Final Oberservations from China

Ni Hao Journal,

A few final observations from my 2 weeks in China...

1) Chinese goods appear to actually be higher quality than people give them credit for. Remember, they are producing such a large quantity of goods to the world marketplace that of course there will be some shoddy products that make it out of their factors. I am sure this would be true of any other similar environment who were producing goods at such a scale.

2) Guanxi - is it really a uniquely Chinese concept? I do not think so. Wouldn't you try and develop a close relationship with any of your business partners regardless of which country you are in? I would.

3) Chinese infrastructure appears really good in the big cities. Highways being built everywhere, mass transit is common, streets did not appears as unsafe as I thought they would be.

4) The Chinese appear to be very well connected. Granted I was in the large coastal cities but I always had cellphone reception no matter where I was. I can't even get good cell reception in many large cities here in the States.

5) A lot of young, intelligent Chinese want to come work for large US companies. This is good for US companies as they can tap into a huge talent base with less of an investment.

6) If I were to open up operations in China I would do it in Suzhou. It is a fairly large city that is close to Shanghai with amazing infrastructure and no traffic! While not my favorite city, it does make a lot of sense to outsource here.

Ok, I am sure I will think of more but that is it for now. I had a great time in China and can't wait to go back again and learn more!

Paul

The Ending

Ni Hao Journal,

I neglected to write to you during my last few days in China. We were incredibly busy and to be honest, I didn't want to spend the remainder of my time abroad "blogging". I have been back in Seattle for just over a day and have been reflecting a lot about my experience.

Before I get to my final observations on China, let me catch you up with our final days and company visits in Shanghai.

We visited Pacific Market International. I had little knowledge about this company outside of briefly talking with their CEO, Rob Harris, at the 2007 Albers Mentor Fair. PMI makes the mugs you see in all the Starbucks shop. They have also acquired Stanley and Aladdin - separate drink cup companies. Qin Chen, managing director of their Shanghai office was there to greet us and give us a tour of the offices. Qin was very enthusiastic to host us and did a good job putting together a variety of speakers from within his office. Kind of cool was the fact that an SU MBA Alum from a few years back was working in the Shanghai office as Director of International Marketing (I think that was his role). It gave me a little hope that I could get to working abroad in Asia - TJ was a Westerner and most of the people I met working in China had spoke Mandarin. The one thing that made me wonder about PMI was their marketing plan. We asked about their marketing research abroad and it didn't sound like they did a lot of it. One of their marketing managers indicated they had a "feeling" their product would be successful in China based off of the success of other products (not similar) in that region. Seems like a risky assessment to me...

After PMI we went to Shanghai Goss. I had never previously heard of this company but they actually are a pretty decent size. Their primary business is producing printing presses for newspapers. To give you an idea of their scale, they supply the New York Times with their presses. They used to have their factories in the Midwest USA but acquired the factory in Shanghai a few years back. I felt like our tour of Goss provided a more realstic look at what a Chinese factory looked like than Black and Decker and Andrew Telecomunications. The Goss factory, while didn't appear unsafe, was not as clean or comfortable as B&D or Andrew. Also, they were more traditional in their ways, i.e. - only women control the cranes above (apparently this is common though). I think the look at a more common factory setting (less sterilized) was the most I got out of this visit. I did find it interesting but overall the company does not fall into my interest set.

Our last two visits were at a US Consulate in Shanghai. This included the US Commercial Service and Thompson Market Services (TMS). The US Commercial Service is a wing of the government which helps US companies begin operations abroad. One of the diplomats spoke to us about their mission and Americans doing business in China. I had never heard of the Commercial Service and was impressed with the scope of services they offer. Essentially, if a US company is interested in doing business abroad they could go to their local Commercial Service office and then get information on doing business in their desired company. The US Commercial Service will do some of the due-dilligence required for market entry such as identifying interest in the market and providing a list of resources (lawyers, etc) to the US company. This is all available for a small fee. Like I said, I never heard of these services being offered - the whole process really seemed pretty basic and straightforward. If I decide to eventually do business abroad I can definitely see myself taking advantage of their services.

Our final speaker/company visit was with TMS - they followed the US Commercial Service. We didn't actually go to their offices but they came to consulate. Apparently, Bill Thompson usually comes to speak but this year he couldn't. Instead he has one of his associates come. Unfortunately, this was a very poor presentation that last about an hour. Most of it was a Chinese government propaganda video about anti-piracy efforts. The rest of his speech was him reading word for word from his powerpoint presentation and not making eye contact. Luckily, Madhu cut him off after an hour and that was it! I wish we could've ended on a better note but overall I think Madhu did a great job putting together a diverse set of company visits in China that provided us all with plent of insight.

I will do a quick follow-up posts with some key oberservations I took away from China.

9/16/08

Ni Hao Journal,

I feel like a lot has happened since I last posted even though it has only been a couple of days. Let me see....

Oh, thats right! After my early morning posting on Monday we had a full day of visits in Suzhou. First was Andrew - they are an American company who provide wireless solutions....essentially all the gadgets that go on a cell antenna...nothing that the consumer actually sees. The Director of Ops gave us a presentation on the company. He did a good job providing a glance at what the company does but didn't get too technical. Additionally, he is American so was able to provide some more background on the Expat experience in China. He stressed that productivity was good at their China factories but due to low wages and plenty of opportunities elsewhere, it is important to keep a close eye on the employees to make sure production levels stay high. Our visit to Andrew also provided our first actual factory visit where we got to walk the floor. I have never really been to a US factory so I cannot compare but everything appeared to be well organized, clean, and efficient.

After Andrew our bus zipped us over to the Suzhou Industrial Park (SIP)...well technically we were already in it but we went to the headquarters part. The SIP is a cooperative development between the governments of China and Singapore. Really, it is almost a city within a city. All teh buildings are new and so is the infrastructure within. It is really impressive! I can understand why a lot of companies are locating in Suzhou. The scary part, development is still underway - in the next few years I think Suzhou will look like any other large American city. Actually, it will probably have more impressive architecture.

We had lunch at SIP then went to Black & Decker, another American company. They had an assembly plant in Suzhou. Unlike Andrew who had a lot of business interests in Asia Pacific, much of Black & Deckers products were being shipped back to the US. The Manager discussed the importance of Six Sigma at the plant and within the company. One improvment they made was instead of storing the goods for a time after assembly they ship directly after the item is packaged. This saves time and money and ultimately makes the operation more productive and profitable.

It was a busy day in Suzhou but Shanghai was to follow the next day. I am actually in Shanghai now. We arrived yesterday morning. First thing I did was went to the tailor and got a suit and 5 shirts - I pick up tomorrow. I got all this for about $170USD. Not a bad deal! In the US for similar quality and custom made I would pay 10x time that!

Shanghai is a really impressive city. The architecture is amazing - mixes old vs new. Very impressive skyscrapers. The tallest building in the world just opened up this last month actually! I will upload a picture soon! Also, Shanghai is bracing for Expo 2010...don't know exactly what it is but the city is building up for it. I have a feeling it will provide a similar chain of events as Beijing 2008 olympics did, i.e. - improve infrastructure....just to a lesser degree.

At night we met with MBA students from Shanghai Jiantong University (STJU). This is one of the more prestigious universities in China. We had dinner together and then a joint class to discuss outsourcing in China and also key marketing differences between the US and China. Really, I was impressed with how similar we all were. Despite the many differences in culture and education style, I think we shared a lot of similar viewpoints. I found this to be one of the more valuable experiences here in China.

That is all for now - busy day ahead!

Paul

9/15/08

Ni Hao Journal,

Today was rare as it was a free day due to a holiday here in China. It is the Mid-moon festival and has to do with the lunar calendar.

A few of us set out explore Suzhou and see what the city had to offer. Took a taxi to Renmin Road - sort of the main thoroughfare in town. Lots of shops - picked up a few things but nothing special. Afterwards, Brian, Stephen and I took a tuk-tuk ride to the Humble Ambassador's Garden. The ride was an adventure as the tuk tuk was only built for 2 passengers. In addition, the driver was about 70 years old caring 450lbs of passengers...he charged us 50RMB...way too much but well worth it.

Where as Hangzhou was known for West Lake, Suzhou is known for its gardens. They are these large sprawling green patches walled in within the hustle and bustle of the city. It is really a nice retreat from the hectic daily life that exists in Suzhou - even better if you can find a patch of shade.

Just got back from hot pot dinner with a group of about 11. Food was amazing - one of the better meals I have had here in China...also the spiciest. Check out the video below...



Ciao,

PG

9/13/08

Ni Hao Journal,

Yesterday in Hangzhou proved to be a lot of fun! We started by going to a very large Buddhist temple. I was pretty intrigued as it was very different than the temples I have seen in Southeast Asia. For one, Chinese buddha is fat. Also, all the monks use cell phones and drink beer....i think this is unique but maybe I am wrong?

Spent the afternoon at a Tea Farm. I bought some rare Emperor's tea - very expensive but high quality green tea. Good gifts for the family.

Night was spent at a Japanese style teppenyaki restaurant followed by Hooters Hangzhou - what a cultural experience! Interestingly enough, the Hangzhou Hooters girls spoke amazing English!

Today we are going to Suzhou - a city of 2 million. No company visits today or tomorrow due to the holiday Half Moon Festival.

Write to you all later,

PG

9/11 - 9/12

Ni hao Journal,

Sorry for the momentary lapse in writing to you. Where did we leave off? Ah yes, last day in Beijing. If memory serves right, it was a free day and then a travel day or rather "travel night" in an overnight training from Beijing to Hangzhou.

The last morning in Beijing was spent wandering around the huge Forbidden City. It was neat to see the period architecture and gardens but to be honest, i got "forbidden citi-ed out"... It is just a huge walk with tons of tourists who tend to get in all your pictures.

The overnight train to Hangzhou...12 hours...first class sleeping car, still a rough ride. enough said.

Hangzhou is a beautiful city of 6.4 million - small by China standards! The main attraction here is West Lake - think Greenlake but on a larger scale. The city is really nice with a mix of old and new architecture. Hangzhou is also known for its beautiful ladies.

The only company visit for Hangzhou was Alibaba.com. I had heard a lot about this company so it was finally good to visit and learn more. Essentially, it is a very popular website in Asia who has had a lot of success duping US sites such as paypal, ebay, etc... They Have Alipay.com, taobao.com, alibaba.com and they 100% own Yahoo! China. We had a VP speak with us who was enjoyabble as he was honest and to the point with his answers. The offices were fun - not quite up to google standards but regardless, looked like a nice place to work.

So on another note, I always knew Asians liked to Karaoke... well I finally experienced this for myself. A group of us went to PartyCity, a large karaoke place. It has a full buffet and large private rooms with huge leather couches and big screen tv's. I sang "Bye Bye Bye" and "Sexy back".

I am off to walk around the lake now.

Ciao,

PG

9/10/08

Ni Hao Journal,

Yesterday consisted of two companies visits - Boeing and Google. Out of all the company visits scheduled on our trip I was looking forward to these two the most. Mainly because of Boeing's Seattle connection and then all the talk of Google being one of the best companies to work for.

Ken Yata, VP of China Business Development, spoke to us from Boeing. He was a good speaker who had a lot of valuable insight to share with our class. One of the key takeaways I had from his talk was the role politics plays in business. Specifically, how Boeing being an American company is almost a disadvantage because there is a correlation between Boeing's relationship with government officials and Capitol Hill's relations with Beijing. Airbus can avoid this situation as they are a European company. Yata's example was if Germany were to make a statement about Tibet, China would probably not talk to them for a month. But lucky for Airbus, France can ease the situation as they are separate from Germany but still part of the EU. Lucky for Airbus.

Jun Liu, VP of R&D for Google China was next on the line-up. First impressions of Google were that is is TRUE, google is an amazing place to work for. They had a spacious game floor with pool and foos-ball, wii, and a massage chair. Also, a fully stocked fridge with drinks and meals and a very large snack pantry. In a way I wish I had not seen this, it was like enter the Garden of Eden then being kicked out after an hour... Anyways, Liu worked in the States for a long period - I think he may have been with MSFT before going to Google as he hinted he lived in Seattle. He did a good job "dumbing down" his talk so the class would understand... often I find Engineers talk at a higher level which makes it frustrating as the whole time is spent trying to figure out what they are saying, not the case here. Google certainly is an ego-centric company. He openly said they don't discuss competition. Essentially, Liu seemed hesitant to admit that Google had any weaknesses. A little frustrating but still a valuable talk. Interestingly enough, Google has purchased music rights from the big 5 studios to make music downloads available for free on Google China - I better download some songs before I leave!

After the company visits we sat in traffic for 2 hours. Too put this into perspective, we weren't going far and there are still rules in place from the Olympics allowing only even or odd numbered license plates on the highway each day. Yesterday was an even day. Imagine if both even and odd were on the road....

Finished the night with a large feast of Peking Duck and rice wine. It was a great experience and a lot of fun to spend the last night in Beijing with the whole group.

9/9/08

Ni Hao Journal,

Again, I find myself writing at a ridiculously early hour of the morning. But, outside of the minor case of jetlag, Madhu is keeping us moving throughout the day and I don’t have any other chance to write!

Yesterday was another action-packed day! We started the morning with our breakfast buffet at the hotel – I love Asian breakfast! There is much more variety and it is not just the usual eggs, yogurt, and cereal routine but rather a large buffet with noodles, cheeses, meats, and other delights. A good way to start!

First stop was Lenova. You may be more familiar with them as IBM ThinkPad but in 2005 Lenova, a Chinese company, bought the ThinkPad division from IBM. So now, they are most known for their Lenovo ThinkPad. We had an American expat speak to us – Cory Grenier. Cory has been with Lenovo for 3+ years and was one of the first expats to work there. He discussed his experiences as a foreigner working abroad in China and the various challenges Lenovo faced when taking over the ThinkPad product line from IBM. I found his experiences as an expat most interesting, mainly the differences between cultural communications. While I previously thought that companies were making progress towards achieving an understanding in cultural differences, Cory pointed out there is a long way to go. However, despite the many cultural differences in the way the Chinese conduct business, there are many still many similarities that we neglect.

After Cory’s talk, we were bussed to another Lenovo building where we walked though a museum-like exhibition on Lenovo’s history and where they are heading to the future. This was developed for the Olympics. FYI – they were the chief sponsor of the 2008 games. It was an impressive exhibit – it seemed more like a club with the flashy displays, techno music, and flashing lights – was this really Club Lenovo sans bar?

I found Lenovo to be an interesting stop and a great first company visit. Then it was off to the Wenjin Hotel where we would have a buffet lunch and hear Terrance Tsang speak. Terrance is a communications consultant who works with many top companies in China and around the world. He was a great speaker and was able to share some of his “war stories” about doing business in China. He did provide some interesting viewpoints. Terrance discussed the hot issue of music piracy in China. He told us that due to the Cultural Revolution the Chinese missed out on the “vinyl” phase of music and thus never really purchased any music due to cassettes and CD becoming available at little or no cost after this. Therefore, the idea of paying for music is an almost unknown and absurd concept to the Chinese. I definitely never thought of this issue in that light.

The day was not over after these two speakers – then the tourist activities began. First, was the Summer Palace – very impressive grounds and buildings – lots of good photos! Perhaps more exciting was going to the Paralympics at night. Madhu scored all of us tickets. To be honest, I found the architecture of the buildings to be more exciting then the various sporting events. After watching the Olympics on tv last month it was amazing to the see The Bird’s Nest and The Water Cube in person. Again, I got plenty of great photos. Too bad the weather turned and it was pouring at the time. It took us a long walk and many frustrating attempts to finally hail a cab and get back to the hotel. It was an exhausting day but all very enjoyable.

Ciao,
PG

9/8/08

Ni Hao Journal,

Well – I made it to Beijing in once piece! Sorry I haven’t posted sooner but we have an action packed scheduled since we arrived.

Our group all arrived via Korean Air at 830pm on Sunday night. By the time we got all our bags and made it to our hotel (Beijing Hotel), it was around 930pm. A large group of us took a five-minute walk to the Forbidden City. It was not too crowded and really quite a sight to see at night when it was all lit up! After the short walk I passed out and slept pretty well.

Monday was the day much anticipated by most in our group. We took a 2.5-hour bus ride out of Beijing to the Great Wall (of China) at Simatai. There are multiple points at which you can access the Great Wall but Simatai was more remote and less touristy. On the drive over I had a few observations: Audi’s and VW seem to rule the road (my type of town) and the traffic was surprisingly calm. Unlike many other Asian cities (most noticeably Saigon and Bangkok), Beijing drivers are relatively tame. Really, if it weren’t for the surrounding scenery and I were just looking at the roads alone, I could’ve mistaken it for any US city. In class we learned that Chinese infrastructure has been improving over the last few years – thanks to the Olympics. Obviously, this is most noticeable in the host city of Beijing where China was (and still is) able to show off their strong infrastructure, among many other offerings.

Finally, we made it to the wall. Madhu mentioned that it would be quite the physical task to reach the top of the wall. I underestimated him. My walks around Green Lake back in Seattle did little to prepare me. I was panting after climbing the first few steps! This section of the Great Wall, at least the part open to visitors, consisted of 12 connected watch towers snaking their way up a steep hill. My guess is this was probably a 2.5-mile climb with an increasing elevation of up to 2,500 feet, Everyone in our group made the climb to the top! All in all, getting up and back down was about a 4-hour journey. It was kind of neat because this portion of the wall also acted as a border between China and Mongolia so I was able to look over at the Mongols!

Back to Beijing and everyone was pretty exhausted. Most people went to get feet massage but a small group of us went to get dinner at a nearby restaurant. As we ate a tourist-oriented restaurant for lunch at the Great Wall, dinner was really our first authentic Chinese meal since we arrived. It was delicious and very cheap. I am not sure of all that I ate but no complaints…at least yet. After dinner we passed by our hotel and made it to the Night Market. This market is none for its exotic “culinary delights” such as fried scorpion and fried seahorse on a stick. Three members of our group tried the scorpion and I split a seahorse with a friend. It wasn’t exactly great but really it tasted like a shitty potato chip.

Another observation when passing through the Night Market and a busy pedestrian mall was the International influence as well as IPR issues we discussed in class. Nike, McDonalds, Rolex, KFC and many others were all readily available on the busy pedestrian mall. Although, usually across from each of this was a similar store with a different name. Across from Nike was Ni-ling with the slogan of “Everything is possible”. Across from McDonalds was a jewelry store with very similar golden arches. I was surprised how obvious these “copycats” were and how they operated so close to their competitors.

Tomorrow we are off to visit Lenovo. Will keep you posted!

Paul

9/5/08

Ni Hao Journal,

Tomorrow I am off to China for a Study Tour through my MBA program at Seattle University. It is actually a pretty good deal - 2 weeks in China, and credit for 2 courses. Part of the requirement of the program, in order to receive credit, is to maintain a journal. As I will be bringing my trusty macbook along, I figured I would do this journal in the form of a blog. Unfortunately, I will have to sensor this a little bit as a result... Don't worry, I will include the stories of the nights out and the various escapades but I will also be discussing the key contrasts I notice between US and China, specifically in terms of the business world.

Our schedule is pretty packed - various company visits (Google, Boeing, PMI, Lenovo, Alibaba, etc..). In addition, we have some "tourist" days - Great Wall this upcoming Monday, Beijing Opera, Peking Duck dinner, and much more. Oh - we will be traveling, too. Fly into Beijing then Hangzhou, Suzhou, and end in Shanghai.

I have never been to China before but it has long been on my list of places to visit. On this trip I hope to better understand how China fits into the Global marketplace and also compare it to my experiences elsewhere in Asia (mainly SE Asia). But, to be honest, I am most excited about the food!

Next update will be from China.

Paul