Powering a Greener Future

Today we visited Qingdao Xiaojianxi Waste-to-Energy Plant, a project of Wheelabrator. The plant uses the trash generated by the 3.5 million residents of Qingdao to create usable electricity. The visit continued the theme of many Chinas by showing the contrast between the high-tech, forward-thinking technology of the electric plant and the low-tech living conditions of the workers around the plant. Another striking feature was the speed of construction both of the plant and of the suburbs of Qingdao. It seems the cities in China are springing up out of nowhere, and in some cases they are.

The view from the second story of the plant

The plant has three incinerators, each capable of burning 500 tons of trash per day. After it is burned, only 15% of the 1500 tons of trash is left over as slag, which can be used in construction materials. Sadly, the city of Qingado produces 3,500 tons of garbage per day. It seemed from our visit that the city of Qingdao has plans to build another waste-conversion plant in the future to help make up this 2,000 ton difference.

The plant picks up garbage from the nearby landfill and transports it back to the plant where it is weighed and dumped into a garbage pit. It is then picked up as needed and fed into the incinerator where it is burned at 1000 degrees centigrade. The heat generated by the burning waste boils the water in the boilers, turning it into high pressure steam. The steam powers the turbines, which power the generators, which create electricity. The plant sells the electricity to the local power grid.

Interestingly, the crucial equipment for the plant was imported from Europe. This was surprising given our common theme of indigenous innovation and intellectual property rights. It will be interesting to see whether any IP cases stem from this transfer of equipment in the future.

What stood out the most to me was something our host said at the end: “The project is a waste management project first, then it is an electricity project.” It is true that trash burns less efficiently than other energy sources, but with a burgeoning population, waste management is a leading challenge for the government of China. Simultaneously, providing enough electricity for the new businesses and the rising middle class is another problem. This project presents a potential solution on two fronts.

For the rest of the day we are free and we will likely visit the May 4th Square, birthplace of the People’s Revolution, and Tsingtao Brewery. The poli sci major in me is most excited about… both.

Doing Business in China

Today we got two very interesting, different takes on China’s present and future. One point of view came from the CFO of Citi (China), Mr. Frank Sirna, the other came from Mr. Keenton Chang of the US Commercial Service. Interestingly, Mr. Sirna  seemed to have a more bullish outlook than the speaker from the US Commercial Service. Some of the difference might have had to do with the two different positions of the speakers.

Frank and Rui at the US Commercial Service

At Citi, it’s part of Mr. Sirna’s job to take a long-term view. He’s thinking decades ahead and positioning Citi in China to be ready to take advantage of future growth in China. Of course he’s also concerned with the present and taking advantage of current opportunities, but his time-horizon is well into the future.

The US Commercial Service helps businesses here and now. While Mr. Sirna sees opportunities, Mr. Chang sees challenges that American businesses will have to overcome.

Mr. Sirna said that one of the challenges he sees for Citi is Chinese regulation in the financial sector. One of Mr. Chang’s tasks is to assist American businesses in preparing to navigate Chinese regulations. Mr. Chang warned that some businesses don’t understand the risks of entering China, particularly the risks to their intellectual property. Businesses that want to enter China need to be able to devote significant financial resources to defending their positions and their property. Otherwise, they should not enter China.

Both Mr. Sirna and Mr. Chang talked about the importance of relationships in Chinese business. We talked about the importance of relationships in China and other high context cultures in Dr. Liu’s class way back in the fall. Mr. Sirna noted that it’s a good idea to be on the government’s good side and that maybe things get done faster when the government sees your business as a partner. Both Mr. Sirna and Mr. Chang talked about the importance of spending time in early meetings getting to know your Chinese counterpart. Mr. Chang likened it to making friends, and applying that concept from your social life to your professional life.

The two speakers agreed that China’s future is big – too big to ignore. Mr. Chang pointed out the stressers that could derail China’s fantastic rise, and Mr. Sirna pointed out some diplomatic issues between China and the US that the US government should pay attention too. Still, though, it was clear that both believe China’s future and America’s future are closely linked.

“If I would have asked people what they wanted, they would have said faster horses”—Henry Ford

Dealing with change was the central theme of our day one company visits to Ford Motor Company and Continuum Innovation.  The challenges and opportunites presented by the Chinese and Asian market were the core of our discussion at both companies.

At Ford, we had the pleasure of speaking with Randy Creel, the China Director of Service Parts Purchasing.   The main issues he discussed were system integration and communication between divisions and departments.  He shared the rising problem of “parts tourism”:  a part manufactured in location A was shipped to location B, only to be then shipped to location C—a mile away from location A!!!  This incidence is due not only to the lack of integrated systems but to the challenge presented by the rapid growth experienced by Ford and lack of available storage space and available personnel.   The main challenge faced by Mr. Creel and his team is gaining commitment and embracement of change by top management.  Ford is embracing the opportunity to grow in the Asia Pacific and South Africa market by eliminating duplicative processes, paying close attention to parts prices and sticking to a 5 year systems integration plan.

At our second visit was with Continuum Innovation, a design and innovation consultancy firm, we were greeted by Michelle Cheng and Marcus Lui.  They discussed their company, one that the general public may not be familiar to many but a company that has been an integral part behind many innovations we take for granted.  Through ethnographic research, Continuum is able to find the driving forces behind what consumers truly want (even if they are not yet aware of it themselves).   From creating a brand new product for Procter and Gamble the “Swiffer” to designing a hospital room geared to faster patient recovery, Continuum addresses not only what people want but the motivation, emotion and context behind those unrealized needs.

Disruptive change is a central part of staying competitive.  Both Ford and Continuum stressed the importance of gaining top management support, user commitment, inter department communication and collaboration and adequate user involvement.   Both of the presentations were “real world” examples of the case studies from our IT for Process Innovation class from the Rio and Atlanta modules.  Thanks to the clever and innovative teaching approaches of Dr. Noguiera and Dr. Truex, our class was better able to understand, appreciate and absorb the first company visits of our China Business Tour.