China Day 6: Ironic contradictions of an intellectual nature

This was the morning that I realized that there was no internet connection back to the United States.

Yes, it took 5 days.

Or anywhere else outside of China. I could not update Facebook, access Google, or even get to my personal website to check email.  It was an odd feeling to be in a country with such advanced technology but to feel so isolated.

I was able to use Skype for phone calls so all was not lost.

Today we started our visit with Sinotruck who, ironically,  asked that we not to take any photos on the production floor or premises. A country notorious for stealing intellectual property was suddenly conscious of the issue and looking to protect it's secrets.

The company manufactures light and heavy duty trucks used all over the world.  We toured the assembly line and were shocked to see no evidence of safety equipment.  No gloves, no ear protection, no eye protection, no anything as workers nimbly danced in and out of chassis moving down the line, assembling this or placing that.  The floor, areas, even rafters were clean, no sign of grease, chemical spill or blood anywhere in sight.

There were painted lines, rights of way, signage, and other protection in the areas.  I don't want to make it sound stunningly dangerous, we were limited to an overhead catwalk to keep us off the floor and out of the way and I didn't see any sign of injury or issue.  In addition, we were shown the training area for workers.  Individuals can sign up and receive cross training in other areas to support the company if someone is ill or unable to work, or to be promoted to a new area or job.

Next we toured Sang Le Solar a company that builds and sells solar powered water heaters for installation on building roofs.  This is a highly efficient system and provides (mostly) hot water for bathing and sinks in apartments and smaller homes. Parts for the water heaters are made by another Chinese company including the key component, the tubes that make the system operate efficiently.

There was an explanation for the importance of the tubes, demonstrations, and even visuals but since I don't have an engineering degree I relied on the nods and approving looks of the engineers with the group.  The company is fortunate to have a government contract and the units are ordered and installed on government owned apartment buildings. This means guaranteed sales and maintenance contracts for the company. This is in direct contrast to the water bottling company we visited yesterday. There was not an apparent lack of pride in the work of Sang Le, but it was definitely not as enthusiastic.

We attended a reception at  Shandong University, and their business students. Remarks were made, gifts exchanged and we were broken into groups to meet and talk about business in China and the United States.

Conversation was a bit stilted at first.  It was explained that Chinese students are educated in a very traditional form, with students taking notes or listening to a teacher without asking questions or requesting clarification until after the class is over.  This makes for limited English speaking, but their written English was better than most native speakers I know.  So if there was a breakdown in communication, all that was required was a pen and paper to get things going again.

To a person they were all college graduates who could not find jobs in their field of study.  The jobs they had were working on factory lines, in department stores as cashiers, or other places where they could find work.  They had returned to graduate school, passing very competitive examinations, in the hope that they would be eligible for jobs at higher salaries with less manual labor and able to work in professional areas in which they were interested.

After pleasantries and introductions, the first conversations began in our groups.  The focus turned to oil and seeking new markets for materials made with crude, such as plastics and clothing.

The second conversation was on elder care and medical care for the Chinese.  Both conversations were fascinating if for no other reason than just to hear someone speak to familiar issues from a different culture.

We ended the evening in a traditional Karaoke bar.  While there are photos of that, I'm not sharing them.  Some things just have to stay in China...

Slide for your life down 1,000 Buddha Mountain!

We awoke to another clear day in China.  Both our tour guides and the group continued to profess their amazement at the weather.

We had been warned that Jinan was a second tier city (only 7 million people) and was not used to seeing whites or Americans so we should be prepared for more attention. However, on arriving at breakfast at hotel we noticed that the room was filled with American's.  Sitting down to tables with them we discovered that they were part of a large adoption group there to finalize procedures  and take children back to the United States.

Suddenly we were not so special.

We did head to a market on our way to our first location, a cultural visit to 1,000 Buddha Mountain.  We bought fresh fruit and our country guide Frank handed me a Mandarin Orange.  I started to peel it and he grabbed my hand.  "What are you doing?  The skin is the best part?"  He popped one whole into his mouth and began chewing.  Having eaten a number of strange things so far (including fried scorpion) I followed suit.  It was actually better than peeling, with the tart rind balancing the sweet orange.  

1,000 Buddha Mountain is an artificial cave where hundreds of Buddha statues of varying size and type are carved, stored, displayed and, in some cases, dumped.  The cave could not hold all the Buddha's and they spilled out over the mountain, finally ending in a giant laughing buddha nearly 100 feet tall, looking to be made of gold.

We walked up the mountain past giant Buddhas in various poses with prayer strips and people burning incense. Because it is an active religious site, nothing is gated, fenced or otherwise restricted. Something fairly common in China. Respect is expected and adhered to.

Once inside the cave itself the Buddha's, and other antiquities, were open to the weather and people to touch and handle, (and hopefully not damage), at will.  Only a handful were behind locked doors or glass.   It seemed that it was just good will and respect for the Buddha's that kept them safe.  But environment and weather are clearly working away at them.

As we progressed through the cave, a guide explained that bribery is rampant and even Buddhists are not above it. This came up from a question - someone int eh group observed a monk driving into the parking lot below in a brand new Mercedes Benz.

We ended the self-guided tour at the back with a donation and our names entered into a prayer book, then exited to tiredly look down the mountain and the climb down. Our guide ushered us off to the side and into a lock and gate system similar to an amusement park.

Because that's what it was - a ride.

The visit ends with an Alpine Slide down 1,000 Buddha mountain.  It had pangs of Disney - and since we were flying by below the belly of a giant laughing Buddha, didn't feel particularly disrespectful.

We left and drove through streets and neighborhoods of Jinan, stopping for a traditional Chinese family lunch at a lovely restaurant clearly popular with locals, before heading to Pease Water Company.

This is a privately owned Chinese bottled water company set up over natural springs in Jinan.  The owners and workers of Pease take great pride in the fact that they are independently (not government) owned and their success is due to hard work and entrepreneurial spirit as opposed to guaranteed government contracts. That pride came through in the very gracious reception, the tour the bottling plant demonstrating the cleanliness and use of innovative technology, to the storeroom floor and the stacks on stacks of bottles ready to ship.

They presentation of the company was fairly short, but touched on the challenges that they faced as a privately held concern in a formerly communist country.

We ended the day in the best way possible, with a visit to Tsingtao brewery. Any day that ends with a brewery tour. There was no reception, but there was a tour of the museum and history of the beer in China, a walk through an educational section designed to replicate being drunk without consuming alcohol to remind people not to drink and drive, and then on to a reception with freshly brewed beer, snacks and small gifts.

Thankfully we had a bus to get us back to the hotel, where we mostly passed out from the exercise and alcohol. 

Doing Business in China - it's easier/far harder than you think...

It's Monday.  The weekend is over and it is time for us to get down to the business of our trip - visiting companies and discussing emerging markets, specifically in China.

This will also be our last day in Beijing before we head to Jinan in the Shandong province. So it's a sad, but exciting, day.

We start the day with a briefing at the US Embassy.  The impressive part of the discussion was the candor and direct responses to our questions.  The unfortunate part is that, as informative as it was, a lot of it was confidential and cannot be discussed.  However, the information was not original and did not color our views of either the country or the trip, but merely served as an explanation for a lot of what we saw and answered questions we had on issues with starting and maintaining foreign businesses within China.

One of the issues brought up, for instance, is the reliability of food quality in China.  Consistent quality of food, transport, sale and pirated packaging is a universal concern not just for local markets and "street meat" but has shown up overseas in baby food and animal food.  This is a recognized issue and the country is attempting to respond to ensure consistent quality.

Lawsuits and bad press have a way of getting someone's attention.

Our first business visit (aside from the Jade store) is with General Electric Medical devices.

We were received by several executives in a meeting room, provided refreshments and a generous welcome.  We were then treated to a slideshow presentation that gave not just an overview to GE's development in China, but in general development in the country.

With over 1.5 billion consumers it is understandable why companies want to develop business in China, with such an enormous market it is critical to first identify what type of business you want to do there.  GE is developing In China for China (ICFC) products which means that they do not create products for export, but for use within China.  In the medical device market there are urban global players such as hospitals, and there are rural local players.  To reach the suburban markets GE, with their ICFC strategy, set up salespeople in second and third tier cities to learn the culture and market as a holistic enterprise. 

 This is important as each region within China has challenges that need to be mastered.  Ensuring that they understand how each region operates and what positions them best in that region is a critical goal for companies like GE who recognize that China will eventually become their biggest markets.

Because of the issues with Intellectual Property protection there is a risk of localization in China with any product, but high tech products are particularly susceptible.  Companies like GE keep critical parts of their devices separate and key items in a secure location.  Final assembly is done in a different location to avoid intellectual property theft.

 This issues mean that companies may only decide to bring 10 year old technology to China while leaving newer products back in the United States or Europe where they enjoy IP protection.

Because of the recurring IP issues GE is focused on commitment to a high quality product and support to their customers.  This also helps compete against less expensive knock offs since they are not as high quality and their support is not as sophisticated as GE's.

Our second visit is with Ogilvy & Mather Advertising.

The owner of the company has a simple philosophy: The consumer is not a moron, she is your wife.

The company deals with public relations and advertising for companies.  One of the company's areas of expertise is foreign clients who are doing campaigns in English.  This requires that their specialists be versed in two cultures and able to operate, and translate, from one to the other and back.  For instance, one of their specialties is training clients to talk to the media succinctly.  This requires an executive to sometimes have to prepare and deliver remarks in a language that is not native or to a culture where gestures or facial expressions may carry a different message.

One of the most interesting parts of the presentation was the method of direct advertising used in China.  They do not use flyers or direct mail, but send messages, coupons and other advertisement directly to cell phones.  This guarantees that the people on the receiving end have disposable income for the products or services advertised.

But in China it is not just about reaching the consumer.  Reputation is critical and Ogilvy has developed a method of measuring reputation through four emotional indicators: Trust, Esteem, Admiration and Good Feeling. It is part of the complete package that the company offers to clients to ensure that the campaigns and products are positioned appropriately in foreign markets.

Train ride to Jinan:

We boarded a high speed train to Jinan after the visit with Ogilvy, enjoying first class service on the train ride.  We met with our local guide at the station in Jinan.  She greeted us with some stories about local culture, sang a traditional song, then got us to the hotel.  Unfortunately for her, we had been drinking for several hours and a few of the members then treated her to some traditional American music in the form of Beastie Boys.

After checking into the hotel we piled into cabs to continue enjoying finally getting over jet lag and feeling like normal at 9 pm.  The bar had a local musician, beer and smoking allowed.  You really forget what its like to reek of cigarette smoke after an evening out.  Being reminded was one of the less pleasant parts of the trip.