 shortly after my wedding and before I left Shanghai, and had only spoken to him briefly a few days before and at the Chongqing airport, where I told him what had happened to my foot.

He started right in with the jabs, like "had I been successful in stealing more money, would you have kicked another wall with your left foot?". I was so happy I immediately started babbling and didn't stop until he had given me a ride to his company, which was now twice as large and much more profitable, as evidenced by the not-so-cheap Chrysler 300 he was driving me around in while telling me he was just doing "okay" at his business.

Later that evening, we went over to 7,8,9 Hot Pot, a small, grungy hot pot restaurant we used to frequent eight years ago. Yao Wei, my longest and closest friend in Chongqing, came running up the stairs to meet me and make fun of my foot and extended midsection (When I was in China eight years ago, I couldn't pronounce the name "Tong Zhi Hong" because it is not easy to say for an American. They told me to just call him "Pang Pang", which means "Fatboy") and to say that my new Chinese name should be Pang Pang.

When we got to the bottom of the stairs, I was met by six other old friends, with more stopping by as the night progressed. One of the friends was Seng Hao, who I had not seen in 10 years. I can't discribe the pleasure it gave me to see everyone again.

Over the last three days, I have been taking it all in. I've realized that I need to come back to China to live and work, to learn the language better and finish the work I began here on developing a career eight years ago. This trip has been one of the best decisions I have made since moving from China to Seattle, and the only regrets I have are that I have to return to the states in two days and I have to wait a whole year before graduating so I can come back to China.

Thanks for reading everyone, I hope you've all enjoyed this thuroughly.

Sunday, September 21, 2008

The rest of the trip.

I haven't gotten online and posted a blog for a week. I apologize for this. Things got a little busy for me from Suzhou through the rest of the time in Shanghai, as I was trying to get as many of my contacts in line as possible and figure out my trip to Chongqing.

Suzhou was amazing. The growth that they have experienced there in the last eight years since I lived in Shanghai and regularly traveled to that city for business is astounding. I didn't recognize a single building as we came into the city until we hit the Nokia factory, when I realized why. Eight years ago the Nokia building was on the edge of the city. We had already been driving in Suzhou for about two or three miles at that point, maybe more. For a city to expand outwards that much in such a short period of time is just indescribable. If you were watching the city from a satellite I believe you could almost see the city expanding slowly in real time.

We had the weekend in Suzhou and the Monday after that was a national holiday for the mid-autumn moon festival. Everyone kind of did their own thing and had a good time. I took a group out to La Ma hot pot so they could try it out, and some of them enjoyed it so much they went back the second night for more. Hot pot is kind of the Chinese version of fondue. They bring out a boiling pot of very spicy liquid and you cook fresh meats and vegetables (I use the term "meat" loosely here) in the broth. In Chongqing, the center of this style of hot pot, you have to dip whatever you remove from the pot into a bowl of sesame oil and crushed garlic before you can eat it, because the broth is so spicy it would be foolhardy to do otherwise. The sesame oil soaks up a bit of the spices so they are not quite so harsh. Lao Ma hot pot in Suzhou, however, did not have as many spices in it because the Suzhou palate does not like ridiculously spicy food. I was very impressed with everyone who came for trying something so different. Especially those who tried the duck's intestine, and particularly Paul, who really liked it and helped me finish it off.

Our company visits in Suzhou were interesting as well. We went to the Black and Decker assembly plant, visited the Suzhou Industrial Park, and met with expatriates from Andrew Telecommunications.

The Black and Decker plant was interesting because we got to see how a large western company operates in China, and how they have been finding ways to cut costs by improving processes as the RMB appreciates in value against the dollar and labor costs in China, along with shipping costs due to increases in gas and metal prices. Black and Decker had a lot of management level employees who stayed with the company rather than leaving for other opportunities because they regularly train people up to 6 sigma level in that program, which teaches MBA graduates how to better manage processes to create what they refer to as a "lean" process system. This type of management style is used in factories and financial institutions alike, and I was impressed that a western company was investing in it's China management at such a high level.

We toured the factory floor and learned about how the process went from beginning to end. We also found out how management had made changes to the system so that employees were using more of their time assembling rather than hunting around for parts or moving around the factory. It was a slightly less insightful visit than some of our others because we weren't getting a lot of information on how business is different in China than in the states, but the whole tour was put on by two local managers and I thought that alone was a useful experience. They ran the tour well and explained the process very in-depth.

After the Black and Decker visit, we went to the Suzhou Industrial Park (SIP). The SIP idea was first mentioned back in 1978 or 79, when Deng Xiao Ping mentioned that he thought Singapore managed its island very well, and that China would benefit from doing business with that country by learning the way things are run there. The SIP is actually a cooperative attempt at creating a state-of-the art technical and industrial park that will be suitable of all types of foreign IT and assembly operations in China. The park itself is huge, offering both local housing and housing suitable for American and European comforts, it has a large financial district that is still under construction, a golf course, a moorage (It is around a very large lake, I believe called the Jingji lake) and tunnels under the lake to alleve transportation. It's built like a large, modern, western city, with most of the infrastructural components (electric lines, cables, etc.) run through tunnels beneath the area. This type of cooperative drive towards creating a high-tech park where companies can set up more sophisticated operations shows very definitively that China wants to broaden the range of services it can provide to the rest of the world, and not remain as simply everyone else's manufacturing source.

In the afternoon we met with two expatriates and one local manager from Andrew Telecommunications. This meeting was very informative because both Jim and Tom had been in China for a number of years, and had a lot of experience dealing with the Chinese in a business and personal environment. Although they did not speak Chinese extremely well, they seemed to understand the need for a higher level of "customer service" that exists in China when doing business here. The Chinese like to get to know they people they are dealing with, and it is the same in management. The best thing a new manager can do when coming to a company or factory, especially if he or she is from the US and moving to China, is to take each department out to dinner and talk very little about business. Just sitting down with a local manager or the head of the accounting department (and all of the accountants) will go a long long ways towards gaining some respect and showing the employees that you know at least a little about how things work over here and are trying to learn more.

On Wednesday morning we headed to Shanghai. The trip was uneventful, but I noticed as we entered the city that there were a lot of faces plastered to the bus window (I didn't mention that the bus had seat-covers with the playboy bunny logo plastered all over them...copyright infringement, as I don't believe playboy makes seat covers in China). Entering Shanghai was a lot like entering a huge western city. We traveled into the heart of the town on one of the raised highways that connect different districts of the metropolis above ground. This gave us a better view of all of the buildings. The thing that really struck me was that Shanghai has not expanded nearly as much as any of the other cities we visited. It was already expanded significantly more eight years ago than the rest of the country and right now the rest of the country is catching up. The one thing that really did get built up however was the PuDong district. PuDong sits on the other side of the Huangpu river, across from the bund, a section of the city built up in the early 20th century by western interests. Eight years ago the tallest building was the JinMao tower, at about 420 meters high. The JinMao tower was visible from much of the city, and rose above everything else much like the world trade center did in New York. It, along with the PuDong TV tower, defined Shanghai's skyline. But now the World Financial Center, a Japanese-developed building, stands across the street from the JinMao tower and rises to 492 meters. To enter the city and see that structure rising above the JinMao tower really nailed for me just how much the whole country has grown in the past eight years. an average of 10% GDP growth for the last five years shows up everywhere you go in these four large cities we visited.

For our company visits in Shanghai we went to PMI (Pacific Marketing International), Shanghai Goss, and the US Commerce office.

PMI was a great visit. We met with Mr. Chen, the director of the Shanghai branch, and participated in a presentation with many of their managers, after which we had lunch with members of the PMI Shanghai branch. We also met with TJ, who came along on the China Study Tour in 2004. All of the PMI people gave great presentations and insights into what it's like doing business in China. The company itself spends a lot of time together going on leadership trips, celebrating birthdays, and throwing parties for Chinese and American holidays. There is a higher level of inter-departmental communication evident at the company, which strengthens everyone's dedication to their work and passion for their responsibilities. It was also a company where it quickly became evident that the expatriate employees were working diligently to understand Chinese culture in order to work together better and enjoy their time in Shanghai more. I don't think there was another company we visited that paid as much detail to our visit (they made a presentation customized for us, and gave us coffee mugs with the logo they designed specifically for our trip). PMI designs and markets the Stanley and Alladin brands of coffee cups, as well as all of the mugs you buy at Starbucks. I can't say enough about their level of professionalism and their attentiveness to our questions about how they do business in China. They touched on a lot of different issues, including how they value their products, how they target markets in different parts of the world, the ways in which they research markets before entering them, and what solid promotion and successful sales margins entails. By the time they finished lunching with us, I think half the tour wanted to come back there to work.

We also paid a visit to Shanghai Goss, a company that manufactures printing presses. (I apologize for my lack of complete names, I'm typing this blog from a huge Chongqing internet bar full of young men playing video games online, and I didn't bring my business cards out). Their manager, Johnny Yang, and the director of the company gave us a presentation on what the company does and then a tour of the plant, followed by a Q&A session. Since none of us plan to get into the printing press manufacturing industry, I think the overview of the company was a bit dry for us, but when we got into the factory everything changed.

I don't think we fully comprehended the size and scope of the work they were doing. They received very large components from other parts of China and assembled huge presses at this site. I was able to ask a lot of questions, as were other students, as we went from building to building. A few things we discovered (also mentioned at Alibaba and Andrew Telecommunications) were that there is a fair level of turnover for young business school graduates, but like Alibaba and Andrew, Goss tries to make sure they aren't across the street from a competing organization that will simply steal their employees after they train them. One thing I noticed during the trip was that a lot of the manufacturing employees were in their 40's or 50's. We were informed that Goss was looking for a new site to build a more modern plant (their current assembly plant was built in 1948 or 49) but they wanted to make sure their employees would not be too far away, because they placed an extremely high value of retaining all 600 or so people, many of whom had been with the company for years. The employee following us around the plant taking photos had been with the company for 28 years. Another interesting fact we learned was that a lot of Chinese cranes are operated by women, as it requires multi-tasking and attention to detail on simultaneously performed actions, while requireing little heavy physical labor. The Director told us that throughout China most cranes are operated by women because the Chinese believe women are much more capable in multi-tasking. They also try harder to not hit people with massive swinging chunks of steel.

The US department of Commerce is a branch of the government that tries to assist and promote exports from the US to China. Chip Peters, one of the agents there, gave a great presentation on the Things they do to promote American products in China. It was obvious that he could have gone to a much higher level than what we heard, but the work they do is very complex and involves a lot of positioning similar to lobbying. The type of guanxi that Chip mentioned seemed more like the type that Brian Li from Alibaba referred to on our visit to their office. One of the biggest parts of their work there is to meet with government officials to continually promote the important role the US plays in China's development and ask for reciprocal assistance in strengthening our local presence there.

After Chip's presentation, we met with Thompson Marketing Systems, which helps large western firms combat Intellectual Property and trademark violations. A large part of their work involves finding factories around China that are making counterfeit products and bringing them into court. It was a very interesting presentation. We learned a lot about the process and how they get into the factories.

A small group of us went to PACCAR on our last day in Shanghai and met with Richard Yin, a former SU MBA student and 2006 study tour participant. Daryl, their director, and Paul Heffernan, their purchasing director, discussed what PACCAR does in China and how they do it. They talked a lot about how PACCAR approves new manufacturing plants to build parts they install in trucks worldwide, and what they're doing in China as they move forwards expanding their presence in the country.

PACCAR is very conservative in its approach to business in this country, and at the moment they primarily ship parts abroad from China to other parts of the world. They are currently selling their engines to selected bus companies in China, but are very careful about who they sell to because they don't want a PACCAR engine installed in a bus or coach that isn't otherwise well-built. We learned about how their careful and patient approach to business has made them profitable over the years. It was an extremely interesting and in-depth presentation that left all of us very impressed.

Richard came out after work and hung out with us on a boat tour of the Huangpu river. He gave us some insights on the history of PuDong and what it is like living in Shanghai from the perspective of an Seattle U MBA grad who was about the same age as the rest of us (a few years younger than me, I believe).

After the boat trip many of us went out to a nightclub that Richard recommended. For many of us the trip ended the next morning, but for about a quarter of us it is still not over. I can't write a wrap-up section of my blog when I'm now much deeper in China than our group went, and I have typed my fingers out. I will write more tomorrow morning about my foot injury, my experiences in a Chongqing hospital, finding my friends from Chongqing, and eating real hot pot for the first time in eight years.

Sunday, September 14, 2008

SolTong Advertising Company.

Before I go any further with this blog, I have to get this new development off of my chest.

I have been looking for two very close friends from China for the past three months or so, with little luck. One of them, Yao Wei, is an artist from Chongqing. He did not have a permanent address when I knew him eight years ago, and he didn't use computers, so no email. I had a phone number, but the last time I called him he was about to board a plane for Henan (island in southern China) for a vacation. I never called him back. That was six years ago.

The other friend was close friends with Yao Wei as well. His name was Tong Zhihong, and he had a small-ish advertising company in Chongqing. I was hoping to reach either of them, but when I got to China I found out that all cel phone numbers had grown by one digit. His did not work. I started searching online for Soltong Advertising Company, but to no avail, since I don't know the Chinese characters for the company. Then the receptionist came in to ask me for help translating to someone that the other computer in the business center was broken and mine the only one available. I asked her if she could help me read some of the names of these advertising companies online that I had found, since I couldn't understand all of the characters. She thought it odd that I was researching Chongqing advertising companies online, and asked me why I was looking. I told her I was trying to get in touch with a guy I hadn't talked to in nearly nine years, and she said "well why don't you just call information?"


So she helped me look up the city code for Chongqing and even spoke with the information operator for me (in China, you are still met with a live person when you call information). They said they had a Soltong advertising company and gave me the number. When I called it I got a woman who informed me that everyone was out for the day because it is Mid-moon festival, but that he would be back tomorrow, probably. I am going to call again later and leave a cel-number for him to call.

Other than that, we are now in Suzhou. We went from Beijing the day after the Forbidden City tour and headed for Hangzhou for a few days, where we got to talk to Brian Li, one of the higher-ups at Alibaba, which is a large Chinese website that specializes in Ebay-type transactions and also has an English version of the site where people can find companies in China looking to export product to the states. One of the students, Ryan Chin, exports home furnishings from China and sells them on ebay in the states. He uses Alibaba almost exclusively to source his clients. We have been having a lot of discussions about how to do this type of business and whether or not I might be able to find a niche market in which to work.

Ryan had a lot of very interesting questions for Brian, and Brian gave us as many answers as he could. Ryan believed that Alibaba should have a rating system like ebay does, so that importers and exporters could more easily research one another's records. The other thing that Ryan thought might be useful was to have more services available, like escrow services, information on customs and logistics companies. Brian seemed to agree that Alibaba needs to have a better way to allow potential business partners to feel each other out, but it had not yet happened. He did not think that Alibaba was poised to move in the direction that Ryan was suggesting, but I felt, along with most in the class I'm sure, that Ryan's points were extremely valid and that by expanding their services, Alibaba could potentially take over a larger share of the market. Alibaba, Brian explained, is trying to figure out what Chinese consumers want and how to get them using the web site more often and for longer periods and for more things (instant messaging, information search, news, etc.) than with competitors. Brian explained that the online industry and web-site competition is not limited by country, but by language. We might not have the slightest idea who Alibaba, Baidu and tencent are, but there are huge battles for market share going on in China right now between these three giants in the Chinese web site industry.

One of the things that was brought up during the Alibaba discussion was the idea of guanxi and whether or not it affects the way people do business online in China. Brian seemed confused by the question, and unlike nearly every other company we met with, he didn't think guanxi had anything to do with how people do business in China anymore, and seemed to feel that this had died out 2o years ago.

But after listening for awhile, I think I understood what Brian was talking about. Guanxi really has a few different connotations. It is a broad word that means "relationships" in a high-context society where very little can be said verbally and volumes communicated by the way in which those words were spoken. Guanxi as Brian was understanding it was the idea that if you know someone and they owe you a favor, they will pull some strings to help you get what you want. Brian said that when dealing with the government, this may sometimes still happen, so he was not surprised that companies like Boeing and Lenovo discussed the importance of maintaining good guanxi with your business partners and with the government. But aside from this type of string-pulling guanxi, there is also the much larger importance placed on building relationships. Cory Grenier at Lenovo pointed out that if an American arrives in China on a Saturday to do business on Monday with a Chinese company, he will be met at the airport by the highest ranking official at the company that can make the time to come, he will be taken by private company car to a restaurant for lunch and treated for the whole day as a very welcome relative. There will bar dinner, karaoke, walks in the park, etc. The whole trip will be set up. When a Chinese person arrives in the states on a Saturday, this will not be done. They might even have to take a cab to the hotel, where they will be on their own for the weekend until they have to be in the office for the very cool business meeting on Monday morning.

This is one large difference in how business is done between our two countries. It is something that we will have to pay more attention to as time goes by, or we will risk falling behind as one of China's biggest trading partners.

Saturday, September 13, 2008

The Forbidden Tourists

Today we went to Boeing’s China headquarters and met with Kenneth Taka, who is in charge of business development. Ken had a lot of interesting things to say about China. He’s lived here for 14 years total and spent the last ten straight as a resident of Beijing working for Boeing. He pointed out many interesting facets of doing business in China as a large company trying to gain market share. He talked a lot about guanxi and about making sure you understand at least a little that doing business in China requires understanding the general differences between Chinese and American cultures. He pointed out that over the past 14 years he has come to learn enough about Chinese culture to understand and accept that he will never be fully accepted as equal. There is just too much of a gap and so much of it depends on understanding the language and culture in a way only someone who has grown up here can do.

He also discussed the challenges Boeing faces in the future and how they are trying to deal with them. Boeing is always facing competition from Airbus, but now China is hoping to build its own airplane, and many other countries are starting up smaller factories themselves. He also discussed the difficulty of competing with Airbus (Boeing currently has over 50% of the market share, I believe he said around 62%) when the EU political leaders come to China to discuss business contracts but George Bush and other American political leaders do not seem interested in discussing business with China. I found myself agreeing with his view that the Americans are saying such things more to position themselves favorably to the American press than for any other reason.

Overall it was a very eye-opening experience, allowing us to see how a really large western company operates in an environment where changes in political views can strongly affect their business.

In the afternoon we met with Jun Liu of Google. The meeting was delayed for a few minutes before the start, so we had a chance to play pool and foosball while we waited, as the Google headquarters in China are very similarly structured to those in the US.

Jun discussed the successes Google has had and the improvements to their search engine that they attained by utilizing the programs invented by the local talent they sourced. He was an engineer and very passionate about Google’s success, so we had some trouble getting opinions on competition in the marketplace or his thoughts on the differences between running Google in China and running Google in the states. But we still came away from it with another view of how a different business functions in this huge new market.

The next day was our free day in Beijing. We got up and headed for the Forbidden City, only a few blocks from the Beijing Hotel where we were staying.

I’ve been to the Forbidden City four times now, and I have to admit that I was not looking forward to wandering around a big empty castle for the emperor. I could think of countless things to do as I entered the gates. Once I got in, I accepted the fact that I’d be wandering this big palace again and started trying to find other ways to occupy myself. This is when the Forbidden City again got interesting to me.

I did not expect to see any changes to a 600-year-old palace. Especially one where the government has taken pains to keep it exactly the same as it was originally. But I saw a very large change. The people taking the tour of the Forbidden City had grown in size and national origin.

The first three times I saw this city it was not nearly as crowded and most of the tourists were from North America, the EU or former British Colonies. This time there was a decidedly heavier amount of tourists from mainland China. I met with groups from Hunan, Shanxi, Sichuan, and Zhejiang. The group from Hunan was especially interesting, as they were a rather large group (all wearing matching hats and following a guide with a red flag) and they were mostly blue-collar Chinese.

Hunan is not known as the greatest recipient of the economic successes China has enjoyed since opening up to the world. And these people looked like they were factory workers and taxi drivers. They had the skin and hands of Minnesota farmers, and looked like the walk through the city would not be giving them new aches in their feet. I was impressed with this because although we have been studying a lot about the disparity in earning power between urban eastern coast Chinese and the rest of the country, we have ignored some numbers that I believe Ken Taka brought up.

Once a country’s per capita GDP hits about $1,000 USD per year, that population, no matter what country they are in, generally begins to develop dispensable income. This is important to Boeing because once a population gets to that point, its citizens can begin saving up for a plane ticket and can start traveling around the country for shorter tours in places farther away. The Forbidden City was proof that people who do not own their own businesses in Shanghai can still get out and take a tour of Tian’anmen Square. I was very touched by this, having learned to speak Chinese in the working class city of Chongqing in the southwest of the country.

So finally I learned something from the ancient Forbidden City. I learned that commerce is doing good things at all levels of the Chinese economy.

Wednesday, September 10, 2008

Bernard Ablola's Blog.

Bernard Ablola, also traveling with us in China, has asked to post the link to his blog about China here. Take a look for another perspective on our time running around the country:

The first day of visits.

Good day today. Rainy. It came down most of the day like it does in Seattle, witth occasional un-Seattle-like downpours.

I got up very early to try getting online so I could post my blog, but had trouble finding an internet cafe and instead got led by my stomach to a baozi shop. Baoizi is a steamed roll with different types of meat and vegetables inside. The only had shimp/pork/mushroom buns, so that was my breakfast. I saw that coffee was only 5 yuan per cup, so I ordered one to discover it was a 3oz cup of coffee with freeze-dried nestle instant coffee masked by sugar and non-dairy creamer. The baozi was very good.

I went back to the bus and joined everyone else for our first speaker, and expatriate from California named Cory Grenier who worked at Lenovo, China's largest computer company, who bought IBM's PC arm a few years back and caused a controversy because the US Security Council then voted to use other computers in their embassies and consulates.

Cory discussed the expatriate lifestyle, and talked about words that we will be hearing a lot over the next few weeks. One big focus of his discussion was the concept of Guanxi. Guanxi means "connections" or "relationships", and is really a way of life. If you have good guanxi with a business contact or the government, you can pull strings and call in favors occasionally. Businesses are built on the idea of guanxi. When I was an English teacher in the city of Chongqing a few years back, I was often asked by a friend who owned a small advertising company to go with him to business dinners with government officials. He did a lot of advertising for the cities traffic and public safety bureau. At these dinners I introduced myself as his English language expert and assistant, which gave him face because I was a foreigner and he had a smaller-sized company. I wasn't really expected to sell anything and none of us spoke with one another about business at any of these fairly regular "meetings" at upscale hot pot restaurants, but as long as my friend Tong Zhi Hong continued to keep the relationship going, he assured himself of preferential treatment when a new contract came due.

Mr. Tong had a lot of these dinners with a lot of different business and government leaders. I never saw or heard much, if any, talk of a contract. Once a good relationship was formed, it was relied upon.

This is a large barrier to doing business in China for US companies. We go over and try to sit down at a business table on day one, because we're in a hurry and want to take hold of a good business opportunity. The Chinese are more interested in forming a relationship that can be benefitial to both parties for a long period of time. They shy away from complicated contracts that spell out the terms of the marraige.

Our second business presentation was with Terrance Tseng. Terrance was the head of ASEA television in Hong Kong, one of the largest stations in Asia. He also discussed guanxi, but also delved into the reasons that US and Asian companies sometimes fail to find their full potential when engaging in cooperative business agreements. He talked about the differences between Confiucionism as a basis for eastern thought and protestant conservative values as an underlying set of principals for western business operations. He discussed the fact that we are always encouraging others question authority, and that goes over poorly in a country that has never experienced the type of revolution and celebrated the forms of free speech and individualism that we as a nation grew up with. It's just not the Chinese way. And it flows through their culture and their heritage.

In the evening, our tour guide Jenny Pan acquired tickets to the Bird's Nest for the day's track and field events at the Paralympics. The stadium was amazing, and the olympics exciting. Especially the final race of the evening, the men's blind 5000 meters. Each runner holds hands lightly with a sighted guide who runs by their side. And they run fast. The guides need to be Olympic level athletes themselves, with at least one runner switching guides halfway through the race because the sighted guides did not have the athletic ability to run 5,000 this quickly.

The Chinese qualifier, Zhang Zhen, was in second place the entire race and being cheered racously by the roughly 70,000 in attendance. As he rounded the final turn he turned it up three notches and sprinted by the Kenyan leader as if he were standing still. The stadium erupted and I think everyone there felt their hair stand on end.

After the Olympics, Professor Chen and I took the subway back to the Beijing Hotel. Along with the other 70,000 people who had been in the stadium. It was a great day.

Monday, September 8, 2008

WangFuJing Street.

There will be more about Wangfujing and Tiananmen square later, but I wanted to place a quick post about Wangfujing.

The first thing I saw would have made OSHA cringe or possibly faint. There was a man outside the McDonalds on a step ladder, changing a light. The step ladder was being supported by two men holding it steady because it was perched on four plastic armchairs they had pulled from the side of the restaurant.

Wangfujing is a foot and bike traffic-only street. No cars unless you are a government official. (Unfortunately, there are a lot of government officials in China.) There were a few interesting sites on Wangfujing from a business study tour perspective. One was the Jade Shop (can't remember the exact name) that had a very close replica of McDonalds golden arches. This would have been trademark hijacking in the States or Europe, but in China it was okay. When you register a trademark, you have to register it in every specific industry you expect to trade in or don't want others to trade in. McDonalds obviously did not think to make a trademark restriction in the jade trade industry, so copying (somewhat closely) the McDonalds logo was not a violation.

Another was a Li Ning (Chinese athletic footwear store with a logo quite similar to Nike) store across the street from a Nike store. I would assume in this case it was Nike who opened their store second, in an attempt to pull profits away from Li Ning. There is a pretty fierce battle going on in China right now between Li Ning, Nike and Adidas. Adidas spent $80 million on the Olympics for the right to be its largest official sponsor, but then Li Ning trumped them by having their namesake, former gymnastics olympian Li Ning himself, fly across the Bird's Nest stadium on a zip line to light the cauldron and officially start the olympics. And he didn't pay a penny for this service. Nike, on the other hand, has spent millions promoting its sponsored Chinese athletes prior to the olympics, only to see many of them (Liu Xiang the gold-medal hurdler, for example) fail to do well at the games. So seeing those two stores facing one another across Wangfujing street had a bit more significance to me.

More on Wangfujing tomorrow. We haven't been to the little appetizer night-market street yet, where you can eat deep-fried scorpion on a stick....

Korean Air, Great Wall at Simatai, Beijing.

Wow. I don't even know where to begin.

Our plane ride turned out very comfortable. Korean Air had to unload the plane in Seattle right after we boarded because somebody disembarked after boarding and decided not to go to Korea, which meant the plane had to be searched. We ended up leaving a bit late, but that meant when we hit our transfer flight at the Seoul airport all we had to do was take a quick walk across the terminal, board the new plane and head out to China.

We landed, took the bus to the Beijing Hotel, found our rooms, and went out for a couple of celebratory beers on WangFuJing Street (very touristy street, lots of lights, right next to Tiananmen Square. You can get a lot of different Chinese food there.....or McDonalds). Everyone pretty much just went to sleep early to get ready for the following day at the Simatai section of the Great Wall.

Simatai was very enjoyable. And painful. And torturous. I would recommend renaming the Great Wall "The Ridiculously Steep and Humbling Wall". The Great Wall at Simatai is largely unrepaired. It has been fixed up just enough to be safe to climb, and when heading up the east side of the wall you have to go up extraordinarily steep grades, one tiny step at a time. Madhu appeared to really relish the Great Wall, and moved around through the group from front runners to stragglers cheerfully stopping people to take photographs of us, at one point even standing on the edge of a broken-down section of the wall where a fall in either direction would have been an unpleasant experience. Reminded me a lot of my father on family vacations.

As we got closer to the top of the wall, and our legs started to feel increasingly like the egg noodles we ate for breakfast, two events occured.

One was that I would look up at a very steep incline, knowing that there were at least four more torch towers to pass before reaching the top, and see a 65-year-old retiree humping back down the wall from the top. I owe the elderly tourists of the world a debt of gratitude, as were it not for them I probably would not have made it to the top. But to think that they could make it and I, at the age of 34, could not, was something I really didn't want to carry with me for the rest of the trip.

The other was that local farmers' wives, mostly in their 50s, began meeting us on the wall and trudging up with us. As soon as they discovered I could speak Chinese well enough to communicate with them, we struck up a conversation.

The farmwives supplement their living (or in this drought year, possibly support their families) by hiking up and down the wall twice per week, usually two or three times per day, being helpful to the tourists there to take in the sites. I should mention, by the way, that the view was absolutely astounding from every angle, and the climb was ultimately worth it.

The farmwives would try to sell you t-shirts, fans, chopsticks, picture books, postcards, braclets, and other brick-a-brack. They told me most of them grow corn, but the lack of rain had made it a tough year. I knew this to be true, because on the way out to the wall I could see the crops, mostly corn, had grown to just over half the height they should be for this time of year.

Once we got to the top, the farmwives really went to town with the hard sell. Every five minutes a new one would approach me and ask me to buy something, usually offering a different price for some item I had not yet purchased. I ended up buying a picture book and some post cards. The picturebook I bought for much more than I should have paid, because I felt a connection to the ladies who had not only told me a story similar to that of my own childhood growing up in central Minnesota dairyland, but because I really didn't want to haggle over what was in essence $3.

This was a mistake. As soon as I finished buying the book for too much, I was accosted. I kept trying to change the subject by asking them questions about their lives (one thing I noticed was dried mushrooms all over the wall's apex. They pick them wild, dry them in the sun, and either sell them or eat them depending on the haul) but they always returned to the chopsticks or the t-shirt I hadn't yet puchased, which they assured me they were giving me at a price no other foreigner had ever seen.

In the end, we all made it to the top of the mountain, and most of us bought something from the farmwives. I figured out that the trip back down from the top was when I should have bought something, because that was when the prices started to fall. I bought them all some water to share amongst themselves, because they mentioned they had not drank any water all day.

That was the other impressive thing about the Great Wall. We would hike nearly to the top (an elevation increase of a ridiculous 2,500 feet in a space of what was probably right around 1 mile) to discover Chinese men and women selling cold beer, soda, water and ice cream, along with other snacks. They had to lug this stuff up the mountain every day. I was having trouble just getting my midsection up the mountain. I would have never made it with a case of beer in each hand. Yet these mid-50s farmwives were walking next to me without breaking a sweat. And carrying a whole tourist store in small purses to boot.

The day ended with us returning to the hotel for a little free time and to contemplate the next two weeks of travel. It is wonderful to be back in this country and able to use the language I've learned to help people get around. Should be a really enjoyable trip.

Thursday, September 4, 2008

T-minus Two Days

We're learning about intellectual property rights and the difficulties around their enforcement in China, so I hope this blog will not be hacked or stolen, but with such a group of intelligent, attractive people heading out on this study tour, we will likely be copied shamelessly.

My name is Ben Brown, and due to a high level of masochism paired with a bit of an ego about my writing skills, I volunteered to record our adventures on this study tour for the three or maybe four of you interested in reading about them.

A bit of background:

I've been to China before, the first time through another small private catholic organization: St. John's University in Minnesota. I was getting my undergrad degree at that Benedictine higher learning center and discovered that going to Chongqing, China for a semester would save me a grand on overall school costs, including the plane ticket. I fell in love with China, so one cold February morning (-20F) as I stood with a hair dryer plugged by extension cord into the house, warming my car door lock so it would open, I realized I needed to get out of Minnesota. In fact, I had to get as far away as I could.

I went to Chongqing again and ended up staying for 3.5 years, then returned to the US to get an MBA and move back to China to live, work and learn. When the opportunity to go there with my fellow grad students to meet business leaders and explore arose, I signed up immediately.

So starts my psuedo-official blog. Hopefully, you will find the insights posted herein as enjoyable to read as they will be to gather.