Maybe Hummers are not going to China afterall…

The news that Hummers will be everywhere in China was disturbing.  But maybe they are not going to China afterall?   

Hummers aside, there seems to be a trend of increased government control over the past few months.  Slightly worrying signs.

Where to draw the line?

I am pondering about this.  Where does one draw the line when it comes to bribery/corruption?  Particularly relating to business dealings?  This does not apply just to China, but let’s take China as an example.  OK, I know bribery/corruption is illegal. I’m defining it broadly.  Maybe I should call it influence instead.  So that includes taking people out for elaborate dinners, gifts, using “agents”, lobbying (in this country), etc.

I would say, definite NOs if:
- You are going to harm innocent individuals.  E.g. contaminated milk, leaded toys
- You are going to sabotage a competitor.  E.g. paying someone to block a competitors’ deal
- You are breaking the law, outright 
- You are robbing Peter and giving it to Paul.  For example, you’re enhancing the wealth of the management of a company while hurting their shareholders. 

Likely YES if:
- You are removing an artificial roadblock.  E.g. you are paying authorities not to delay a regular business license application
- You are ”paying to play”

NOT SURE if:
- You’re getting an unfair business advantage or special treatment.  E.g.  winning a contract from a competitor
- The Yahoo/Google predicament.  They’re paying to play.  Not with money, but by cooperating with the government.  Their actions causes harm to someone who is innocent according to US law, but not innocent according to Chinese law. 

What do you think?  Are there hard and fast rules?

Why June 4th still matters

This year in particular, I find myself spending more time reflecting on what happened 20 years ago.  I ponder whether with all the progress China has had over the past two decades, June 4th could have repeated  itself.  Disturbingly, I find myself thinking that it could.  Not in the same way or same form, but in the same spirit.  

I am worried that China’s economic strength will deterioriate rather than enhance the advancement of human rights.  I worry because Chinese citizens seem to have adopted the view that sacrificing the freedom and happiness of a small group of people for economic prosperity is the right thing to do. 

I am afraid not that June 4th will be forgotten, but that June 4th will be viewed as a positive.  I am worried that China’s economic progress will make the suppression of individuals justifiable or even encouraged.

Today is June 4th.

Here is a  reflective piece on the Tiananmen Square incident 20 years ago. 

On that note, I am planning to read Zhao Ziyang’s memoir just recently released called Prisoner of the State: The Secret Journal of Premier Zhao Ziyang.

Update: there are some good coverage this year.  Here are a couple from the Financial Times: West miscasts Tiananmen protesters, and Netizens use strength in numbers.  And here’s one from the Asia Times: Forget Tiananmen, thus spake Confucius. 

Hummers going to China

This is a sad news indeed.  A Chinese company bought the Hummer brand and will be bringing this gigantic (ugly ass) car to China! 

I hate Hummers.  And especially Hummers in crowded cities.   In New York City, they even have Hummer limos which is the most obnoxious car in the world.  They literally take up the entire road when they turn. 

Who needs a car like this?!

Why do Chinese save? (Or, why don’t Americans save)

I came across this post by Michael Pettis on his analysis on why he thinks Chinese saves much more than the US.   There are multiple reasons listed, most of which relates to policies and how Chinese do not have a safety net, how the credit system is not in place yet. 

I think the real question is: why are Americans saving so little, and the Chinese saving so much? 

In my mind, there’s one simple answer.  Americans have formed the habit of spending their future projected earnings, and the Chinese have formed the habit of insuring their future with current and past earnings.   

Digging a layer deeper, Americans are confident that good and better days, will come while the Chinese worry that good days will not last.   

I agree with Pettis that the reason is not purely “cultural” but largely sociological.

Running in circles

The Amazing Race is my favorite reality TV show.  The previous couple of seasons weren’t as interesting… esp. when they did the US special and the family special, but this season is coming back in full force.  I love watching the contestants scramble to perform ridiculous tasks in foreign countries! 

Yesterday’s espisode was based on Beijing.  I wish they had better tasks then eating scorpians and painting Beijing opera faces…  how about trying to get on the subway during rush hours? 

During one part of the race, the contestants needed to find a clue box in a nearby location.  They have the name of the place in pinyin, but no directions.  So they all asked the locals for help, which seemed to be a logical idea (and their only option actually).  What happens next is typical in China - people start pointing them in all sorts of directions and they ended up running in circles. 

What I can’t quite figure out is: how can people have such different answers to one seemingly straightforward question?  Did they not know the answer to start with?  Or, they think they know but they are wrong?  Or, perhaps the question was not clear?

Please leave a message after what?

Wang JianShuo, as always, wrote a thought provoking post a few days ago, titled, “Why people don’t use v-mails in China“?  I have always pondered about this, as well as the question raised in his related post “Do you have a calendar“.

Wang’s perpsective is that Chinese people don’t use v-mails because they have leaped over the technology and adopted SMS and IM.  If the objective for using v-mails is to reach others when they are not reachable…  then the internet and mobile phones should have eliminated the need because (technically) everyone is now reachable 24/7. 

There is certainly merit to this argument.  I also agree with some of the comments on his blog that social ettiquettes also come into play.  While it is impolite in the US to take a phone call in the middle of a face-to-face meeting, it is impolite in China not to pick up your phone when it is ringing. 

The question then is, are these differences in ettiquettes shaped by culture, or by habit?   If we had mobile phones in the 70s and 80s, would we have voicemails today?  If we had IM and SMS in the 90s, would we use emails the same way we do?  I think not.  Just look at the teenagers today; with no legacy habits, their behaviors resembles those in China.

Too many college grads already?

The WSJ ran a piece this week titled “China Faces a Grad Glut after Boom at Colleges“.   This issue of oversupply of college graduates in China is not new… it has been written about back in 2006 here, and in 2007 here.  

Together with everything else in China, higher education has expanded at a rapid pace.  Here are the key statistics (from the WSJ article):

 

 

 

 

 

 

 

 

 

University enrollment in China 30% per year consistantly over the past 10 years.  This growth surpasses China’s GDP growth, and greatly surpasses growth of “white collar” jobs.  Today, Chinese universities churn out >6mn graduates every year.  I have heard that even in prestigious universities like Peking University and Tsinghua University, 30-50% of students will not land a job right after graduation. 

Some people argue that China needs to reduce its university enrollment so that more of the graduates can land a job.  Philosophically, I do not agree with this approach.  Education creates hope and economic/social mobility within a society.  At the individual level, it makes no sense to take the opportunity away.  It is easy to say that there is nothing wrong being a farmer or construction worker when we are not the ones doing it.   Having said, once given the opportunity, it is up to the individual to make the best use of it.

Lessons learnt

Having spent two years negotiating and closing an investment in China, I thought I will share some thoughts on what I have learnt (so far) about conducting cross-border deals. 

1. Yoga classes should be a prerequisite.  It is a huge test of patience.
2. Emails drop into a black hole – IM or call.
3. Every question is a statement.  A repeated question is a protest.  Pay attention.
4. Always ask for multiple opinions.  Never trust the self-declared “expert”.
5. Invest face time.  Maintain both official and unofficial communications channels. 
6. English is not a measure of business capability.
7. Risk-reward in China does not pay off.  The risk is basically unlimited.  ROI cannot be the only consideration.   
8. Trust is the basis of the relationship.  Legal protection won’t actually protect you.