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” (guan – zhee). 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.
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” (guan – zhee). 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.
1 comment:
Harris- you should call Bryan and Elizabeth (Holmes) Moore in HK.
george t
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