Tuesday, June 5, 2007

My Final Assessment

It's amazing. Since I have returned home, I have thought a great deal about my travels, what I learned and the impact it has had on me. I continue to be amazed at the impact of this experience.

I read through an essay I wrote prior to the visit, having reveiwed footage from a documentary on China. What's funny is, my perspective then is the same as my perspective now. Take a read of "Colliding Cultural Forces". It sums up my thoughts still.

Colliding Cultural Forces (Written Prior to My China Visit)

The rise and fall of multiple dynasties throughout China’s history has forced the Chinese culture to endure numerous periods of control followed by chaos. The Communist Party leveraged the desire for order, wielding control over the lives of so many Chinese for so long through the promise of stability and order. One of the state’s most compelling control features? A deep seeded cultural norm of caution and unpretentiousness. The result? A cautious, risk adverse populous. China’s way is described as the “middle way” – stability over the unpredictable nature of creativity and individuality.

How can a risk adverse populous embrace the rate of change China is experiencing now? Powerful forces are colliding in present-day China – the force of change vs. the force of order. This collision is pervasive in every aspect of Chinese culture.

Young minds are opening. Innovation and daring are commonplace. The impact of a liberalized information flow is stimulating curiosity, creativity. Students now boldly question everything and distrust propaganda. Yet the government and Communist Party still find their way through propaganda into the lives of students.

The broad and uncontrolled reach of the Internet is forcing state influenced media outlets into a competition for the first time, causing many consumers to distrust state run media outlets as pure propaganda. Broadcast programs like “Live at 8” are now seen as consumer advocacy outlets forcing accountability on government officials when solving problems of Chinese. Yet government and party officials still ensure that some investigative reporting material remains unaired, unreported.

The evolution from a planned economy to a capitalist economy is creating economic forces never before felt by the Chinese. Privatization of state run firms. Pressure to perform. 10% unemployment. Yet many businesses prosper thanks in part to a strong tie in some form to party and government officials.

The Communist Party in China has prospered for so long due in large part to their ability to stabilize virtually every aspect of the lives of all Chinese. Delivering prosperity is now the “measure of the party’s legitimacy”. The government has shown incredible signs of flexibility in responding to the change. Yet much of the economic reform felt today is due to the party’s insistence that change take place.

The force of change is rampant in China. All the while, the government continues to flex its powerful muscle in more subtle ways.

But what will happen? Which force will win in the end? Human nature will eventually prevail. As the Chinese taste the effects of freedom, ingenuity, innovation and creativity, they will inevitability want more. Of course not all Chinese will want to lead the life of a capitalist society and it will take decades to truly transform the culture from one of caution to one of risk. But for the most part, the culture will follow.

But do Chinese leaders understand this? Of course they do. Chinese are planners. They take the long term view. They are calculated and take smart risks based on well thought out plans. This is game theory in action. What the rest of the world must do is understand their moves and plan accordingly.

Saturday, May 19, 2007

One Last Day

Today I left the group behind to have a day to myself. I started with a visit to Sam’s, a world famous tailor who has dressed every sitting president since Nixon. Of course I had to pick up a couple of shirts. I then hopped a cab over to the Jade Market. That was quite an experience. Rows and rows of vendors peddling trinkets of all kinds. There were a few items I had left on my list. While there I happened upon a typical Chinese open air market. I am fascinated with these markets. Rows and rows of exotic foods of all kinds – fresh meat dangling in the open air. Seafood so fresh that the clams spit at you. I then stopped in a Pizza Hutt for lunch. Brian and Lizzy showed me a good time last night so I needed a slice of pizza and a sweet tea. That hit the spot. Then, it was off to Cheng’s for my final fitting. Francis and Cindy Cheng have been fitting customers with hand made suits and shirts for 39 years. They have connections with IBM in RTP which is how we all found out about them. My suit and tux fit me like a glove. At these prices with this quality and custom fit, I’m done with off the rack clothing. Move over Brooks Brothers.

Tomorrow we leave for the United States. Last night, we gathered together to say our final goodbyes and assess the course from our own perspectives. As I said last night, this has been a life changing experience for me. I recounted Ashley’s comment to me the morning she and the kids drove me to the airport. As we wound down Glenwood Avenue passing by manicured lawn after manicured lawn, she said: “Do you realize that you are actually going to cities far more sophisticated than the one we live in right now?” How true. What has amazed me most in this experience is just how sophisticated and cosmopolitan the urban areas of China actually are. The pace of culture and business in Beijing, Shanghai and Hong Kong is fast and furious. They are confident and charging forward. There is no stopping this transformation going on right in front of our eyes. This is what we have seen, smelled, touched and heard over the last two weeks.

Honestly, each and every MBA should want to experience what I have just experienced. It has had a profound effect on me. My view of this world has changed entirely. During my childhood I watched the fall of communism. Ella Reaves, Harry and Fletcher will watch the rise of China.

Friday, May 18, 2007

Wow, Again.

Today we concluded our two day tour through the business culture Hong Kong style. On Thursday, we left Hong Kong and reentered China to visit several sites in Shenzen, a heavy manufacturing zone. After China regained control of Hong Kong, they enabled a principle of “one country, two systems”. Because of that, when entering and exiting, we had to pass through customs again with a great degree of paperwork.

Our first visit was to Lenovo. We met with the VP of Global Manufacturing for Lenovo. Fixing the supply chain is the number one priority for Lenovo. He discussed many aspects of their global and Chinese operations as well as his thoughts on the ex-pat lifestyle. We then toured the worldwide manufacturing plant for ThinkPad which produces 35,000 units per day, all hand assembled. Interestingly, there is absolutely no government control of Lenovo, never has been.

We were then hosted for a delicious lunch where we also met with the head of Gradiente for China, a Brazilian manufacturing firm.

After lunch, we visited a Joint Venture between IBM and China Great Wall Computer Corporation. Great Wall manufactures huge servers for IBM. Joint ventures are an entry point for multi-nationals into China. They are typically required for many industries and it becomes a way for companies to develop relationships and a foothold in China. We were able to hear from the head of operations and also tour the manufacturing facility. Servers of this type generally begin at $250,000 US dollars. Part of the presentation was a continued discussion about the Chinese talent pool. In almost every company we have visited, the talent pool is young, educated and very passionate – what company would not want that “problem”?

I ended the night with a stop to visit Francis and Cindy, owners of New Hung Cheng Company, custom tailors in Hong Kong, for my fitting. I have a blue suit, a tux and five shirts coming back with me. Custom work is amazing and I look forward to the final fitting on Saturday.

On Friday morning, we began the day with a trip to China Construction and Bank of America. Thanks to the fact that our dean, Steve Jones, sits on Bank of America’s Board of Directors, we were addressed by Sam Tsien, President and Chief Executive Officer for China Construction Bank and Fred Chin, Managing Director at Bank of America and also Company Manager for Hong Kong. Bank of America bought about a 9% share in China Construction, one of China’s four large government-owned bank’s. This is a strategy Bank of America is pursuing, different from Citi which bought a larger position in a smaller, regional bank. It will be interesting to see which strategy works out in the end, something we may not know for several years. The photo here was talent from the meeting room at the top floor where our meeting was hosted.

We then traveled to Li & Fung, the blue chip of the sourcing industry. We were fortunate to be addressed by Bruce Rockowitz, president of Li & Fung, a $12 billion supply chain company. Each of us on the trip is responsible for studying one of the companies we visit and serve as ambassadors for the group at each appointed visit. This was the company I reported on and boy was it amazing. Over the last several years, they sourced, manufactured, packaged and shipped 8.6 billion consumer goods across the globe and don’t have one plant, one ship, truck or train on their balance sheet. They are truly a new age, virtual company. No assets but plenty of cash flow. Believe me, I could go on forever about this company but will spare you the gory details. Just know this: I bet at least 75% of everything in your house has been touched by Li & Fung. My partner on this report, Kate Blanchard, and I are presenting Bruce with a gift, of which I told him Li & Fung probably sourced.

Finally, we ended the day at Dubai Ports International – and were simply amazed. DPI operates the Hong Kong port – the third largest in the world. At DPI, we drove our bus through the largest concrete facility in the world – larger than the Pentagon at 9 million square feet. It rises twenty floors from the port floor. Takes in 12,000 vehicles a day. Has 15 miles of highway intertwined within it and offers up 6 million square feet of storage space. We all agreed that DPI was a great way to end our trip in China.

Tonight, we head to an Irish pub to wrap up the course as we share our thoughts and perspectives on what we have seen and experienced. Tomorrow is a free day before we leave on Sunday.

Fortunately, in a truly global world, I’m off to a cocktail party hosted by Brian and Lizzy Moore, friends from North Carolina. And who knows what the night will entail.

Stay tuned.

Thursday, May 17, 2007

Midway Takeaways

I'm flying to Hong Kong as I write this. Below are several snippets and takeaways from my trip thus far.

We’ve completed travel through two of our three cities. At the end of each visit, Mabel asks the group to share your perspective on our learnings from both business and social perspectives. Today (5/16), while crowded near our gate in Shanghai’s airport, I shared mine.

For almost three years I had the pleasure of living and working in Washington, DC. Every time I came back to Washington from a trip, I made myself drive into the heart of Washington, crossing over the Potomac and getting a crystal clear view of the Lincoln Memorial, the Washington Memorial and the Capital Rotunda. I would drive right up to the west side of the Capital Building before circling around it to head to my humble apartment on Capital Hill. Why did I do this? It was simply my way to take in the awe of Washington. To feel the power of American government. It’s splendor and magnificence.

Visiting Beijing, I had the same feeling. You can certainly feel the power of government. “Official-dom” is ever-present. Armed guards and gates. Flags. Statues. Enormous monuments and open spaces. It felt the same as Washington. But just like in the states, once you leave Beijing, it’s difficult to have that same feeling. You don’t “feel” Chinese government in Shanghai just like you don’t “feel” American government in New York. That is mostly because you can’t see it. The symbols, statues and official-dom are not there to behold. But clearly, what we learned is that government – even in Shanghai – is ever-present in business. And not only must business develop relations with the central government, provincial and local government must be factored in as well. Government is behind the scenes. It’s in phone calls and lunch meetings. It’s in contracts. In negotiations and business deals. We heard from one CEO that many multinational CEOs wish they could spend 50% of their time working with the various levels of government. It is part of the business process and if an organization maintains strong productive relationships with all levels of government, business will generally blossom. What is “productive”? A relationship that is win-win for both sides.

Same Principle Applies
In planning my trip, I packed a short narrative written by my uncle Laurence Sprunt. Uncle Laurence, through his own will, gathered together some wise and interesting stories about life as he has seen it – some humorous and all instructive. In one of the stories, he talks about how he and a friend headed west to California to develop relationships with lumber companies to represent their lumber on the east cost of the United States. How ironic. Here I am, many years later, heading east to make business contacts in China reading a book from my Uncle, a graduate of UNC with a degree in “commerce”. The world has changed so much in his lifetime but one thing hasn’t changed about Uncle Laurence. He’s one shrewd business man and still to this day has the first penny he’s ever earned in his pocket. So while touring through the streets of Souzu, I couldn’t help myself when I came across this sign – evidence of a good marketer and just like Uncle Laurence, and Chinaman who knows how to drum up business.

Sweet Candy
I can’t imagine moving through China without a guide. They help with translation and logistics but also the better guides really know their history and the traditions of this country. And in Shanghai, we had the best experience with Candy, pictured here. She was not only thorough and easy to deal with but she was also quite funny. On day one, someone sneezed on the bus. She said to us – in heavy Chinenglish: “You know Chinese tradition about sneeze? Chinese says that one sneeze means someone thinking of you. Two sneeze mean someone cursing you. Three sneeze? You’re sick.”

Another one from Candy: “You know what national bird of China is? Building Crane.”

And finally: “You know what national flower of China is? Peony. Some people, they think national bird is carnation. Get it? Car-nation.”

We will miss Candy.

A Lesson in Brushing Teeth

Harry and Ella Reaves, you’ve got it made. We know its such a drag to brush your teeth twice a day. But imagine not being able to brush your teeth with the water from the sink? For the entire trip, I have brushed my teeth with bottled water. And I’m incredibly efficient. I can get about three brushes in with a small bottle. China is a developing country and drinking water out of the sink can’t be done. So brush up kids and be grateful. You’ve got it made.

The Evening Class

Those of my classmates following our trip, we’re having a great time. I think I speak for the evening group in saying that it’s been a fun experience meeting and traveling with the day and weekend students. We’ve shared some good stories about professors, careers and other life matters. But in addition to the folks on our trip, we’ve met alumni – both ex-pat and Chinese – in every city along the way. They have been fascinating and have provided a whole new level of perspective for our trip. Meeting students from the other Kenan-Flagler programs has been a rewarding experience in this global emersion. It has also proven Kenan-Flagler’s prominence throughout the world – something that we can all be proud of an leverage in the future.

Stay tuned.

Tuesday, May 15, 2007

Corporate Shanghai Two

Yesterday (May 15th) we ventured out for our last corporate tour of Shanghai visiting Corning, Lord and hearing from ChinaVest.

The Corning trip was fantastic. We heard from the CEO of Corning China and I found it to be the most candid discussion about doing business in China we have heard to date. He talked a great deal about how most CEO’s in China he knew spent, on average, 30% of their time on government relations and wished they could spend at least 50%. Government relations in China is far different from what we know in the US. The contract lobbyist model would never work in China. It’s too confusing. Chinese officials – public and private sector – need a strong sense of trust and it takes time to build that trust with them. Another major message that he left us was two fold. One, the intellectual debate over whether or not to do business in China is long over. Two, you can’t put your toe in the water in this market. When you decide to jump in, you must do so with gusto and the operation on the ground must have the entire support of top management at home. This explains why Corning has enjoyed such a strong presence in China and will continue to grow and invest here.

After a tour of the Corning fiber production operation, we left for Lord. Lord manufacturers a variety of vehicle parts and has some form of part in every car produced in the world. I found Lord’s presentation about being an ex-pat in China most interesting. Our presenter, the head of operations at Lord China, has been in the country for two years with a wife and children. His take: “An ex-pats assignment is an adventure, not a fairy tale.” The quality of healthcare in China varies greatly. We’ve heard from most ex-pats that if you have anything beyond a broken finger, you need to get care in Hong Kong. He pays about $4,000 US dollars for a townhouse and $21,000 for his daughter to attend an international elementary school. I asked him about practicing religion in China. He happened to be practicing Catholic and he is able to attend a special mass for foreigners on Sunday’s which requires a passport for identification to get into mass. High mass for Chinese Catholics is practiced on Saturday’s.

Finally, we came back to our hotel for a presentation from ChinaVest, a merchant and investment bank in Shanghai. Get this: in April alone, more than 5 million stock trade accounts were opened in China. The markets are red hot and so is business. Consider construction. On average, one building a day goes up in Shanghai. Every year, China is building the equivalent of two cities of Boston. Interestingly, we learned that the reason for the incredible Shanghai skyline stems from the fact that the former mayor of Shanghai is an architect and when the building boom began, he invited some of the world’s most prominent architects to design some of the most incredible skyscrapers you have ever seen. Infrastructure will be a big play over the next five years through China’s “Go West” initiative. In the private equity markets, investors are paying huge premiums – 31 times equity value/EBITDA, on average. Sixty-eight private equity funds are operating in China and invested $12 billion by the end of last year. Sourcing deals in China is very difficult. You make money typically when you buy, not sell. Due to a lack of transparency, due diligence and valuations are also challenging. Also interesting is China’s social welfare investment. To accommodate China’s large aging population, the government has set aside $200 billion for a social security fund. More than likely, they will invest the fund in US and international blue chip stocks making the IBM’s of the world quite happy. A big question in our business discussion is whether or not the market will crash. Many believe it has to but worry about what that will do to world markets. Considering the ripple effect the Shanghai Exchange caused in February, it could be huge.

We ended our night with a trip to the Shanghai circus which had a very similar feel to Cirq. Afterwards, we headed out to a night on the Bund – an incredible waterfront property with lots of bars and a breathtaking view of Shanghai. We celebrated Kate’s 30th birthday.

Today is a travel day. We take a bullet train (travels 250 miles per hour in about nine minutes) to the airport and then catch a flight to Hong Kong. Objective #1 in Hong Kong: get fitted for a hand made suit.

Stay tuned.

Corporate Shanghai

I apologize, we've been very busy and I have been unable to post as often as I had planned. (We've also discovered a strong nightlife in Shanghai.) Plus from here until we leave Hong Kong, the hotels are charging us for web access. Rest assured I am reading your posts but will more than likely not respond to all just to keep costs down.

I think we have all decided that Shanghai stands in stark contrast to Beijing. Beijing’s blend of government and corporate sectors is only one difference. Cultural differences also exist and western influences are everywhere – from Starbucks to the way people move through the streets.

We had a banner day (5/14) which started with a bang at Citi. We were addressed by the CFO of Citi for all of Asia as well as the head of corporate training for the organization. The presentation was fantastic and considering Shanghai’s rising prominence as the financial center for China, it was the perfect start for our trip here. Some interesting perspectives were shared. Regulators in a developed economy are typically very confident and prioritize initiatives. Regulators in developing economies are typically insecure about the future and are generally more willing to try new approaches to financial practices. If the practices work, they usually allow more of them to happen. In China, stable financial markets are very important. Concern for overheating is huge and the regulating authorities will stop anything that will potentially destabilize the markets. Also of interest: a credit bureau or organized credit rating system does not exist in China, nor will it ever. According to Citi, authorities will never allow the collection of data on their own people in a repository outside of their control. Doing business in the banking industry without a credit rating is a difficult challenge to overcome.

Our next stop took us to the Shanghai Stock Exchange. You may recall that the SSE ignited a dip in markets throughout the globe earlier this year. About 850 companies are listed with a total capitalization of over $900 million US dollars. A lot of the discussion with our guide centered around the lack of information for individual investors. Unlike the US, information is far from perfect and many investors are unskilled at making good decisions. That does not, however, stop them from investing. Right now, they are up 240% over the last two years.

We then transitioned the day into a manufacturing tour visiting Eaton and Atlas Copco.

“There lies a sleeping giant. Let him sleep. For if he wakes, he will wake the world.” – Napoleon 1803.

This quote graced the front page of the presentation from the CFO of Eaton’s Chinese operations. And how true. The giant is awakening, growing at 10 to 12% each year and according to Citi, if you count what some call the "cash market", the growth rate is likely 13 to 14%. Of greatest interest to me was the discussion around attracting and retaining top talent in China. This has become a consistent theme on our trip. Eaton recognizes that their talent is the most expensive asset of the 21st and they know it won’t change. They believe that people want to work for strong brands and a commitment to internal branding at Eaton exists. We were also introduced to another concept: Guanxi” (guanzhee). Guanxi is a Chinese term that describes how to “network” to do business in China. It’s a way to build trust. Essentially, you don’t really talk business for the first three or four meetings with a prospect. You build a friendship and confidence over time before you even discuss business.

Finally, we ended the day with a visit to Atlas Copco. They are a global manufacturer of huge machines like mining equipment and compressors of many types. It just so happens that the VP of their operations, Mangus Gyllo, is an alum of UNC School of Business, the name Kenan-Flagler operated under before the school was renamed. He was fascinating. As a manager of their Chinese operations over the last 9 years, he is convinced that it all comes down to good people. He has a theory – which I completely agree with – the throughout the world good and bad people exist regardless of where they live. Again, the challenge is finding and then retaining good people. Human resources is a defining challenge for Atlas Copco in China and for that matter – all of the companies we have met with thus far. Atlas Copco believes in two main things: train your people well and ensure that you develop Chinese managers for Chinese employees.

Tonight we will travel to South Beauty Restaurant for an alumni dinner with several Kenan-Flagler alumni in Shanghai.

I’m beginning to detect a theme in our trip. Recruiting, training and retaining good people is a tremendous challenge. There seems to be a huge opportunity in China for firms that specialize in the HR side of corporate life.

Stay tuned.

Sunday, May 13, 2007

To the Country

This morning we headed about two hours outside of Shanghai to experience "rural" life in China. What amazed me most was that even in "rural" Shanghai the number and size of buildings still beats the Raleigh skyline. Our trip took us to Suzhou where we visited the Master of Fishing Nets Garden which dates back at least 2,500 years, the Suzhou Embroidery Research Institute, a silk factory and the Pan Men City Gate. The embroidery work was incredible. We watched Chinese women hand stitch in an ancient Chinese tradition which takes 6 years to master. The Pan Men City Gate was interesting. I got to ring the Pan Men bell three times – for prosperity, health and longevity. (Boy did I ring it loud.)

We left Suzhou for Tongli. Tongli was amazing. We went deep into the city to visit a very old part. Tongli is surrounded by a canal system. They use boats, similar to Gondolas to move through the city. We took a ride and then left to meet our bus in rickshaws. It was a long day but well worth a trip away from city life and smog. It was a sunny day and a little windy making it much easier to breath. Tomorrow we go back into the business world.

Stay tuned.

Shanghai Bound

Today (May 12th) was a travel day. We hopped a very early flight on Air China from Beijing to Shanghai. We were in the air for about two hours. We arrived in Shanghai and I could already feel the difference. There seems to be a little more chaos and less order in Shanghai – a southern city in China. We checked into our very nice hotel and then hopped a bus ride over to lunch with Sage Brannon, a Kenan-Flagler alum and ex-pat who leads all of the research operation for Pacific Epoch in Shanghai. PE serves the hedge fund industry in researching emerging firms within China. Hedge funds are huge in this city. Hundreds of millions of dollars are just waiting for the next best trick to invest in. I asked Sage how difficult it was to obtain information about business in China. He confirmed my suspicion that it was extremely difficult. Chinese business is closely held to the vest, almost secretive. It’s difficult to break through and receive information but Pacific Epoch has managed to do it with great success. They focus primarily on emerging high tech firms.

Our lunch was outstanding. Sage did all the ordering and in true family style we dined on eel, squid, fish, a delicious pork dish and an incredible squash dumpling, among plates and plates of other food. The restaurant was the oldest in Shanghai. With over 17 million people and scores of restaurants, that is a huge feat to claim.

We then traveled to a section of the city known as Old Town. It was amazing to see so many Chinese in one location. Old Town is filled with trinket vendors – we call them “hello people” because they accost you by saying “Hello, hello, you want watch? You want nice silk scarf?” You get used to it over time. Our response: “Bou yow” which means “No, I don’t want!”

Hidden within Old Town is the oldest tea house in China. Several of us ponied up for a traditional tea ceremony and sipped on some high end but delicious hot tea. It was fascinating. I had two teas, one of lavender bloom and a woolung. The taste is indescribable and to watch the bloom come to life in the cup once hot water hits it is bizarre.

Tonight, we’re headed down to the waterfront for dinner. We hope to take in the sites of the lit skyline. And let me say that Shanghai, like Beijing, is filled with some of the most incredible contemporary architecture I have ever seen. New York doesn’t even come close to these skylines over here. Imagine the very contemporary design of the new Twin Towers location in New York only thousands of those everywhere. In the last five years in Shanghai, over 1,200 skyscrapers have been built.

Stay tuned for more.

Big Brother and Me

Well, it happened. Last night (May 11th) as I went to post my blog update, for some reason, I could not access my blog address directly. After two days of posting, I was suddenly unable to view my own site. I was however, able to post through the blog host site and I did confirm that you were able to read my blog in the states. Amazing. I shared this development with the group and Mabel (Our Professor and Official Host) suggested that due to certain words and phrases, a “higher power” probably shut down my viewing capability. Please don’t stop reading and posting however. We need to keep the thread alive.

Friday, May 11, 2007

Pearls for the Girls

We had a free day today which was a nice break after several full days of meetings, presentations and travel. I slept in, ate a McDonald’s Happy Meal for lunch and spent the rest of the day at the main pearl market in Beijing. The pearl market is quite an experience. Three full floors of pearls with very aggressive vendors. I held a strand of South Sea pearls in my hand valued at $47,000. (Ashley, don’t get any ideas.) In one of the stores, I was asked where I was from. When I told the attendant the “United States”, she smiled and said “Mrs. Bush”, referring to the pearl queen herself, Barbara Bush. And sure enough, there on the wall in the store was a picture of the former first lady and the former president during a recent trip to China. They both shopped in the store. (That made me feel better.)

We ended the day with a 90 minute foot massage which was about the most incredible thing I have ever done. Massages are a big thing in China and also happen to be very cheap. The 90 minute message was an intense foot, shoulders, arms, legs, head and neck workout. Seemed more like a full body message. But the cost? $23 and worth every penny.

We leave tomorrow at 6:30 AM for Shanghai. I feel like I have been here for a month – but in a good way. This is an amazing experience.

Stay tuned.

A Long Night

For those of you wondering why I didn’t post yesterday, I have a simple explanation. Last night we experienced Beijing nightlife. Fortunately, America can still export entertainment. We toured the club scene and it was incredible but it was also a long night. (And no, I did not take my camera).

We began yesterday with a tour of Nortel’s brand new campus. The Chinese authorities have made communications a national priority. And what does that mean? China has built a telecom park in the outskirts of the city. Ericcson, Motorolla, Agilent and many other telcos have built state of the art sprawling campuses. Nortel’s office was incredible. We heard from the head of Nortel R&D for Asia. Her message? The quality of engineers produced by today’s university system in China is quickly transforming the country from a low cost manufacturing center to an R&D center. Much of what Nortel produces worldwide stems from research conducted in China by Chinese engineers. During the tour, I was the guinea pig selected to test drive Nortel’s new web-based broadcast platform. After my performance, the group pegged me as John Edwards. I told them all I lacked was a mole on my lip and a fortune.

We then moved on to GE Healthcare. GE was one of the earliest multi-nationals to enter into China. We heard from the head of production in China. The facility manufactures MRI equipment. We were not surprised to learn that MRI machines manufactured for the US required larger holes to accommodate larger people. We learned also that recruiting for GE jobs is not easy in China. They compete often with government recruiters. Chinese like the stability and good pay offered in government positions vs. what GE can offer. This stands in stark contrast to our country.

We ended the business day with what is probably my favorite trip thus far: CCTV. CCTV is the only television station in China. Is offers 16 standard channels with about 79% original programming. Our group was hosted by the Director of Programming. We were the largest official group ever hosted by CCTV. We had some very interesting discussions with her through her translator. I can write forever about my impressions of this meeting. A few observations: armed guards stationed outside the transmission control room, a “survey” of over 5,000 citizens revealing their disinterest in a channel similar to our C-SPAN that would broadcast the work of their government, the stated mission of their organization as to “create understanding” about China. The list goes on and I should save it for conversation when I return. One funny thing that happened: when we toured the transmission room, up on the screen was a shot of none other than Hanoi Jane being interviewed by Larry King. How ironic.

Finally, we dined over a traditional roast duck meal. It was delicious. We hosted several Kenan-Flagler alumni and some new students that will begin school full-time this fall. I dined beside a young alum from 2005 who is the Account Supervisor at Ogilvy in Beijing for the China Mobile account. China Mobile is the largest mobile provider in China. They are one of the premiere sponsors of the 2008 Beijing games and a heavy advertiser. Ogilvy’s media company buys over 25% of CCTV’s advertising inventory each year.

Stay tuned for more.

Wednesday, May 9, 2007

How to Eat in China

Harry and Ella Reaves, if you think eating five green beans is a challenge, try fried shrimp heads, jelly fish, and eel. The flavors and food choices are exotic, in some cases. The interesting thing is that in my experience, food is always served family style and rarely do you get a chance to truly "choose" what you want to eat. The kitchen keeps churning out dish after dish. Culturally, the Chinese take offense to hunger. A basic question in everyday living is "have you eaten yet?" The Chinese never want you to go hungry so they keep serving food to ensure that you are satisfied. Kids, the next time you don't eat your green beans, I'm ordering fried shrimp heads.

Beijing Whirlwind

We just ended a very busy but insightful day. We began with the Deputy Minister of Education. China currently enrolls 300 million students in K-9 compulsory education - that's the size of the United States population. 130 million students are in elementary school. 25 million are enrolled in higher education. The teacher to student ratio is 1 to 21. They have over 2,000 universities. The most telling thing to me was the Minister's honesty about the government's shortfalls in education. What was even more telling was how similar their problems are to ours - teacher ratios, teaching technology, filling demand, the gap between rural and urban systems and limited resources. The most striking difference, however, was China's lack of "creativity" instruction.

We then traveled across town to Tsinghua University to visit with current MBA students. TU is essentially the Harvard of China. It's the number one program for engineering in China - and some believe the world. Four members of the governing polit bureau have degrees from TU. They educate 20,000 students each year and it is highly selective in admissions. I must say, it was fascinating to interact with those very bright students. They toured us through the campus and hosted us for a typical family style lunch which included fried shrimp heads and eel. Of note, it costs 290,000 yuan (divide by 8 to convert) to attend each year and the average salary of their graduates is 40,000 yuan per month. The highest paid positions right out of school are in sales and marketing. Most MBA programs graduate students that are highest paid in finance. I figure with 1.3 billion consumers in China, sales and marketing MBAs are finally in demand.

Our next trip took us to Peking University Hospital where we met with physicians, nurses and the Vice President of operations. PUH operates 1,183 beds and has 1,300 under construction. They service 7,000 people per day with 776 physicians and 1197 nurses. They are the official hospital of the 2008 Beijing Olympic Games. Of note, they actually have a VIP ward - the very top floor of the surgical center. The rooms are twice as large, private and come equipped with flat screen TVs.

We then moved to a visit with Volvo Truck. Volvo had a fascinating story to tell commenting on the huge growth in highway construction recently. The government is trying very hard to push development into central mainland China, a portion of the country still lagging the east coast in development.

Finally, we wrapped up our day with a visit to CB Richard Ellis's Asia office with an address from the president of Asia for CBRE. Currently, in Beijing alone over 6 million square meters of office space will become available. Over half of the world's cranes are positioned in China to help facilitate the construction boom, not to mention the raw materials constraints like steel and concrete. China is currently consuming half of the world's concrete. Of note, we spotted the "Bird's Nest" stadium under construction. The "Bird's Nest" is the site of the 2008 Olympics opening and closing ceremonies. It will hold 90,000 spectators comfortably.

Stay tuned for more.

Tuesday, May 8, 2007

What a Day


Our first true day in Beijing has come to an end. We began early this morning with a trip to the Mutianyu section of the Great Wall. It was fascinating. It's hard to believe that such a project was completed by human beings - and started before Christ. We climbed the wall for about two hours and took a toboggan ride down afterwards.

We then came back into the city and headed out for Tian 'amen Square and the Forbidden City. Tian 'amen square is the largest public square in the world - over 90 football fields in size. It was awesome. You could sense the power of the government - it was orderly yet massive. Hoards of people, cars and bikes moved carefully and quietly through the streets. I've never seen anything like this.

We then moved through Tian 'amen into the Forbidden City. The Forbidden City was the ritual center for the Ming and Qing dynasties (1368-1911). The palace grounds cover more than 1,000,000 sq. meters. Frankly, only pictures can do both locations justice.

Just now, we ended the night with a traditional hot pot meal. In addition to beef and vegetables, I tried jelly fish, fish balls and mushrooms I have never seen grace my Anderson Drive lawn. I hope I live through it.

I'm amazed still at the size of this city and its features. The attractions are vast and hoards of people blanket the landscape. Ancient history and the new world order are colliding, however. The smog is difficult. My nose and eyes are very dry. And construction is everywhere. But, this is a sophisticated city. I look forward to tomorrow when we begin our site visits.
And of course, a signal of China's dynamic and growing economy was found at the bottom of the mountain having returned from the Great Wall: a box of tourist trinkets labeled with none other than "Made in China". Tomorrow will be yet another day. We'll see what our first look at the business climate in Beijing brings.