[School Post] - Just got back - Also an observation on Chinese dealings

What a LOOONGG DAY! I haven't slept in over 24 hours. I can't sleep on a plane. You should see Kelly S. though. She sleeps on planes at will...she walked off the plane in Seattle today looking like she just left a spa while I and a few others looked like the "Wreck of the Hesperus".

I am really groggy so I will post more this week when I am more coherent. Just wanted to comment quickly that the Seattle University China Tour was a bargain...that is to say, I don't think I ever spent money better on an eduactional/cultural experience. WOW!

I also wanted to comment that I feel that I think I got a much better perspective on the way Chinese operate and do business. Yes, it was only 2 weeks, but I took in quite a bit and listened closely and observed not only the company officials that spoke with us, but also other people who do business in China. Namely: Linda - our tour guide who also runs 2 consulting businesses (offshore drilling and Chinese business consultling), Joana Zhang - SU Alumna and A VERY AMBITIOUS YOUNG LADY, Resturant owners, Steve -The manager at "The Door", Hotel workers, shop keepers, taxi drivers and even the street people who were semi-constantly hustling you for a buck in some fashion.

I will make a very general statement and refine it in a later post:

"The Western business world will continue to struggle to compete with the Chinese and I honestly think that we may be giving too much leeway to the Chinese in terms of us having to repsect their "Asian ways." - hear me out before you are quick to jump to a narrow conclusion of xenophobia and shortsightedness on my part....please, anyone who knows me will attest that I am pretty opened minded about almost anything but I am thankfully also a realist. I am VERY impressed by the Chinese culture and drive...I have seen it in my Chinese friends from the U.S. but it was great to see it first hand in China.

Most notably, the idea that we have learned in class that Asian business people are "high-contextutal" and they prefer guan-xi and relationships before business is discussed. Then, when it gets down to business, they prefer honoring the word and talk loosely about details surrounding a deal. To me, this is where we should expect them to change a little more and have them become more formal more of the time in business matters. Please realize that I am not naive enough to think that big business in China or any Asian country will be (or is) conducted soley on the basis of napkin drawings and a handshakes. There will always be contracts to sign. However, all the details and small agreements leading up to a deal will be formed over informal and formal discussions that will undoubtedly be conducted with a mix of Mandarin, some Cantonese, English and English as a Second language. This is brings me to what I'm talking about. Situations that I observed during my stay may have been mostly due to language problems, but I observed MANY times that ambiguity and "don't worry about it" platitudes had together, laced deals of many sizes. This included figuring out why our bar bill was so high at the Door on our second visit there (that was a very interesting mix of "he said, she said" discussions that took about 45 minutes to resolve), the mystery of how much to "tip" (or is it "pay"?) the band at the Door for an encore, simple negotiating in a store and some of the out of band expenses that were part of the tourist activities we did (The Tea Ceremony for one). A Chinese National contact of mine who has lived in the United States and currently does business in China told me on the tour that "Chinese are very clever". Oh yes that is true. Clever.

All I can say, is that the US needs to focus on playing ball with China seriously while respecting their customs. However, if you smell something fishy, it probably is fish and don't let someone guanxi you into thinking differently. More on this later...I will go to sleep now. Until then, remember your experience of buying a new car and try to recall the math that the sales guy does. Remember how it was many times different from your math but the sales guy try to convince you that his way was the right way? Think about that...it is similar to what I am talking about.

I know, I know....2 weeks and I think I' expert. No, I realize I have a lot more to learn. I'm simply offering observations based on what I saw and experienced and only from a general perspective.

JP

Disclaimer on Typo errors!

Thanks for your corrections on the mis-spellings of some words in this BLOG. But understand that the keyboards here on average, display half the letters on the keys, they stick alot and I'm a sloppy typist. Also, everything on the computers is written in chinese so spell checks are next to impossible. Please bear with me. Oh yes, I can't delete stuff that I may have accidently posted more than once. Sorry again. :-)

Thanks,
JP

[School Post] - The ChinaTour Group 2004

Just a quick note letting all the Chinatour members know that I have gotten to know a lot of you...fairly well given the time alotted and it has been my pleasure. Thanks for a great time. I liked the learning, partying and conversing with all of you! There were a lot of good people on this tour and I feel really lucky to have been a part of it.

Xie Xie

More on Shanghai

Wehave gone to some good nightlife here in the city. Last night, we went to a club called "The Door" and were lucky that there was an Australian (I think he was an Aussie) name George who seemed to have some authority there. He took care of us as seated the our 12 person party in short notice. We saw an awesome East/West fusion band that played primarily traditional Chinese instriments. These, coupled with a sythesizer and the band absolutely rocked the house with what can best be described as elctoronica meets Chinese opera meets Chinese folk. We loved it. We went to another club "California" after that. This was one of those "where the beautiful people go" type places. Most of us fit in...:-)

[School Post] - Alibaba

This is a Business tpo Business (B2B) electroninc Market place site www.alibaba.com. Jack Ma started this company in 1999. They actually just celebrated their 5th anniversary the week before we vistited (They were actually founded in October).

We had a high level presenation and then a tour. Not much to take note of except that there are a lot of young people that work there and the company definitely still has a startup feel to it. One thing that I noticed is that since the Harvard Buisness School case that we read was published in 2001, Alibaba has yet to implement a transcation fee strategy. That is, when its members conduct online transactions, Alibaba would get a cut. Right now, they are simply linking SMEs (Small to Medium Enterprises) and charging optional premiums on services such as electronic storefronts or window displays for members in order for them to have buyers come and interact with their products. They are also recieving revenue from advertising. Other than that, Aliba has gone into "lean mode" and is looking to hold on and remain profitable until they can figure out how to execute the next phase of their revenue generating strategy.

[School Post] - Alibaba

This is a Business tpo Business (B2B) electroninc Market place site www.alibaba.com. Jack Ma started this company in 1999. They actually just celebrated their 5th anniversary the week before we vistited (They were actually founded in October).

We had a high level presenation and then a tour. Not much to take note of except that there are a lot of young people that work there and the company definitely still has a startup feel to it. One thing that I noticed is that since the Harvard Buisness School case that we read was published in 2001, Alibaba has yet to implement a transcation fee strategy. That is, when its members conduct online transactions, Alibaba would get a cut. Right now, they are simply linking SMEs (Small to Medium Enterprises) and charging optional premiums on services such as electronic storefronts or window displays for members in order for them to have buyers come and interact with their products. They are also recieving revenue from advertising. Other than that, Aliba has gone into "lean mode" and is looking to hold on and remain profitable until they can figure out how to execute the next phase of their revenue generating stratgey.

[School Post] - Hangzhou High Tech Zone Visit

Well, it is Saturday morning....our last day in China. Quick updates:

We visted the Hangzhou High Tech Zone (HHTZ) office www.hhtz.gov.cn and got a great presentation from Mr. Han Gang. Basically, Hangzhou is a "Silicon Valley" of Shanghai. Any high tech company that wants to set up there is encouraged to do so by getting tax breaks (Corp. taxes are 26% on avg.) from the government and also gets their pick of the local talent from Hangzhou University and other local schools. He mentioned there is a pool of 250,000 students and 50,000 graduates to choose from. I'm not sure how many of these are engineering students though.

One of the observations I had was that Hangzhou (and for that matter, China) is becoming extremely self-sufficient technically and they are starting to build a tremendous agdvantage over the U.S. techically because like everything else, their wages are so much lower. Couple this with several other factors: The abilty to do software development for a multi-national company remotely, hard core engineering training and strong middle-school development and China's strategy to integrate Chinese-proprietary technology into wireless and encryption gear and software and one can plainly see that China is posturing (and already actioning) itself to face off with the US as a world superpower via the economic route. This isn't a revelation I know, but we are seeing it first hand.

• Other notes: $47.8 billion total hi-tech industry in China....70% is telecom.
• Worlbank ranked HZ an A+ ratin gfor foreign investment
• Hitech workers make an average of 30% less than they would make in Shanghai.
• Typically, you get 7 days of vacation (beyond the set Chinese holidays or I beleive 2 weeks) after working for a company 4 years.
• Workers typcally get a 41% housong allowance as part of compensation

Sox are in a rain delay with the Yankees right now...I'm listening to Ted Sirandis to fill the air space...my stomach hurts....he should call it a "Listen Show" because he doesn't let anyone talk. Sorry Ted, but you are brutal.

Been in Shanghai for 3 days now

Shanghai is an unbelievable city. It easily rivals Manhattan in terms of size, skyline and business. There are about 3 times as many people in Shanghai as well.We are smack downtown in the middle of it all. This has been a great trip.

Went up about 350 meters into the Oriental Pearl Tower yesterday. That's over a eleven hundred feet folks. Check it out:
http://www.shme.com/attracti/tower/tower.htm

It has rained here alot and has been hot and humid.

A bunch of the guys on the tour got fitted for custom made, Italian wool suits,and custom made shirts at WW Chans of Shanghai. A real classy place from Hong Kong. We think we scored. I got a suit, 3 taylormade shirtsand 4 silk ties. Hopefully they will be ready by Saturday! http://www.wwchan.com/


Went to Shanghai Maritime academy today and visited Alibaba.com and Hangzhou HighTech zone where we got a great ecommerce presentation from Vice-Chief Mr.Han Gang. I will post stuff on this tomorrow.

Leaving for the U.S. on United this Sunday.

That's it for now...

[School Post - BiMBA]

Again my apologies if I covered some of this in another post.


The school visit there made me see there are more similarities than differences between us and the Chinese students. One guy in my group, Galton, got elected class president that day. Congrats. He was the most outspoken one of the all the students that I met. Our professors were the ones that led the discussions. We are going to suggest that the next tour have 2 days at BiMBA and let their professors teach us on the second day.

A question was asked by the students in our group: "What does it take to be a good American manager?" We won't answer that here, but I can say that the differences between American and Chinese managers that these students have worked for in either a State Owned Enterprise (SOE) or Multi-national joint venture were, according to them, very noticeable. For instance, they felt more trust working for an American manager when it came to things like promises on compensation (performance bonuses, etc.) and HR related stuff. However, they felt that American expat managers could sometimes be not fully commited due to the fact that expatting can be hard, especially when a family is involved and the manager may just play out the 2 years and leave. Also, local managers can be more effective in that they know the local market and what can motivate local workes better than Americans. Kind of an academic comment I know. But, this is what the students told us.

They also told us that guan xi is used more for connections than actually transacting business. Very similar to the US. In other words, if you are liked by people, you hustle, and come through for people, you stand a good chance of operating successfully. This leads to the last point of guanxi. You need to excercise it well to find someone you trust. I would imagine that is very difficult. I am asking more about this from my new embassy friend and our travel company president: Linda. She does new-venture consulting for Americans in China as well as I'm sure getting good payoffs from all the tea,perl,silk museums we have been visiting with a full busload of American shoppers! :-)

Note on Hangzhou

I referred to Hangzhou as a "resort city" to Shanghai and i should point out that the city proper has about 2 million residents with nearly 7 million living in the area as a whole. I just took a walk on the famous Westlake and saw a statue of my goomba, Marco Polo. There was a quote from one of his notes at the base of the statue calling this city the most beautiful in the world. It is nice and IT IS A CITY.

Americcan brands that I saw:
Coca-Cola, McDonalds, Starbucks and KFC are the biggies. It was the same in Beijing.

BTW - My Boeing post got posted by accident before I could entirely proofread it. Also, I was going to make the political rant an appendix. Sorry if my ideas are not clearly presented.

Not many caucasions in Hangzhou...visiting or otherwise. Get a lot of strange looks. Some smiles as well though!

[School Post] - Boeing

I feel very privileged and grateful to be on this trip. The reason why I feel this way is because we are really getting an inside scoop on stuff here and I realized that I am lucky to be doing stuff like this given my semi-humble beginnings (Read this as: Not bad for a kid from East Boston).

Today we were received by Boeing- China Vice President David Wang and listened to a presentation by VP of Sales: Robert Laird and VP of China Initiatives: Mike Paone. It was more information on how Boeing does business here. We asked a lot of questions about what it takes to be a successful ex-patriate, what kind of technical infrastructure issues they face and what other issues they have to deal with in order to do business. (Listening to the Sox/Seattle game on the Internet right now...Belhorne homers for his 17th..Sox up 7-0 pummelling Moyer).

Boeing points:
They said one of their biggest problems are visa issues their employers face when trying to get back to the US for training, development and other business trips. The US government seems to be hampering (to a point) commerce in China because most European countries (according to what we heard at Boeing), don't have the visa restrictions China has. This is interesting since China has not been linked to terrorism and in my research prior to this trip, anti-terrorism is considered a common political (economic) rallying point between the US and China. This bears more investigation especially since the "armchair" US presidents are quick to vilify the US government and The Homeland Security Act. Understandably so, but I fear a greater percentage of oppositionists on this issue are against it more for the reason of being swept up in left-rhetoric (which meshes well with credible human justice thinking) vs. really looking at security policy and WHY it challenges practicality. I'm not defending it, I just think many, including mainstream media have not explored enough why our policies exist. Remember, there is A LOT we don't know and policy makers may be willing to take it on the chin from public criticism in order to get a dirty job done i.e. US protection. The world isn't fair remember. Oh, and also remember that the U.S. doesn't have a monopoly on doing things in its own interest. Read this as, we are playing the same game the rest of the world is. If we want to change the rules (for good or bad) don't expect others to. This is just a tidbit to chew on. I don't endorse it...I just at least consider it. Unfortunately, we have been forced into acting in a protectionist mode because of it. I feel that we may have to play ball with the rest of the world and tone down the Good vs. Evil mantra. It is elitist thinking and as I stated earlier, everyone else in the world plays in the same game and their view of good vs. evil is much different. Therefore, the "is or isn't" mentality may be a dangerous platform to base world security policy on but SOMEONE, ESPECIALLY ON THE LEFT, TELL ME ANOTHER APPROACH. Your argument will hold more water if you can do it beyond the overly-simplistic, "The government is fear-mongering in order to erode our liberties in order to serve its own interests" argument. Why? What interests? I digress.

However, the above problem IS affecting Boeing (and I suspect other US companies) , along with lingering trade issues between our two countries and WTO mediation. This may make China look to other companies (i.e Airbus) to do business. This would be unfortunate since Boeing predicts: Chinese air fleet will quadruple in the next 20 years, China will build 200 new airports in the next 10 years and it is the Chinese government's intention to raise the standard of living in all of China as it has already started doing on the East Coast. Boeing needs in on this.

We didn't get much information on e-commerce infrastructure issues from Boeing except that they are conducting an infrastructure assessment in October over here which I suspect will point to long-haul and local capacity issues with China Telecom, etc. On that note, if business is to be successful here, the broadband infrastructure of China needs to dramatically improve. So far, most of the effort for infrastructure improvements have been analog (highways and structures).

A few interesting notes:

• All tail assemblies for Boeing Aircraft are manufactured in China
• We were told (i have to verify) that Boeing is the largest exporter to China. Hmmm. not sure by what metrics.
• All new construction in Beijing will end in 2006 to prepare for a 2 year sprucing up for 2008 summer Olympics.
• A small city in China is 2-3 million people.

[School Post and Personal Post]

It looks like I can only post messages and cannot see what I have posted, nor can I see your comments unless you choose the email option so I apologize if I repeat myself (when i can find an access point). we surmise that there may be some policies over here restricting access to bulletin boards etc. we are no sure though. My roommate brought his laptop and surprisingly the room connection is giving us a 10 mbit sec. link. It is surprising because we are in Hangzhou....a sort of resort city 2 hours SE of Shanghai which we will be going to next. So, i am trying to bang out as many posts as i can right now while i have the chance to write.

Tour stuff:
Beijing traffic is (NewYork x 5) all day long. It seems that the whole day is rush hour! Couple that with the driving style being (Boston x 2) + (Bicycles everywhere!) and you have a bunch of marvelled Seattleite tour members who are used to the tame, orderly (somewhat wussyish) Seattle way of driving and walking. I got a chuckle out off that. I actually got so fed up being stuck in traffic all day that I jumped out of a cab when we were going shopping on the last day. Sorry guys. The cab driver yelled at my friends after I bailed. I have already made my amends to them.

From what I saw, the Beijing people are nice, focused, and want what Americans want: To be happy and to get along. There is a lot of opportunity over here. We are all thinking of business ideas every day. I have made a few contacts - a BiMBA student through my Chinese friend from Seattle U. and a U.S. embassy official through an expat friend of a friend from Boston - thus building my guan xi (network of helpful contacts which you need to do business in China). When you look at China and business opportunities..no matter what the idea...you have to keep thinking of the number 1.3 Billion. That is the number of people who live here. Therefore, any idea may be plausible. Income in the cities is on the rise and prices are still down. That is the only thing that concerns me....whatever you sell here will have a lower margin due to prices that you would need to make up for in volume and low cost. Which means you would most likely set up shop here to take advantage of the workforce and low wages. There is a unemployment issue still happening here but that could change as more JV (joint ventures) are set up here or more investment comes in from abroad. I have a few ideas rolling around right now. I was also reading an English printed Chinese newspaper on the flight from Beijing and it was mentioning issues with pension deficiencies which may force the gov to raise the retirement age from 50 to 55. The fact that the banking system is still immature here and consumer credit is not as regulated or integrated between various banks, still leaves China on a long road up so expect plenty of bumps if you want to do something here. However, the ex-pat execs and the locals will all tell you that the cities are changing so fast and development is happening.


Ok, very quickly...Great Wall last Monday. We got inundated with the local farmers of Simatai who "accompanied" us up the wall. Each farmer grabbed one of the wealthy Americans and became our Moose - (See the M.A.S.H. episode that explains what a Moose is). The woman who latched on to me got me to buy her overpriced books...oh well, these people are poor and it only amounted to $8 US. (The Yuan or RMB - Chinese money is pegged to the US Dollar ~8.3 to 1 by the way).

Tienanmen Square and the Forbidden City (Goong-Goon sp?) were Tuesday. More tourist stuff.
Beijing U. on Wednesday, Siemens and Boeing on Thursday. Travel to Hangzou on Friday. By the way, we are in a different hotel here. It is the Eastern Commerce Hotel 86.571.86118888

Yesterday, Saturday, we went to a "Tea Ceremony" to the local tea grower plantation. This was basically: get everyone excited about the tea and soak us with a buy 2 large can get a small can for free fast pitch from a cute, charismatic Chinese girl. They made about $1600 US off of us. It was actually a first hand look at what business is all about should have earned us 3 credits on entrepreneurship. :-)

Good food....Great People on tour. We all sang Karaoke last night...a lot of fun!!
JP

[School Post] - Siemens China

I have an Asimco Post in draft form but this stupid site won't take me there from the posting link page. Will try again.

Thursday (Sept 9th), we visited Siemens China and Boeing China. These company visits are making the trip a bargain. We are getting so much inside information!

At Siemens, we met with the director of HR and the “Siemen’s Management Institute” head: Han Qing. Jeesh! Working at Siemens is better than going to school. They outlined a terrific management training plan that (from what is sounds like) virtually guarantee’s success and mgt. Knowledge for anyone willing to take advantage of it. I find that Siemens is very up on the idea of employee retention and as we saw at Asimco, one of the issues that challenges businesses in China is retaining local managers who are bi-lingual and gain the skills as competent managers.
Mr. Qing also spoke about how Siemens (and I suspect American companies in general) over emphasize the effect of cultural differences. They are aware that they exist and they provide training to managers and employees to deal with them. However, when it comes right down to it. Professional, educated adults need to get the job done and communication can only be diversified so far before it loses its intent of getting the job done. I found this to be a very pragmatic approach. We found this type of dialog at BiMBA (Beijing International Business School at the University of Beijing). The MBA students there echoed similar sentiments. I liked that. In American education, I find that we deliver the message of sensitivity to a point of near guilt on our part. I have always suspected it was to far to the edge and the comments of the educated, professional Chinese students and managers here have confirmed that. Please know, that I know cultural sensitivity is important to the point you need to understand where the other person is coming from in order to get things done as well as not take offense (or give offense) inadvertently. A good manager, or employee will take this skill and make what they can out of it. If they still cannot cope with a diverse landscape at the workplace after this, well then they are not cut out to work there. It is funny. Many times, I hear people talking about this a lot in class. How important cultural sensitivity and tolerance is. However, I have observed that a few times, these people are the first to mock things (and people) that they don’t understand here. It could be a simple case of social awkwardness - you know, say something for the sake of saying it in an uncomfortable situation. But nonetheless, practice what you preach please!

[School Post] - Jack Perkowski and Asimco

Asimco Tour.
This was a great presentation. We are so lucky we took this tour. We are getting the inside scoop on a lot of stuff in China. On Tuesday, we visited Asimco which manufactures engine block and brake equipment for motor vehicles. They started in China. Jack Perkowski, a former football player at Yale and A Harvard MBA (interesting mix) presented his company’s strategy in China. He mentioned that he finds it important to surround himself with senior managers who are local but not part of the “Old Chinese Manager” pool that was, according to the HBS case and Mr. Perkowski himself, susceptible to the influence of misusing their “guan xi” and acting in conflict of interest with Asimco. The “New Chinese Manager” the type of person now rounds out his senior management, has bought into making Asimco successful. I am not in the class that did this case but what Asimco is doing is pooling promising candidates to give them access to become leaders in the company.

Finally could get to a posting page!!!

Last night in Beijing and I finally got online to this thing. The post page kept getting denied until Jessica showed me another way to create a post. Oh well. China is great. There are a lot of people and a lot of opportunity. We met with Senior leaders of 2 companies (Asimco and Boeing) and the training/HR directors of Siemens. They all gave excellent accounts and insight into doing business in China. Read the individual accounts in other posts for the details.

On other notes: The Red Sox are smolderingly, white hot!!! They are now 2 back from the Yankees and have gone 22-2 in the last 24! The kicked the crap out of Oakland (sweep), swept Anaheim and took 2 of 3 from Texas. So much for the Western division. (Now that I said that, watch Seattle take 3 of 4 the next 4 days...)

Up late packing...what else is new?

I am such a "johnny come-way-lately"! Almost time. Pretty excited (and pretty tired right now). :-)

Check with you soon.

JP

Link to our itinerary

http://ecis.seattleu.edu/rao/cst2004/itinerary.htm

in case we get lost! :-)

Just set up the Blog Account

Heading to China in less than 2 days. Will keep you posted on updates, observations andother good stuff.