Obama and China

While I have always strived to maintain a somewhat upbeat and informative blog, I admit this is not the U.S.-China business bible. One thing I have strived for is to be current. And what can be more current then a pending visit from our very own President Obama to the shores of China. Yes, according to some, Obama knows no bounds, he can part the Red Sea, he can slay the hydra, and he invented electricity. Ok, well I don't know about the last one. He epitomizes hope, ambition, promise, utopia. Surely he can pave the way for progress between the United States and China right? Not so fast grasshopper...

Sure the ties that bind us have strengthened in recent decades, but major differences between the two nations remain unsolved. One of these differences is how to deal with global warming. What are the two most polluting countries on the planet? If you guessed China and the United States you would be correct. It is difficult for us to take the high ground, especially after having our industrial revolution, what gives us the right to deny China their respective revolution. After all, China wants industry, industry that is not regulated by foreigners, foreigners who are concerned with China's economic development, development being their first and foremost goal going forward.

Another concern for the United States that Obama may press China on is China's relationship with Iran. This is asticky situation indeed. While China may not be happy about the ignorant President that leads Iran, they do have substantial interests there. Another import albeit tricky issue for the two countries is the human rights issue. Whether or not comments or specific issues will be made public is to be determined. Perhaps they will be made in private consult. Either way, Obama should walk a fine line here. China does not respond well to finger pointing, or nations who view them as unequal, or the questioning of their way of handling human rights. Sure, I don't think they have a sparkling record when it comes to their treatment of certain ethnic groups or political aspirants, but China is not an itch we can simply scratch and it will go away. Mutual understanding and respect must be given.

To Obama's credit he has already layed some solid groundwork prior to his arrival. He views the nations as equals and even advocated that the United States will not seek to "contain" China. This is important. Another tricky situation is the status of Taiwan. This also seems to appear whenever the two countries meet. While it may be second page news behind the latest Hollywood bullshit, this is a monumental visit. Not just for the United States and China, but for the whole world. Be sure to tune in, I know I will.

Prospects for Onstar and a Booming Automobile Industry in China

OnStar will soon be making landfall in China. GM recently announced this development which would mark the first time that the service would be offered outside of North America.

For those of you unfamiliar with OnStar, it is quite an interesting and comprehensive service. Utilizing mobile and data communication and GPS technology, emergency responders can locate individuals who are in danger or who have been in an accident. I myself do not own the service, but I do find it quite remarkable. Upon hitting a sort of "panic button," locational information is transmitted to an OnStar node center (as pictured here) and then onto emergency personnel. In addition, I was surprised to learn that OnStar provides diagnostic advice for vehicle maintenance and even boasts a "stolen vehicle slowdown" system in which police can remotely slow and disable your vehicle in the event it is stolen or hijacked. Not bad huh?

Now many of you are probably wondering why this service has not been exported in bulk. Despite the unique functions, roughly 5-6 million in North America and Canada employ the service. While this is certainly a substantial number, it is small potatoes when matched to vehicle ownership numbers. Some reasons for this are price, utility, and privacy. Many people are unwilling to pay a high price for the features OnStar provides and even question the need for such a service with the existence of sophisticated mobile phone technologies. Also, the issue of privacy has also raised alarm as locational information could be used for surveillance or other illegal activity.

In turns out though, that OnStar could not pass up the potential that is China. As I mentioned in an earlier blog post, China has recently become the largest consumer of automobiles (and continues to rise at a high clip) in the world and there is potential here to tap this enormous market. Relatively speaking, and I can attest this based on experience, China is a nation of "new drivers." While we have been driving here in the United States for decades, driving in China is a relatively new phenomenon. This is evident by the still large volume of bicycle traffic competing with automobile traffic in China's congested cities, as well as the song of horns and vehicle accidents that often occur. It makes perfectly good sense to market a safety product there amidst the surge in vehicle ownership that is currently ongoing. Another reason that OnStar could and should be bullish is recent news that the automobile industry will continue to experience growth.

The growth I am referring to is based on findings from Nissan Motors which sees the automobile industry in China growing even after government stimulus measures expire. I talked a little about how growth numbers were inflated in an earlier post concerning vehicle sales based on incentives similar to the United States "Cash for Clunkers" program, which to many is synthetic and not true demand. Nissan Motors CEO even went as far to say that Nissan Motors will struggle to meet future demand. To combat this Nissan and other automobile manufacturers are turning to their factories in Guangdong province in the hopes of ratcheting up their capacities.

While I am not sure if I will go this route, one thing about business related to China that has never stopped having lucrative potential is automobiles and anything that pertains to automobiles. If you or I can create the newest and next best windshield wiper blade, interior espresso machine, or stylish hubcap, the potential that is the Chinese Market awaits. Before I go I want to leave you with this: Last year over 9 million automobiles were purchased, and as you probably guessed, that number is supposed to rise!

Guangdong

Today I want to talk about China's most populous province. Along with being the most populous province in China, it is also one of the most prosperous. It is of particularly of interest to Chinese firms and multinational firms as Guangdong province has a very dense and expansive production base.

Besides being a factory hub, Guangdong is also unique in respect to the rest of China. Like their brethren in Hong Kong, their spoken language is Cantonese. Although most of the younger generation increasingly speaks Mandarin, those attempting to wield Mandarin may find things difficult. Perhaps if business is to be done, one should brush up on some polite Cantonese gestures.

Another item of interest is Guangzhou, the third largest city in China and a major center for businesses who utilize one of the many smaller factory cities nearby, the most prominent being Dongguan. Besides the international airport, Guangzhou also has access to the South China Sea via the Pearl River. I have spent several weeks in Guangzhou and came across Africans, Eastern Europeans, and many other nationalities from Europe to the Pacific Rim. Many are working in the clothing, textiles, and toy industries to name a few.

As a result, it is no wonder that Guangdong is often referred to as "the factory of the world." What is most interesting to me is Guangdong's future path. The Chinese government has shown interest in eliminating some of these antiquated factories in favor of hi-tech industries. A pretty bold agenda, but possible considering that Guangdong is an economic powerhouse. Led by development in Guangzhou and Shenzhen, Guangdong province has a larger economy than Singapore or South Africa. The question is, with the implementation of hi-tech industries, what does this mean for the hundreds of thousands of migrant workers who now call Guangdong their home?

Largest Consumer Market in the World

One of the things that amaze me most about China is the strength of consumer demand. Economic difficulties fail to derail the will of Chinese consumers, they simply keep spending as they bum rush glitzy shopping malls. As for the shopping malls, they keep springing up all over China. I am not one for shopping, but I do enjoy poking around these places when I am there. They are multi-storied, have all matter of goods and services available (my favorite aspect is the plethora of food stands and restaurants), are teeming with Chinese and expats alike, and some even have full size movie theaters on the top floor (in which you can watch the latest Hollywood blockbuster no less).

To show the sheer magnitude of this consumer market, ingest these facts: China Mobile, which is state-owned and one of two major providers in China, has just seen their customer base cross the half billion mark. As a result, it is easy to comprehend that China Mobile has the world's largest mobile network and the most subscribers. China has also recently become the world's largest automobile market as well.

I must admit, this news does not really surprise me all that much. However, what does surprise me is during China's trouble economic period (let us not forget that China's exports are down at the moment) this rampant consumerism has not only sustained but is increasing. This is good news for China as it tries to diversify and boost domestic demand, a key element of Beijing's economic strategy.

Despite all the positive indicators, many economists and skeptics are not buying the surge. Beside the concern about the sustainability of such a robust consumer push, they are also concerned about the data itself. Many contest that the figures in play also account for government expenses and purchases. Like the United States, China is also employing a stimulus program of sorts.

While these factions can go back in forth all they want, I believe that while the growth may not be as high as Beijing purports, it is still nonetheless growth! All over China in various slices of life, things have been happening rapidly. More rural and provincial Chinese are getting into the mix, albeit some of this is on account of incentives in place by the Chinese government (much like the United States "Cash for Clunkers" program), still, this information is still telling. In Chinese urban society, incomes are rising and so is the pollution from new automobiles clogging the roads and highways.

I've mentioned before in earlier posts the vitality of China's consumer market. There is of course an element of risk. There could be a drop off in spending or the bubble may burst. I am no economist, but if I had a thriving business and a marketable product, I would bet all the chopsticks in China that this will happen later rather than sooner and that profits could be made. The key is to understand the nature of the Chinese and find that next untapped market.

World of Warcraft

Wow, I just read an interesting article about World of Warcraft. As many of you know, the game is popular all over the world and China in particular has a VAST following. I can attest to this. Visit any internet cafe throughout the country and you will find it teeming with adolescent boys (and some time girls) drinking soda, smoking, and hacking away at their enemies!

Surprisingly, China has banned foreign investment into their online gaming industry. The reason? They want to tighten control over the virtual world within the popular game. This astounding. I am not surprised however; China has been filtering Google and other Western media for some time now in an effort to keep out influences and information perceived to be harmful. It seems they are taking it to the next level with the virtual communities of World of Warcraft and their ilk. I am not going to get into the political nuances of this, but this news could have an implication for business.

So what does this have to do with World of Warcraft? Since there is such a prolific amount of Chinese gamers, the government may be concerned about what else is going on besides slaying the Burning Legion! I researched a bit and was impressed with the depth of the game and ability to interact with people all over. I remember years ago playing Warcraft II where you only had a choice between the Humans and the Orcs. Seems like there is much more going on with this one.

Along with banning foreign investment, firms also will be unable to participate in technology support and other influencing agreements with Chinese gaming firms. This is of note, particularly for businesses planning to tap into a rich and growing market in online gaming. Since the news is very recent, I am interested to see any developments and to what extent these restrictions may be. Something else to think about: How will this be received by gamers?

Competition in the Friendly Skies?

I was reading about China yesterday and I came across something very interesting. China, which has been a relative backwater as far as the airline industry is concerned, is now stepping up efforts to rival the world's largest airline manufacturers. That's right Boeing! Be advised Airbus! The name of the jet is C919, but it is still in developmental stages and likely will not be rolled out until 2014. Still, this development is significant in terms of international business.

First of all, it is a display of China's increasing capacity to shift from lower tech consumer goods to higher tech consumer goods. In this respect, China is following the lead of "tiger economies" in the region such as South Korea, which has made a shift from lower tech consumer goods to a market of high quality electronics, vehicles, and computers. China still has a long way to go, but this development shows the potential that remains untapped.

China has made it clear that this is a strategic decision as well as a business decision. China hopes to field the C919 for primarily domestic use but also for sale on the global market. It is yet to be determined what kind of effect this will have on American manufacturer Boeing and European manufacturer Airbus, but it is likely both are paying heed to the developments occurring in Beijing.

At this stage, the manufacturer has made some pretty bold claims. First of all, he said that the C919 will be superior in terms of fuel efficiency than planes the same size, such as Boeing 737 and Airbus A320. Additionally, the C919 will be marked down below the going price of its future competitors. I think this could be very significant for several airlines, which in a struggling market are in need of updating their fleets and improving quality while maintaining or reducing expenses. I am curious how this will play out over the next decade and to what extent China will shop their C919.

Despite these boasts, many analysts and think tanks question the likelihood of such claims. They concur that the cheaper labor market does not necessarily equate to cheaper planes, as materials costs usually make up the lion's share of expenses. Also, analysts claim that China's investigation using composite materials instead of steel (to boost fuel efficiency), likely will not come to fruition as rivals Boeing and Airbus have delayed similar projects citing little difference in efficiency.

Success or not, I feel this project will have a significant impact on China, if not the global community. With a rising Chinese middle class, the airline industry is booming. If anything, the C919 can be a huge boon to domestic airlines as the demand for airline travel in China is currently and likely to remain high. I, among others, hope to have a front row seat as this development unfolds!

United States-China Trade Relations and the Chinese Yuan

Of all the trade relationships, the United States trade relationship with China is one of the most unique. Through the context of globalization, the United States and China have become increasingly interdependent on one another. The United States is far and away the largest importer of Chinese goods, more than Japan, South Korea, and Germany combined. Also of interest, and not as well known, China has increasingly boosted their quantity of U.S. imports. Over a decade ago, China was the 13th largest export market, now it ranks 4th.

What can we attribute this to? Certainly with the rise of the Chinese middle class, the demand for quality American goods has risen. Additionally, globalization has spread over the past couple decades and penetrated deep into societies.

Before getting into some of the trade inequalities that exists, let's give credit where credit is due shall we? The flood of Chinese imports (quality issues aside) has resulted in cheaper products for U.S. consumers and helped keep inflation in check. Secondly, U.S. investments in China consistently perform better than the global average. Also of note, and of particular interest to this blogger, American businesses in China have been generally successful, also performing better than the global average.

Despite these positives and despite the increase in U.S. exports to China, the trade balance between the two countries is still skewed towards China. Many economists, particularly in the United States attribute this to the Yuan/Dollar exchange rate. The Chinese Yuan is a "floating" currency which is pegged to the United States dollar and is closely monitored and some might say manipulated. The result? A currency that is worth much less than it should be. The Chinese Yuan is worth much less that purchasing power parity would suggest. This results in Chinese exports being much more competitive and makes U.S. imports less attractive. It is no wonder that U.S. officials (and the World Bank) have called on China to re-evaluate their currency! Still, much depends on the eye of the beholder. Americans living in China and those conducting business likely favor the status quo. It is the American manufacturer who is most at odds. Facing a substantial decline in domestic production, this only further complicates matters for those exporting to China.

Outsourcing: A System of Tragedy and Triumph

Outsourcing. Everyone talks about it and we have all heard about it. Buy American they tell us. Don't send our jobs overseas. For many people this line of thinking is not necessarily in the fore of their minds. That is, until they are notified that they have lost their job because it can be done by intermediaries in a foreign land at a huge discount. Buy American? Sure if you can afford it. Let's just say there is a reason that China leads the world in exports.

From an economics standpoint, outsourcing makes perfect sense. It is in a particular firm's best interest to lower costs and efficiently employ capital and resources to improve the bottom line. More and more firms are outsourcing to places like India (Information Technology) and China (automobile parts). In the case of China, this has had a significant impact on places like Detroit and Flint, heavily dependent on the automobile industry.

Critics of outsourcing will point to reductions in quality control measures, language barriers, exploitation of workers, and damage to local labor markets to name a few. These are significant risks for a firm to undertake and outsourcings are not always successful. With that being said, more often than not, reward is not achieved without risk. For some firms, the promise of wage differentials and increased efficiency is too much to pass up. Often, they reap the spoils as a result.

While much can be said about the victors and the fallen, there are other things to consider when talking about outsourcing. What are the incentives for the firm to outsource and who should control what? This is a big question as multinational firms that engage in outsourcing need to establish ownership or dictate who should own or run a particular input. Some firms like to micromanage, while others put key business decisions and operations in the hands of local managers. As you can imagine, micromanagement comes with added costs to the firms, and delegating often can lead to detrimental results. Looking at another angle, country A and country B aside, what are the implications for international trade as a whole. For example, how does the outsourcing of U.S. jobs to China affect Japan or Europe or international trade as a whole? These are all things I would like to analyze in more detail in coming posts.

The world's local bank

"The Bank." This is often what expatriates refer to it when asked about the Hongkong and Shanghai Banking Corporation (HSBC). I became interested in HSBC as a result of a fluke during one of my visits to China in 2006. I was in Shanghai at the time and had been traveling on my own for several months and my money belt was getting a bit light. So I decided I needed to shake the money tree and I proceeded to withdraw money from an atm. I must have tried six or seven different banks, some state owned Chinese banks and some international banks. All of these banks denied my card and I was starting to get a bit worried. I made my way to the Bund and as I was admiring the British colonial buildings I found the main building of HSBC Shanghai branch. I waited my turn and attempted to withdraw money, and to my satisfaction, that atm started shooting out crisp, beautiful, 100 RMB bills. After that, I thought HSBC was a beacon of all things modern and civilized!

As a result of that experience I began to do research about the bank and was interested to learn that the bank was established by a Scotsman in 1865, and as a result is one of the oldest banks in modern world. It was developed with Chinese-European trade in mind as British colonized Hong Kong needed a way to finance trade. The Shanghai building I referred to was built in the early part of the 20th century and is very striking. The inside is very ornate and there is even a beautiful dome mosaic. It is surely worth a look if you find yourself in Shanghai.

Presently, HSBC is a major force in international, corporate and commercial banking, and also offers personal financial services for residents of China and expatriates alike. It is one of the largest investors among foreign banks on the Chinese mainland and have won many awards concerning the quality of their service. I have been following their developments over the years and would even be interested in joining their team. After all, with the exponential growth of businesses in China, HSBC is and will continue to be a major player in China and beyond. If you are planning on establishing or developing your mid-level or large business, you may want to comparison shop with HSBC as they are both qualified and competitive.

Below, I have provided a link to one of their ads concerning China. It is quite funny so I hope you enjoy!

http://www.youtube.com/watch?v=6_WAmt3cMdk

Along with providing comic relief, this ad also serves other purposes. Along with explaining some cultural differences between the British and Chinese, another concept in the ad deals with a previous blog post of mine. The social concept of face. Many of my Chinese friends say that in everyday life, this notion of finishing your plate being a slur on your Chinese host isn't really followed. However, they do say traditionally that this view is often held, and respected. So if you are in a dinner meeting with a Chinese host, it would behoove you to know this cultural difference.

As far as face is concerned, if you inadvertently question the generosity of your host, you can cause him/her to lose face in front of their peers and subordinates. This is a cultural taboo in China! I must say that this was never a problem with me. For my hosts often ordered more food than I could ever imagine eating in one sitting. Problem solved!

A few notes about the pictures. The picture on the right is a picture I took at night of the Bund in Shanghai. The HSBC building is the dome-shaped building. The other picture is of the main branch in Hong Kong.

Social Bookmarking Soul mate

I was looking for love on both diigo and delicioius and found that delicious was much easier to use and I was able to find a unique soul mate. The user name is purescience who has some interesting sites bookmarked. I selected him over other users who may have more sites of interest because he seems to be a beginner as I am. His bookmarks are all recent and are still a work in progress. He has been active since September 14 and bookmarked most of his pages today actually.

Two articles in particular sparked my interest. The first one is an article on Mattel's Barbie which is going to be making a splash in China. This is quite significant as a move to this market could be a boon for Mattel which is seeing sagging domestic sales. However, with that being said, Barbie will have to deal with her Far Eastern counterpart, Yu-Sai Wa Wa. Interesting stuff.

http://www.huffingtonpost.com/2009/03/03/barbie-in-china-mattel-to_n_171540.html

Another link that peaked my interest was on China's youth appeal. It is a handy guide to what the youth are looking for. Important information considering growing retail sales. Social status is important to the Chinese and delivering a high end item at a good price could be a boon for a company looking to raise profit margins.

http://www.wwd.com/fashion-news/china-s-youth-appeal-455785?full=true

On the opposite side of the spectrum, I found this link very interesting:

http://en.ce.cn/Industries/Consumen-Industries/200906/13/t20090613_19309926.shtml

This article from China Economic Net, comments on the reluctance of Chinese to consume luxury goods. Lamborghini and Hermes were given as a few examples. This is a good warning for other companies that are thinking of dabbling with a market that is often set in its ways. This article parallels the previous article on the appeal of brand names to the Chinese youth. For at some point, as salaries continue to rise in China, Western luxury brands will soon become more affordable.

While purescience's blog is not purely on China, the majority of bookmarks and tags are China related. Purescience has 22 bookmarks and 29 tags. Like mine, organization and volume needs work, but that can come with time. For 22 bookmarks, I feel that 29 tags is not a serviceable amount of tags. He should elaborate on this as many of his bookmarks simply are tagged "China" or "Business." Also, he has a few random blogs and sites amongst all his China sites which give it a disorganized appeal. I have checked many of purescience's sites of interest and did not find any evidence of comments.

I am sure if I continued to look, maybe I would find the grass greener on the other side, but I like the fact that this user is new and is focused on business in China. A more experienced user could have more information, but he would not be a good match for a fledgling upstart like me. At any rate I want to continue to monitor his progress and see what useful information he may decide to post in the coming days. Since he is a new user, I also want to see if he stays the course and continues to refine his site and add new bookmarks.

Power Transition Theory

Out with the old and in with the new. Well, not quite. However, I am often asked why I am so interested in China and studying Chinese. Besides the fact that I am interested, I also see the practical nature of undertaking such a venture.

First, China is the most populous country on the planet. Second, they are a force in global business and international relations and lead the world in exports. Third, which I will touch on in this blog post, is they are increasingly becoming more powerful and relevant in international relations.

Currently, many in the field of international relations will attest that the United States is a lone superpower in a unipolar international society. Many more would also claim that this is being challenged by a fast rising China. What is going to happen if/when the United States is put to the test by China. Will war break out? Will we see the beginning of a new world order that is bipolar in nature? Will this occur in the 21st century?

These are all relevant questions. In the field of international relations, the power transition theory is a Realist view of the cyclic nature of war. A powerful entity, or superpower that has long been dominant, begins to be challenged by an aspiring power. The aspiring power who challenges the status quo is not very likely willing to attack a dominant power and this same challenger will also not likely attack this entity once power has become transitioned to the challenger since they would view the previous superpower as "inferior." Therefore, the most likely chance for war comes when parity exists between the two powers and one is not significantly stronger or weaker than the other. This is the essence of the power transition theory.

So if this moment in time when the United States and China are on an equal plane does
occur, I do want to be able to tell the story. Especially in the off chance that Mandarin becomes the world's official language!

Trifecta

Hello Post

If you are reading this post I gather that you work or live in China, are afflicted with "China Fever," or you are here by mistake by making a wrong turn on the information superhighway. I know I am in the right place however. I have long been interested in China, so when it came to starting a blog, China was the logical choice. I am an International Relations/Global Business major and I am very interested in what is going on in China's business sector.

I originally came up with a few ideas to title my blog before approaching some of my peers.

Crazy enough to do business in China?
Taming the dragon
Chinese private enterprise and the Chinese government: Who will bend first?

As you can see, "Taming the dragon" won out, and I assure you it won hands down. Additionally, it is the perfect moniker for a blog grappling with business in China. For those who partake, it can be quite a challenge.

China is an interesting case. Just a few decades ago China's doors were closed to the world, but the story today is starkly different. Travel there today and you will find that investors and businesses have entered this mystical land in search of the largest market of consumers on the planet. You want Starbucks? Try every other corner in Beijing or Shanghai (or any other city for that matter). McDonalds? Try every other corner. The West has flooded the market with restaurants, banking institutions such as the Hong Kong and Shanghai Banking Corporation (HSBC), and goods and services of all kinds. Large foreign automobile companies have established manufacturing centers throughout China in an effort to widen their profit margins. China's cities and megacities are testaments to engineering and in some respects architectural achievement. Many of them rival other prominent cities of our time. A place where the old and the new are as present as it is a punch line; China is a land rich with opportunity.

However, before taking the plunge it is important to know a few things. I am by no means an expert, economist, businessman, or expatriate. I am simply a student and an individual who is studying business (in the global sense) and has an intense interest in China (and all things Chinese for that matter). I follow the news regularly and have traveled to China on several different occasions. My travels there have only driven my curiosity further and now I would like to someday work in China or work for a Sino-U.S. company here in the United States. I hope throughout the course of my first ever blogging environment to learn a great deal about this topic.

Business in China is such a vast topic. There are countless blogs, articles, and opinions on the matter. I hope to focus my efforts on a few areas. First, what a potential investor or entrepreneur should know before deciding to work in China. Next, what are the keys to success? Who are the prominent international players in Chinese markets? What are the latest trends and nuances? How is the Chinese economy weathering the current U.S. recession? Last, I want to explore the delicate relationship between the Chinese government and private enterprise. The last posting topic is particularly interesting and important as it not only shapes China, but the world at large. Chinese exports line our shelves here in the United States and are often available at a lower price. What would happen if the Chinese government tightened their fist or loosened their reins? In an effort to protect its culture, will China limit or deny access to certain foreign businesses? Or will it give way to the almighty dollar (yuan). In fact, China is even loosening its grips on internet filters, which have long been used to block out many western internet sites/companies/groups. Other topics that I may broach are social behaviors of the Chinese such as face and guanxi (networking and establishment of personal/professional relationships) and city profiles for some of the power players in China such as Shanghai, Beijing, Guangzhou, and Hong Kong.

For those still reading and interested in working in China or just fascinated about the topic, be advised that China is an intriguing place, but also fast paced and DENSELY populated! Each time I go there it seems my senses are heightened, my pulse more rapid, and my heart beats faster. There are cultural differences and practices to note. However, if you keep an open mind, you will find that it is an interesting ride, this place called China. Your business calling card awaits!

Voice Critique

"It is like having your own branch office in Asia." This, coming from the Silk Road International Blog. Of the many blogs I have been researching, I found Silk Road International Blog to be among the most interesting of the lot. Not only did it cover many topics from Chinese business to Chinese culture to personal stories, but it is also updated very frequently. One of the authors of this blog is David Dayton who has spent over a third of his life working in Asia. After reviewing his blog posts, I found he fits the mold of the expatriate that loves to do business in Asia (China now), but has issues with political environments, aspects of the culture, and the people involved. On one of his blogs, Mr. Dayton commented on the mood in Shenzhen (where he is currently based out of) during the Olympics torch relay. Apparently, a leg of the relay was going right through Shenzhen and though he did not plan on interrupting or protesting the relay (which was happening all over if you remember), he still wanted his 1/2 Chinese boys to see this piece of history for themselves. Long story short, he was cursed out by a Chinese (in Chinese no less) individual who was apparently not fond of foreigners. What came next seemed to me to be the voice of a naïve American, which really contradicts what Dayton is all about. For he is quite an accomplished and experienced business man who is fluent in both Mandarin and Thai. His exploits and achievements have also been chronicled in several interviews for prominent news and business networks and newspapers. However, as Dayton proceeds to discuss the aforementioned altercation he claims:

I’m surrounded by thousands of rabid, flag waiving patriots and I’m holding two babies, (both of whom are Chinese!!!

Doesn't he have a flair for the dramatic? While I am not trying to take potshots at Mr. Dayton, I do find that several of his posts have this quality. This quality of surprise and astonishment that not everybody likes us! Several of his posts comment on how government officials won't let him take pictures of certain things, or how a particular Chinese official or businessman/businesswoman is corrupt or shady. The voice that comes across to me from him is very "American" in this respect. What I mean by that is that he believes he should be liked and respected, even more so since he is married to a Chinese national etc. Unfortunately, the days of the Doughboys are over Buddy and if you work/live abroad it is my duty to inform you that you have to expect this kind of behavior from time to time. Of all people, he should know the social differences between Americans and Chinese. If you were wondering the name of this particular blog, it is "Foreigners not Welcome." Once again this is a bit dramatic based on a small unpleasant incident, but perhaps it was written when emotions ran high. The above quote of rabid Chinese even had multiple exclamation points to further the cause or perception that he was in "dire straits."

Another one of his posts is entitled "Attitude in China." In this particular post his voice changes. Instead of playing the victim, he takes the role of pointing the finger at everything that is wrong about China and the Chinese. Ok Ok, I understand their human rights record isn't tip top. But who are we to tell them? I am not going to go into specifics, but our boots aren't squeaky clean either. So as this particular posting continues, the blogger's voice continues to take the character of finger pointer/ranter. He talks of racism, unpleasant incidences that have changed his perceptions of the Chinese, and even provides this revelation:

I’ve been saying for almost 15 years that China has national-size insecurity complex. They’ve had it for at least 30 years (if not 100 years), but now you see it daily. They want to be welcomed onto the world stage as a player, but can’t handle the heat from the spotlight.

Further on, his rants become more concentrated and I even feel and sense the anger in his voice when he offers this:

CHINA—WELCOME TO THE WORLD STAGE—NOW DEAL WITH IT LIKE THE REST OF US.

The capital letters across the board was really striking and came across as an ultimatum. In Dayton's defense, his entire blog world is not like this. He has several posts which I plan to refer back to on his business experiences and I assure you he is not always ranting!

Profile Blog

A modern day Marco Polo. I believe I may have discovered yet another good resource for my blog. Not only is the blogger knowledgeable and versed in global business practices, he also has a lot of experience. This blogger, Boyé Lafayette De Mente, is a graduate of Jochi University in Tokyo and the Thunderbird School of Global Management in Glendale, Arizona. Additionally, he has written over 50 books on various aspects of business, culture, and languages of China, Japan, Korea and Mexico. Along with studying in Tokyo, he also worked as a journalist and editor working in Seoul, Hong Kong, and Mexico City, among others.

De Mente blogs about many topics that deal with business and social aspects of Japanese, Chinese, Korean, and Mexican culture and currently resides in Arizona. De Mente's blog, entitled "Cultural Insight Columns by Boyé Lafayette De Mente," is quite extensive with over 30 topic categories and a multitude of posts. The blog is not maintained daily as the posts occurred throughout April and May of this year. However, links exist that can take you to some of his other works and affiliated websites.

As far as the popularity of the blog is concerned, I am a little unsure. The blog seems to have a collection of various articles or topics that De Mente has written about. There are no comments visible on the blog, but upon doing research I noticed several of his articles have been commented on (mostly favorably). Also, from researching De Mente, I have learned that he is internationally known for his work. Even if his blog is unpopular, I do see a wealth of good information for my topic discussion. Two of the more interesting posts are "'Face' in China" (http://culturalnews.wordpress.com/category/face-in-china/) and "The extraordinary importance of connections in China" (http://culturalnews.wordpress.com/category/aspects-of-chinese-culture/.) Just by scanning the post on "face" I discovered this valuable nugget:

The Chinese concept of “face” is very personal, and covers any act, comment, tone of voice or even facial expression that indicates criticism or disapproval. Because of this extraordinary sensitivity, foreign managers should be cautious about criticizing or disciplining employees in public.

This blog is very relative to my topic. De Mente's posts on cross-cultural issues in business and social environments between China and the West is an important building block for anyone who wants to understand how the business environment actually works in China. Certain practices in the West may not apply or may not be as emphasized in China. For example, in China there is less focus on individualism and more of an emphasis on establishing connections. These connections are known as guanxi, and are mentioned briefly in some of my other blog posts.

De Mente's blog is scholarly, academic, and professional as many of the topics and texts are pulled from his existing works. As I mentioned before, his articles and books are internationally recognized and much of what he is writing about is based on his experiences in dealing with these different cultures. The blog posts themselves are very detailed and I liked how they provided links to other resources and some of De Mente's other blogs. De Mente's audience most likely is or would be foreigners working and living abroad and those planning to do so. Additionally, students such as me also fit the category.

I plan on using De Mente's blog for some of my writing, though it will not be a lynchpin, nor will my site mirror his. De Mente's works seem to focus on interpersonal relationships at the lowest level. While some of these issues are important, I also want to look at "bigger picture" economic issues and the relationship between the Chinese government and the market sector. With that being said, in order to understand the more complex relationships at the higher level, knowledge of relationships at lower levels is a must. De Mente will help me better understand these relationships. As De Mente stresses in his blog about connections:

The personal as well as the professional lives of Chinese are based on making and keeping connections with a variety of people they can call on for help of one kind or another. Such guanxi are especially important in matters that involve government offices on any level.

Another way my blog will differ from De Mente's is that I will also be blogging about issues and topics as they occur with an eye on current events. The nature of China is one that is undergoing rapid change and there is certainly more to come.

Comment Post

I posted a comment on David Wolf's "Silicon Hutong" blog. David Wolf is a corporate communications and marketing strategist living and working in Beijing since 1995. Wolf blogs on many topics relevant to my blog. I chose to comment on a blog post that talked about the Krispy Kreme donut chain and why it is likely to fail. http://siliconhutong.typepad.com/silicon_hutong/food_and_drink/

I just wanted to say that I found your blog on Krispy Kreme very interesting. I found it surprising that there are no donut chain stores in Beijing. Is that still the case now? I have been to Shenzen and although it is one of the most successful Special Economic Zones in China, to me it almost seems like an extension of Hong Kong. So in order to be successful in the mainland I don't see why he would want to start in Shenzen.

I agree with what you said concerning Shanghai and Beijing. I think if someone wanted to start a business there they would be more successful starting in central mainland China and then branching out. They would also be wise to observe successful predecessors as well.

Since you are a long time Beijinger, I was wondering about a few things. First, if a donut chain was able to be successful in Beijing, which part of the city do you think it would be? Second, I have not been to Beijing post-Olympics and was wondering what the business environment was like currently. Third, how is Beijing faring in the midst of the global recession and downturn in exports that is currently affecting China?

Chinese Concept of "Face"

No, it is not that pretty thing you look at every morning in the mirror. Rather, face is a social concept that is actually Chinese in origin. However, it does not fundamentally belong to the Chinese. This concept of face is prevalent all over the world, but plays a particularly important part in China's and other Eastern cultures.

Face has much to do with the dignity of an individual and how that individual is viewed by his peers. In the Western sense, face is alot like reputation. While one may argue that reputation and face is important in the west, it is even more important in Eastern cultures and plays a big role in social interaction.

In China, you can expect one to nurture many family and business contacts as the establishment and development of personal and business relationships is an important part of developing face. These relationships, or guanxi, form an intimate relationship as they are both inseparable. In my research, I found it interesting that these concepts were even codified by law in ancient Chinese cultures. Long time writer of Asian cultures Boye de Mente (whom I have written about in an earlier post) stresses the importance of face and guanxi today:

Both concepts are so deeply embedded in the culture that they continue to play leading roles in the everyday lives of the people.

So what does it mean to have "good" face? Essentially, this means that you have a good reputation and that you are highly thought of by your family and by your peers. It is an important attribute to be associated with as it can affect daily interactions. You would be viewed as honest and dependable. People would not shy away from doing business with you. If you are enacting a business deal, you want to make sure there is an element of prestige and honesty apparent in your counterpart before you break out the ink. Someone with good face will likely have more business contacts, suppliers, and connections to government officials. All of these are vital to establishing or developing a business. A bank or other financial institution equates face with fidelity and even sometimes views positive face as good credit! In this sense face has a certain "value" attached to it.

Now face isn't just your merits and accomplishments and the fact an individual is dependable or a "good" person. In order to have good face, you must take great care not to cause others to lose face. It is extremely important, especially in the business sense, that employers and colleagues take great care not to embarrass or openly criticize an individual in front of others. This would cause that individual to "lose" face.

So now you are wondering what this has to do with you and me. Well if you are foreign and hope to do business in China with any success, it is important that you understand the concept of face to avoid any social pitfalls. For example, if a peer or one of your bosses asks you to join him/her and others after work for a meal and drinks, refusing this offer can cause the individual to lose face in front of his/her peers. Remember this when you simply "don't feel like going." With that being said, it is important to note that in the process of earning and maintaining good face, Chinese may look to exploit others, especially foreigners. For this I have a personal story.

Several years ago I met a Chinese businessman when I was traveling along Australia's Gold Coast. We started talking and he invited me to go out with him and his colleagues. He was not the old stuffy businessman; he was the risk taking younger type, not too much older than me. So we hit it off and his crew proceeded to take me out to some lavish spots before returning me to my hotel. I left the next day but we kept in contact over the years and when my travels took me to China a few years later, we met in his city of Guangzhou. Though I didn't know it at the time, I was essentially "used" by him. At my expense he was able to increase his face among his peers and colleagues. He was in the process of working on a deal with a factory so he took me along (apparently in certain circles to be in touch with or know foreigners enhances status) and paraded me in front of all the textile workers, managers, and the like. He had me make phone calls to those colleagues that spoke English. I even met one of his foreign contacts alone since he was worried about his reputation.

Now I didn't go empty handed, I got to see alot of Guangdong province doing this kind of thing, meet alot of people, and ate some great food; and we did get along. I was young then, but looking back it makes me feel a little embarrassed as I was a tool to enhance his face. My willingness to please him could have been taken for weakness by others and would not of been beneficial for me in terms of face. It is a good lesson for me and one I will build upon in the future. While you should take care not to cause someone to lose face, you need to ensure you keep your dignity and your face in the process. A fine line to walk I suppose.

So what is a "green" foreigner to do? Consult an expatriate who has spent a long time in China or develop a friendship with someone who is Chinese and who you can trust. Remember, it is not just about accomplishments, but it is also about who you know and the reputation that precedes him/her. Strive to have good face and you will go far!

Voice Critique

Of the many blogs I have been checking out, I found Silk Road International Blog to be among the most interesting of the lot. Not only did it cover many topics from Chinese business to culture to personal stories, but it is also updated very frequently.

The author of the blog is David Dayton who has spent over a third of his life working in Asia. Judging from his blog posts he fits the mold of the expatriate that loves to do business in Asia (China now), but has issues with political environments, aspects of the culture and the people involved.

On one of his blogs, Mr. Dayton commented on the mood in Shenzen (where he is currently based out of) during the Olympics torch relay. Apparently, a leg of the relay was going right through Shenzen and though he did not plan on interrupting or protesting the relay (which was happening all over if you remember), he still wanted his 1/2 chinese boys to see for themselves.

Long story short, he was cursed out by Chinese (in Chinese no less). What came next seemed to me to be the voice of a naive American. As Dayton proceeds to disuss the altercation he claims:

I’m surrounded by thousands of rabid, flag waiving patriots and I’m holding two babies, (both of whom are Chinese!!!

Doesn't he have a flair for the dramatic? While I am not trying to take potshots at dear Mr. Dayton, I do find that several of his posts have this quality. This quality of surprise and astonishment that not everybody likes us! Several of his posts comment on how government officials won't let him take pictures of certain things, or how a particular Chinese official or businessman/businesswoman is corrupt or shady. The voice that comes across to me from him is very "American" in this respect. What I mean by that is that he believes he should be liked and respected, even more so since he is married to a Chinese national etc. Unfortunately, the days of the Doughboys are over Buddy and if you work/live abroad it is my duty to inform you that you have to expect this kind of behavior from time to time.

If you were wondering the name of this particular blog, it is "Foreigners not Welcome." Once again this is a bit dramatic based on a small unpleasant incidence, but perhaps it was written when his emotions were running high. The above quote of rabid Chinese even had multiple exclamation points to further the cause or perception that he was in "dire straits."

Another one of his posts his entitled "Attitude in China." In this particular post his voice changes. Instead of playing the victim, he takes the role of pointing the finger at everything that is wrong about China and the Chinese. Ok Ok, I understand their human rights record isn't tip top. But who are we to tell them? I am not going to go into specifics, but our boots aren't squeaky clean either.

So as this particular posting continues, the blogger's voice continues to take the character of fingerpointer/ranter. He talks of racism, unpleasant incidences that have changed his perceptions of the Chinese, and even provides this revelation:

I’ve been saying for almost 15 years that China has national-size insecurity complex. They’ve had it for at least 30 years (if not 100 years), but now you see it daily. They want to be welcomed onto the world stage as a player, but can’t handle the heat from the spotlight.

Further on, his rants become more concentrated and I even feel and sense the anger in his voice when he offers this:

CHINA—WELCOME TO THE WORLD STAGE—NOW DEAL WITH IT LIKE THE REST OF US.

The capital letters across the board was really striking and came across as an ultimatum. In Dayton's defense, his entire blog world is not like this. He has several posts which I plan to refer back to on his business experience and I assure you he is not always complaining.

Profile Blog

I believe I may have discovered a good resource for my blog. Not only is the blogger knowledgeable and versed in global business practices, he also has alot of experience. This blogger, Boyé Lafayette De Mente, is a graduate of Jochi University in Tokyo and the Thunderbird School of Global Management in Glendale, Arizona. Additionally, he has written over 50 books on various aspects of business, culture, and languages of China, Japan, Korea and Mexico. Along with studying in Tokyo, he also worked as a journalist and editor working in Seoul, Hong Kong, and Mexico City, among others.

De Mente blogs about many topics that deal with business and social aspects of Japanese, Chinese, Korean, and Mexican culture and currently resides in Arizona. De Mente's blog, entitled "Cultural Insight Columns by Boyé Lafayette De Mente," is quite extensive with over 30 topic categories and a multitude of posts. The blog is not maintained daily as the posts occurred throughout April and May of this year.

As far as the popularity of the blog is concerned, I am a little unsure. The blog seems to have a collection of various articles or topics that De Mente has written about. There are no comments visible on the blog, but several of his articles have been commented on and there are links to other sites about De Mente. Also, from researching De Mente, I have learned that he is internationally known for his work. Even if his blog is unpopular, I do see a wealth of good information for my topic discussion. Two of the more interesting posts are "'Face' in China" (http://culturalnews.wordpress.com/category/face-in-china/) and "The extraordinary importance of connections in China" (http://culturalnews.wordpress.com/category/aspects-of-chinese-culture/.) Just by scanning the post on "face" I discovered this valuable nugget:

"The Chinese concept of “face” is very personal, and covers any act, comment, tone of voice or even facial expression that indicates criticism or disapproval. Because of this extraordinary sensitivity, foreign managers should be cautious about criticizing or disciplining employees in public."

This blog is very relative to my topic. De Mente's posts on cross-cultural issues in business and social environments between China and the West is an important building block for anyone who wants to understand how the business environment actually works in China. Certain practices in the West may not apply or may not be as emphasized in China. For example, in China there is less focus on individualism and more of an emphasis on establishing connections.

This blog is scholarly, academic, and professional as many of the topics and texts are pulled from his existing works. His articles and books are internationally recognized and much of what he is writing about is based on his experiences in dealing with these different cultures. The blog posts themselves are very detailed and I liked how they provided links to other resources and some of De Mente's other blogs. De Mente's audience most likely is foreigners working and living abroad and those planning to do so. Additionally, students such as me also fit the category.

I plan on using De Mente's blog for some of my writing, though it will not be a lynchpin, nor will my site mirror his. De Mente's works seem to focus on interpersonal relationships at the lowest level. While some of these issues are important, I also want to look at "bigger picture" economic issues and the relationship between the Chinese government and the market sector. With that being said, in order to understand the more complex relationships at the higher level, knowledge from De Mente will help me better understand these relationships. As De Mente stresses in his blog about connections:

"The personal as well as the professional lives of Chinese are based on making and keeping connections with a variety of people they can call on for help of one kind or another. Such guanxi are epecially important in matters that involve government offices on any level."

Another way my blog will differ from De Mente's is that I will also be blogging about issues and topics as they occur with an eye on current events. The nature of China is one that is undergoing rapid change and there is certainly more to come.

Hello Post

Crazy enough to do business in China?

Taming the dragon

Chinese private enterprise and the Chinese government: Who will bend first?

Though just a few decades ago China's doors were closed to the world, the story today is starkly different. Travel there today and you will find that investors and businesses have entered this mystical land in search of the largest market of consumers on the planet. You want Starbucks? Try every other corner in Beijing or Shanghai (or any other city for that matter). McDonalds? Try every other corner. The West has flooded the market with restaurants, banking institutions, and goods and services of all kinds. Large foreign automobile companies have established manufacturing centers throughout China in an effort to widen their profit margins. China's cities and megacities are testaments to engineering and architectural achievement. Many of them rival the prominent cities of our time. A place where the old and the new are as present as it is a punch line; China is a land rich with opportunity. However, before taking the plunge it is important to know a few things.

I am by no means an expert, economist, businessman, or expatriate. I am simply a student and an individual who is studying business (in the global sense) and has an intense interest in China (and all things Chinese for that matter). I follow the news regularly and have traveled to China on several different occasions. My travels there have only driven my curiosity further and now I would like to someday work in China or work for a Sino-U.S. company here in the United States. I hope throughout the course of my first ever blogging environment to learn a great deal about this topic.

Business in China is such a vast topic. There are countless blogs, articles, and opinions on the matter. I hope to focus my efforts on a few areas. First, what a potential investor or entrepreneur should know before deciding to work in China. Next, what are the keys to success? Who are the prominent international players in Chinese markets? What are the latest trends and nuances? How is the Chinese economy weathering the current U.S. recession? Last, I want to explore the delicate relationship between the Chinese government and private enterprise.

The last posting topic is particularly interesting and important as it not only shapes China, but the world at large. Chinese exports line our shelves here in the United States and are often available at a lower price. What would happen if the Chinese government tightened their fist or loosened their reins? In an effort to protect its culture, will China limit or deny access to certain foreign businesses? Or will it give way to the almighty dollar (yuan). In fact, China is even loosening its grips on internet filters, which have long been used to block out many western internet sites/companies/groups.

For those still reading and are interested in working in China or just fascinated about the topic be advised that China is an intriguing place, but also fast paced and DENSELY populated! Each time I go there it seems my senses are heightened, my pulse more rapid, and my heart beats faster. There are cultural differences and practices to note. However, if you keep an open mind, you will find that it is an interesting ride, this place called China. Your business calling card awaits!

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