China’s Bipolar Condition

After studying and subsequently experiencing China, our group was asked: Based on your experiences, how do you predict the future of China in business? Will China lead the world or fall by the wayside?

During the last two weeks, we experienced Chinese culture and gained a firsthand look at the reality faced by this growing society. After talking to representatives of different local and foreign companies located in Shanghai, Qingdao, and Beijing, we drew our own conclusions about the future of business in China and its ability to become a global superpower. We believe it is a growing economy whose destiny depends on whether it can address key social and economic issues or leverage its current strengths for continued success.

China could certainly falter in the future if circumstances align. From some of our company meetings, we gathered that the Chinese have a tendency in business to “stay inside the box” by maintaining traditional mindsets that won’t serve them to meet the challenges ahead.

• Social issues: By not confronting the present social issues, unrest could ignite. Censorship could cause backlash, and prevents learning from diverse viewpoints. The masses can only be silenced for so long before there is push back. For example, we learned and saw first-hand that the Chinese government flexes its muscles in a show of strength through media censorship. It blacks out CNN news clips that it believes are negatively portraying China despite the fact that viewership is limited to English-speakers, hotels, government and university viewers. Social media is heavily monitored and blocked, however many people still access Facebook using underground software. If that access were to be taken away now that people have had a taste of the entertainment and ability to self-express that Facebook offers, this censorship could add fuel to the flame of unrest.
• Economic issues: There are major wealth disparities in China, however so far China has maintained major, steady GDP growth. Yet these levels of GDP growth may not be sustainable over the long term.  If the growth slows while the Yuan appreciates and inflation continues to rise (a “perfect storm” for uprising), the huge population of the working class will be inordinately more impacted than the upper class. This “perfect storm” could negate the progress the working class has achieved thus far, or even leave them worse off. The population has very limited peaceful means of imposing change, so under the pressures of social and economic issues, a revolution could boil over.

China certainly has the ambition to become a major economic force, however it seems that changes have been short-sighted leading to inconsistent results. For example, the Chinese government took a large step by opening up journalistic regulations, like the ten-day rule, for the 2008 Beijing Olympics. Yet, when faced with the Jasmine Revolution coverage, rather than being consistent and maintaining the open policies, they reverted to the “in the box” old practices that increased negative attention. This stance of control was seen again over the weekend with the detention of the Shouwang church members who gathered for Easter.

Despite the potential downfall, China also has the opportunity to successfully become a world power. In addition to confronting the aforementioned issues, China has distinct advantages that lend to its growth.

• Consumerism: China has 1.3 billion people, and as these people have increasing disposable income, the domestic consumer market is a major opportunity and driver. In looking at a product-market framework, for many companies China is an attractive market where new products can be offered. China is transitioning its economy from an import/export to a consumer focus.  This shift will further China’s self-sustainability because then the complete market cycle (from producing to purchasing) will occur within China. This will keep profits within China, elevating the purchasing power of population and economy as a whole.
• Policy Globalization and Integration: During recent years, China has embraced many policies that align with the rest of the developed world. It has established anti-trust laws that are rooted in European policies. The rule of law increasingly is more important, as shown by the rise of more Western-style contracts. With the growth of more Chinese companies that have developed their own intellectual property, the value of protecting IP is more apparent and more supported by new laws and enforceable dispute resolutions for infringements.

Predicting the future of China as either a world leader or as falling by the wayside involves taking an extreme, polarized stance. We have discussed issues that could lead to either outcome. The reality is likely somewhere in between. Our group (Maria, Stacey and I) believes that in the long term, China will be successful, emerging as one of the world’s leaders. This, however, is a long-term goal that will require perseverance while China learns to think outside the box and confront the tough issues it faces.

China Final Analysis

Those who watch China carefully should already be aware that there has been tremendous development in the Chinese economy over the last few decades.  As such, I’m not going to expound on the numbers or the well known accomplishments, but instead I will start this analysis from the point that the reader is already aware that China is developing rapidly and has made some incredible achievements.

The general consensus among our group is that China will go on to take a leadership role on the world stage.  While China has already developed very quickly in the last few decades, there is still a lot of work to be done and as such there are some risk factors which could compromise its recent success.  While many of these risk factors are already receiving attention from the Chinese government in terms of protective policies, a few worth mentioning are “hot money,” the real estate bubble, and banking practices. 

Hot money was discussed as an issue during our visit to Citibank and it describes the practice of investors finding ways to transfer liquid assets into the country to enjoy currency appreciation.  The risk involved with hot money is that investors are notorious for pulling the money out quickly which can destabilize an economy if the amount is significant enough.  While the government has put safeguards into place, the issue still persists in that many investors establish holding companies for the purposes of transferring assets and avoiding financial controls.  It was noted that customs officials even sometimes need to participate in investigations to ensure that goods are in fact being traded by some companies at all.  Thus the financial controls employed by the Chinese government sometimes seem restrictive, but in reality they are needed to control certain practices like hot money.

The next point deals with the rising real estate costs which has both financial risk implications as well as societal implications.  This topic was discussed at several visits and generally people believe that while pricing will eventually need to come back down, the effect won’t be as severe as a typical bubble bust in the US for example because consumers aren’t nearly as leveraged in their properties.  The importance of real estate in Chinese society shouldn’t be overlooked though because in many cases a young couple needs to own a house before getting married as a societal practice.  Thus, there is likely to be stable demand as long as speculation doesn’t get out of control.

The topic of banking policy was discussed briefly during our visit with David Yu.  This comprises two major issues including the point about bad debt for loans at the banks and also the Chinese currency.  David basically stated that while there used to be a lot of bad debt at Chinese banks that gave out loans for start-ups in China, the government has already bought the bad debt to eliminate the risk in the banking sector.  In terms of currency, it would be nice to see the currency take on a role as another one of the world’s major currencies and there is already evidence of this taking shape.

Thus while there are some challenges facing China domestically, there is immense opportunity for the country and it indeed has the capability to take on a leadership role in the future.  In order to take the lead though, there are still many things that need to be done.  Some of the main elements that need to be addressed include the internationalization of Chinese companies and Chinese culture.

Chinese companies will need to begin expanding overseas more rapidly if China is going to take a stronger leadership role on the world stage.  During our visit to Hisense, our speaker mentioned that Chinese companies currently tend to be cautious when expanding overseas.  This is consistent with my experience as well in that management is often uncomfortable involving too many outsiders in the operation.  This general attitude, while sometimes justified, may mean that the expansion of Chinese companies will occur more slowly overall.  On the other hand, our visit to the UPS government affairs office was somewhat encouraging in this regard.  Our speaker mentioned that with the recent financial crisis in 2008, the Chinese government attitude has generally shifted towards creating its own industry champions domestically.  As a result, the Chinese domestic market may be more restricted for foreign competitors for a time, but the result will be that more Chinese companies will emerge after gaining market share in the growing Chinese market.  (Just as many strong US companies were first established by winning the domestic market.)

The next point that will be critical is exporting Chinese culture.  China has already initiated several activities to export both the language and the culture.  For example, several Confucius institutes are springing up in different locations around the world.  I also remember one of my old Chinese teachers mentioning programs that send Chinese teachers overseas to various countries, so that type of activity will help as well.  Additionally, our speaker at Yuanfen Flow mentioned the need to foster more creativity within Chinese culture, but I think that the cultural exportation process will help to lead to more of that as well.  For example, Hollywood creates movies that export US culture, but the creativity is funded by such an operation.

Thus China has made a lot of progress and while there is still a lot of work left to do, it definitely has strong potential to take on a leadership role in the international arena.

Food Attraction!

“Want to order some Chinese?” I believe all of you are familiar with this phrase. Chinese food and Chinese restaurants have “penetrated” into the eating list of many western cultures. However, although there are many decent Chinese restaurants around, it seems that the idea of Chinese food is limited in mostly fast/express food category. Moreover, Apart from the localized tastes, certain dishes were invented to suit the local demand. Authenticity of the Chinese food culture is lost within. After the visit, here I am going to make a short list of the top three dishes from the three cities we had visited in China. (In the order of visiting)

Shanghai – 上海

Giving the special position and characteristics of Shanghai, it is a city with people coming from all over China, gathering of all kind of food. Nevertheless, neither like the sweet taste from Canton area, nor the spiciness from Sichuan province, the authentic Shanghai flavor is famous for its light, fresh, and delicious. The combination of steam, boil, bake, fry, and flat-iron bake, four ways for food preparation, determines the variety of the food. The most welcomed food, called “three main pieces”:

– Bun with soup inside – thin skin, filled with grounded shrimp, crab, or pork, most importantly, soup from within the bun!

– Nod of sheet bean curd – called Thousand Pieces by Shanghaiese. It is boiled in fresh bone/rib soup. Then cooked together with pork belly meat.

– Fried flour puffs – combined effort of boiling oil and boiling soup!

Qingdao – 青岛

– Roasted squid

– Braised pork feet – it’s definitely good for your skin~

– Three-flavored pot stickers – best pot sticker I’ve ever had!

Beijing – 北京 Capital, Political center of China

As for the Beijing food, they are a combination of several ethnic groups as well as the Ming and Qing dynasty. They are hundreds of dishes can be listed under this category but due to the length of the blog, three most famous dishes have been picked out. They are:

– Beijing Duck (Peking Duck)

When eating in at the famous duck restaurants, the chef would slice the whole duck in three different ways which allows three famous ways of devouring the whole duck: Skin only, meat only, and meat with skin.

First is to have the crispy skin dipping into sugar cane sugar; second is to have meat dipped into grounded garlic sauce; third is to have the meat with skin wrapped into a thin piece of flour skin together with sweet sauce, cucumber sticks, big green onion pieces and garlic sauce. Each brings a different taste to the guests. Well, the leftover of the sliced duck, which are the bones with some meat on it would be used to make soup. The most famous Beijing duck restaurant is Quan Ju De (全聚德). It is said that chef from this restaurant is able to slice the duck into exactly 108 pieces.

– Beijing Lamp Hotpot

Hotpot with different flavored soup bases, together comes with thin sliced lamp/mutton, different kind of mushrooms, vegetables, and more!

– Pork intestine & liver strew

Although this might be less appeal in names, once you got used to the flavor, you’d like it.

There are many more special and authentic foods. Each of the Chinese provinces has its own specialty. If you are interested, please leave a comment!

P.S. I am introducing one of the most famous, the most preferred local food from Guilin – the Guilin Rice Noodles!!! It can be eaten as breakfast, lunch or dinner! I prefer to eat them for all three meals.

Have all these pictures and introduction brought back your memory or brought you the urge of tasting them? I know that my mouth is water right now~

Adaptation!

As we had mentioned in the earlier blogs, the concern about food and uncertainty about the new country had been proved positive for some of the classmates. I will be pretty much critical on this blog.

First of all, the bravery of some students who are able to open themselves in trying the new food is very much praised; with that said, those who did not really try much are not to be blamed either. It is normal to have a different taste of flavors, a different taste of life. However, not only in eating food, some
inconsiderable comments were made through out the trip. Why inconsiderable? It is the way how some people just use their “common sense” (perceived from their original culture) on seeing things from different cultures. It is understandable how culture shock can take place, but the reaction to such shock
should be smoother among this group of people, in comparison to someone who does not have much international exposure or experience. But the real reaction isn’t as good as I had expected.

We talked about cultural adaptation in many classes. Many times, we were starting from an angle where we were on the manager’s spot and had to deal with multi-cultural employees. We were taught to learn about and be understanding on others cultures so that we could manage the team more efficiently. However, the cultural adaptation is not only to understand other culture in your own cultural setting but also to enter the setting and be adaptable to different cultures. If you start by putting yourself into a defensive stance, it will be harder to get over the wall and fit into the play.

What we need to do is to keep an opened mind, try not to judge anything according to what you are used to. A perfect example is a child’s mind. It is like a piece of white paper, anything can be projected on it. What is going to be written on this piece of white paper would be the value set developed later in the stage. Same idea to our adults’ head, except that we have already had the value set written on this piece of paper, now we have to prepare another or maybe even more than one piece of white paper for the different cultural projections. To keep these value sets separate from the previous fully written paper, is like having them exist in a parallel state where they don’t conflict with each other even if they don’t make any sense to each other.

If a culture can last for the time of history, it means that this culture is feasible of surviving the examination from history itself. In this case, adaptation of different cultures is not that hard at all. It is all the games in mind.

Is China finally moving forward and allowing art to flourish or is it just a facade?

Just yesterday we visited the front lines of China’s modern art movement in Beijing’s central Art District. We visited a new venture that serves as an incubator for new artistes ad entrepreneurs. We were we were told of how Beijing is rapidly moving forward and how the central government has finally gotten behind the progress of modern art and has begun to support it. Beijing is the center of the art movement in China and is attracting all types of foreign investors and dignitaries. Apparently it is on its way to catching up with the developed art world.

This comes to me as very interesting especially after an article in the current issue of Time magazine. There is a Chinese artist who evidently scares Beijing. Just at the beginning of the month the country’s best known modern artist was imprisoned by authorities in Beijing. Ai Weiwei is being investigated for economic crimes, which is basically what the Chinese government asserts to political prisoners to detain them while they are investigating the individuals until they decide what to charge them with. His only so-called crimes were related to seeking out the real number of school children died from collapsed schools during the 2008 Sichuan earthquake and brought attention to the tragedy. His art often depicts the hypocrisies of Chinese government and culture.

Weiwei is well known across world for his provocative art. This is no small up and coming Beijing artist only known by Chinese. He currently has a huge exhibition at the Tate Modern museum in London. His newest exhibition will be displayed in Central Park in New York featuring items stolen by French from Summer Palace.

After spending two weeks in a in depth study of China, this does not come as a surprise. In fact, this one development completely sums up how China is progressing, which is very limited and tightly controlled.

The modern art movement is just like far to many other areas in China. It is very disturbing how they try to control society. Society is allowed to progress, however, only to a certain extent. Just as Rob Gifford explains in China Road, the bird cage still exists, it has just expanded. They are able to fly around, but cannot leave.