Final Reflections

It was fitting that my brief stint at Cal Poly would conclude just how it began: off and running. The International Business Tour, like the two summer courses, was an intense and stimulating academic experience. However, the trip to China was like no other course I have ever taken in my college experience. Talk about “learn by doing”, my days were busy and filled with many valuable learning opportunities.

China is an amazing country filled with abundant business opportunities. Capitalism and consumerism are breathing life into communist China. The numerous firm visits and the frequent shopping outings bear witness to the previous statement. Such large corporations as Sun Microsystems, Microsoft, and HSBC have a presence in China and I am more familiar with their business models because I visited these firms while in country. The trips to the different markets, where vendors compete for your business via a negotiated price, made it clear to me that free market practices are alive and well in China. In addition, I purchased a necklace for my wife from a chain store that had locations in Shenzhen and Shanghai and the experience was no different from a transaction in the United States.

The highlight of the trip for me was the numerous interactions with Chinese citizens. Whether the interaction occurred in a business transaction or a native practicing English, the experiences will never leave me. More specifically, two episodes from the tour are noteworthy.

The first episode occurred in Shanghai when my roommate, Adam, and I wandered the streets after dinner for a couple of hours. During our short adventure, we had several opportunities to interact with the people of Shanghai and it was unforgettable. We sat down in a bar where we were the only customers in the place and we had to communicate with hand gestures. In another instance, we stumbled upon an open-air market where there were few tourists and a vendor became so enraged and grabbed my arm because I would not purchase her shirt. My belief is that the woman attempted to force me into the transaction with her erratic behavior. Fortunately, I was able to hold my ground and not succumb to her desperate measures. On the final stop of our brief adventure, Adam and I discovered a barbershop down a dark alley that we decided to patronize. What was unique about the barbershop experience is that Adam and I had to communicate with hand gestures and pictures to show the barbers how we wanted our hair to be styled.

The second episode was English Corner where Chinese citizens practice their English and ask questions about the western world. It was a once in a lifetime opportunity and I am incredibly grateful for the experience. All the people who engaged me in conversation were delightful and they left me feeling humble and thankful at the same time. I left English Corner hoarse and I would have stayed longer if the opportunity presented itself.

On a less cheerful note, I have to mention the pollution that I witnessed. Being from southern California, I have experience with smog but I have never observed it so thick. In fact, the smog in China affected my eyes and throat like never before. Litter is ubiquitous and I saw Chinese citizens throwing trash on the ground on a regular basis. In addition, any fresh bodies of water I encountered while in China were squalid and opaque. However, these conditions would not prevent me from returning to China and I sincerely hope that as the country moves closer to modernization that this issue will become more important.

In conclusion, I hope that a study tour like this becomes a tradition for the Cal Poly MBA program. I recommend that all future MBA students take advantage of this wonderful opportunity. I will talk about this trip for many years to come.

Predeparture Research: Beijing

US Embassy/Commercial Attaché

This is an impressive and comprehensive site aimed at helping American companies doing business in China. In addition, the US Commercial Service assists Chinese buyers looking for US suppliers. The US Commercial Service has six offices in China and they have offices all across the United States. Based on the research from their website, protecting US export interests in China is the primary purpose of this entity and it satisfies me that my tax dollars contribute to this goal.

These two questions come to mind:

1. Will they help any US company regardless of size?
2. What US companies have you assisted in the past?

Sun Microsystems Engineering Center

It was somewhat difficult to determine anything from this website because it is Mandarin. Fortunately, I am familiar with the company and its history. In fact, I lost money in the stock market investing in Sun Microsystems in the early part of this decade. Please forgive me for the digression, but it is hard to forget the dotcom bubble. Anyway, it appears that the company is offering its Solaris 10 OS and the latest version of Java to customers in China.

Questions:
What type of technology solutions does Sun Microsystems perform for the Chinese government?
How does the company combat piracy in China?

Predeparture Research: Hangzhou/Suzhou Area

Suzhou Industrial Park

Back in 1992, the late Chinese leader, Deng Xiaoping, wanted to construct a modern industrial park using Singapore expertise. As a result, this park came into existence in 1994 through a joint effort between China and Singapore. The data provided on the website indicates that this park is a success. Based on statistics on the website, the GDP of Suzhou Industrial Park increased every year from 1994 through 2003 and all other economic indicators demonstrates that the park is growing. Why are the statistics only through year 2003 is a question that comes to mind.

Predeparture Research: Shanghai

PriceWaterhouseCoopers

This global company is the largest of the Big Four accounting firms. It offers services in the fields of assurance, tax, human resources, transactions, performance improvement and crisis management. According to their industry surveys, the China market has the highest level of interest of any of their growing markets. Based on the Annual Survey of Asian Tax Advisors, PricewaterhouseCoopers was voted the leading tax advisor in China in 2006. I would like to know how challenging it is for PricewaterhouseCoopers to stay on top of the rapidly evolving Chinese economy and taxation system.

CB Richard Ellis

Happy days for CB Richard Ellis. They recently announced that their earnings per share are up 108% for the first quarter of 2006, resulting in a three for one split of its common stock. The company specializes in commercial real estate and has offices in over fifty countries and, of course, CB Richard Ellis has a strong presence in China. In their May newsletter, CB Richard Ellis states that the expectations for China’s property market are “bullish” because of the possible increase in the valuation of the yuan. The company is an excellent position to experience this “bull” market if it takes place. I am curious to discover how much expansion has the company experienced in China over the last five years.

Shanghai Urban Planning Exhibition Hall

It is an attractive facility from the pictures on the home website. Fortunately, I was able to find another website briefly describing the Shanghai Urban Planning Exhibition Hall in English. The hall has a total floor space covering nineteen thousand square meters and highlights the city planning achievements of Shanghai. To put the rapid building in perspective, I hope there are many pictures from the past. I want to know how much expansion the city has experienced since China opened up its economy.

HSBC

HSBC is the largest foreign bank in China and has been in the country since 1865. With twelve branches in China and over five billion in US dollars invested, HSBC has clearly demonstrated a long-term commitment to the country. While browsing their website for China, I stumbled across their multi-currency account, which really caught my attention because of its novelty. This account allows the customer to place up to eight different currencies in his or her account. I wonder what the impetus behind this type of account was and how popular they are among their customers.

RR Donnelley

RR Donnelley has been offering print services for over 140 years and did over eight million dollars in sales in 2005. They have over 600 locations worldwide, including five locations in China. RR Donnelley entered China as a joint venture in 1993 and was the first US company since 1949 to receive a license to offer commercial print services in China. I am curious about their views on censorship and I would like to know to what extent, if any, the Chinese censors have eased up since 1993.

Microsoft Global Technical Service Center

This center has been in Shanghai since 1998 and Microsoft was the first Fortune 500 company to open a support center in the city. It surprised me that the center offers support not only in Asia-Pacific, but in Europe and the United States, as well. This makes me think about what types of support issues are prevalent in China and how do these issues differ from the United States and Europe. I also thought it was noteworthy to mention that the Microsoft Global Technical Service Center offers internships to Chinese college students.

Carre-Four

This French retailer appeared on the China scene in 1995 and has a presence in over twenty-nine countries. Carre-Four currently operates seventy-three hypermarkets and two-hundred thirty-four hard discount stores in China. A hypermarket is a large store that carries food and non-food items and stocks around eighty-thousand goods on its shelves and a hard discount store carries around eight-hundred food items. I am looking forward to visiting these stores because I am interested in discovering what types of food items the different stores offer. Are there any popular French products in China?

Predeparture Research: Shenzhen

Shenzhen Newly Ever Rise Electronics Co., Ltd

Unfortunately, the company’s website was down, but I was able to find a site that briefly described the company. Luckily, for me, the site was in English. The company makes products used in electrical appliances such as computers and color televisions. This information aroused my curiosity because now I wonder what companies use their products. In addition, I discovered that Shenzhen Newly Ever Rise Electronics is a joint venture and now I want to know who their partner is.

BBK Cell Phone Factory

From the pictures on the website, it appears that this company produces electronics in the form of portable mp3 players, cell phones, dvd players, and home audio systems. Because I was not able to find anything from a google search on this company, I think the market for BBK is only in China and possibly other parts of Asia. I believe asking about their market would be an excellent question to pose on our visit to their factory.

Yantian Seaport and Logistics Center

The pictures of the large containers on the website remind me of Long Beach. Being from Long Beach, I am familiar with some of the port operations because I have a couple of friends who work there. Because of this familiarity, some questions come to mind regarding the Yantian seaport. What is the amount of merchandise passing through the port annually? Is there a union presence at the port (the port of Long Beach has a very strong union presence)? What country is the port's leading destination for exports? What security precautions does the port undertake?

Book Review

Harvard Business Review on Doing Business in China

The Harvard Business Review on Doing Business in China is similar to One Billion Customers in that it is a business handbook on how to succeed in China. However, in comparison to One Billion Customers, the Harvard Business Review on Doing Business in China relies much less on stereotypes and it is a more scholarly read. There are eight entries, including one fictional case study, that describe in detail the intricacies of doing business in China. The entries explain what methods work in the developing economy of China and some of the methods that will ultimately fail. The entries cover Chinese negotiation style to the proper entry mode into doing business in China.

The Harvard Business Review on Doing Business in China begins with the description of the evolution of China’s market economy and the tremendous growth since 1979. In that same chapter, the authors describe the opportunities and risks for multinational companies doing business in China. There is a chapter dedicated to short-term results indicating how well a business will do over the long haul. The chapter that is a fictional case study offers advice from four experts on how to increase and maintain profits in China. All of the chapters include an executive summary and the opening chapter offers twenty questions to evaluate your China strategy and operations.

The purpose of the Harvard Business Review on Doing Business in China is to inform practitioners (managers, professionals, and multinational companies) on effective Chinese business practices. In fact, the back cover states that the Harvard Business Review series targets managers and professionals so they have the necessary information to remain competitive in their endeavors. I agree with this objective because I believe managers and professionals will gain valuable insight for their respective companies if they choose to read this book.

The strengths of the Harvard Business Review on Doing Business in China lie in the authors’ experiences and their writing abilities. The authors made their writing accessible and were explicit in their instructions on how to succeed in the Chinese business environment. Additionally, the authors present many statistics and graphs to support their recommendations and observations and this made me feel confident in their words. The chapter on Chinese negotiation style was my favorite because it outlined in detail the Chinese way of negotiation. This chapter includes a comparison of western negotiation style and the keys to successful negotiation between a westerner and a person of Chinese descent. Last, I really appreciated the insight into joint ventures that several of the authors put forth.

One weakness in the book deserves attention. Three of the chapters come from the nineties and in fact, one chapter is from as far back as 1994. I think this undermines the validity of the book to some degree because some of the information is out of date. For example, the chapter from 1994 states that KFC is returning to the market on a small scale in Hong Kong after the decline of its early business success. However, according to the most recent information, KFC is doing well in Hong Kong with fifty-two restaurants there.

Overall, I enjoyed reading the Harvard Business Review on Doing Business in China and I would recommend this book to my friends and colleagues. However, I would make sure to point out the weakness mentioned in the prior paragraph. Like One Billion Customers, I found this book to be more relevant to the study tour than The World is Flat.

Foot Binding

Hats off to Dr. Morris for a fabulous lecture on the history of China. The information from the lecture captured my interest and it made me think of the novel The Good Earth by Pearl S. Buck. More specifically, the practice of foot binding portrayed in the novel is what came to mind. I read the novel over ten years ago, but the images of this practice will never leave me.

I have included a link to a website that describes the practice of foot binding. In addition, the site has pictures of bound feet from many years ago. If you decide to check out this site, please share your thoughts on the MBA blog or on my personal blog. I am curious to hear your opinions. I have purposefully refrained from sharing my thoughts on the topic because I do not want to bias anyone who chooses to visit the link below.

http://www.conniewrite.com/footbinding.html

Book Review

One Billion Customers: Lessons from the Front Lines of Doing Business in China

By James McGregor

Fresh off from reading The World Is Flat, I expected One Billion Customers to be similar in its message. How wrong I was in that assumption. The book is not a historical treatise on modern globalization, but a survival guide for doing business in China. The author, who has extensive experience in China, offers his insight into Chinese business practices and culture.

One Billion Customers sets the stage with a brief history of China and the events leading up to the evolution of its market economy. The remaining chapters are accounts of Chinese business ventures that succeeded or failed. Rupert Murdoch’s struggles to enter the Chinese market are among the stories in the chapters. Another chapter discusses the Communist Party’s attempt at controlling the media and at the same time allowing enough public information so the country can compete in the global market. At the end of each chapter, McGregor summarizes the lessons of the ventures in “The Little Red Book of Business”.

The book contributes to the knowledge base of Chinese business and politics from a western perspective. Because the book is well written and highly accessible, it serves as a manual for any person or company planning to do business in China. I stress the word manual because the book is straightforward in its approach with many business lessons. Managers, entrepreneurs, and companies who plan to enter the Chinese market for the first time would benefit from reading this book. Of course, One Billion Customers is a must read for business students because of China’s future economic potential.

One Billion Customers strengths are in the author’s style of writing and the organization of the book. McGregor is concise and brutally honest about his observations and experiences. This is a valuable resource for the reader because it allows him or her to gain insight into Chinese business practices and culture. This insight will ultimately help the reader if he or she ever chooses to enter the Chinese market. Each chapter has the same format so the book is very reader friendly. This format allows the reader to focus on the many lessons in the book. In the last section, titled “What This Means for You”, McGregor describes how the details of the chapter can affect the reader when he or she does business in China. Finally, the chapter summary, “The Little Red Book of Business”, is another valuable tool for the reader. The reader can easily return to this section after completing the book and refresh his or her memory about the valuable information provided by the author.

If I had to choose a major weakness of the book, it would have to be its pessimistic tone. The author dedicates a large amount of ink to the negative aspects of doing business in China. I feel that a few more examples of successful ventures would have brought more balance to the book. I also felt that McGregor relied too heavily on stereotypes and this was unsettling to me. I am of aware of the stereotypes and maybe I am too optimistic, but I do not believe that the Chinese people fit neatly into McGregor’s descriptions. Unfortunately, I do not think many readers will share my optimism. The last weakness I observed is that the book dedicates only two paragraphs in the first chapter to the rise of the Communist Party and Chinese rule under Mao. For example, a description of the famine that resulted from the Great Leap Forward or the treatment of intellectuals during the Cultural Revolution could have provided more context to the evolution of Chinese culture.

In closing, One Billion Customers is an excellent book and James McGregor is an outstanding writer of nonfiction. In fact, I enjoyed reading this book more than I did reading The World is Flat. In addition, I found more value in One Billion Customers as it relates to the study tour. Like The World Is Flat, I would recommend One Billion Customers to friends and colleagues. Finally, I really appreciated the end of chapter summaries in “The Little Red Book of Business” and I will be revisiting them prior to my trip to China.