Giosia Berri

My biggest challenges in China

This is my first trip to China and before coming here I didn’t know what to expect from this experience. In my first blog I asked myself what would have been my biggest challenges during this trip, and now I can finally answer this question: my biggest challenges here in China are dealing with the (a) spoken and written language barrier, (b) shopping and negotiation, (c) and untrustworthiness. Surprisingly the food, which was one of my main concerns at the beginning of the trip, didn’t create any issues and was absolutely delicious!

Spoken and written language barrier. I knew from the beginning that the language would have been a communication barrier here in China, but I was not expecting such a high degree of misunderstanding with the locals. Even the simplest daily tasks, as for instance calling a taxi or asking for a restaurant recommendation, is extremely difficult. I speak four different languages and I’m usually able to communicate with almost everybody all around the world. Nevertheless, in China, this is not feasible. Our alphabet is extremely difficult for them and as a result, requesting information becomes extremely complicated and often the outcome is characterized by a degree of misunderstanding. Although primitive and approximately, gesture is for me the most effective mean of communication with the Chinese population.

Shopping and negotiation. Going to the Silk Market was one of my least favorite things here in Beijing. The sellers in the building are extremely pushy and try to grab your purse or your arm if you do not stop, look, negotiate and obviously buy something from their stand. This chaotic environment is somehow funny and interesting for the first ten minutes, but then is gets very annoying. They don’t even let you walk close to their stall that they start calling your nationality and yelling famous brands as “Gucci”, “Prada”, and “Rolex”. Negotiation is mandatory and is perceived as a game. Every time you ask for a price, they would at first try asking for a ridiculous amount of money. For instance, I wanted a silk scarf and they started with 900 RMB. After I told them that 900RMB was way to high, they started offering lower and lower prices – down to 50RMB. Such a behavior irritates me, because a person that is willing to make a profit of 850RMB on an item that does not even worth 30RMB, it’s a thief. Negotiation happens everywhere in China: in restaurant, street food, and gift shops. Here is a hint: if they have a calculator on the table next to the selling items, there is most likely negotiation involved.

Untrustworthiness. China is exhausting because one has to constantly keep an attitude of skepticism and thoughtfulness about everything. I’m not only talking about high-technology products, shoes, cloths, purses, pearls but also other offerings as for instance taxi (some are legal and some are not), alcohol (very often they re-bottle it) and food (there are some kind of fake sausages and eggs). What is a fake item and how to identify it? Some argue that the government should get more involved in order to stop these practices. However, I also recognize the complexity of the issue, and probably the government, while being motivate to respond to the companies that have been harmed from these practices, is also aware that the industry is a tremendous employer and wants to maintain internal stability (jobs, roads,…).

Starting the day with a Chinese breakfast!

Today we had an extremely interesting day, from a cultural, historical, gastronomic, and business perspective. I usually prefer to focus my blog on a specific topic, but today I really would like to give a general overview of a what a regular day with the GPMBA here in China looks like!

7 a.m. – Having a Chinese style breakfast. This morning in the elevator I met Rui, one of my Chinese classmates, and I went to breakfast with him. I honestly just wanted to get some cereal and yogurt (as I always do…) but I asked Rui to introduce me to a typical Chinese breakfast –with no cereal, canned fruit or muffins. We started our meal with a big pot of green tea called in Chinese “Yam Cha”, which literally means “drink tea”! According to Rui, Chinese breakfasts are very different from region to region within China, but fortunately the buffet in our hotel offered a little bit of everything. First of all, we got some Dim Sum with vegetables and shrimp (see picture on the left). Dim Sum consist in little balls of soft white pastry, usually steamed, boiled, or eventually also fried, filled with either vegetables, shrimps, crab meat of meat. Just delicious! One of the waiter at the buffet explained to me that green tea and Dim Sum is a perfect combination to help the digestion! Then we had some spicy noodles in a broth soup, with some pig meat and green vegetables. This dish was not my favorite, but I must say that it is worth a try. After that, we also had some deep-fried dough sticks (in the picture below), a few coconut snowballs, and finally one hard-boiled egg. I was extremely satisfied with my breakfast and I was ready to start my day!

10 a.m. – Walking through The Forbidden City. I’m simply fascinated with The Forbidden City! Bo Kim, one of my Korean classmates was able to give me great overview of the history and main function of all of the buildings. Everything is done with extreme attention to detail in The Forbidden City: roofs, gold doors and handles, windows, ceiling, and floors, are just unique and characteristic of the Asian architecture. The weather was great today and I was able to get some spectacular pictures! During the visit I closed my eyes for a few times and tried to imagine how the palace would look like hundreds of years ago – it must have been just amazing!!

2 p.m. Visiting Jones Day law firm. In the afternoon we left the hotel at 1.15 pm to go to Jones Days firm, which is located in one of the most prestigious building of the financial district. Jones Day started its fist office in Hong Kong in 1986, then opened another one in Tokyo 1990, then in Taipei in 1997, in Shanghai in 1999, and finally in Beijing in 2003. The four Asian locations together have a total of 150 lawyers and make Jones Day one of the largest international law firm in the area. The company deals mainly with litigation, arbitration, Intellectual Propriety, Taxes, and capital markets. Five people working in the company were nice enough to take time to tell us about their company. Apparently, the main challenges faced from clients initiating new businesses in China are either to disregard cultural differences, or to excessively buy-in into these differences and believe that to do business in China is just about accommodating Chinese requests and working the “Guanxi”. Honestly, hearing these words from someone who has to deal with the Chinese population on a daily basis was a great lesson for me: all of the cross-cultural skills that I’m learning in the GPMBA must be balanced with the real regulations and business strategies, as for instance finding the right partner or a professional law firms to support a business project.

4 p.m. Meeting with Jaime FlorCruz – CNN. The meeting with FlorCruz, CNN’s Beijing Bureau Chief and correspondent, responsible for the network’s news coverage of China, was very insightful. He is a great speaker and he provided us with a very honest perspective of the Chinese media situation. With very humble manners and linear logic, Mr. FlorCruz was able to talk about very sensitive and delicate topic, as for instance media censorship and government involvement. Additionally, Mr. FlorCruz raised many questions strictly related to the book China Road, as for instance “ What is it going to happen to China?”, or “How can the government keep Chine together and keep it growing at the same time?”, “Is an economical reform necessary?”

His speech became the starting point for an interesting conversation between a few of us, which ended in front of one of the most famous dishes here in Beijing: the Peking duck.

Encounter with the counterfeit goods market

Today we went to the Qingdao Waste-to Energy Project and learned about a new waste management solution for China. A few of my classmates already wrote a blog about it, so I really would like to take the opportunity to talk about an interesting personal encounter that I had today with the counterfeited goods market.

My passion and interest about luxury goods. Fashion and luxury good are my passion and I’m fairly knowledgeable about brands as Louis Vuitton, Gucci, Prada, Fendi and Hermes. I love reading fashion magazines and learning about new collections and different types of fabrics, leather, colors, and models. Before coming to China, I though that I was able to immediately recognize a counterfeit Louis Vuitton just by looking at its shape, seam, or by feeling the quality of the leather. Yet, here in China counterfeit purses are extremely well done and it is almost impossible to make a distinction between a fake one and a real one. I noticed that almost every woman walking in the street has a Louis Vuitton, Gucci or Prada purse on her shoulder. Now, considering that the monthly average salary of a Chinese worker is about US$1000, and that a Louis Vuitton purse costs between US$800-US$5500, I strongly doubt that so many women can afford such an expensive good.

My personal experience. This morning I went to buy a pack of cookies in a little store located in the subway right outside our hotel in Qingdao. While I’m paying for my cookies, the woman looks at me and asks me “Do you like Louis Vuitton?!”. I nod and she discretely takes me in the back area of the store, where she has at least 60 counterfeit Louis Vuitton purses and 100 wallets. I’m completely shocked. She keeps giggling and tells me “Don’t say anything. Police, jail!!”. I want to find out more about it. I grab one of the purses and start looking at every single detail. The woman thinks that I’m interested in the purse and she starts writing numbers on a piece of paper. For a medium-size that usually costs around US$1700, she wants US$120, and for a wallet that costs approximately US$850, she wants US$90. Very politely, I leave the purse on the counter and I walk away….

The consequence of the black-market for luxury goods companies. The black market here in China happens anywhere and at anytime. Illegal vendors approach woman in the street and in the subways with catchy words as “luxury purses”, “Gucci”, “Prada”, “watches”, and small stores have a backdoor with a closet fool of purses and wallets. Obviously, such an uncontrolled and widespread black-market is a nightmare for luxury companies, not only because it reduces sales revenue, but especially because it “dilutes” the brand. Louis Vuitton is still the most copied and counterfeit luxury brand in the world and most counterfeited goods are manufactured in China.  The company invests around US$20 million per year fighting illegal counterfeiting activities worldwide. Also, Louis Vuitton employs more than 80 in-house lawyers and hundreds outside investigators to counter these activities, and for instance in 2006 it won a lawsuit against the Xiushui Market (Silk Market) in Beijing.  Unfortunately, due to technology developments and greater skills among workers in counterfeit factories the counterfeited market shows high-quality improvements and counterfeited goods are not visibly inferior to the original ones anymore. Even though governments and luxury goods companies are fighting together against counterfeiting activities this black-market show no sign of letting up.

Citigroup – visit

Fighting the Jet lag and reading the news. This morning I woke up at 4 a.m. The jet lag is still affecting my day schedule, but hopefully I will be fine by the end of the week. While I was waiting to go to breakfast, I read the China Daily newspaper (http://www.chinadaily.com.cn), which provides the English speaking population located in China an inside overview of what is happening in the country and the Shanghai Daily (www.shanghaidaily.com) , which focuses on the Shanghai area. Up to what extent does the media censorship in China affect these two informational sources?! Unfortunately I don’t have the means to answer this question right now, but the only thing I can do is to be aware and mindful of the situation, and keep a skeptical attitude in regard to everything I read.

Developing Global Executives. Among the three visits that we had today, I thought that Citigroup was the most interesting one. We met with the CFO Francesco Sirna, who is originally from Italy but was born and grew up in the United States, Connecticut. As any good global Manager, Mr. Sirna has been building his career path by traveling and working in many different countries: first the United States, then Italy, Spain, Bangkok and now China. Accepting different jobs all around the world is extremely challenging but provides managers with a better understanding of the global dynamics, as well as a wider and more cultural perspective. In the book “Developing Global Executives” the leadership development experts Morgan W. McCall, Jr. and George P. Hollenbeck, reveal that in such a borderless global economy “(…) companies must ship their executives nearly as far as their products“. Also, according to the authors, accepting this challenge is what it takes for individuals to become successful international executives. This is why I believe that a Global MBA program is the right choice for a successful career into the international arena.

Long-term business strategies and “Guanxi”. City Group has a clear strategy “consistent profitability and sustainable growth”. Given the uncertainty of the world, nowadays companies have no other option than invest heavily into forecasts and embrace a long-term perspective (e.g. Coca Cola company’s long-term strategy called “2020”). Nevertheless, what creates an additional level of uncertainly in doing business in China, is the role of the government in any kind of business activity. Coming from a country like Switzerland, where the government is the institution that assures fairness and honesty in business transactions, I was amazed to hear that the Chinese government actually competes actively into business operations. As a result, Mr. Sirna enhanced the importance for executives to create and keep good personal relationships and connections – “Guanxi” – with decision-makers within the government, and be ready for “Chiku Nailao” (relentlessness, endurance) in negotiations.

The gap between poverty and richness. The gap between poverty and richness is still extremely evident in China, and what is even more unbelievable is how these two social groups are geographically close in the city. For instance, not surprisingly City Group was located in one of the most prestigious areas of Shanghai, where Louis Vuitton, Cartier, Ritz-Carlton and Piaget, are just a few of the thousand luxury brands stores. Nevertheless, it doesn’t take more than a 5 minutes taxi to get into a very poor area of Shanghai, where people earn an average of $200 a month and fight on a daily basis to find the way to feed their children. My next blog will  focus exclusively on the gap and the contradictions existing between these two extremes of the countries.

Last “Asian Experience” Lecture before departure

Yesterday we had our last Asian Experience lecture with Dr. Loch. Everybody in the class is very excited about the trip to China! During our breaks and lunches we talk about the flight, the accommodations, the cities, the food, the climate, and in particular about the best packing strategy to avoid to be charged a fee at the Atlanta airport check-in!

Rui, one of our Chinese classmates, sent out an email to see if anyone was interested in trying out some “authentic” Chinese food before leaving for China. The place he recommended is called « Atlanta Chinatown » and consists of several small restaurants in a food court style, which offer the taste of both North and South China. The place is located in 5389 New Peachtree Road, Chamblee, GA. This is not surprising given that Chamblee is the area of Atlanta with the highest concentration of Chinese population. I love tasting new dishes and discover new flavors! Hopefully I will be able to find some time to check this place out, while trying to finish all the papers and homework for Marketing, International Law and Global Informational Technology.

Yesterday’s lecture was very interesting and focused on a few main salient topics about China, as Intellectual Propriety Rights, the recent phenomenon of “reverse migration”, the trade relationship between U.S. and China, environmental issues, the real estate bubble, unemployment and corruption. Given the multicultural characteristic of our class, we had different points of view about this topic, which generated several constructive discussions. The professor recommended a book about China – « Poorly Made in China: An Insider’s Account of the Tactics Behind China’s Production Game » written by Paul Midler – which discusses the problem of quality creep and explain how this has become a huge challenge for the manufacture in China.

At the end of the class we finally received our China trip’s schedule and agenda. We will leave Atlanta on Friday the 8^th of April at 5 p.m. and we will land in Shanghai on the 10h of April at 6.40 a.m. The day of our arrival in Shanghai I will probably feel very weak and tired because of the jet-leg, but this will not prevent me from taking advantage of our free day, wear a pair of comfortable shoes, and discover the city! Our company’s visits will start on the 11^th of April and includes Ford Motor Company, Citigroup, UPS, MIQ logistic, Hinsense International Co. LTd, etc.. Each of us has been entitled to write a short briefing about a specific company or city that we will visit. All of our writings will be compiled in a “briefing booking” and distributed to the entire class to help us preparing for this trip!

This is what I expect from my daily schedule: alarm at 6.30 a.m., breakfast in the hotel, departure with the bus at 7.30 a.m. for a company visit and return at the hotel at around 5.30 p.m. After a quick shower I will be ready to leave the hotel and experience Shanghai at night….