Friday, February 20, 2009

Constant Gathering of Knowledge.

I just realized that the last post on this site was Christmas Eve. Sad, really, that on the day everyone is with family, I'm writing about that James Kynge book. It truly was a good book, but sheesh, I think I need a life.

While books like that and the one I'm reading now Capitalism with Chinese Characteristics are interesting and informative about the current status of China's fascinating economy, I think the books every business student planning on engaging in international trade with China should read are not necessarily studies of the market. Those books are great for learning what is new in China and how things are progressing, but the real teaching tools on the country are books about it's most influential figures. I'm reading "Zhou Enlai, the Last Perfect Revolutionary" right now. It's an easy read after so many books on market changes and real estate development. It talks about the much more astounding feat of living next to and under the thumb of Chairman Mao for decades without getting killed.

The biggest difference between China and the US is how we perceive shame. I firmly believe this. In China, power and status are almost always more important than money. Especially in the government. While that may be the same here, I think it is on another level there. A lecturer that I firmly disagreed with on a number of points came to Seattle University to talk about his twenty years in China and what it was like. I disagreed with him that my time spent studying China will not help me get hired by a company looking to move into the country. But he said one thing that really stuck with me. He mentioned gifts.

I've often thought that if someday I start my own consulting firm or exporting company, or even help get a manufacturer or some other branch of a US firm going in China, I will eventually run into the bureaucrats who will want a slice of the American Pie in the form of a red envelope filled with cash passed under the table. I will never go this route because it just turns into more pain and suffering. But I had never figured out how to get around it until that lecture at Seattle U. The answer was so simple: Bring them information.

In China, gift giving is a big deal. You can't have a house with no fruit in it. What if someone comes to visit and you don't have a bowl of fruit to offer them? That would be a much bigger deal there than not having a beer in the fridge would be here. So when you get involved with the government in an attempt to start a business in, say, Chongqing, what the hell are you supposed to bring?

The answer really surprised me, but after a little further thought, it made sense. The one way to prevent anyone from asking you to give them a bribe to grease the wheels of your own personal progress over in China is to find out what will help that person who has what you need get what they need from someone else. The company man who lectured talked about business reports from the US government, translated into Chinese, that could not be easily found elsewhere. They gave this to people who they thought could help them, and those people became instant allies.

In China, especially in the government, people aspire to rise up in rank. Getting one step higher up the ladder means a pay raise and more respect. But there are usually less spots available every step of the way than there are people who want them. If a guy whose help I need to get a building permit from the government goes to his boss in the department of big buildings with the latest information on global interest rates at US banks, all written in Chinese and translated from the Economist or the Wall Street Journal, I'll get my building permit. My new friend will get a nod and a smile from his superior, and he'll be looking for opportunities to help me in the future.

Business is really the same everywhere. You have to find out what the person you need something from needs, and make sure it's a positive, enticing carrot rather than a stick or payment for a service that should have been rendered for free. If a guy looking for a little graft finds out that I can help him look good in front of his boss, he's going to try to make things work for me.

The rest of it all falls into line. You have to know the country you live in. You have to understand the new culture and how it differs from your own. You have to know the differences so the message you're sending gets properly received and understood. Otherwise, the recipient of your instruction will lose respect for you. If this happens, you've lost face. Lose face to the wrong person, and you'll never get it back.

Wednesday, December 24, 2008

James Kynge.

I'm reading "China Shakes the World" right now by James Kynge, who is, thankfully, not only an economist but a skilled writer. This is rare in the modern world, where economists don't waste time learning to write flowery prose or dabble in ironic discourse.

The book is fascinating. I'm only on the second chapter, but he has already discussed numerous subjects that caused me to reflect on my own experiences with China a little more deeply.

One of these reflections deals with the snapshots I've seen of China over the last two decades, and how they relate to China's own growth and economic explosion.

Deng Xiaoping took his "Southern Tour" in 1992, when I graduated from high school. Up to that point, the city of Chongqing, where I ended up in 1994, had not participated in any portion of the economic boom that was going on leading up to the June 4th, 1989 incident. So when I got to Chongqing in 1994, I was viewing the city from the perspective of a western American who was used to a consumer-driven, demand-based economy built on the principles of a free-market society. My counterparts in China were just becoming aware of that lifestyle, and up until about 1993 had been living according to the communal tenets of communism. I still remember stepping into a "friendship" store, which was already going out of fashion because other stores were rising up around it that had the same goods at lower prices and offered something a little closer to customer service. At the friendship store in Beibei, a suburb of Chongqing famous primarily for the university at which I was studying, I found a bottle of Canadian Club whiskey for sale at about the price I would have paid in Minnesota. The unique thing about this bottle of whiskey was that it was aged almost 20 years. It had been bottled at 12, and then sat on a shelf in Beibei for the next eight. When the cashier pulled it off the shelf there was a noticeable circle of dust underneath, and she had to wipe the bottle off with a white rag that came away pitch black. The whiskey, although it had been sitting in a glass bottle for eight years on a shelf in a city that hits 102 degrees every summer, was delicious and consumed rapidly that evening by a group of classmates that had not had good western whiskey in two months.

What does this have to do with Kynge's book? I went to Chongqing in 1994 and saw a clamorous, huge city that seemed on the move. I returned in 1997 to witness a city growing swiftly but still in many ways unchanged. During the three years I lived in China, and the two I spent in Chongqing, the city did not change drastically, but the infrastructure continued to improve. New roads were being built. In 1994 it took 8 hours to travel from Chongqing to Chengdu. By 1997 the freeway had been completed, and it took 4.

When I returned in 2008, the city had more than doubled in size. It used to be a 20 kilometer taxi ride from the airport to the city's edge in 1997. By 2008 the airport was at the edge of the city, and when you exited the front gates of the airfield you were met with 20-storey apartment complexes lined up like huge air-conditioned dominoes.

The city was dynamic, huge, and much more modern than it had been before, but yet the public toilet downtown, along with other random highlights such as the pigeon soup restaurant and the 7,8,9 Hot Pot restaurant, were still there. The city hadn't lost its personality, but it had grown much more quickly than Barry Bonds' biceps.

The pollution was absolutely dismal. I could spit diesel particulate out of my mouth after taking a motorcycle taxi, and the air quality recalled in me a line from a book by a forgotten Minnesota author who described the Xi'an pollution of the late 80's by noting he thought of quitting smoking but figured the filter was doing him some good.

Still, they had a 20 kilometer monorail line (because Chongqing is Seattle's sister city, and Seattle voted initially to build one. Chongqing had theirs up before we would have gotten one mile completed, and they're currently working on a second line. Seattle later voted to discontinue their monorail dream). They have a raised highway system along the river bank, and they have a number of new bridges. Huge bridges across the Yangtze and Jialing rivers. These bridges did not even have foundations or roads leading to them when I left the country in 2001. The raised highways were just beginning.

The book also mentions the tenacity and entrepreneurial spirit of the Chinese, which I've been talking to nonbelievers about for years now. Many people talk about the Chinese not having imagination or ingenuity, because the stories we hear in the states are all around copyright infringement and intellectual property theft. But I posit that the economy is simply so large and the quality of higher education still so far behind that many who would be able to develop the required business acumen through education are still waiting hungrily for the opportunity to arise, while those with a natural tendency towards risk and dreams have already branched off on their own and made waves in the business world. Kynge talks about the Shagang steel company and its mercurial rise to the top in the late 80s and early 90s. But his example is just one of thousands across the country over the last decade; more and at a higher rate of success than we see in a developed country like the US. All this has been done on a playing field just as fair as what we have here at home.

Monday, December 22, 2008

The global economy.

What is this economic slowdown going to do to the global economy, and how is it going to affect my search for international employment.

I want to go back to China, but I also want to have a career that I like. Right now I'm learning a lot at school and a ton at my job about sales, finance, good management practices, and how a company works. But I'm a residential loan officer. That's a long ways from a country manager or a relationship expert creating smooth transitions to internationalizing companies moving into China. I want to be involved in the big picture, working on projects that move the corporation forwards. What I'm doing right now is not very close to that, and not a stable, versatile type of employment that makes HR managers looking for factory managers raise their eyebrows.

And even if I finish school and find a dream job where I either get to move to China or travel there often, pulling in a hefty salary to work with a bit more responsibility, what are my prospects? Is the international market going to recover in the next six months, or will it be more like 15 years? Things are tough right now. Credit markets and banks are not lending, those who have jobs are not spending, and as the equity in large corporations disappears, those who were heavily invested in stock are suddenly finding their wealth dissipated. Is this the job market for a novice MIB to get into? I have a lot of assets to bring to the table, but I don't have enough yet if my competition consists of managers with ten years of experience. I need to get into a new industry and to do that I need to start making more waves.

Tuesday, December 9, 2008

The Search.

I don't even know where to begin. Sometimes I sit in my office in Seattle and wonder how it is I got here. I am good at my job and I like it, but always I'm thinking about getting back to China. I want to transfer my sales skills, people skills, knowledge of budgeting, finance, marketing and management into a job that will result in a ticket back to the Mainland. That should be easy even in a slow economy. I know factories and production facilities are closing left and right in China, but I also know that very few expatriates want to move to Chongqing. One of my professors told me that Motorola used to have a policy of keeping all expatriates in China for a five-year term. Now people are going over for two. The problem is that in two years a lot of the time an expat can't even get his or her bearings and really settle down. They end up doing that right about the time they're leaving. Unless they live in Beijing or Shanghai, where it is much easier to be an expat. Then it might only take a year and the company will get another year of solid production out of them. But people get homesick and tired of a culture as different and difficult to understand as China's. There are dips in production. Moments when they just don't care. And expats have trouble figuring out how to effectively communicate with their local subordinates and peers.

We come from a country with a history of independence, freedoms that China has never known. Our religious base is Christian and our constitution was written with the belief of equality for everyone. China's history, often, is the opposite. That doesn't mean it's wrong, just that it's not the same. Understanding the Chinese and how their subconscious is built is the foundation an expat needs to hit the ground running in China.

I'm comfortable in that arena. And I want to go to Chongqing. I want to live in one of the most polluted cities in the world, because the sight of millions of people crowded into a hot, dank, hilly river city makes me feel euphoric. Why? I think because I grew up in central Minnesota, where it's cold, grey and empty. Chongqing is a humongous city filled with farmers and simple working people. Many of them are similar to the people I grew up around, but there are millions instead of hundreds. They are open, curious, friendly and so polite and accommodating that sometimes it just flat wears you out. I love hot pot. I love spicy food. I love turning a corner and not knowing whether the shop you walked by last week will still be there or replaced by a 30-story building.

Chongqing is one of the next big cities that is going to develop into an economic center. I want to be a part of that. HP is there, Ford is there, Nokia is there, Corning is there, the list goes on and on. And I want to be a part of it.

But one invaluable thing I learned while I lived in Chongqing is that patience is an absolute necessity. I'll keep pushing from this end, looking for a road to that end.

Sunday, November 23, 2008


I'm reading a book right now on Cultural Differences by Geert Hofstede. It's viewed by many to be the authoritative study of why and how cultures differ from one another. Really dry reading, but interesting content.

One of the things discussed that I believe affects the US and China in a big way is context. China is a high-context society, while the US is low-context. When I do something wrong at my job, no matter what job it is, my manager will call me into the office and tell me how I screwed up. Then there will be a conversation about what I can do to fix things and how to perform better in the future. Emotions are not really involved, and I don't walk out of the office expecting to begin seeking new employment. I don't fell embarrassed around my peers for getting told to revise how I do things and it doesn't cause me to lose self-confidence. If this same conversation happened in China, which it often does between foreign managers and local employees, things would be very different.

Lets say a plant manager from Texas asks his local director of engineering to come into his office. As the director sits down the Texan starts talking about a report on the status of operations and some new system they're implementing. He tells the local director that he was hoping for something different than the report he received and explains what he wants again in simpler terms than he did the first time. He points out what in the report was not to his liking, asks the director if he understands everything that has been discussed (just so that they can be clear with one another) and then asks if three days is enough time for the director to fix the report.

There are numerous problems with how this meeting just went. If the Texan starts off telling the director what he wants done differently, the employee is going to lose "face". Also, it is difficult in China to be too clear unless given permission to do so. Starting over and explaining what one wants in China is demeaning. At the end, when he asks if three days is enough, the only possible answer from the director is "of course". It doesn't matter if the report was fifty pages long and the Texan asked for it in five minutes. No matter how impossible, there is only one allowed response to that type of question.

Losing face is the biggest issue, though, and it occurs a lot in China, especially to foreigners. Many of them don't even know it is happening. I don't always know when I'm embarrassing myself in China, and I lived there for four years.

The last time it happened, I was in an airport on my way from Chongqing to Shanghai, and I needed to make a phone call to a German guy in Shanghai whose apartment I was planning on crashing at. I knew there were no phones in the airport that I could use, but still went up to the ticketing desk and asked the girl if I she knew where I could find a phone. She said she didn't know of any phones in the airport. I also knew it would be in bad form for me to ask her if I could use her phone, so instead I "asked" in the way most Chinese would ask: I started telling her all about my problem, that I was going to land in Shanghai very late at night (the flight was delayed) and I invited a group of people to a bar but my flight would arrive so late that they would have left by the time I got there, which would cause me to lose face. As I told her the problem, I was giving her the opportunity to offer her cel phone to me to use in calling my friends.

She eventually interrupted me and asked me if I would be okay using her phone. I thanked her profusely, called my German friend, and left him a message asking him to please tell everyone else I couldn't make it. Up until this point I was doing fine, but then I thanked her and asked her if it cost any money to make the call. This was embarrassing, and she told me not to worry about it, but like an idiot I pulled out a wad of cash from my pocket and tried to offer her some. She was more embarrassed, and the guy standing next to me waiting for his turn to talk to her about the delayed flight told his traveling partner "He just lost even more face".

This time the Chinese guy lost face, because he momentarily forgot I could understand him. Things like this occur all the time in China, and one of the reasons Americans never learn how they've just offended someone is because nobody tells them what they've done, because you lose face when you call someone out on something they've done wrong.

This is high and low context. We believe very strongly in being clear with one another in the west, especially when it comes to business. We write everything down when forming agreements and are straight talkers in meetings. We don't shy away from issues and we tell it like it is. This is low context. The Chinese don't like direct questions, and they don't like straight talk. The Texan should have started the meeting by apologizing for not being clear enough earlier, and pointing out that he, not the director, was completely at fault for the director's report. This gives the director the opportunity to deny any responsibility on the part of the Texan, then claim to be unskilled himself and ask for the Texan's guidance. At this point, they should be able to get down to business. This is high context. Low context societies like the US shy away from apologizing because it's an admission of guilt. In China if a superior started a conversation with an apology, I knew I had made a mistake and would interrupt my boss, tell him that I was in the wrong, and ask for his guidance.

If you're going to China to manage the Chinese and increase profitability, you don't need to know how to speak Mandarin, but you'd better understand how to avoid embarrassing your subordinates every time you speak. Eventually, once a relationship has been established and you've invited everyone out for dinner, drank with them, sang karaoke, and learned their stories, you can begin to be more direct and clue them in on the differences between your country and theirs. But you will not succeed in teaching them and connecting with them until you first learn from them. That is how it works.

The Chinese Environment.

I first became interested in China at the age of 20 when I was finishing my sophomore year at St. John's University in central Minnesota. I was hoping to study abroad in the fall quarter of my junior year, and chose Chongqing in Sichuan province because it seemed the most different from home.

I was intrigued with the culture, food, and people enough that when I finished school I returned to Chongqing in 1997 to work as an English teacher. I spent two years teaching in Chongqing, and studied the language constantly. Most of my friends were Chinese artists and businessmen who did not speak much English, so to communicate I needed to study.

I moved to Shanghai in 1999, where I worked at an international real estate company for about a year and a half as a leasing agent for their sole-agency accounts. I represented Ford Motors, Philips, Unilever and Nokia while I was there. My duties involved showing new families around town, setting their children up in private schools, and negotiating housing leases. It was a fun job, but I realized I would need to return to the states to get more business experience and an MBA if I really wanted to make progress in China in the way I hoped.

In 2001 I moved to Seattle and have worked primarily in the real estate industry. I'm one year from graduation with a Master's in International Business from Seattle University and hope to move back to China shortly after graduation. I believe the knowledge I've gained from working in business in both countries plus the added studies I've undertaken will make me a valuable asset to companies planning to sell products in China and produce them for export. Please comment on any of the blog entries I make here, as I value all feedback.