Religious Wars in the NDE Movement: Some Personal Reflections ...
Personal Reflections Report
175
1 st Term, 2010‐2011 Dec 06‐11 2010 MBAC6080W Business Field Trip – Beijing & Tianjin, CHINA Personal Reflections Report Professor: Ms. Ping Ping Fu
Transcript of Personal Reflections Report
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MBA6080_20110221.docMBAC6080W Business Field Trip – Beijing & Tianjin, CHINA
Personal Reflections Report
Andrew, CHAN Chi Hang.......................................................................................................................................... 17
Benjamin, CHIANG PeiChia..................................................................................................................................... 19
Brian, LEE Ho Yan..................................................................................................................................................... 22
Davy, YIU Wai .......................................................................................................................................................... 42
Jessica, ZHOU Wenchuan ........................................................................................................................................ 65
Joyce, YIP Ka Yee...................................................................................................................................................... 75
Marisa Chantal, POHL............................................................................................................................................ 115
Ryan, KOO Kyung Min............................................................................................................................................ 124
Tony, LAW.............................................................................................................................................................. 149
Tony, NG Tung Wing.............................................................................................................................................. 157
Yoji, OKADA ........................................................................................................................................................... 172
Alex, HO King Chung
(yuán qí, Origin)
About 10 months ago, it was March 10, 2010, I met Mr. Kenneth Mok (the Administrative director of the CUMBA program) for the MBA admission interview and I still remember his first question was why CUMBA program attracted me. My answer was pretty simple, "just because of the course has the China business concentration and the business study trip which will enable me to decide if I should move to China to continue my career."
As the local kid who was educated in Hong Kong when it was still the British colony, then studied in the university in England, witnessing the transfer of sovereignty and working in an international company, I have many exposures and mixed feelings when I worked with the colleagues and companies from China. Cultural and policies differences are the major issues but the more important is that, I suddenly realized that I am the hare in the "The Tortoise and the Hare" story. Ten years ago, I was travelling to Beijing to provide training to my colleagues and recently I am always the student and trained by my colleagues from the Mainland. I am also amused by the size of the projects in China. Last August, I was in Shanghai to conduct a project experience sharing session with the clients from a China tier2 bank and I started my presentation: "The project that I am going to share is the biggest teller system in HK but the capacity is not able to support half of your customers in Shanghai."
The schedule of the trip:
Pretrip meeting I (Oct 9, 2010) Briefing and "Doing business in China" by Mr. Fu Qiang (President, Yuanheng Biotech)
Pretrip meeting II (Oct 9, 2010) Group presentation on how we are going to study
Business field study (China) Date Dec 6, 2010 Dec 7, 2010 Dec 8, 2010 Dec 9, 2010 Dec 10, 2010 Dec 11/2010 Visits/Events Olympic
stadium Water Cube
)
)
My first lesson learnt following the government's policy
The business field trip started with the first meeting at Oct 9, 2010. Instead of just a briefing of the logistic arrangement, Professor Fu also invited Mr. Fu, the President of Yuanheg Biotech Company and a very experienced businessman to join the session. Mr. Fu shared his experiences and some tips on doing business in China. His advice is: follow the government's policy if you want to be successful in China.
During the entire business study trip, this advice was proven correct again and again. ENN () is a very good
example. The company started as a liquefied petroleum gas distributor and transforming into an innovative clean energy company and growing rapidly. Capital steel gave up the core factories and spent 5 years to move away from Beijing city to align with the government policy, and enjoy a new strategic location (first large scale steel factories that builds at the seashores) to help the company to extend to the overseas. Google China the company that withdraws the core business search engine from China market because of the China internet policy, is looking for new business opportunities and still staying in China. I still remember when my coursemate asked about the future plan of Google China, the answer was "We will see what we can do."
We all understand the theory of "sail against the current" () and therefore Mr. Fu's advice is easy to
understand. But what if the personal believes do not match with the government's policies? Do we still follow?
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This dilemma is one of the major reasons why I would like to join the trip and understand China better. Chinese government's policies definitely are not the devil's ideas but some may not be well accepted by the Western world. We were lucky that we had a lecture on "National Governance in Transition " at
the Peking University by Professor XU Xianglin , who introduced the complex Chinese government
structure and the difficulties to ensure the consistency in policy execution from central to provincial governments. More importantly is that Professor Xu highlighted that there is no similar scale of transition/transformation happened before for China to reference and follow. Therefore, the transition/transformation must be proceeded careful and slowly. And, we could not apply the standard that defined by the Western world to judge whether China is doing good or bad.
Together with the above "lessons," I do believe I should spend more time to understand the Chinese government's policies and the strategic direction in order to enable myself to develop a career in China. "We will see what we can do" also reminds me that no matter what kind of business opportunity, I should always remember my beliefs and find something that "I can do" ().
My second lesson learnt leaders, management style and corporate culture of the stateowned companies
We visited four stateowned companies during the trip. Before the trip, the images of stateowned companies were traditional, conservative, old fashioned, bulky, not efficient, and they did not care about the business results and ("meal in a large pot", a Chinese term to describe people in communist society sharing the
results together without differentiating the individuals’ contribution). After the first visit to Shougang (), my
understanding of the stateowned companies was completely changed. Our visit was the last one Shougang Beijing factory would ever offer as the company was moving away from Beijing to Caofeidian .
Immediately I was thinking the company was forced to follow the government's green policy. It gave up the base and spent a large amount of money to relocate to another location. During the visit, I was amused by the scale of the relocation and the position of the new factory. Caofeidian was a small island in the Bohai Bay ()
and recently developed as an industrial area by land reclamation. Shougang has built a port inside the new factory so that the company can immediately ship the heavy steels by lower cost ship transportation to other cities or other countries. What a strategic move! No wonder why the leader who led the tour had reminded us to pay attention on the future prospect of the company instead of the recent business results.
MBAC6080W Personal Reflections
A safety reminder to tell the employees to remember not to ride bicycles inside the factory for the sake of the family happiness and harmony.
The last production in the Shougang Beijing factory
After the trip, I spent more time to study this "mega migration of a steel factory." The project started in 2005 and the company spent 5 years to build the new factory and relocate the staffs and assets. The "relocation" plan matched with the company's maintenance schedule and therefore the company built the new factories and relocated those retiring factories one by one without a large amount of new investment. The new factory has the biggest blast furnace () in China and the design is mainly focus on recycling, for example, about 97% of
water can be recycled and reused. It is also highly efficient and only requires 20% of the original staffs to achieve higher yield. The original factory area in Beijing will be redeveloped as a residential and commercial area which will provide a good business opportunity for Shougang in the redhot property market. Therefore, the "mega migration" is not just to fulfill the government's plan but also introducing a large amount of new business opportunities to Shougang. It is a winwin situation which the government will benefit from the green environment in Beijing, more tax contribution from Shougang and the successful "mega migration" project is a good reference for the future consideration on how to relocate the other 46 large steel companies that located in the cities.
Another stateowned company that we had visited was BNBM. BNBM is a construction material supplier and it is one of the largest in Asia. The company has spent a lot of resources in research and focus on the high quality products. We were shown a "Lego house" which is long lasting, elegant and the price is reasonable. With the rapid economic growth in China, citizens are becoming richer and it is easy to predict that the "Lego house" will become a popular product shortly.
MBAC6080W Personal Reflections
The wall of the "Lego house". It looks thin but
it is very effective in reducing noise and keep
the house warm.
The "Lego house"
With the above 2 examples and other companies that we visited, I found that the stateowned companies are longterm oriented instead of focusing shortterm wins. The companies have strategies on how to grow the company and how to meet the government’s expectations. They are no longer bulky, inefficient and traditional.
Back to the Shougang "mega migration" project, the company has not laid off any staff because of the relocation. About 100,000 staffs were reallocated to other factories or projects. That made me start to think that may be
is actually a nice culture of the stateowned company. Western corporation are managed by the system
and many Chinese corporations are still managed like a family. The Shougang leader told us a story about a retired staff still returning to the factory and contributing his knowledge and experiences every day. The Shougang factory area that we visited contained schools, hospital and other facilities to support the staffs' daily activities. Instead of just maximizing the profit, many Chinese companies are still willing to spend more resources for the staffs in order to win the loyalty. Look back to the Foxconn incident that happened in 2010, may be what the staffs really need is not just the high salary but also the cares from the company and the feeling of "a home."
Other than the companies, I am also impressed by the leaders of the stateowned companies whom we met. Most of them already have master or doctoral degrees. They are open minded and willing to share the knowledge. Mr. Hua from Tianjin Teda Construction Group not just shared his point of view on the Chinese property market but also gave us a good lecture on value innovation and the uncertainty in customer demand by sharing his projects with us. The way he developed the estates is more advance and conscientious than the developers in Hong Kong.
The trip has introduced a new image of stateowned companies to me. The management style and company culture that I observed during the trip has inspired me to rethink about the nature of the corporation is not just making profits. May be there are still many things that I did not see or know as we were not staying long enough but, by just observing the materials that the leaders presented to us and the way on how they responded our
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questions, I am sure that there are many things for us to learn. Mr. Hua reminds us to read more books especially on economics is a very good advice to us as MBA students. Other than the above, the role of state owned companies in the government policy execution is also important. We would not be able to see the blue sky in Beijing if Shougang insisted to stay in the Beijing city. The society would become unstable and unemployment rate would increase if the 100,000 employees were not being handled properly.
My third lesson learnt West Vs. East
There are more and more foreigners working in China. Mr. Cory Grenier from Lenovo is a typical example. China is still a developing country and needs many experts from all over the world. In our trip, the professors that gave us lectures are all returnees from overseas. On one side, we see the culture mix as many foreigners are working in China, learning Putonghua, trying to adopt the Chinese culture and at the same time, many Chinese are studying in overseas and then return to China and local Chinese are learning the western cultures quickly. On the other side, western governments are trying to push for the RMB appreciation, pushing China to import their products and the Western media are sometimes wrongly report the Chinese government's policies or news. Full of contradictories.
I do not find a real solution from the trip as the West Vs. East conflicts are easily to be spotted during the trip when there were discussions on the environmental issues, RMB appreciation and government policies. There are many different understandings on those sensitive topics which, including myself, are sometimes involved in debates. There are different points of view and most of the time the debates were ended with disagreement. No matter who is right and who is wrong, with the globalization, the West vs. East conflicts are not good for the teamwork and as managerial staff, we need to ensure the harmony within the team.
Before I could find out on how to manage this conflict solution, I would like to study more about China in order to minimize any misunderstanding before I can explain and discuss with my foreigners colleagues. During the trip, I already found many misunderstandings on the Chinese companies and when we had the final presentation to summarize what we have learnt from the trip, our Germany coursemate was trying to share some of her point of view but once she started to speak, we misunderstood her meaning and thought that she was challenging China's environmental policies. After we briefly explained, she told us what she really wanted to say was the data that we presented was not what she used to see or read in Germany. She raised the concern on the western media not providing the full set of information and that always creates misunderstanding on China's policy. We could not change someone's view point but better understanding and better communication definitely is required to resolve the culture conflicts.
Summary
What we have learnt from this business trip is much more than the three points that I summarized in this report. Other than that the above three lessons learnt have fulfilled my original objective, the trip has motivated me to further study the business environment in China and enrich my experiences on how to work with my colleagues
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and clients in Mainland. An important thing that I have learnt from the trip is the "" (relationship) and "
" (face). Professor Wu from Tsinghua University reminds us that these are the two most important elements
of doing business in China. And, those require a long time to build.
China is still a developing country and has already created huge impact on the globe. The size of the markets in China has never appeared before and it will be a great experience if I can be involved. I am looking forward for this golden opportunity to work, learn and practice what I have learnt in China and contribute myself as a Chinese.
Actually this trip is my first time to Beijing as well as my first visit to a Chinese company. Because China is getting more and more important in understanding world economy, I wanted to see and feel from this trip what made them so powerful, what are they doing now, and where are they going now. I think I got some hints about the above questions from this field trip, which is very helpful to me. I want to talk about the hints I got from this trip in this report.
First of all, China seems to be the same as United States in 19th century, land of opportunity. As it is growing so fast, there are a lot of chances in almost every industry in China. In Tianjin, we had a chance to meet successful entrepreneurs in there. The one I met is doing five businesses at once, which was very impressive to me. And I also met with a Korean in Beijing who is running his own business in Beijing. Both entrepreneurs I met in China have one thing in common: the belief that China has a lot of opportunities. The entrepreneurship itself, I think, is the one that will make China much stronger in near future.
Second, it is common that developed countries are better at service area than developing countries. Like everybody else in this class, I was shocked by the service in Haidilao hot pot restaurant. As I am wearing glasses, they gave me a piece of cloth to clean glasses. And I asked an employee where Citibank ATM is. As he cannot speak English and I am not good at Chinese, communication was difficult. Nevertheless, he brought me downstairs and showed me some ATMs, where I could not find Citibank ATM. However, he said sorry to me several times with sincerity in his face. I have never experienced nor have expected such kind of service in my life. Haidilao is definitely creating a new business model in its own way. And I think there may be another Haidilaos in many service sectors, which can increase overall service level in China.
In the class at Tsinghua University, we had some dispute between Western students and the professor. That was a very good chance for me to understand what Chinese and Western think. I felt in this small dispute that China is more rational than what Westerners think. It looks as if Westerners are worrying about their position as China is growing so fast and that is the reason why China is reluctant to appraise RMB. However, the real reason of their weakness in business lies in their own reason not in RMB. So I really agree with the professor that US should go back to basic and fix their own problems. It seems to me that they understand others well as well as themselves.
Finally, as a Korean, I saw yellow dust many times in spring in Seoul, which is originated from China. Whenever there was yellow dust, we saw what’s going on in Beijing in TV news. It was so serious that I thought Beijing will be thick with yellow dust before this trip. However, when I just arrived in Beijing, I was somewhat surprised about the fact that it was not so bad. After visiting Xin’Ao group and Ecocity, I was able to find a hint of this change. China is really trying to keep their environment. It must be difficult to chase two hares at one,
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maintaining growth rate and keeping environment. However, many Chinese seems to agree with the idea that these should be chased at once, which I think is important to the world as well as China.
In conclusion, this trip was very good chance for me to grab some hints about knowing China. Every step that China takes is getting more and more important than before. So this trip also helped me by reminding me that I should know more about China.
MBAC6080W Personal Reflections
Preface
I had never been to Mainland China before the China business trip. What I knew about it came from my second hand experiences such as books, news and conversations with Chinese classmates. They are good sources for information, but I wanted to see and feel how it is with my own senses because I hope to work in Mainland China after the graduation. Through the trip, I got to have some understandings about China and Chinese business, though 8 days were not enough to apprehend all aspects of them. My understandings, however, might be confusing to other people because I concluded that China is difficult to define as one word. Like Yin Yang
(), it sometimes appears to have two opposite aspects at the same time. It is a socialist country while it has
harshly competitive market. Some of its technologies are as much advanced as many developed countries while some part of the society is still remaining same as developing countries. It has also high level of diversity thanks to its large population and territory. Generally, I would make an argument about what makes me think like this and in the end I would add my opinion about cultural conflicts.
Socialist Market Economy
One of the words explaining Chinese economic system is “Socialist Market Economy.” When I first hear this word in a China finance class the last semester, I felt as if it is a kind of contradiction though I knew China was doing well in terms of “Market Economy”. In my understanding, socialism economy is controlled by the government and capitalism economy is controlled by open markets. For me, China is basically a socialist country, though there is no perfect market economy in the world. I was wondering how much China is socialist and how much China is market friendly.
On the way to the Hotel from Beijing International Airport on the first day of the business trip, I thought I had found out a clue to grasp what “Socialist Market Economy in China” means. I saw Volkswagen, Benz, Toyota, Hyundai, Honda and especially Audi running on roads with Chinese local brands’ cars. To my surprise, the foreign automobile brands seemed to account for a lot of portion in cars on roads. South Korea, although it has defined itself as a market economy county, has not given a much opportunity to foreign brands in its automobile industry. Local companies were supported by South Korean government in the beginning of the business and have been protected de facto more than companies in other industries by it. Considering that South Korean market is relatively very small and a lot of foreign brands’ cars are produced in China by a kind of jointventure companies, I have found Chinese automobile market more open and face freer competition than that of South Korea.
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On the other hand, I had heard that most of big steel companies are state owned and their reform is made by the Government. During the visit to Shou Gang (Capital Steel), I made a question to the speaker whether its move to Tangshan in Hebei province has to do with a national plan to develop north eastern China and he replied it does. The company seemed apparently controlled by the Government. However, it is not the case that there is no competition in the market. I have strongly felt that Shou Gang is also trying to improve its productivity and technology to provide customers with high quality products so that it can survive in the harsh Chinese steel industry1.
A market is important in market economy because it causes competition, and therefore offers efficiency to a society. Market economists believe that planned economy would damage function of markets and consequently harm overall efficiency of the society. On the contrary to their beliefs, in China, competition in markets seems to be vivid even though economy is planned by the Government. Personally, I think the Chinese government is doing well because many Asian countries have achieved their economic success being led by governments, and stateowned companies contributed a lot to a nation’s fast growth.
However, more important things in this report are business aspects and in that viewpoint, I have felt doing the business in China in is not so easy in contrast with the belief that China is the land of new opportunity seeing a myriad of foreign and car makers. At the same time, I felt that a private company cannot compete with companies controlled by the Government. For example, I have heard that Shou Gang sometimes provides its products at low prices to boost the other industries. Mr. Fu Qiang also said during his presentation that big companies in terms of revenue are almost Government related companies and a private firm should get into the area that they don’t exist. In conclusion, I felt extremely competitive free markets and extremely government leading industries coexist in China.
Between a developed country and a developing country
China’s GDP per capita in 2009 is 3,648 US Dollars.2 Actually, it is relatively less than several developing countries. However, China is one of a few countries that have succeeded in launching a manned space ship and a lunar probe. In business, Google, most brilliant internet company, still keeps its office in China in spite of the censorship issues and Lenovo has acquired IBM PC division, which owns a high technology in manufacturing laptops. During the visit, Xin’Ao ENN shows advanced technologies in Green Energy industry and BNBM also shows its technology is not so far behind its global competitors from developed countries. Seeing these companies, I felt that China had already become a developed country.
1 According to a chinaknowledge.com, there are ten major players in the steel industry and they account only for slightly more than 50% of the production. In South Korea, POSCO, the biggest player in the industry takes up 60% of the production. 2 Korean National Statistics Office
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hospital. In contrast to its size, sanitary status was not so good. Especially, a bathroom was worse than I expected. It was very surprising to me that hospital’s sanitary was not good enough to protect patients’ health. If it is a normal building, I could understand it because I have used extremely dirty toilets many times in South Korea. However, hospitals should be different from other buildings in sanitary because they must do their best to avoid secondary infection inside hospital buildings where more germs and viruses are hanging around than normal buildings. I don’t think that hospital managers have not set up proper sanitary policies. I believe that it is highly likely that the policies are not obeyed well due to systematic flaws or insensibility of hospital workers.
In addition, driving habits of drivers in Beijing is different from those of developed countries. I was almost hit by a car a few times when I was crossing a street at a crosswalk because drivers didn’t care about pedestrians though it was a stop light for them and there was no traffic jam. These experiences of mine make me think that many people are not faithful to the basic rules.
Admittedly, faith to basic rules saves a lot of cost in doing business. For example, if workers do not abide by security policies of a company, business secrets of the firm could leak to its competitors, therefore management have to spend much money on watching its employees. And if workers do not much care about standards of the product quality for their convenience, low quality products would harm the reputation of the firm some day and it should be a great amount of cost in the future.
Diverse markets in one country
As everyone knows, China has over 1.3 billion of people. I’ve heard that in human history, we have never seen this kind of single big market emerging. European Union has around 900 million but it consists of several countries. The United States, which has been the biggest single market, has around 370 million of population. However, it is the true that China is one homogeneous market?
One country is one market. This was my basic idea and I had never thought about it in depth before the lecture about Chinese marketing in Tsinghua University. One part of the lecture was that life style in Chinese cities are not the same, and therefore marketing strategies should different. It is very interesting to me because South Korean cities are usually not considered different markets though there are some differences between them. On top of the professor’s explanation about it, I think basic factors like extensive territory and big population make distinct marketing strategy worth conducting. As for China, physical distance between cities is not comparable with that of South Korea, so it could cause clear differences of natural environment and people’s way of thinking. One of my Chinese friends who came from Chengdu has told me that women in Chengdu have elastic skins because of high humidity in Sichuan province. On the other hand, Beijing is vey arid because of the winds coming from innerMongolia and Siberia. It is highly likely that the needs of women in two cities for cosmetics are different and if I were a marketing manager of a cosmetic company, I would have to conduct different marketing strategy in two cities. Moreover, the population of each city is significantly big and 12 million people
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live in Chengdu and 17.5 million in Beijing.3 If they are small markets, distinct marketing is not efficient. However, I think it is not the case in China and even if it is not efficient right now, I anticipate it would be in the near future as GDP per capita of Chinese cities are rising rapidly.
Conclusion
It is often said that there is no competition and efficiency under the planned economy. However, the competition in China is as harsh as a capitalist economy even though some industry is under the government control. I’ve watched a documentary about Chinese history and I heard from it that Deng Xiaoping said that there is no capitalist economy without planning and no socialist economy with markets. I think Deng Xiaoping made a totally brand new “Socialist Market Economy” concept based on this idea. Foreigners like me who knows only about western economic system might have trouble understanding it because this concept has never been tried in other countries. However, it has been working very well and I think one wanting to do business in China must understand it to survive there.
As with economic system which has characteristics of Socialist economy and market economy, China has characteristics of developed countries and developing countries simultaneously. I think China would make a fast improvement in a lot of aspects, but businessmen need to consider where China currently stands in aspects relevant to their business. A great diversity that comes from the history and regional features of each province should be considered as well.
Andrew, CHAN Chi Hang
I have learnt a lot from this trip and I find it very inspirational. I have learnt many different things from each visit during the trip which I did not expect.
There were four visits that I found particularly interesting that I wanted to share. They are the visits to Google, ENN, Tsinghua university lecture, and Lenovo.
I have my own brand that focuses on manufacturing camera lenses for digital cameras. I tried my best to learn something out of each visit so that I can apply to my own business.
The Google visit was very interesting. I learnt that you couldn’t use the same business model that is successful in one county and directly apply it to another country. The speaker explained to us Google’s initial strategies for the US web browser market and how it did not work when applied to the China market. Consequently Baidu took over by filling in the gaps. My brand is quite successful in the US and European market. However, it has not been too successful in the Asian market. I originally planned to do the “do noting approach” like Google. I thought it just needed more time to spread. However, I changed my mind after listening to the efforts Google had to go through to strengthen its attractiveness in China. Asian markets need a more attractive pricing than US and European Markets. It is very difficult for the manufacturer to have a price cut. I’ve now changed my strategy and attracted Asian distributers to carry my brand to target the Asian markets.
The trip to Lenovo was very interesting as well. In a way I felt some sort of resemblance to the roots of the company. Lenovo, formally known as Legend, continually gives back to the community. It felt like a very right thing to do and so I’m also implementing donation from sales of my company to nonprofits upon returning to Hong Kong.
At the Lenovo talk, the speaker addressed issues such as to why they might have a low customer satisfaction despite having such innovative products. Lenovo is priced at a premium over its competitors at the professional notebook class. When there is difference in price, consumers expect problemfree computers. I learnt from this, for a growing brand, it is important to have a competitive price as customers’ expectations rise in correlation to price.
Lenovo is a very traditional brand but they are now making many efforts to involve style and innovation in their products that is usually not the current brand image they have. They showed us the before and after photos of their designs of their must current lineup. This shows that brands within China has now evolved and the element of the design are highly valued. I was in Copenhagen for the Europe study trip last year and during a visit to the designer Dustbin they said design never goes out of fashion. During a visit to Norman Copenhagen the speaker said design adds value to a product. Companies in China are known for cheap packaging, zero design. Lenovo is a role model for a Chinese company going through globalization and this is a huge break through.
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Lenovo has their own Ideapad line and their new and innovative items show that they are ready to accept new challenges. This is a huge breakthrough for any Chinese company. Usually design means added manufacturing cost and therefore a higher retail price. Lenovo’s products do seem to have a premium over its competitors. In the short run the public will view it is a premium in terms of comparable specifications. However, in the long run people will start to realize they are paying for the design and not a premium for comparable specs and this is a great move! The third talk that really inspired me is the talk at Tsinghua University. We were taught about online business on taobao.com.
Prior to the talk I always had an impression that there is no space for growth and earnings for sellers on taobao. Entry to the market is low and everyone can easily become a seller on taobao. There are hundreds to thousands of sellers that may sell the same product. The competition one has over the other is a cheaper price. Due to this issue, I was unwilling to explore the taobao market opportunities. The sample case the lecturer gave was the Japanese brand Uni Quo. They did not have much business when they opened up their online store. However, when they made the exact same website on taobao, sales went up dramatically and surpassed the annual sales of their certain stores within two weeks! I was really surprised when I heard about this. It seems like I have left one kind of seller out. The manufacturer is the winner whoever ends up selling their products. I suspect the future trend of online sales will be taken over by all the big brand and manufactures, as they are the only ones possible to sell a product without competition.
The other speaker at the Tsinghua University told us about the Chinese network card manufactures. One is Huawei and the other is ZTE. Their main strength is low cost. At the moment, one of the strength of my brand is high value at a low price. However, I was really afraid the low price image will stick and the brand will not be able to increase the price in the future. I raised the question on this issue and I was told Chinese can enter the market easily because they are willing to work harder for a lower price. However, when they have 80% of the market share they can consider price increase. I found this talk very inspiring and upon returning I have been working hard looking for worldwide distributors for my camera lens. It feels very weird recently as my sales volume increased dramatically with my price drops but at the same time I am earning about the same as before. What I have gained is more exposure. However, I trust what I have learned and will put it to execution.
Overall I am very satisfied with what I have learned in the trip. I’ve managed to apply many of the things I have learnt into my business and that was my primary goal in terms of the learning outcome for the trip!
MBAC6080W Personal Reflections
Benjamin, CHIANG PeiChia
Lenovo success & BenQ fail
In 2004, Lenovo announced that they would buy PC department of IBM by using 1.25 billion U.S. dollars. Also, in 2005, BenQ, a Taiwanese computer company, announced that they would buy mobile phone department of Siemens and Siemens would give 250 million E.U. dollars to BenQ. Both of mergers and acquisitions had the same target, building a global brand in PC and mobile phone industry. However, Liu Chuanzhi, CEO of Lenovo, successfully merged PC department of IBM and made Lenovo one of world's top five brands in PC industry. KY Lee, CEO of BenQ, made BenQ’s mobile phone out of the market.
Mr. Liu would like to reflect IBM highquality image to the Lenovo computer. This strategy was not fully successful and made Lenovo lost a lot of international market share. But Lenovo could be compensated by growing China market. If we compare the market situation that BenQ faced, the market share of mobile phone which Siemens occupied was continuingly declining. On the other hand, Lenovo's expertise is in cost control. Therefore, Lenovo could use low cost product with IBM image to create a good market position. At the beginning, BenQ also wanted to use the low cost way to produce mobile phone in China. They wanted to close Germany plant instead of spending 1.5 million E.U. dollars every day. Nevertheless, Germany union protested and then created a lot of negative news. Finally, the value of international brands decreased rapidly. And the losses of mobile phone department in BenQ were 600 million E.U. dollars in 2006. Comparing the two cases, we know that Mr. Liu and Mr. Lee both are ambitious people in setting up a global famous company. Mr. Lee overestimated the risk tolerance for BenQ, but Mr. Liu made the right decision for Lenovo.
When I visited Lenovo, I found that Lenovo has high degree of internationalization. There were a lot of foreign staff and local staff also could speak fluent English. I think that is because Lenovo established dual headquarters in the United States and China when Lenovo acquired the PC department of IBM. This strategy made senior management and external contact of the international community still retains intact. And a lot of local staff have opportunities to make relationship with foreign staff by using English. This helped the company build its international image, as well as maintain the stability of the original international customers. Besides, local staff must have international view and good English skill because their superior could be foreign. They need these professional skills to make their boss to see the results of people’s efforts. For example, the CEO of Acer is a foreign person, not Taiwanese. After Acer’s board of directors invite foreign person to become the CEO, this company really transferred from a Taiwan company to an international company. Based on Lenovo and Acer cases, I believe that appropriate proportion of foreign workers in the company could help company internationalization quickly.
MBAC6080W Personal Reflections
China view v.s. Western view
“Exchange rate” is always a hot topic during this economic situation. Certainly, we always discussed this topic with professor when we got the lecture in Tsing Hua University. A lot of Chinese students and Western students debated whether RMB should appreciate. Most of students who come from Asia would agree that their national currencies should not be appreciated to avoid recession in export. However, other students who come from western countries would think that they undervalued currencies result in the imbalance of international trade. We also could find that it was not easy for western students to give up their insistence. If we could watch CNN and BBC news every day, we would find that the news is always reported in western point of view. They always give a lot of criticism about Chinese government. Under such statements every day, foreign people finally would be persuaded that undervalue RMB is so evil and unfair.
Therefore, I suggest that a lot of foreigners need to read the book “China’s Megatrends—The 8 Pillars of a New Society”, which was written by John Naisbitt and Doris Naisbitt. In this book, they would make western people understand that China is a very special country due to its culture and its huge population. In the past, people always prefer to use western view to analyze China. People think China need to follow the western step to develop country. However, Naisbitt suggested that Chinese government should develop the country by themselves, instead of western rule. If we review the example of Japan, it followed western rule to appreciate its currencies quickly. As a result, the Japan economy has already fallen down more than ten years.
I always believe that Chinese government should appreciate RMB slowly. It could assist Chinese economies in successful transition. On the other hand, it could also make Chinese society maintain stable situation in the future. If RMB appreciate too fast, it would cause millions of people lose their jobs and cause a lot of social problems. Finally, this situation would not be good for other countries. A stable China is really helpful for global economies.
“Democracy” is another important topic which is always discussed by a lot of western people. I totally agree that democracy and freedom are a basic human right. Is westernstyle democracy suitable for China? I think the answer is negative. It is not suitable for China. For example, Taiwan is the first democracy country in Chinese society. However, in the past ten years, Taiwanese economy did not have any significant progress. Congress fought every day. During election time, anonymous letters and violence occupied the headlines .The problem was democracy made a lot of battles between the two parties and then economic develop was stopped. At this moment, the critical issue for the Communist Party of China is how to prevent every Chinese person from starving. It is not easy to find a solution, which could make everyone have a job to support his/her family. Based on Taiwan’s experience, the process for democracy could create social unrest for a long time. This result is not the Chinese government can afford at this stage. On the other hand, imperial rule has been practiced in China thousands of years. In culture and idea of Chinese people, the thinking of democracy could change their everyday life. Therefore, China must find its own way, which is suitable for the process of democratization. This process may last for sever decades. But, I always believe that a stable China is good for every country in the world.
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Based on the above discussion, I think Chinese government should solve economic problem first and then promote political reforms. With the further opening up the media and economic, many contradictions will become even more serious than before. Imbalance in economic and social development makes serious gap between poor and wealth people. Government and the laws are not perfect, making it possible for government officials to corrupt. The future of China is able to successfully take policy to address these issues and last stable development. Not only for China itself but also for many developing countries around the world, it could be of great significance.
SinoSingapore Tianjin Ecocity
China’s Change and the future
The Forbidden City Today
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Steel Manufacturing in China The Great Leap Forward and the ShouGang Steel Factory in Beijing
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Chinese steel nowadays accounts for more than 30% of the global steel production. ShouGang indeed started to produce steel during the Great Leap Forward (or you may say it’s a consequence of Great Leap Forward). ShouGang today is a successful company with revenue over 100 billion Yuen every year. The factory in Beijing where we visited was still producing on the day, although it was to close entirely the following day. The facilities looked old but it was huge and I had never seen such a large factory (First time I saw heavy industry production). I can see the hard work that people put in during the ‘Great Leap Forward’. I appreciate the vision of Mao although it failed at the very first beginning. We did start producing steel because of the ‘Great Leap Forward’. There is a Chinese idiom ‘, ’. The successfulness we saw today comes from the failure of
Great Leap Forward.
Cultural ChangeCultural Revolution, Google and Scholars in China
In 195657, China did encourage open criticism and welcome different points of views. Chinese intellectuals and scholars returned from overseas helped with reconstruction. On the other hand, open criticism always led to the instability of the leader. There was a different view for developing China within the Party in 1960s. The leader, Mao, in order to further strengthen his position, purged different views. He started the cultural revolution. He made all people worship him, published little red book of Mao’s selected thoughts, set up red guards. During that period, he controlled people’s thought, blocked the information, destroyed books and killed scholars. Some scholars nowadays argue that if there was no cultural revolution, China would at least be moved 10 years forward. In the past, our thought had been depressed.
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EcoCity Today Leader’s vision
EcoCity is a green city that is rarely found in the world at this moment. EcoCity will have ambient air quali
Personal Reflections Report
Andrew, CHAN Chi Hang.......................................................................................................................................... 17
Benjamin, CHIANG PeiChia..................................................................................................................................... 19
Brian, LEE Ho Yan..................................................................................................................................................... 22
Davy, YIU Wai .......................................................................................................................................................... 42
Jessica, ZHOU Wenchuan ........................................................................................................................................ 65
Joyce, YIP Ka Yee...................................................................................................................................................... 75
Marisa Chantal, POHL............................................................................................................................................ 115
Ryan, KOO Kyung Min............................................................................................................................................ 124
Tony, LAW.............................................................................................................................................................. 149
Tony, NG Tung Wing.............................................................................................................................................. 157
Yoji, OKADA ........................................................................................................................................................... 172
Alex, HO King Chung
(yuán qí, Origin)
About 10 months ago, it was March 10, 2010, I met Mr. Kenneth Mok (the Administrative director of the CUMBA program) for the MBA admission interview and I still remember his first question was why CUMBA program attracted me. My answer was pretty simple, "just because of the course has the China business concentration and the business study trip which will enable me to decide if I should move to China to continue my career."
As the local kid who was educated in Hong Kong when it was still the British colony, then studied in the university in England, witnessing the transfer of sovereignty and working in an international company, I have many exposures and mixed feelings when I worked with the colleagues and companies from China. Cultural and policies differences are the major issues but the more important is that, I suddenly realized that I am the hare in the "The Tortoise and the Hare" story. Ten years ago, I was travelling to Beijing to provide training to my colleagues and recently I am always the student and trained by my colleagues from the Mainland. I am also amused by the size of the projects in China. Last August, I was in Shanghai to conduct a project experience sharing session with the clients from a China tier2 bank and I started my presentation: "The project that I am going to share is the biggest teller system in HK but the capacity is not able to support half of your customers in Shanghai."
The schedule of the trip:
Pretrip meeting I (Oct 9, 2010) Briefing and "Doing business in China" by Mr. Fu Qiang (President, Yuanheng Biotech)
Pretrip meeting II (Oct 9, 2010) Group presentation on how we are going to study
Business field study (China) Date Dec 6, 2010 Dec 7, 2010 Dec 8, 2010 Dec 9, 2010 Dec 10, 2010 Dec 11/2010 Visits/Events Olympic
stadium Water Cube
)
)
My first lesson learnt following the government's policy
The business field trip started with the first meeting at Oct 9, 2010. Instead of just a briefing of the logistic arrangement, Professor Fu also invited Mr. Fu, the President of Yuanheg Biotech Company and a very experienced businessman to join the session. Mr. Fu shared his experiences and some tips on doing business in China. His advice is: follow the government's policy if you want to be successful in China.
During the entire business study trip, this advice was proven correct again and again. ENN () is a very good
example. The company started as a liquefied petroleum gas distributor and transforming into an innovative clean energy company and growing rapidly. Capital steel gave up the core factories and spent 5 years to move away from Beijing city to align with the government policy, and enjoy a new strategic location (first large scale steel factories that builds at the seashores) to help the company to extend to the overseas. Google China the company that withdraws the core business search engine from China market because of the China internet policy, is looking for new business opportunities and still staying in China. I still remember when my coursemate asked about the future plan of Google China, the answer was "We will see what we can do."
We all understand the theory of "sail against the current" () and therefore Mr. Fu's advice is easy to
understand. But what if the personal believes do not match with the government's policies? Do we still follow?
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This dilemma is one of the major reasons why I would like to join the trip and understand China better. Chinese government's policies definitely are not the devil's ideas but some may not be well accepted by the Western world. We were lucky that we had a lecture on "National Governance in Transition " at
the Peking University by Professor XU Xianglin , who introduced the complex Chinese government
structure and the difficulties to ensure the consistency in policy execution from central to provincial governments. More importantly is that Professor Xu highlighted that there is no similar scale of transition/transformation happened before for China to reference and follow. Therefore, the transition/transformation must be proceeded careful and slowly. And, we could not apply the standard that defined by the Western world to judge whether China is doing good or bad.
Together with the above "lessons," I do believe I should spend more time to understand the Chinese government's policies and the strategic direction in order to enable myself to develop a career in China. "We will see what we can do" also reminds me that no matter what kind of business opportunity, I should always remember my beliefs and find something that "I can do" ().
My second lesson learnt leaders, management style and corporate culture of the stateowned companies
We visited four stateowned companies during the trip. Before the trip, the images of stateowned companies were traditional, conservative, old fashioned, bulky, not efficient, and they did not care about the business results and ("meal in a large pot", a Chinese term to describe people in communist society sharing the
results together without differentiating the individuals’ contribution). After the first visit to Shougang (), my
understanding of the stateowned companies was completely changed. Our visit was the last one Shougang Beijing factory would ever offer as the company was moving away from Beijing to Caofeidian .
Immediately I was thinking the company was forced to follow the government's green policy. It gave up the base and spent a large amount of money to relocate to another location. During the visit, I was amused by the scale of the relocation and the position of the new factory. Caofeidian was a small island in the Bohai Bay ()
and recently developed as an industrial area by land reclamation. Shougang has built a port inside the new factory so that the company can immediately ship the heavy steels by lower cost ship transportation to other cities or other countries. What a strategic move! No wonder why the leader who led the tour had reminded us to pay attention on the future prospect of the company instead of the recent business results.
MBAC6080W Personal Reflections
A safety reminder to tell the employees to remember not to ride bicycles inside the factory for the sake of the family happiness and harmony.
The last production in the Shougang Beijing factory
After the trip, I spent more time to study this "mega migration of a steel factory." The project started in 2005 and the company spent 5 years to build the new factory and relocate the staffs and assets. The "relocation" plan matched with the company's maintenance schedule and therefore the company built the new factories and relocated those retiring factories one by one without a large amount of new investment. The new factory has the biggest blast furnace () in China and the design is mainly focus on recycling, for example, about 97% of
water can be recycled and reused. It is also highly efficient and only requires 20% of the original staffs to achieve higher yield. The original factory area in Beijing will be redeveloped as a residential and commercial area which will provide a good business opportunity for Shougang in the redhot property market. Therefore, the "mega migration" is not just to fulfill the government's plan but also introducing a large amount of new business opportunities to Shougang. It is a winwin situation which the government will benefit from the green environment in Beijing, more tax contribution from Shougang and the successful "mega migration" project is a good reference for the future consideration on how to relocate the other 46 large steel companies that located in the cities.
Another stateowned company that we had visited was BNBM. BNBM is a construction material supplier and it is one of the largest in Asia. The company has spent a lot of resources in research and focus on the high quality products. We were shown a "Lego house" which is long lasting, elegant and the price is reasonable. With the rapid economic growth in China, citizens are becoming richer and it is easy to predict that the "Lego house" will become a popular product shortly.
MBAC6080W Personal Reflections
The wall of the "Lego house". It looks thin but
it is very effective in reducing noise and keep
the house warm.
The "Lego house"
With the above 2 examples and other companies that we visited, I found that the stateowned companies are longterm oriented instead of focusing shortterm wins. The companies have strategies on how to grow the company and how to meet the government’s expectations. They are no longer bulky, inefficient and traditional.
Back to the Shougang "mega migration" project, the company has not laid off any staff because of the relocation. About 100,000 staffs were reallocated to other factories or projects. That made me start to think that may be
is actually a nice culture of the stateowned company. Western corporation are managed by the system
and many Chinese corporations are still managed like a family. The Shougang leader told us a story about a retired staff still returning to the factory and contributing his knowledge and experiences every day. The Shougang factory area that we visited contained schools, hospital and other facilities to support the staffs' daily activities. Instead of just maximizing the profit, many Chinese companies are still willing to spend more resources for the staffs in order to win the loyalty. Look back to the Foxconn incident that happened in 2010, may be what the staffs really need is not just the high salary but also the cares from the company and the feeling of "a home."
Other than the companies, I am also impressed by the leaders of the stateowned companies whom we met. Most of them already have master or doctoral degrees. They are open minded and willing to share the knowledge. Mr. Hua from Tianjin Teda Construction Group not just shared his point of view on the Chinese property market but also gave us a good lecture on value innovation and the uncertainty in customer demand by sharing his projects with us. The way he developed the estates is more advance and conscientious than the developers in Hong Kong.
The trip has introduced a new image of stateowned companies to me. The management style and company culture that I observed during the trip has inspired me to rethink about the nature of the corporation is not just making profits. May be there are still many things that I did not see or know as we were not staying long enough but, by just observing the materials that the leaders presented to us and the way on how they responded our
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questions, I am sure that there are many things for us to learn. Mr. Hua reminds us to read more books especially on economics is a very good advice to us as MBA students. Other than the above, the role of state owned companies in the government policy execution is also important. We would not be able to see the blue sky in Beijing if Shougang insisted to stay in the Beijing city. The society would become unstable and unemployment rate would increase if the 100,000 employees were not being handled properly.
My third lesson learnt West Vs. East
There are more and more foreigners working in China. Mr. Cory Grenier from Lenovo is a typical example. China is still a developing country and needs many experts from all over the world. In our trip, the professors that gave us lectures are all returnees from overseas. On one side, we see the culture mix as many foreigners are working in China, learning Putonghua, trying to adopt the Chinese culture and at the same time, many Chinese are studying in overseas and then return to China and local Chinese are learning the western cultures quickly. On the other side, western governments are trying to push for the RMB appreciation, pushing China to import their products and the Western media are sometimes wrongly report the Chinese government's policies or news. Full of contradictories.
I do not find a real solution from the trip as the West Vs. East conflicts are easily to be spotted during the trip when there were discussions on the environmental issues, RMB appreciation and government policies. There are many different understandings on those sensitive topics which, including myself, are sometimes involved in debates. There are different points of view and most of the time the debates were ended with disagreement. No matter who is right and who is wrong, with the globalization, the West vs. East conflicts are not good for the teamwork and as managerial staff, we need to ensure the harmony within the team.
Before I could find out on how to manage this conflict solution, I would like to study more about China in order to minimize any misunderstanding before I can explain and discuss with my foreigners colleagues. During the trip, I already found many misunderstandings on the Chinese companies and when we had the final presentation to summarize what we have learnt from the trip, our Germany coursemate was trying to share some of her point of view but once she started to speak, we misunderstood her meaning and thought that she was challenging China's environmental policies. After we briefly explained, she told us what she really wanted to say was the data that we presented was not what she used to see or read in Germany. She raised the concern on the western media not providing the full set of information and that always creates misunderstanding on China's policy. We could not change someone's view point but better understanding and better communication definitely is required to resolve the culture conflicts.
Summary
What we have learnt from this business trip is much more than the three points that I summarized in this report. Other than that the above three lessons learnt have fulfilled my original objective, the trip has motivated me to further study the business environment in China and enrich my experiences on how to work with my colleagues
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and clients in Mainland. An important thing that I have learnt from the trip is the "" (relationship) and "
" (face). Professor Wu from Tsinghua University reminds us that these are the two most important elements
of doing business in China. And, those require a long time to build.
China is still a developing country and has already created huge impact on the globe. The size of the markets in China has never appeared before and it will be a great experience if I can be involved. I am looking forward for this golden opportunity to work, learn and practice what I have learnt in China and contribute myself as a Chinese.
Actually this trip is my first time to Beijing as well as my first visit to a Chinese company. Because China is getting more and more important in understanding world economy, I wanted to see and feel from this trip what made them so powerful, what are they doing now, and where are they going now. I think I got some hints about the above questions from this field trip, which is very helpful to me. I want to talk about the hints I got from this trip in this report.
First of all, China seems to be the same as United States in 19th century, land of opportunity. As it is growing so fast, there are a lot of chances in almost every industry in China. In Tianjin, we had a chance to meet successful entrepreneurs in there. The one I met is doing five businesses at once, which was very impressive to me. And I also met with a Korean in Beijing who is running his own business in Beijing. Both entrepreneurs I met in China have one thing in common: the belief that China has a lot of opportunities. The entrepreneurship itself, I think, is the one that will make China much stronger in near future.
Second, it is common that developed countries are better at service area than developing countries. Like everybody else in this class, I was shocked by the service in Haidilao hot pot restaurant. As I am wearing glasses, they gave me a piece of cloth to clean glasses. And I asked an employee where Citibank ATM is. As he cannot speak English and I am not good at Chinese, communication was difficult. Nevertheless, he brought me downstairs and showed me some ATMs, where I could not find Citibank ATM. However, he said sorry to me several times with sincerity in his face. I have never experienced nor have expected such kind of service in my life. Haidilao is definitely creating a new business model in its own way. And I think there may be another Haidilaos in many service sectors, which can increase overall service level in China.
In the class at Tsinghua University, we had some dispute between Western students and the professor. That was a very good chance for me to understand what Chinese and Western think. I felt in this small dispute that China is more rational than what Westerners think. It looks as if Westerners are worrying about their position as China is growing so fast and that is the reason why China is reluctant to appraise RMB. However, the real reason of their weakness in business lies in their own reason not in RMB. So I really agree with the professor that US should go back to basic and fix their own problems. It seems to me that they understand others well as well as themselves.
Finally, as a Korean, I saw yellow dust many times in spring in Seoul, which is originated from China. Whenever there was yellow dust, we saw what’s going on in Beijing in TV news. It was so serious that I thought Beijing will be thick with yellow dust before this trip. However, when I just arrived in Beijing, I was somewhat surprised about the fact that it was not so bad. After visiting Xin’Ao group and Ecocity, I was able to find a hint of this change. China is really trying to keep their environment. It must be difficult to chase two hares at one,
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maintaining growth rate and keeping environment. However, many Chinese seems to agree with the idea that these should be chased at once, which I think is important to the world as well as China.
In conclusion, this trip was very good chance for me to grab some hints about knowing China. Every step that China takes is getting more and more important than before. So this trip also helped me by reminding me that I should know more about China.
MBAC6080W Personal Reflections
Preface
I had never been to Mainland China before the China business trip. What I knew about it came from my second hand experiences such as books, news and conversations with Chinese classmates. They are good sources for information, but I wanted to see and feel how it is with my own senses because I hope to work in Mainland China after the graduation. Through the trip, I got to have some understandings about China and Chinese business, though 8 days were not enough to apprehend all aspects of them. My understandings, however, might be confusing to other people because I concluded that China is difficult to define as one word. Like Yin Yang
(), it sometimes appears to have two opposite aspects at the same time. It is a socialist country while it has
harshly competitive market. Some of its technologies are as much advanced as many developed countries while some part of the society is still remaining same as developing countries. It has also high level of diversity thanks to its large population and territory. Generally, I would make an argument about what makes me think like this and in the end I would add my opinion about cultural conflicts.
Socialist Market Economy
One of the words explaining Chinese economic system is “Socialist Market Economy.” When I first hear this word in a China finance class the last semester, I felt as if it is a kind of contradiction though I knew China was doing well in terms of “Market Economy”. In my understanding, socialism economy is controlled by the government and capitalism economy is controlled by open markets. For me, China is basically a socialist country, though there is no perfect market economy in the world. I was wondering how much China is socialist and how much China is market friendly.
On the way to the Hotel from Beijing International Airport on the first day of the business trip, I thought I had found out a clue to grasp what “Socialist Market Economy in China” means. I saw Volkswagen, Benz, Toyota, Hyundai, Honda and especially Audi running on roads with Chinese local brands’ cars. To my surprise, the foreign automobile brands seemed to account for a lot of portion in cars on roads. South Korea, although it has defined itself as a market economy county, has not given a much opportunity to foreign brands in its automobile industry. Local companies were supported by South Korean government in the beginning of the business and have been protected de facto more than companies in other industries by it. Considering that South Korean market is relatively very small and a lot of foreign brands’ cars are produced in China by a kind of jointventure companies, I have found Chinese automobile market more open and face freer competition than that of South Korea.
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On the other hand, I had heard that most of big steel companies are state owned and their reform is made by the Government. During the visit to Shou Gang (Capital Steel), I made a question to the speaker whether its move to Tangshan in Hebei province has to do with a national plan to develop north eastern China and he replied it does. The company seemed apparently controlled by the Government. However, it is not the case that there is no competition in the market. I have strongly felt that Shou Gang is also trying to improve its productivity and technology to provide customers with high quality products so that it can survive in the harsh Chinese steel industry1.
A market is important in market economy because it causes competition, and therefore offers efficiency to a society. Market economists believe that planned economy would damage function of markets and consequently harm overall efficiency of the society. On the contrary to their beliefs, in China, competition in markets seems to be vivid even though economy is planned by the Government. Personally, I think the Chinese government is doing well because many Asian countries have achieved their economic success being led by governments, and stateowned companies contributed a lot to a nation’s fast growth.
However, more important things in this report are business aspects and in that viewpoint, I have felt doing the business in China in is not so easy in contrast with the belief that China is the land of new opportunity seeing a myriad of foreign and car makers. At the same time, I felt that a private company cannot compete with companies controlled by the Government. For example, I have heard that Shou Gang sometimes provides its products at low prices to boost the other industries. Mr. Fu Qiang also said during his presentation that big companies in terms of revenue are almost Government related companies and a private firm should get into the area that they don’t exist. In conclusion, I felt extremely competitive free markets and extremely government leading industries coexist in China.
Between a developed country and a developing country
China’s GDP per capita in 2009 is 3,648 US Dollars.2 Actually, it is relatively less than several developing countries. However, China is one of a few countries that have succeeded in launching a manned space ship and a lunar probe. In business, Google, most brilliant internet company, still keeps its office in China in spite of the censorship issues and Lenovo has acquired IBM PC division, which owns a high technology in manufacturing laptops. During the visit, Xin’Ao ENN shows advanced technologies in Green Energy industry and BNBM also shows its technology is not so far behind its global competitors from developed countries. Seeing these companies, I felt that China had already become a developed country.
1 According to a chinaknowledge.com, there are ten major players in the steel industry and they account only for slightly more than 50% of the production. In South Korea, POSCO, the biggest player in the industry takes up 60% of the production. 2 Korean National Statistics Office
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hospital. In contrast to its size, sanitary status was not so good. Especially, a bathroom was worse than I expected. It was very surprising to me that hospital’s sanitary was not good enough to protect patients’ health. If it is a normal building, I could understand it because I have used extremely dirty toilets many times in South Korea. However, hospitals should be different from other buildings in sanitary because they must do their best to avoid secondary infection inside hospital buildings where more germs and viruses are hanging around than normal buildings. I don’t think that hospital managers have not set up proper sanitary policies. I believe that it is highly likely that the policies are not obeyed well due to systematic flaws or insensibility of hospital workers.
In addition, driving habits of drivers in Beijing is different from those of developed countries. I was almost hit by a car a few times when I was crossing a street at a crosswalk because drivers didn’t care about pedestrians though it was a stop light for them and there was no traffic jam. These experiences of mine make me think that many people are not faithful to the basic rules.
Admittedly, faith to basic rules saves a lot of cost in doing business. For example, if workers do not abide by security policies of a company, business secrets of the firm could leak to its competitors, therefore management have to spend much money on watching its employees. And if workers do not much care about standards of the product quality for their convenience, low quality products would harm the reputation of the firm some day and it should be a great amount of cost in the future.
Diverse markets in one country
As everyone knows, China has over 1.3 billion of people. I’ve heard that in human history, we have never seen this kind of single big market emerging. European Union has around 900 million but it consists of several countries. The United States, which has been the biggest single market, has around 370 million of population. However, it is the true that China is one homogeneous market?
One country is one market. This was my basic idea and I had never thought about it in depth before the lecture about Chinese marketing in Tsinghua University. One part of the lecture was that life style in Chinese cities are not the same, and therefore marketing strategies should different. It is very interesting to me because South Korean cities are usually not considered different markets though there are some differences between them. On top of the professor’s explanation about it, I think basic factors like extensive territory and big population make distinct marketing strategy worth conducting. As for China, physical distance between cities is not comparable with that of South Korea, so it could cause clear differences of natural environment and people’s way of thinking. One of my Chinese friends who came from Chengdu has told me that women in Chengdu have elastic skins because of high humidity in Sichuan province. On the other hand, Beijing is vey arid because of the winds coming from innerMongolia and Siberia. It is highly likely that the needs of women in two cities for cosmetics are different and if I were a marketing manager of a cosmetic company, I would have to conduct different marketing strategy in two cities. Moreover, the population of each city is significantly big and 12 million people
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live in Chengdu and 17.5 million in Beijing.3 If they are small markets, distinct marketing is not efficient. However, I think it is not the case in China and even if it is not efficient right now, I anticipate it would be in the near future as GDP per capita of Chinese cities are rising rapidly.
Conclusion
It is often said that there is no competition and efficiency under the planned economy. However, the competition in China is as harsh as a capitalist economy even though some industry is under the government control. I’ve watched a documentary about Chinese history and I heard from it that Deng Xiaoping said that there is no capitalist economy without planning and no socialist economy with markets. I think Deng Xiaoping made a totally brand new “Socialist Market Economy” concept based on this idea. Foreigners like me who knows only about western economic system might have trouble understanding it because this concept has never been tried in other countries. However, it has been working very well and I think one wanting to do business in China must understand it to survive there.
As with economic system which has characteristics of Socialist economy and market economy, China has characteristics of developed countries and developing countries simultaneously. I think China would make a fast improvement in a lot of aspects, but businessmen need to consider where China currently stands in aspects relevant to their business. A great diversity that comes from the history and regional features of each province should be considered as well.
Andrew, CHAN Chi Hang
I have learnt a lot from this trip and I find it very inspirational. I have learnt many different things from each visit during the trip which I did not expect.
There were four visits that I found particularly interesting that I wanted to share. They are the visits to Google, ENN, Tsinghua university lecture, and Lenovo.
I have my own brand that focuses on manufacturing camera lenses for digital cameras. I tried my best to learn something out of each visit so that I can apply to my own business.
The Google visit was very interesting. I learnt that you couldn’t use the same business model that is successful in one county and directly apply it to another country. The speaker explained to us Google’s initial strategies for the US web browser market and how it did not work when applied to the China market. Consequently Baidu took over by filling in the gaps. My brand is quite successful in the US and European market. However, it has not been too successful in the Asian market. I originally planned to do the “do noting approach” like Google. I thought it just needed more time to spread. However, I changed my mind after listening to the efforts Google had to go through to strengthen its attractiveness in China. Asian markets need a more attractive pricing than US and European Markets. It is very difficult for the manufacturer to have a price cut. I’ve now changed my strategy and attracted Asian distributers to carry my brand to target the Asian markets.
The trip to Lenovo was very interesting as well. In a way I felt some sort of resemblance to the roots of the company. Lenovo, formally known as Legend, continually gives back to the community. It felt like a very right thing to do and so I’m also implementing donation from sales of my company to nonprofits upon returning to Hong Kong.
At the Lenovo talk, the speaker addressed issues such as to why they might have a low customer satisfaction despite having such innovative products. Lenovo is priced at a premium over its competitors at the professional notebook class. When there is difference in price, consumers expect problemfree computers. I learnt from this, for a growing brand, it is important to have a competitive price as customers’ expectations rise in correlation to price.
Lenovo is a very traditional brand but they are now making many efforts to involve style and innovation in their products that is usually not the current brand image they have. They showed us the before and after photos of their designs of their must current lineup. This shows that brands within China has now evolved and the element of the design are highly valued. I was in Copenhagen for the Europe study trip last year and during a visit to the designer Dustbin they said design never goes out of fashion. During a visit to Norman Copenhagen the speaker said design adds value to a product. Companies in China are known for cheap packaging, zero design. Lenovo is a role model for a Chinese company going through globalization and this is a huge break through.
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Lenovo has their own Ideapad line and their new and innovative items show that they are ready to accept new challenges. This is a huge breakthrough for any Chinese company. Usually design means added manufacturing cost and therefore a higher retail price. Lenovo’s products do seem to have a premium over its competitors. In the short run the public will view it is a premium in terms of comparable specifications. However, in the long run people will start to realize they are paying for the design and not a premium for comparable specs and this is a great move! The third talk that really inspired me is the talk at Tsinghua University. We were taught about online business on taobao.com.
Prior to the talk I always had an impression that there is no space for growth and earnings for sellers on taobao. Entry to the market is low and everyone can easily become a seller on taobao. There are hundreds to thousands of sellers that may sell the same product. The competition one has over the other is a cheaper price. Due to this issue, I was unwilling to explore the taobao market opportunities. The sample case the lecturer gave was the Japanese brand Uni Quo. They did not have much business when they opened up their online store. However, when they made the exact same website on taobao, sales went up dramatically and surpassed the annual sales of their certain stores within two weeks! I was really surprised when I heard about this. It seems like I have left one kind of seller out. The manufacturer is the winner whoever ends up selling their products. I suspect the future trend of online sales will be taken over by all the big brand and manufactures, as they are the only ones possible to sell a product without competition.
The other speaker at the Tsinghua University told us about the Chinese network card manufactures. One is Huawei and the other is ZTE. Their main strength is low cost. At the moment, one of the strength of my brand is high value at a low price. However, I was really afraid the low price image will stick and the brand will not be able to increase the price in the future. I raised the question on this issue and I was told Chinese can enter the market easily because they are willing to work harder for a lower price. However, when they have 80% of the market share they can consider price increase. I found this talk very inspiring and upon returning I have been working hard looking for worldwide distributors for my camera lens. It feels very weird recently as my sales volume increased dramatically with my price drops but at the same time I am earning about the same as before. What I have gained is more exposure. However, I trust what I have learned and will put it to execution.
Overall I am very satisfied with what I have learned in the trip. I’ve managed to apply many of the things I have learnt into my business and that was my primary goal in terms of the learning outcome for the trip!
MBAC6080W Personal Reflections
Benjamin, CHIANG PeiChia
Lenovo success & BenQ fail
In 2004, Lenovo announced that they would buy PC department of IBM by using 1.25 billion U.S. dollars. Also, in 2005, BenQ, a Taiwanese computer company, announced that they would buy mobile phone department of Siemens and Siemens would give 250 million E.U. dollars to BenQ. Both of mergers and acquisitions had the same target, building a global brand in PC and mobile phone industry. However, Liu Chuanzhi, CEO of Lenovo, successfully merged PC department of IBM and made Lenovo one of world's top five brands in PC industry. KY Lee, CEO of BenQ, made BenQ’s mobile phone out of the market.
Mr. Liu would like to reflect IBM highquality image to the Lenovo computer. This strategy was not fully successful and made Lenovo lost a lot of international market share. But Lenovo could be compensated by growing China market. If we compare the market situation that BenQ faced, the market share of mobile phone which Siemens occupied was continuingly declining. On the other hand, Lenovo's expertise is in cost control. Therefore, Lenovo could use low cost product with IBM image to create a good market position. At the beginning, BenQ also wanted to use the low cost way to produce mobile phone in China. They wanted to close Germany plant instead of spending 1.5 million E.U. dollars every day. Nevertheless, Germany union protested and then created a lot of negative news. Finally, the value of international brands decreased rapidly. And the losses of mobile phone department in BenQ were 600 million E.U. dollars in 2006. Comparing the two cases, we know that Mr. Liu and Mr. Lee both are ambitious people in setting up a global famous company. Mr. Lee overestimated the risk tolerance for BenQ, but Mr. Liu made the right decision for Lenovo.
When I visited Lenovo, I found that Lenovo has high degree of internationalization. There were a lot of foreign staff and local staff also could speak fluent English. I think that is because Lenovo established dual headquarters in the United States and China when Lenovo acquired the PC department of IBM. This strategy made senior management and external contact of the international community still retains intact. And a lot of local staff have opportunities to make relationship with foreign staff by using English. This helped the company build its international image, as well as maintain the stability of the original international customers. Besides, local staff must have international view and good English skill because their superior could be foreign. They need these professional skills to make their boss to see the results of people’s efforts. For example, the CEO of Acer is a foreign person, not Taiwanese. After Acer’s board of directors invite foreign person to become the CEO, this company really transferred from a Taiwan company to an international company. Based on Lenovo and Acer cases, I believe that appropriate proportion of foreign workers in the company could help company internationalization quickly.
MBAC6080W Personal Reflections
China view v.s. Western view
“Exchange rate” is always a hot topic during this economic situation. Certainly, we always discussed this topic with professor when we got the lecture in Tsing Hua University. A lot of Chinese students and Western students debated whether RMB should appreciate. Most of students who come from Asia would agree that their national currencies should not be appreciated to avoid recession in export. However, other students who come from western countries would think that they undervalued currencies result in the imbalance of international trade. We also could find that it was not easy for western students to give up their insistence. If we could watch CNN and BBC news every day, we would find that the news is always reported in western point of view. They always give a lot of criticism about Chinese government. Under such statements every day, foreign people finally would be persuaded that undervalue RMB is so evil and unfair.
Therefore, I suggest that a lot of foreigners need to read the book “China’s Megatrends—The 8 Pillars of a New Society”, which was written by John Naisbitt and Doris Naisbitt. In this book, they would make western people understand that China is a very special country due to its culture and its huge population. In the past, people always prefer to use western view to analyze China. People think China need to follow the western step to develop country. However, Naisbitt suggested that Chinese government should develop the country by themselves, instead of western rule. If we review the example of Japan, it followed western rule to appreciate its currencies quickly. As a result, the Japan economy has already fallen down more than ten years.
I always believe that Chinese government should appreciate RMB slowly. It could assist Chinese economies in successful transition. On the other hand, it could also make Chinese society maintain stable situation in the future. If RMB appreciate too fast, it would cause millions of people lose their jobs and cause a lot of social problems. Finally, this situation would not be good for other countries. A stable China is really helpful for global economies.
“Democracy” is another important topic which is always discussed by a lot of western people. I totally agree that democracy and freedom are a basic human right. Is westernstyle democracy suitable for China? I think the answer is negative. It is not suitable for China. For example, Taiwan is the first democracy country in Chinese society. However, in the past ten years, Taiwanese economy did not have any significant progress. Congress fought every day. During election time, anonymous letters and violence occupied the headlines .The problem was democracy made a lot of battles between the two parties and then economic develop was stopped. At this moment, the critical issue for the Communist Party of China is how to prevent every Chinese person from starving. It is not easy to find a solution, which could make everyone have a job to support his/her family. Based on Taiwan’s experience, the process for democracy could create social unrest for a long time. This result is not the Chinese government can afford at this stage. On the other hand, imperial rule has been practiced in China thousands of years. In culture and idea of Chinese people, the thinking of democracy could change their everyday life. Therefore, China must find its own way, which is suitable for the process of democratization. This process may last for sever decades. But, I always believe that a stable China is good for every country in the world.
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Based on the above discussion, I think Chinese government should solve economic problem first and then promote political reforms. With the further opening up the media and economic, many contradictions will become even more serious than before. Imbalance in economic and social development makes serious gap between poor and wealth people. Government and the laws are not perfect, making it possible for government officials to corrupt. The future of China is able to successfully take policy to address these issues and last stable development. Not only for China itself but also for many developing countries around the world, it could be of great significance.
SinoSingapore Tianjin Ecocity
China’s Change and the future
The Forbidden City Today
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Steel Manufacturing in China The Great Leap Forward and the ShouGang Steel Factory in Beijing
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Chinese steel nowadays accounts for more than 30% of the global steel production. ShouGang indeed started to produce steel during the Great Leap Forward (or you may say it’s a consequence of Great Leap Forward). ShouGang today is a successful company with revenue over 100 billion Yuen every year. The factory in Beijing where we visited was still producing on the day, although it was to close entirely the following day. The facilities looked old but it was huge and I had never seen such a large factory (First time I saw heavy industry production). I can see the hard work that people put in during the ‘Great Leap Forward’. I appreciate the vision of Mao although it failed at the very first beginning. We did start producing steel because of the ‘Great Leap Forward’. There is a Chinese idiom ‘, ’. The successfulness we saw today comes from the failure of
Great Leap Forward.
Cultural ChangeCultural Revolution, Google and Scholars in China
In 195657, China did encourage open criticism and welcome different points of views. Chinese intellectuals and scholars returned from overseas helped with reconstruction. On the other hand, open criticism always led to the instability of the leader. There was a different view for developing China within the Party in 1960s. The leader, Mao, in order to further strengthen his position, purged different views. He started the cultural revolution. He made all people worship him, published little red book of Mao’s selected thoughts, set up red guards. During that period, he controlled people’s thought, blocked the information, destroyed books and killed scholars. Some scholars nowadays argue that if there was no cultural revolution, China would at least be moved 10 years forward. In the past, our thought had been depressed.
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EcoCity Today Leader’s vision
EcoCity is a green city that is rarely found in the world at this moment. EcoCity will have ambient air quali
