Through this trip and course, the most important thing I learned about China and global business that ties into my MBA coursework is that in doing business in China, both individual relationships with manufacturing companies and the larger relationship with the Chinese government are crucial. This was expressed to me by our conversation with Alex at Stream Source. He mentioned that any company coming to China must first understand the government’s plan before constructing its own business plan. This is the nature of business in China. A prime example of this can be seen by the troubles that Google had in China. In conducting business in China one must align their goals with those of the government. If this can be achieved, then China is a very welcoming and encouraging business environment. As for the individual relationships, one of the largest problems is maintaining quality in one’s products. From our conversations with various members of management throughout the trip, it became clear that Chinese companies place a high importance on mutual benefit. A domineering company that is continually trying to low-ball and leverage low costs will not be able to maintain a strong relationship, and in turn will have quality issues. One of the key takeaways from this trip is the importance of relationships and just how to balance them when engaged in outsourcing.
Our business trip to China reaffirmed my perception that China is plagued by energy and pollution problems. In my opinion, these are two prominent markets that are continuing to grow in prominence and that represent an opportunity for a Westerner to export goods. Westerners have the potential to tap into these markets with our progressive green technologies. Just as we saw in the ‘Brits Get Rich’ YouTube segment in our blog posts, I think energy efficient home technologies offer promise. For example, when driving through China on the bus, it was clear that every apartment had an external air conditioner and didn’t have a clothes dryer (Clothes were hanging on large majority of balconies). Low cost and energy/space efficient versions of these appliances would be widely accepted by developers and consumers as the general Chinese public becomes wealthier and energy problems become greater. As for pollution, the Shanghai car sales limitations are a prime example of opportunity. Natural gas and nitrogen-operated vehicles are a chance for China to cut down on automobile based pollution. The West is shifting toward greener vehicles and as China continues to rise, I think this trend will move to the East.
A product that could be imported from China to the US is tea. After visiting the Hutongs, it became clear to me that tea is an integral part of Chinese culture and history. In my opinion, exporting portions of Chinese culture would be a successful endeavor. In my opinion, the West has never been largely influenced by the cultures of the East and tea could be a small cultural product that would be highly accepted. Coffee and tea are a booming sector of the US economy. As Emily discussed, there are no teas in stores such as Teavana that are of the same caliber. A company such as theirs could not only export their product to the United States, but also their story. As was mentioned by Amanda in the tea discussion, starting a monthly tea club that followed the model of wine clubs could be highly successful. Including a pamphlet with individual stories of picking tea in remote regions of China, in combination with the product, could demand a high price.
The most notable ‘best business practice’ that I took away from the Chinese over the course of the trip was the importance of Guanxi, or relationships. Similar to what I discussed in the first paragraph, the Chinese clearly express a strong importance for relationships, networking, and respect. Just as we witnessed at Sealed Air, they prepared a banner, a welcome reception, a tour, and most importantly, sessions to gain our feedback. The Sealed Air team emphasized their appreciation for our visit and input, as well as mentioned their desire to do business with us in the future. The Cal Poly MBA management has clearly taken the principals of Guanxi and applied them to our visits in China. This helps us ‘build the Cal Poly brand’ and aids in changing the perception of the West. I think this also aids in showing the Chinese that the US isn’t only leveraging low cost manufacturing, but is also engaging in mutual learning. Westerners could utilize and learn from Chinese Guanxi, not only in domestic business, but especially internationally. When one shows appreciation and respect, stronger relationships can be built. These relationships form the basis of trust and mutual rewards. On a different note, another ‘best business practice’ that I took away from the trip relates to location. The importance of the physical distance to resources is more strongly expressed in Chinese businesses. For example, at Providence Enterprises they required skilled machinists and transportation, so they were located in a region with a technical school and close proximity to Eastern highways to the ports. American businesses should keep in mind the importance of their relation to resources and less on the importance of being in a desirable location.
In my opinion, one item that developed economies could learn from China’s emerging economy and markets is how to efficiently guide their financial resources. Without sounding like an advocate of communism, it is clear that the double digit economic growth is largely due to the actions of China’s government. Their resource investment is channeled in a manner that effectively builds up the economy. Whether it is in infrastructure, continued investment in enhancing higher education, or the new commitment to enhancing green energies, China demonstrates a model of productivity. In the United States and developed economies, these governmental actions can be easily impeded, but the rise of China should act as a catalyst as to how to appropriate money. One constraint that I believe emerging economies have that developed economies have surpassed is the ability to retain talent. I think this has been better represented by our coursework throughout the year, rather than through our trip. Emerging economies such as China and India are unable to keep their leaders of innovation. Whether this is due to the allure of the American school system or the chance for better opportunities, it is a known issue. China has been successful in beginning to bring people back. This is an issue for these economies because it stifles their growth and creates a lag in their innovation.
Through this trip, I learned that I do have the flexibility that is required of an expatriate to conduct business in China. Personally, I believe that I could add value either internationally or domestically to a firm that is operating overseas. I think I would flourish in a situation where a company would require me to fly to China to solve operational issues. Despite the obvious language barrier, I realized I am a quite a patient person and am able to sufficiently convey ideas. Someone who is easily frustrated and unable to easily cope with the lagging effects of travel will not be an effective international manager. I think I have the personal drive and an engaging personality that would make me effective for a company. In order to be flexible, you have to be willing to step out your comfort zone and I have learned that I’m very capable of this. As for moving to China to conduct business, I feel as though I am flexible enough to manage, but that it isn’t necessarily something that is in my working future. Though I’m able to be flexible in food, activities, and business etiquette, I believe I would better serve a company as a problem solver. On a different note, I do believe it was important to tour Portofino to understand the environment that is appropriate for an expatriate. I also feel as though I would now be able to be effective in choosing someone to conduct international business for my company, having experienced what qualities are necessary.
On this trip I was constantly being forced out of my comfort zone. This occurred with everything from meals to the humidity to even the nightlife. First and foremost, I am an extremely picker eater and I definitely went through a crash course in authentic Chinese cuisine. I gathered that to the Chinese, there is a sense that one shouldn’t waste any part of an animal. Little did I think that the heads of ducks, toes of chickens, or stomach fat of a pig were edible. I have certainly gained an appreciation for Chinese food other than Panda Express through this trip. A second example of being pushed out of my comfort zone came with the weather. We are clearly pampered in California with the weather and it really was quite a change to be in a suit, in high temperatures, and high humidity and still maintain intense concentration. A third example came in the nightlife. Personally I have never been a huge clubbing kind of guy and this was another opportunity for me to get out of my comfort zone. Going to the club in Shanghai was not a standard night out for me, but it was an opportunity for me to prospect and network, as well as enjoy time with my classmates. Another way I was pushed out of my comfort zone was at the Silk Market. My initial impulse was not buy anything unless I achieved their ultimate bottom line. I have never been in a market where you can literally bargain for everything. I admit I was initially caught off guard and started out poorly. Once I got used to the environment and course of the negotiations I was able to better achieve my goal. A final example from a business perspective would be when we toured such factories as the Cataria International Textile plant. I have no background in textiles and it can be intimidating to push yourself to ask questions about a subject that is second nature to others. These visits were perfect situations to test my communication and observation skills. All of these experiences forced me to learn things about myself. I have realized that confidence is a key to business. This trip further demonstrated to me the importance personal confidence and courage in the business environment. This trip has also taught me the importance of being pushed out of my comfort zone. Especially internationally, you don’t only learn things about yourself, but it helps you better understand foreign cultures.
Prior to completing the pre-work for this trip, China was a place with which I was largely unfamiliar. As Professor Carr mentioned on the trip, the Opium Wars are hardly discussed in the course of the US education system as compared to other nondomestic British wars that had equal involvement from the United States. I say this in an effort to relay the level of unfamiliarity that most of us had in relation to Chinese history, culture, and customs. Some of the cultural differences I experienced through the course and trip were related to food, outspokenness, religion, and of course, business practices. These are only a short list of the cultural differences; it truly seemed that in every part of each day we experienced a culture shock. One initial difference I found, aside from the food, was the family oriented meals. The ‘Lazy Susan’ on the table created an intimate shared atmosphere. The Chinese people put a huge emphasis on family, especially with the single child rule, and this is another way the importance of family is emphasized. Another difference, based on a small sample, was the Chinese people’s hesitation to put down the government. We live in a free society where people are constantly slandering the president and country. The barefoot doctor that we spoke with in Mutianyu showed this cultural difference. She discussed her tough life under Mao Zedong and her minimal pay, yet she had pictures on the wall of Mao and mentioned that she, “wouldn’t change a thing.” Whether or not it supersedes that of the US, there is certainly a strong sense of national pride. Another cultural difference was the presence of religion. Where the United States was founded upon religious principles and churches can be found in close proximity to each other, with China being the largest Christian nation, the religious presence was not there. Lastly, whether in gift giving, accommodations, or level of professionalism, the Chinese do conduct business differently. In touring factories and meeting with Chinese management, I have gleaned important management techniques and relationship building tactics.
The most important thing I learned on this trip and through the course that changed me as a person was the importance of being grateful for what you have. We are all truly blessed to live in a country where we are free to pursue our dreams and can live largely unfettered by the government. I say this in reflection of our conversation with the ‘Barefoot Doctor.’ She had lived through Mao’s Cultural Revolution and was elected the ‘Barefoot Doctor’ under his rule. She survived on a minimal wage and expressed to us the hardships that she endured through that period. Despite the state of poverty her village was in, she was immensely grateful for her life. The true joy of her life stemmed from her family. The conversation was a strong reminder of the importance of humbleness and gratefulness.
For me, China continues to represent the face of outsourcing. I am confident that in the course of my professional career I will be involved in offshore manufacturing. I have become more attuned as to what criteria are needed to manufacture in China. For example, before hearing such people as Mike Bellamy speak, I was under the impression that even smaller production runs could be cost efficient. This has led me to the idea that China represents the face of outsourcing, as long as you can achieve economies of scale. Aside from IP protection issues relating to small unpatented products, there are high upfront costs and logistical issues in order to begin production. Whether it is the creation and transfer of a new product mold, or the establishing of foreign suppliers, it is clear that moving overseas too early can have adverse effects. China will continue to be the major world hub of manufacturing, but must be used efficiently at the appropriate time to reap the benefits.
Coming from a background in supply chain management, I was not only surprised, but quite impressed by the Chinese infrastructure. After driving through Shenzhen it became evident that the Chinese road system (in the areas we visited) was highly developed and maintained. As compared to the freeway system in Los Angeles, the road system in Shenzhen appeared brand new and much more highly maintained. In looking at the road maps of Shenzhen and Beijing one could see the efficiency of the road layout as well. The Yantian International Container Port was another great example of the infrastructure of the Chinese supply chain. In order for China to meet the United States demand for goods, as well as that of the rest of the world, the country relies on a highly developed system. Prior to our business study trip I was not expecting anything close to the level of development that currently exists. As I move toward a career in supply chain and logistics, what I now know about China has given me a substantial advantage. I have a deeper understanding of not only internal factory product flow, but also the greater external movement of products from the East to the West. China will continue to be the outsourcing center of the world and I now feel as though I will be able to leverage opportunities and be an effective international manager.
