Final Reflection

What I learned about China
My previous experience in China prior to the MBA trip was limited to a packaged tour and spending time with my parents in Shanghai for three weeks. The MBA trip has exposed me to the business side of China and a wide variety of people living in China (business people, students, ex-pats, shop keepers).

The business aspect was very interesting. When ever the question, “Have there been any mistakes or failures you made that you would have done differently?” was asked to business owners the answer was always something along the line of “I have never made any mistakes.” I personally found this answer baffling because an American business person will always give an amusing horror story. My take is that it must be a cultural taboo to admit failure or that the person does not want to “lose face” by admitting to a mistake.

Business in China is done in a different manner than in the United States. What is usually relegated to middle management or junior executives (meetings with local government agencies or another firm) needs to be attended to by an executive in China. The “important” persons from both parties must meet otherwise the other party will lose face. It seems that being an executive in China can be more exhausting and requires much more socializing than what is required out of the American counterpart.

Surprises in China
- There is a wider use of credit cards than I had imagined. The use of credit cards appears to be stronger in China than in Taiwan. I was under the strong impression that only the wealthy use credit cards. However, it turns out the average middle-class person can obtain credit cards fairly easily (according to Claire) and uses them (as I observed while shopping).

- Living conditions of university students in the dorms is “harsh” by American standards. The dorms do not have air-conditioning, which I thing is bordering on inhumane, despite the high heat and humidity. The dorms also do not have dryers and students hang their clothing to dry outside their windows. Each window has clothes drying right outside and is a magnificent sight to see.

- I saw a Vertu phone store in a shopping mall. Vertu is a line of super expensive cell phones from Nokia. I have never seen a stand-alone Vertu store in the United States (a quick scan of the Vertu website shows that there does not appear to be any stand alone stores in the US) so I was very surprised to see one in China. I happened to speak with a Nokia engineer at English Corner and he said that China is the largest market for this line of phones.

- Some local Chinese were clearly amused by my fellow tall Caucasian students. On several occasions there were requests by random people (usually a group school children on field trips) to have pictures taken with the “Caucasian giants.” I even snapped a picture of a Chinese person taking a picture of my two of my classmates posing with

- The blatant mark up for tourists even though the signs clearly state a cheaper price was annoying. At the Bund in Shanghai a food stand even tried to charge Claire and me extra for a bottle of water. The personnel would not lower the price to the price on the sign even after Claire explained that she was a local Chinese person.

- I can become tired of Chinese food. Back in the States I rarely eat fast food or junk food because it is unhealthy. However, in China I have never been so happy to eat Oreos, McDonald’s, pizza, and French fries.

Conclusion

My favorite part of the trip was rooming with Claire. I learned about habits, beliefs, and society by spending much of my time with her. A large portion of the young generation of China is still very conservative.

I realize that we only visited the developed first and second tier cities, which does not represent all of China. We did not visit the interior where most of the poor reside and much of the country side rebellions take place. I think the trip would have been more complete with a look at how the poor live in China (it would be very different than how the poor in the Sates live). But time, budget, and logistics would not allow for such a detour on this trip. It would also have been interesting to see how we would react to a visit to the country side.

Office Summary Part 2

Hangzhou & Suzhou
- Suzhou Industrial Park: Judging from the picture of a clean room personnel holding a wafer on the main page, the park is supposed to be a technological area similar to Silicon Valley.
1) Where do the knowlege workers come from (a nearby univeristy perhapse)?
2) As the Industrial Park grows, is the city prepared to build additional infrastructure and increase city planning?
- Carrefour: Carrefour is the second largest retailer world-wide after Wal-Mart. They have had a presence in China since the 1990s. Their hypermarket store format makes Carrefour a one-stop shopping store. Carrefour carries food, furniture, house wares, and clothing.
1) Now that Wal-Mart has outbidded Carrefour in purchasing Trust Mart, does Carrefour have plans to purchase a different chain?
2) Despite having fewer stores than Wal-Mart in China, Carrefour is still more efficient per square foot (in terms of sales). How does Carrefour plan to improve on this?

Beijing
- 21 Manager: From the website alone, I can not determine what the nature of the business is. It looks like users must login first. The website also has a link to a blog.
1) How does the client and consultant find a match? What happens if both parties realize that it is not a right fit?
2) Is 21 Manager involved in the salary & benefits negotiation? Or is the company's only purpose to match consultants/managers to clients?
- Center for International Business & Ethics: This is a non-profit research facility that is trying to integrate ethics into business strategies. The center wants to increase awareness of business ethics among businesspeople in China by offering classes, lectures, and training programs.
1) Does the center expect ethics to become an important part of the cirriculum in business schools in China?
2) What do most of the participants expect to learn about ethics?
3) What are the different courses available? (are they tailored to industry?)
- Thomson: This company has six business divisions: Financial, Healthcare, Learning, Legal, Scientific, and Tax & Accounting. It looks like they provide training, software, and consulting services.
1) How is their tax & accounting services different from the large accounting firms?
2) How are all of their divisions tied together (core competencie--it appears to be software)?
- Lenovo: Lenovo started as a small PC company in China that competed on price. The company grew by acquiring competing PC companies. Recently, Lenovo purchased IBM’s PC division and is now growing the company’s brand recognition.
1) Does the company expect to become a world-wide recognized brand after sponsoring the 2008 Olympics?
2) Did any of IBM's large clients swtich providers after Lenovo purchased the PC business unit from IBM?
3) How is Lenovo leveraging the IBM brand?
- Beijing University: Beida was established in 1898 and is one of the best universities in Asia (ranked 14th in the world). There are about 15,000 undergraduate and 15,000 graduate students. The university has 30 colleges, 93 undergraduate majors, 199 master degree majors, and 173 doctorial degree majors.
1) Does the University have a counseling center for students who are need counseling services? Is there a suicide prevention center/hotline? (I imagine there to be a need for this since there is immense pressure on the student to succeed and not lose face for him/herself and the entire family)
2) Usually firms only want to hire the students with the best grades. What typically happens to the students with only average grades?

Office Summary Part 1

Guangzhou
- Zhongkai University: The given link is underconstruction but I was able to find an alternative English page (http://www.chinatefl.com/guangdong/teach/gd_zk.htm). This is an Agriculture and Technology school but offers twenty-six majors that include other majors outside of agriculture and technology. There are over 12,000 undergraduate and graduate students with expected growth to 26,000 students in five years. Zhongkai has “6 foreign experts from America, Britain, Australia, and other countries.”
1) The above link is a website to recruit English teachers. Does the University find this strategy effective?
2) Does the University employ other methods of recruiting English teachers?
3) Does the University feel that the the low compensation (by American standards) deter foreigners from coming to China to teach English?
- Winglok Textile Factory: It appears that this company manufactures only knit polo-style shirts.
1) How does the factory maintain quality control?
2) Are most of the large customers American and other foreign customers or mostly Chinese?
3) What happens to the rejected shirts?
- VTREK Audio and Video Products Factory: This company manufactures audio & video products (LCD TVs, DVD players, Hi-Fi systems, home theater systems), precision optics, and chemicals.
1) Does the company manufacture products for other brands (Sony, Panasonic, etc) or only off-brand products?
2) There seems to be a lot of AV components and product companies. How does VTREK stay competitive? (by price, differentiation, etc.)


Macau
- Macau Polytechnic Institute: MPI offers degree programs and short-term courses. There are 2,700 full-time degree students and about 20,000 people attend professional training courses each year.
1) Is there another institution to compete with their professional training courses?
2) I assume many of the students attending the professional training courses are from Hong Kong. Does the school believe that the proximity of casinos make their courses more appealing over another school's courses?
- Sands Macau: There are three levels of gaming at the Sands. Each ascending level (according to the name) is a classier looking gambling area.
1) With other higher-end casinos around, does the Sands feel that their casino needs to be renovated to retain customers?
2) Does the Sands use loyalty club cards/points to retain customers?
- Wynn Macau: The exterior looks similar to the Wynn in Las Vegas. Retail stores at the Wynn are the typical high-end boutiques (Dior, Louis Vuitton, Rolex, etc.)
1) Did the Wynn tailor the decor of this one to appeal to Chinese consumers?
2) Does this Wynn have certain Chinese gambling that is not at the Wynn Las Vegas?
- New Century Casino: The guest rooms look average as well as the casino. Their website is not as polished as the other casinos. The lobby is in a gilded Roman style.
1) Does the New Century feel a pressure to renovate?
2) How does the casino attract visitors from China?
- Lisboa Casino: The website does not have any pictures of the casino. The room rates are similar to Las Vegas (starting at $108 for a basic suite).
1) How does the Lisboa compete when there are so many choices on Macau?
2) Does the casino use accosters at the transportation stations to convince potential customers to stay/play at the casino?
- International Game Technology: IGT produces various gaming machines with very interesting names (Money Chimes Sea Queen, Wings of Egypt, Multistar Eastern gems, etc.)
1) Does IGT produce special games just for the Chinese market?
2) Do the games have an universal appeal (same game used for Las Vegas, Monte Carlo, and Macau)?


Shenzhen
- Wal-Mart Global Procurement Center: Wal-Mart has over 1,600 associates world-wide who source products. The sourcing centers are located in 23 different countries (I assume that those countries have a retail outlet too). The centers identify suppliers and try to simplify the supply chain.
1) How does the Procurement Center decide on which products to procure?
2) What kind of market research does the center perform to determine the viability of a product?
3) How soon does Wal-Mart know if a product is a success or failure?
- Yantien Seaport & Logistics Center: This site is in Chinese. Judging from the pictures it appears that this port has large facilities to accommodate freightliners.
1) Does the port expect activity to increase to the point that the port can not accomodate all ships and need to turn some away?
2) How much more exporting than importing does the port experience?


Shanghai
- Shanghai Urban Planning Exhibition Hall: This site is in Chinese. The building itself is very interesting looking. It appears that the hall has been used for exhibiting art, watches, and presentations.
1) Does the hold multiple exhibits/events at one time?
2) Is the transportation and parking sufficient or does the hall expect problems in the future?
- Shanghai Museum: The website was down but I have been to this museum. It has exhibits of typical Chinese art: scrolls, jade pieces, furniture, and porcelain.
1) Does the museum find itself understaffed or underfunded? I ask this becasuse the People's Palace's protection of exhibits is primitive compared to what we are used to seeing (such as arcylic cases instead of glass & not much security).
2) Does the museum actively pursue donors?
- KPMG: KPMG is one of the “big four” accounting firms. It is among the top firms in China but it is not number one (PwC holds that position). The website has a document for the new PRC Enterprise Income Tax Law. KPMG has ten offices in China (including Hong Kong and Macau) and have six business sectors (Consumer Markets; Financial Services; Industrial Markets; Information, Communications & Entertainment; Property & Insurance; and Private Equity)
1) How does KPMG try to grow its client base?
2) Did the US Sarbanes-Oxley Act have a significant impact on their Chinese clients?
3) Does KPMG have a turnover probem that is similar with the Big Four in the US?
- Starbucks: Starbucks is a Seattle based coffee chain. In America, Starbucks is very popular and seems to be on every corner. This chain is the McDonalds of the coffee chain. Stores also serve food items in addition to beverages.
1) Starbucks does not need to advertise very much in the US. Does Starbucks find that the company needs to advertise heavily in China?
2) From my recollection, Starbucks is roughly the same price in China as in the States. Does the company expect to lower prices to attract more consumers or keep the prices "high" to maintain brand equity/exclusivity?
3) Do most of the people who receive a free sample eventually purchase a whole cup?
- Callison Architecture: This firm designs commercial and mixed-use properties. It is one of the world’s top retail architecture firms. Well-known clients include Hilton Hotels, Nordstrom, Guess, and Goldman Sachs. The firm also provides analysis services for feasibility and operations.
1) It seems that Callison only performs large projects that can be funded by large companies. Does Callison take small projects at all? Is it part of the comany's strategy?
2) How does the firm control quality, safety, and its subcontractors?
3) Does the firm find the construction hazard/safety codes of China comparable to more developed counrties? Does the firm follow its own stricter codes?
- CF Racing: This website is in Chinese. It appears to be a race track or even maybe a racing company. The company has their own credit card design.
1) Is racing a popular enough sport in China where there are large races (like the Indy races in the US)?
2) Are any of the large racing companys consumers of CF Racing's products?
- Augmentum: This company specializes in software development for companies that do not want to develop in-house. The company was started by a former IBM executive.
1) What differientiates Augmentum from firms based in India?
2) Do clients trust Augmentum more over competitors since it was founded by someone with US working experience at a prominent company?

Book Review: Encountering the Chinese

Title: Encountering the Chinese: A Guide for Americans
Author: Wenzhong, Hu and Cornelius Grove
ISBN: 1-877864-58-7


Overview
This book is broken down into two parts: 1) Advice for Americans Interacting with the Chinese and 2) Advice for Americans Living and Working in the PRC. Part one covers basics such as how to address others, greetings, and other topics of cultural differences. Part two covers what to do in certain situations while in China. I do not think that this section is limited to those only working and living in China. Travelers can benefit from reading part two as well. Each section will present an American’s perspective and Chinese perspective of the topic with an explanation why the Chinese have this view.

Relevance
Judging from the book’s dated cover, I was worried that the material be outdated as well. However, culture is slow to change and the content is very relevant. As a Chinese-American, I was able to relate to both perspectives (most of the time). This book even shed some light on my mother’s actions and personal observations while I was in China. People who interact with Chinese people outside of China will also learn a lot and find this book interesting.

Good Parts
Overall, the best part of this book is that I learned about the Chinese perspective and what is considered “normal.” Knowing about these particular behaviors beforehand can offset the feeling that the Chinese person is being rude. For example, the Chinese may end a phone conversation very abruptly with, “Goodbye” followed immediately by hanging up. The other party does not have a chance to say, “Goodbye” in return. An American may be taken aback and find this rude. My mother has done this to me, which I found puzzling but now I realize that this behavior is “normal.”

The book also has personal stories to illustrate certain points. These stories sometimes make the Chinese perspective clearer. Chinese teachers are expected to not just teach the student but also to help “raise” the student. A foreign student gave an account that his teacher offered advice on family and friends, exercise, attitude towards life, etc. This student finally became overwhelmed with the unsolicited advice and told the teacher that Americans his age made their own decisions. The Chinese teacher was appalled and asked, “Don’t’ your parents and teachers care about you?” These humorous illustrations clarify the Chinese culture even more for the reader.

Readers of this book can acclimate themselves a little bit to the Chinese culture beforehand so they do not experience total culture shock and frustration. One source of frustration for foreigners is that the Chinese do not have the same “time is money” mantra that Americans adhere to. Another is that presenters do not receive undivided attention during presentations.

Bad Parts
Since the book compares the Chinese and American perspectives, this book may not be that helpful for non-Americans. Sometimes there is a lot of useful information in the footnote of the chapter that is not in the body of the chapter. This is annoying because I would need to scan the footnotes for additional information or advice. One such advice was a caution to not praise disliked dishes too much because the dish may appear again at subsequent dinners. Overall, there is not much that is bad about this book.

Recomendation
Encountering the Chinese is a good book for those who will be spending a lot of time in China. It may not be very useful for those who will not be interacting much with the locals or visitors who are on a package tour. Each chapter is short and readers can read a particular chapter with out feeling that he is missing something from preceding chapters.

Book Review: Chindia

Title: Chindia: How China and India are Revolutionizing Global Business
Edited by: Pete Engardio
ISBN: 978-0-07-147657-7


Overview
I was drawn to this book at a Heff Bookstore in Taipei during winter break. The title was intriguing because most international business books are about China or India but not both countries. The fact that it was one of the few English business books about China also convinced me to purchase it. Chinda is a collection of Business Week articles about business in India and China. The chapters are in a logical order beginning with an intro of India’s and China’s business history and progresses to a wide variety of topics in following chapters. Each chapter consists of articles related to that chapter’s topic. Each article and chapter can be read stand alone with out having to read previous chapters. If the reader wants to read only about India or China it is possible but the reader would miss out on the differences of doing business in both countries.

Relevance
Even though we were supposed to read China-related books this one is a very good book for anyone interested in international business because it opens the reader to the differences between business in China and India. This book is very relevant in today’s business world and would be especially beneficial for businesses considering to offshore or outsource any kind of work. What I learned is that China is a better place than India to manufacture goods. The reason why is that India’s infrastructure is not developed enough to handle transportation of goods and that employees have a difficult time commuting. However, India is much better at providing services because, being a former British colony, India has many white-collar workers who speak English.

Good Parts
The best part of this book is that the reader would learn a lot—even more than expected—about the differences between and doing business in the two countries. As mentioned above, China is a manufacturing powerhouse while India is not. I never knew why until reading this book.

One reason why I like this book is that it uses actual figures such as the average salaries of an Indian engineer compared to an American engineer or the average wage of a worker. These figures allow the reader to assess the possible savings but at the same time know that the workers are earning a decent amount compared to the average Chinese or Indian citizen. Another important set of figures is the analysis of consumer segments in China, which helps the reader understand the Chinese frame of mind. Some of these figures bring up interesting facts. China receives much more venture capital than India but India’s return is much better.

Another aspect of this book that I enjoyed is the variety of topics. Many business books will focus on just the business portion in the foreign country. This book touches on education, women in work force, and social agenda. Education trends in both countries show that more people are entering and graduating from college each year. However, the supply still does not meet the growing demand as businesses need more skilled employees. The book also covers the strengths and weaknesses of employees in both countries. Indian business school graduates have a strong sense of managing while Chinese graduates management skills are weak.

Bad Parts
There are not many “bad” aspects to this book. One slightly irritating part is that it can be repetitive with highlighting certain successful companies. Since these are originally articles, there tends to be a background of the same examples of successful businesses before proceeding with the main points of the article.

The second bad aspect of this book is that some parts are depressing when it comes to Americans losing jobs to outsourcing or off shoring. It is not only limited to blue-collar manufacturing jobs but white-collar jobs are also at risk (not very exciting for me as an American college grad). It seems that any sector can move overseas. Engineers in India are just smart, Filipino accountants are trained in U.S. GAAP, and many traditionally in-house departments are being off shored or outsourced to name a few of the depressing realities of a global business environment. This means that Americans will have to gain more skills and become more productive to compete.
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Recomendation
Chindia is an excellent book that readers will not regret reading. It is thoroughly engaging and full of interesting information that the reader may not have known. This book is appropriate for readers who are only interested in India or China but the full benefit comes from reading articles about both countries.

Book Review

Title: Harvard Business Review on Doing Business in China
ISBN:1-59139-638-7

Overview
The Harvard Business Review on Doing Business in China is a compilation of previously published articles on as the title states—doing business in China. It begins with an etiquette and business negotiation process article before delving into strategies and advice in later articles.

Each article is written by an expert in the subject who has studied and/or has experience doing business in China. There are many real life illustrations of actual business success and failures. The authors describe the tactics used and why it was a good or bad strategy for the company. Also included is a hypothetical situation for a manager in China and four different perspectives on what the manager should do next.

Relevance
While the advice is very sound it is unclear how relevant some of the articles are since one dates back to 1994. In over a decade’s time the Chinese government may have changed regulation so much that the older articles may no longer be relevant. This is considering that in many of the articles authors have commented how fast business environment in China changes. Many of the articles are more recent with an original publication date of 2003.

The book is written for busy executives, thus gives great breadth but lacks depth that lower level managers need. For example, it gives many company examples of ones that enter China using joint ventures versus wholly foreign-owned enterprises. However, it does not go into detail of how to set up a wholly foreign-owned enterprise if that is the chosen direction of the company.

Each article is relatively short so a busy person can finish an article in one sitting. Since they are concise the reader does not have to worry whether he or she is wasting time on an irrelevant article. Also, each article has a different point with very little overlapping ideas.

The Good…
The fact that this book has great breadth makes it a good primer book before reading other books on more specific aspects of doing business in China. I found that one of the strong points was to use examples of actual companies instead of just theories. A variety of companies were used as examples instead of only American or multinational companies.

The most interesting article is the one about viewing Chinese companies as competitors. It warns against feeling “safe” because a multinational is larger, has more capital, or has a known brand. Chinese companies have shown that they can gain a significant market share in a short time. A table in “The Hidden Dragons” article shows a list of growing Chinese companies to look out for. These companies have captured a surprising market share in their respective niche market.

Another article that is beneficial is the case study in “Trouble in Paradise.” A manager in China is in a tough situation where his boss in America wants a higher ROI while his partners in China want to buy a fourth subsidiary, which would lower ROI for a few years. Four commentators offer advice as to what the American manager in China should do in evaluating his situation. This case study allows the reader to come up with his or her own advice and compare it with the advice in the book. The case study has more depth than the other articles and highlights problems that a foreign manager in China may be faced with.
Lastly, I like how the authors use key Chinese business terms and explain why they are important in business. The first article describes key terms in greater detail while later articles give a brief definition, unless the entire article revolves around the term. It is better to read the first article before the others.

… The Bad …
As with most business books this one is cut and dry. There is no humor to make it interesting, which is expected. At least the articles are short enough for the reader to not fall a sleep and real life examples were interesting. I doubt I would have stayed awake and finished the book as fast if it was a normal business book with longer chapters instead of short articles.

This book is not for someone who wants concrete plans and strategies for China. It has overviews of strategies and ideas but does not go further on how to implement them. Also, certain strategies mentioned are now being closely looked at by the U.S. government. The administrative arbitrage strategy in “The Forgotten Strategy” gives an example of using holding companies in the Cayman Islands to reduce corporate taxes. It is now a questionable strategy in today’s business environment. Some articles such as this particular one needs to be updated to match the current business environment.

The book does not go into details about how the Chinese doing business with non-Chinese. It would have been nice to know how the Chinese’s view of foreigners affects their business decisions or whether they bother trying to understand a foreigner’s way of conducting business. A Chinese perspective would have made the read even more interesting.

Lastly, it would be nice to have a quick reference section of the key Chinese terms with definitions and pronunciations. Not many people know the pronunciation of pinyin and the pinyin spelling do not make any sense phonetically.

… and The Recommendation
The Harvard Business Review on Doing Business in China is an excellent introductory text to read before starting on other books with more depth. Despite its dryness, the book does pique my interest in other books on business in China, particularly ones that use more detailed real life examples.