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.

Many Chinas

Our first day in China, Sunday the 10th, was a pretty unbelievable day. Unbelievable in the sense that I  it was difficult to convince myself that I was actually in China. Getting on the plane in Paris I had a hard time seeing beyond the next ten hours, but getting off the plane in Shanghai the excitement finally hit me. We made it to China!

That first day was a blur. I went with some of my classmates to the Yu Gardens first thing. The area around the gardens was an interesting contrast of the old and new Chinas. The architecture represented the old, traditional, conservative China pre-globalization and neon lights. The stores that filled the buildings were a mix of old and new. Some shops were very traditional, while others were big multi-national chains. For example, we ate lunch at a local traditional dumpling restaurant that shared a staircase with a KFC. KFC had all the neon lights and brand images one would expect while we had to search to find the dumpling shop.

Dumpling shop and KFC. See the entrance for the KFC? Also the entrance for the dumpling restaurant.

At the gardens, we were a hit attraction. When we stopped to take photos, the locals would also snap a picture. I found this interest surprising as we were certainly not the only tourists in the markets. I guess some of the locals are still getting used to seeing blonde hair and blue eyes in their shops.

We noticed that all the babies’ bottoms were hanging out of their pants. Shocking. We found out from Dr. Liu the next day that when babies in China are being potty-trained (at about 6 weeks old!) they don’t wear diapers. And for easy, on-the-spot “going,” their pants are crotchless. Talk about a cultural encounter.

After the gardens we walked down to the Bund where we saw more of China’s past catching up with its present. The old British concession buildings now house the big Chinese banks along with posh hotels and high-end shops. This remnant of China’s history has become a tourist attraction and a commercial hub. Across the river are the soaring towers of Citi and other big multi-national corporations. While we were walking down the Bund a little girl tugged on her mommy’s shirt pointed at me, like “Look, mom!” Again, we were not the only tourists in the area. Strange.

In addition to noting the contrast between old and new, we made two other observations while walking along the Bund. First, the streets in Shanghai are immaculately clean. In contrast to other major cities we know well, like New York, Washington, D.C., and Rio de Janeiro, the streets in Shanghai are extremely well kept. Second, the public bathrooms are holes in the ground. They are very clean holes in the ground, but, really, they are holes in the ground. Also, thirdly, McDonald’s is truly everywhere.

We were exhausted after walking along the Bund, but it was only about 5:00PM and we were determined not to let ourselves fall asleep yet! We decided to wander and see if we could find a place to eat along the way. We thought we would wander in the direction of the hotel so that if we didn’t find a place to eat we could ask the concierge at the hotel for a recommendation. Frank, our fearless leader, pointed out to us that the “Eiffel Tower”-shaped antenna on top of a building in the distance looked like the tower on top of a building next to our hotel. We found out later that such antennae are not uncommon in Shanghai and this was not a good landmark to choose. With the tower as our beacon, we began our journey. As it turns out, we were not journeying towards our hotel; we were, in fact, totally lost.

While we were lost and wandering through Shanghai, we got to see the full extent of the new, modern China springing up amongst older neighborhoods. There were run-down apartment buildings seemingly overrun by stray animals right next to brand new skyscrapers with impressive landscaping. The contrast on the ground, in the allies, off the beaten path was way more stark than we have otherwise seen.

While we were lost we also found a 7-11, which was the best kept 7-11 I’ve ever seen right next to a Starbucks. So far on this trip Starbucks and 7-11 have stood out to me as examples of the concept of Brand Management that we talked about in our Marketing class. These two establishments are extraordinarily consistent in their offerings. I’ve been to Starbucks in at least five countries now and it’s always the same. I don’t know why I’m surprised. 7-11 seemed more local-ized in their offering, especially in how bright, open, and clean the store was. In the US, I never have high expectations for a 7-11, but the store meets my expectations every time: they always have cold soda and bottled water, snacks, and a bathroom. It seems the Chinese customer – at least the Shanghainese customer – has higher expectations of a convenience store than the American customer. The cleanliness of the store paralleled the cleanliness of the city. I’m seeing a theme….

Finally we made it back to the hotel! Our walk through Shanghai was the best introduction to the city we could have hoped for, and it was partially accidental. The theme of many Chinas is one we will have to keep in mind as we travel to Qingdao and Beijing.

Morning of a new dawn

So here I am sitting on my couch at 6:30am. I’ve beat the sun up this morning and am enjoying a espresso before I head out to an appointment. The birds have already begun their chores of chirping and singing and I feel behind. My room (apartment for that matter) is a war zone of clothes, luggage, and papers. I’m still not finished packing but leave for the airport in under 9 hours. I know today begins a chapter of discovery for me and yet haven’t had time to let the excitement sink in. “Pack!!”, “Meeting at 9″, “Remember your paper” are all things my jiminy cricket keeps telling me (does this constitute insanity?).

However, even with all this circling around me the breaking of a new day gives me a moment of clarity. I’m about to step onto a plane and into a culture I have no experience with. A culture misunderstood or confused by most of the world for most of its existence. Keeping my luggage under 44 lbs suddenly seems a trivial concern. This will be the first time a language will be completely foreign to me. In Arabic I can read, in Portuguese I can at least guess a meaning due to it’s romance base, yet in Chinese I am utterly lost. No guessing or assumptions can be made since the characters mean nothing to me. It’s also a concern that for the first time I will absolutely be known as a foreigner with no hope of blending in. It’s a minor issue and yet it’s one that leaves me with a sense of being exposed. So it is now 7am and as this new day breaks I await its dusk knowing that within its setting something has begun. I’m still not sure what is starting but if this dawn and these birds are any indication it’s going to be dramatic.