The Canadians invading China

Tuesday, we had plans to go to visit Alcan, but the visit got cancelled because the person receiving us was sick.  Instead, we had Mr. Gilbert, managing director of Beijing Global Strategy Consulting Co., Ltd. come speak to us at the hotel.  He was involved in a few ways in the Beijing 2008 Olympics.  He had a lot of interesting things to say, coming from someone that has lived through the 30 year boom in China.  He has been in China since 1980.  He first went through the changes in China from 1980 to today.  In 1980, there was practically nothing possible.  As an immigrant to China, he wasn’t allowed to have contacts with locals.  After 8pm, everything was dead, no entertainment, nothing.  The main thing that struck me, given my industry background and interest, is that the Chinese consumers in the large European cities account for 50% of the luxury market.  And the wealthy Chinese consumer average age is well below the average age of the wealthy consumers in the U.S and Europe.  To me, this is important about the luxury market because even if I never export to China, I would still need to heavily cater to the Chinese people.

After the presentation at the hotel, we ran to the mall to get lunch.  I went to the actual food court part, not international food court like we’re used to, Chinese food court.  I managed to find something that looked decent from the plastic food models.  Then our bus took us to the Beijing train station to catch a speed train out of town.  The train station was really impressive, it looked like a modern airport.  And the train was pretty cool too.  It went up to 300km/h or 200mph and our ride was only 13 minutes.  Once there, we went to visit Lights Medical Manufacture.  They develop and manufacture alcohol pad, and swabs, and hold a 50% market share in the U.S.  We first had a presentation on the company and then visited their facilities.  That was cool, we got to see everything: the lockers where they keep all the samples where we saw some Walgreen alcohol pads, the labs where they develop and test the products, the factory where they produce and print the foil envelopes for the pads and swabs, the machines doing the production, the workshop where the machines are built.  All their machines used in production are created and built on site.  Pretty impressive.  The company was very welcoming to our group and even had a banner outside welcoming us.  Light has just recently merged with a pharmaceutical company and the manager of that pharmaceutical company is a Chinese-born Canadian.  He studied in Ontario and lived in Toronto for many years.

After the tour we had a few minutes before we boarded our train, so we stopped at the new mall in front of the train station.  This mall is an outdoor mall and from the street you can only see the back of the buildings because they are facing inwards and just from the architecture of the mall I could tell it was an outlet mall!!!  It looked like Woodberry Commons!  Nobody really bought anything because luxury is more expensive here, especially with the 17% VAT (tax).  So we got back on the speed train back to Beijing. 

Our bus dropped us at Switch Grill where we had an informal happy hour with Rutgers Beijing students and Alumni.  Rutgers has an EMBA program in Beijing and Shanghai and the professors from the U.S. go to China for a week and teach a class.  The structure is the same as the EMBA in the U.S., one weekend a month and a couple nights a month, so a full course is over in a week.  I met Stephan, a French Canadian from Joliette!  He graduated from the EMBA Beijing in 2009.  The restaurant, Switch Grill, was also owned by a Canadian!  It was mostly American food, so we ate a burger, mmmm!  After the restaurant, we went back to the hotel and packed for our early departure for Shanghai for the next day.

Kong Fu fighting

Monday was our first part of the educational program.  We started in the morning in the hotel conference room with a presentation from David Wolf from Wolf Group Asia, a consulting firm providing strategic communications counsel to companies in innovative and creative industries.  Mr. Wolf was a very dynamic and interesting speaker.  He has been doing business in China and living in China for the past 17 years.  He started his presentation with “In China everything is possible…nothing is easy.”  Then he gave an example of how a client asked him to reserve the equivalent of the Capitol Building in China for a dinner and needed an answer in 20 minutes.  Mr. Wolf’s wife, Chinese born, got it done.  Everything is possible…nothing is easy.  Some of what he talked about was contradictory to what I’ve learned from my preparation for the trip.  For example, before leaving for China I learned about Guanxi and how it is probably the most important thing in doing business in China.  However, Mr. Wolf acknowledged that Guanxi was that important, but he sees thing moving in the direction where Guanxi will not be enough to succeed in China.  However, like many others, Mr. Wolf also agrees that China still need to make more socio-political changes and to innovate to stay on the growth path.  He also talked about the Little Emperors, which I though was interesting.  Because of the birth control laws in China, a family can only have one child, which created a new generation of single childs with two parents and four grand-parents attending to the Little Emperors.  Mr. Wolf also recommended that the best products to import into Chine is luxury goods for two reasons.  There is a rapidly growing number of millionaires in China and you just can’t compete on price with the Chinese on anything else.  One little bit of fact he said that I though was interested is two third of all the world’s construction cranes are in China.  So just that shows how rapidly the country is growing.

The second presentation at the hotel was from Ms. Manuela Reintgen from Dezan Shira and Associates, a consulting firm that provides pre-incorporation regulatory and tax advice.  Her presentation was more of a “textbook” presentation.  She only had a little over two years of experience, but still very informative.  She talked about the potential conflict of doing business in China, such as time – time is not money in China, relations – again she emphasized the importance of Guanxi, dealing with conflicts – the Chinese are not confrontational they want to ensure harmony.  She also talked about the different types of legal structuring to start doing business in China, such as Joint Venture, Wholly Foreign Owned Enterprises, agents and more, and she talked about the risks of doing each of them.  Her information was definitely very practical.

After the 2 presentations, we only had 45 minutes to go get lunch before we had to get on the bus.  Leaving us very little time and no idea how to say “to go” or “we’re in a hurry” in Chinese, a few of us opted for McDonald’s.  I wanted to avoid Western food, but given the situation and I also believe I should try McDonald’s in every country I go to, we didn’t have much choice!

After lunch, we went to Lenovo R&D center for a tour of their office and a presentation from an American marketing and communication manager.  The tour of the R&D center was a presentation area prepared for group tour to go through the history of the company and see the product evolution.  It was interesting, but I would have rather seen the actual production line, which was a mile down the road.  At first I didn’t think they would have a plant that near to Beijing, but when they said the plant was down the road, I was a little disappointed we didn’t get to go see that.  After the tour, we had the presentation from the American manager.  He told us that when he first moved to Beijing, and for the next six years, he had to live in the Lenovo doors, where he shared a room equipped with six metal bunk beds and shared 2 washing machines between 100 people.  Why would anyone want to do that?  I wonder why people decide to move so far overseas and have to live in much more difficult conditions than back home…answer to come.

After the Lenovo visit, which ended an hour late, we had no time for dinner, so we all rushed back to our hotel room to change to go to a Kong Fu show.  I was agreeably impressed with the quality of the show.  On my first trip to China, we went to an acrobatic show and this poor lady fell from where ever she was perched and the tray of glasses she was balancing on her hand or her head, well turned out to be a tray to plastic glasses all glued together.  It kind of ruined the show!

After the show, we came back to the hotel, some people went out, of course, some, including me, went to bed.

Knockoffs everything

On Sunday, we started the day by going to the Temple of Heaven.  The Temple of Heaven is that famous round temple that is often shown in pictures of China.  On our way out of the Temple of Heaven, we stopped in a tea house.  We all sat around a large table and experienced a tea ceremony, which is basically a tasting of different kinds of teas prepared in front of us.  All these teas supposedly have beneficial “powers”, such as lowering high blood pressure or cholesterol, helping memory, making your skin more beautiful.  I enjoyed the experience.

Then we stopped at the pearl market.  The pearl market has everything from real government approved grade pearls to cheap fake jewelry and Canal Street-type knockoffs.  One thing and maybe the only thing I wanted to buy myself in China were pearl earrings, so I went to one of the very nice store inside the pearl market with our local tour guide Isabella, a very very nice lady, and she helped me bargain for the earrings.  In the end I got them for 40% off the ticket price.  Not as low as what you can bargain the knockoffs for, but the lowest they would actually sell them at; I did try the walk-away technique – it didn’t work at that point.  The knockoffs were what you would expect: designer handbags, shoes, “silk” scarves, sunglasses and electronics.  Electronics are still interesting to me because I feel like a fake Louis Vuitton is one thing but a fake Canon camera??  Then again there are fake Mercedes in China!  That is quite funny I think.  To me, that is the prime of all knockoffs – a car!

After the pearl market, we headed back to the hotel, around lunchtime, and our group program was over for the day.  A lot of us went to the mall near the hotel to eat.  There are quite a few restaurants along with some fast food chains in the mall.  It’s a very nice mall.  We went to a Chinese restaurant and I had a delicious Wonton soup and we shared dumplings.  It was so far the best meal I’ve had in China.

After our delicious lunch, everybody did different things: massage at the hotel, nap.  I went to the Summer Palace with Francesca and Carlo.  We took a cab from our hotel and got there an hour later.  It was kind of far.  Although the cab fare was what you would expect in NYC going from midtown to downtown in 10 minutes: $12.  And gas is more expensive in China than in the US.  Not sure how they make any profit.  The Summer Palace is where the last two Emperors spent their summers, up to 6 months a year.  It’s a huge piece of property with a man-made lake, about a foot deep, and about 30-40 little pavilions or houses everywhere. We walked along the lake for about an hour and a half.  It was very beautiful.  I assume I had been there on my first trip to China, but it didn’t seem familiar.  When we were done at the Summer Palace, we were afraid we weren’t going to find a cab to take us back to the hotel because the Summer Palace’s last entry was at 5:00pm and it was already 5:30pm with not too many people left around.  However, as soon as we walked outside, a “cab” was waiting there, so we got on.  I put cab in quotation mark because it didn’t look like most of the other cabs, but it did have a meter – one that turns twice as fast!  We didn’t care, it was already so cheap for an hour cab ride and we were lucky we got one so fast.

The thing I’ve been most amazed by is the infrastructure.  The roads are impeccable and so many buildings are what the very nice buildings in the US look like.  A lot of it look very luxurious and if you take the Chinese characters signs out, you feel like you are back home in a very nice part of town.  That is one thing I have no memory of back in 1995.  I will really have to look at all the pictures from my first trip to China.  I should have done that before I left, but I can still compare when I get back.

Once we got back to the hotel, since I had been cold all day, or actually the past two days, I felt like going to the hotel pool, hoping for a hot tub.  Yes, I am one of the few people I think brought a bathing suit because I did look up the hotels before we left and saw that they had a pool, not so surprising anyway; most hotels do have pools.  But unfortunately, no hot tub.  I walked down the pool steps to my waist and I was still cold so I decided it was enough and sat in the sauna for a few minutes.  When I got back to my room around 8pm, my roommate was sleeping; she had been partying pretty hard the last two nights.  I decided to lay down as well and fell asleep.  Later, I woke up, deciding I should go have dinner somewhere.  Too late, it was 11:30pm.  Back to sleep.

The Great Steep Wall

Saturday was a long (not long in a bad way) cold day of sightseeing.  We all met in the hotel lobby at 8am to make our way to Tiananmen Square, the largest city square in the world sitting on the longest avenue in the world, if I remember correctly 42km.  In my young 12 years old eyes, I saw Tiananmen Square much larger, but it’s still pretty large!  I also remembered tons and tons of bikes going through the avenue in front, but it was summer back then so that might be why.  So we walked through the square, took a few pictures and bargained a group deal for a souvenir book with a group picture taken professionally. 

Then we walked towards the Forbidden City, where we walked for about two hours through layers and layers of walls and interior courts.  There were a lot of Asian tourists, actually the majority of tourists were Asian.  I suppose western foreigners travel more frequently during the summer months.  Walking outside for about two hours already got most of us pretty cold.  Some people had to buy gloves and hats from the vendors walking around.  Then we ate lunch at a Chinese restaurant, which was very good.  Most of us liked it.  It was somewhat close to what Chinese food tastes like at home.  After lunch we rode the bus for an hour and a half towards the Great Wall.  Nap time. 

The Great Wall was pretty much like I remembered, but not as steep as I remembered.  We entered through the Badaling entrance, which is the most popular.  The climb to the peak was quite tough; it started with a smooth walking hill going steeper and steeper until it had to change into stairs, which were not only so steep that all you could see was the heels of the person in front of you, but also uneven steps.  The steps are uneven because if the enemies were running on the wall they would trip due to the unevenness of the steps.  So note to self: don’t run on the wall.  The walk down was just as challenging, in a different way.

After the wall climb, we got back on the bus for the hour and a half ride back to downtown.  Nap time again.  On the way back, just outside Beijing, we stopped to take pictures of the famous Bird Nest and Water Cube, from the 2008 Olympics.  It was very beautiful in person.  The whole Olympic village was quite nice.

One thing I learned that I though was very interesting is how the government controls the traffic, or the abundance of cars.  I hope I remember all of these correctly.  First, to get a license you have to wait, like a lottery, because only 240,000 are issued every year.  Second, every day two numbers are picked and if your license plate start with one of these two numbers you cannot drive on the roads, eliminating 20% of the cars driving every day.  Third, in Shanghai, it is very expensive to buy a license plate or driver’s permit, sometimes as much as a cheap car.  I thought those little facts were pretty interesting.  However traffic wasn’t too bad, not must worse than traffic outside New York, but then again it was the weekend, so it could be much worse during the week.

Then, back to the hotel for about an hour and we were out for our welcome dinner at Jasmine.  It was a very nice restaurant, which I actually didn’t expect.  However, the food was, how should I say, exotic!  In another way, it was fancy Chinese food.  Yeah, not at all what we eat at home.  Jellyfish, lotus roots, frog legs (which I do love, but didn’t want to try them soaking in a bowl of liquid) and many other exotic food.  Most of us didn’t eat much, if anything, until they brought out the bowl of noodles – that was delicious.  We also kept asking for white rice and they kept saying no!  We also had the traditional Peking Duck, that we rolled into pancakes with cucumber and a sauce.  Pretty good.

After the restaurant most of the group went out to a club, which I believe is a pretty famous one in Beijing, coming back at all hours of the night: 12:30am, 1:30am, 2:30am…