FAILURE (or "I Failed")

In talking to many different people in China, from various backgrounds, one word that I heard quite often was "FAILURE". The context was typically something like this, "Before doing , I worked as a , but I was a failure." The Chinese seem to have a binary view of activities. You're either extremely successful (most popular, most famous) or you failed.

I wasn't exactly sure how to interpret this.

• How long do they typically give themselves in a certain activity before it is considered a failure?
• Are they better than Americans at getting out of a bad situation? I know plenty of people in the US that dislike their job but stick with it because it pays the mortgage.
• Is their concept of failure considered a black mark on their career (or resume), or like a badge of honor, similar to how failed entrepreneurs (or NFL football coaches) are revered in Silicon Valley?
• Does their lack of creative thinking (vs. analytic thinking) lead them to consider activities failures earlier than they might if they stepped back and looked at alternative strategies or options more often?

I need to speak to some of my Chinese-American friends about this aspect of the culture in more detail. I need to better understand if this is a widespread mindset, or just a coincidence that we experienced during our two weeks in China.

The Golden Rules of China

Professor Mike Lord shared various tidbits from his previous travels with us throughout the trip. In an email today, he shared with us a list that he and several other exPats (and MNCs) have been developing since their visits in the mid-1990s.

Golden Rules of China

1. Everything is possible.

2. Nothing is easy.

3. Western business logic does not apply.

4. It is a fun project if there is no deadline.

5. You must persist – things will come your way – eventually.

6. Patience is the essence of success.

7. “You don’t know China” means they disagree.

8. New regulation means they found a new way to avoid doing something.

9. “Internal regulation” means they are mad at you.

10. “Basically, no problem” means BIG problem.

11. When you are optimistic, think about Rule 2.

12. When you are discouraged, think about Rule 1.

Feedback on Netbooks & Mobile Computing

Before our trip to China, I wrote about the 9" Asus Eee PC netbook that I would be taking to assist with blogging. Having discussed the product in ITMgmt class in the Spring'09 semester, I got a good chance to experience the difference between a netbook and a full-blown laptop.

Here's my thoughts...

Size & Weight - Considering that I carried this around in my backpack for 14 days, the weight and form-factor were perfect. The keyboard took me a few days to master, and it helped that I'm a two fingered typist. My roommate Gregg had a difficult time on the keyboard using traditional typing techniques. The screen size is obviously smaller, but this tradeoff was more than acceptable for the weight.

Usability & Mobility - I opted for the Linux version, instead of the Windows version, to get the true netbook experience. I wanted to focus on using applications that reside in the cloud, as opposed to local apps (MS-Office, etc.). Most of the applications I needed (Firefox, Skype, etc.) come pre-loaded on the machine, and they worked perfectly. Internet from the hotel rooms was decent, not exceptional, which sort of surprised me. What I didn't find much of was free WiFi access in coffee-shops, and netbook did not have any built-in 3G access, so the mobility aspects weren't something I could experience. WiFi worked fine at home in the states, so I'll give that a pass.

Cons - For the most part, it's a very useable machine and a great mobile computing device. But the one thing I truly disliked was the interaction with the mouse and trackpad. It was very inconsistent (mouse and finger-swipe movements) and the click-button was too stiff and very loud. The noise isn't that big a problem, except in quiet rooms. I think I woke up my roommate several times when I'd get up to write in the morning.

While the netbook seemed to be a decent platform for the trip, I eventually had to compare to using my iPhone. It was somewhat of a difficult comparison in China because the international data rate from AT&T were obscene (20Mb for $20). The netbook had the storage I needed to download picture and videos, and supported Flash for applications that required it. But if I could had gotten US rates for 3G data access, I think I could have been just as happy using my iPhone for all my mobile computing except for data storage.

Overall, mobile computing has come a long way in just a few years, with netbooks beginning to fill a niche in size, weight and functionality. The iPhone fills another niche, and I think there may still be room for an in-between form factor (or a storage add-on to the iPhone). I still had to carry my FlipVideo and others used their digital cameras, so the all-in-one mobile device still doesn't exist. And of course, ubiquitous & cost-effective mobile bandwidth still has a little way to go.

The Chinese seem to do everything from their mobile phone, so I wouldn't be against that form factor. A world without wires is critical, and the instant reponse times possible with a phone-like device make business in China move at the pace it does. Innovation in this area still has a alot of potential to drive huge amount of revenues and business opportunities.

Why China isn't the next Silicon Valley!

This is an interesting article by Sarah Lacy. I'm not sure how many times she has been to China, nor do I claim to be an expert with my visit count at a whopping "1". I find her viewpoint interesting, but not surprising. How could anyone but America, and especially our innovation mecca of Silicon Valley not be the home of the next great invention? I'm ashamed to admit that before our trip a few weeks ago, I would have thought the same thing. China is great at copying stuff. They are great at completing tasks that the brilliant and creative Americans assign to their low-cost workers. They all skipped the creative classes in school to take an extra math class.

Boy was I wrong about that. Its hard to explain without visiting, but there is definitely a culture of innovation in China. You can't build the cities that dominate their landscape without some creativity and strategy. You can't create business models that allow your companies to grow, when faced with a copied product within 90 days, if you don't have creativity and innovation. At this stage the innovation may not all be about new technology, but it is definitely about operational excellence, business model creativity, and a good bit of raw determination. Call it survival innovation. It's what motivates you to move from $1/day to $40/month to a high-rise in Xi'an, to a 100M RMB villa outside Beijing.

I'm looking forward to seeing if China becomes another Silicon Valley. But from the little bit I learned about Chinese culture, I doubt they want to become another anything. They will want to create a uniquely Chinese mecca of technology and innovation, or maybe a half-dozen. I'm hoping to find some ways to be part of that growth. I that for the next 5-10 years (or more), it will be a partnership play for those willing to create win-win situations in both countries. I don't believe it will be a zero-sum game with only one winner. As we've seen from the current econalypse, neither current can succeed if there is only one winner.

btw - kudos to Ms. Lacy for working on her Mandarin. I've been trying for a few months and not having as much success as I'd like. If she needs a study partner, please let me know. Or if she learns any tricks to learning it faster, I'd welcome those as well.

Communism in China - A single party system

[Cross-posted from our WFU MBA China '09 blog]

While not everyone on the trip remembers the Cold War (Russia), or the falling of the Berlin Wall (Germany), or the beginning of the Cultural Revolution (China), you could definitely sense that everyone on the trip had a curiosity, or concern, about how the Communist Party might effect our trip. Having worked for Cisco for many years, I had heard all the accusations about how our products were used to censor the Internet for Chinese citizens.

So the question remained, how much would the Communist government effect our trip? How much would we be allowed to see? How much does it effect the ability to do business in China and with Chinese business partners.

By no means should this post be taken as a definite answer or viewpoint. We were only there for two weeks, and had limited visibility into any aspect of companies or the Chinese people. But we saw bits and pieces, and that is what I'll share today.

In Beijing, we met with the former Chief Economist of The CITIC Group. CITIC is a mulit-national conglomerate that serves as an investment arm of the Chinese government. With that connection, the views from CITIC and the Chnese Government are obviously fairly well aligned. The views from CITIC recognized some of the huge challenges facing China:

1. An increasingly growing wealth gap between the richest and poorest people.
2. Environmental problems (air & water) as a result of all the growth over the past 10-15 years.
3. The challenge of finding enough natural resources to support their growth, as well as the search for alternative mechanisms (solar, wind) to substitute for those natural resources.
   
4. The dependencies on exports to drive their economy (especially the US), and the need to drive consumerism within their country.
   

These challenges all have a long-term time horizon, and all of them have a direct impact on the overall quality of life for almost all Chinese citizens. They impact the government's primary goal of a harmonious society, and they impact the long-term viability of the country.

At other State Owned Entities, such as Bright Dairy or Xi'an Aircraft Corporation, we saw how the government had identified certain industries or economic areas as critical to the long-term success of the country and was providing them with favorable benefits (ie. limited or no corporate taxes) to help drive growth and employment of Chinese people. While these benefits may or may not have been extended to other competitors in these industries, they did highlight the levels that the govenment will go to create a type of "floor" under parts of the economy to avoid speculation or wild swings that could create broader social problems.

Extending this concept of a "floor" to the financial portion of the Chinese economy, we visited the Shanghai Stock Exchange. The most prominent exchange in mainland China, it employs very rules that attempt to ensure more order in their markets:

1. No short selling of stocks.
   
2. All stocks must be held for at least 1 full day prior to being resold (N+1 rule). This essentially eliminates day-trading.
3. The variation in any one day can not exceed a +/- 10% band from the original price.

While some of these rules could be viewed as restrictive to efficient markets, especially from a US perspective, they could also be viewed as trying to force some amount of patience or "take a step back" into their markets to prevent extremes reactions to rumors, fear or greed. Whether or not this is a good thing for the SS Exchange or the overall Chinese marketplace will have to be determined long-term, but it does highlight another aspect of trying to maintain a level of harmonious society in various aspects of Chinese business.

As the trip progressed, I asked several of these questions to Professor Mike Lord, who has been leading this trip for 10 years and has extensive business accumine in the region. His response was that it probably makes more practical sense to view China as a single party capitalist country, instead of a Communist state that endorses capitalism. You still have to be aware of the guidelines needed to do business in China surrounding ownership, relationships and competition, but that their inclusion into the WTO had sparked a tremendous understanding that global economic powers can not control markets and that competition and innovation will ultimately determine their success or failure. This made a lot of sense. From an outsiders perspective, it was very hard to see China as being anything but a hyper-competitive capitalistic market. Just the pace of re-engineering of products and creation of companies to sell those would suggest that the government can only extend so much influence.

Don't get me wrong, I'm not trying to suggest that the government is not a prevalent part of daily life in China. I witnessed this first hand. YouTube is blocked. I heard people listening in on my phone calls. I saw soldiers outside of many buildings. I heard citizens tell us stories about their knowledge of Fallon Gong, and their fears of discussing the events of June 1989 in Tienanmen Square. But none of these things seemed to impede the flow of business (except maybe portions of Google's business).

So the conclusions I drew were primary about my mindset about this blend of Communism and Capitalism. For now, it seems to exist in a fairly harmonious state. Could this change in the future? Possibly. Those major challenges I listed above could get more difficult, or the citizens might become less tolerant. But there appear to be (at least surface level) signs that they are being addressed.

My advice to Americans looking at interacting with China is to view their economy as being similar to the US, except with the competition level turned up a few notches. Learn what you can about ownership and relationships with Chinese companies and the government, but don't let the fear of a single party system paralyze your ability to actively engage in the world's largest marketplace. Like anything else, keep expanding your knowledge of the region and it's culture.

Healthcare in China

[Cross-posted from our WFU MBA China '09 blog]

After meeting with United Family Healthcare, we had the opportunity to speak with several Beijing residents about healthcare in China. Several interesting aspects emerged, which highlighted major differences from the United States.

1. You don't make appointments with a family doctor or at a local clinic. If you have an issue, you take the day off work and go to the hospital. There you stand in line and wait for a doctor to examine and treat you. The doctors don't make much from a basic visit (fixed fee), but instead make the majority of the money on prescriptions. So most Chinese people are often over-prescribed with each visit, to the point that they feel the doctor has failed them if they don't walk out with a list of prescriptions.
2. Traditional Chinese Medicine (TCM) is primarily focused on reactive medicine rather that the preventative medicine of the west.
3. The majority of people in China do not have health insurance. This has resulted in people saving massive amounts of money (50-80% savings rates) out of fear of major medical bills. This is recognized as a major cultural issue by the Chinese government, so effects are underway to consider ways to create a social "safety net" system.
4. The level of doctor skills in China is excellent, both because many of them have been educated in the US, but also because science is so heavily emphasized in the schools from an early age.
5. The average lifespan is 71 (Male) and 74 (Female). While the air and water quality have serious challenges, the fact that their diet is low in fat and they frequently exercise (walking, bike riding, kung-fu, tai-chi, etc.) contributes to this longevity.

Just as in the US, China has a growing ederly population and will face similar long-term healthcare issues. Without social security of Medicare / Medicaid type programs, many elderly will potentially move in with their children. While this was traditionally accepted, as more of China becomes westernized and the young families are more focused on careers (with only a single child), this is beginning to cause some culture changes and difficulties across the generations.

Long term the population will face the risks associated with growing pollution problems and water shortages. Combine this with the growing western influence to their diets and China has some potentially large challenges to address over the next 10-20 years of their evolution.

Killing the Trolls of your Past

Another good find from Seth Godin. I noticed this at the end of the first semester as classmates told us about their background in our LOB class. So much of their decision-making today was guided by one of those "trolls" from their past. As I mentioned in my China Hangover post yesterday, I've been overwhelmed this week by how much of this I hear around the office. "We can't do that because....", it's almost always based on some failed attempt sometime in the past. Nobody seems to remember that today isn't yesterday and the world is not the same.

One of the most powerful sessions we had in China was a meeting with WFU MBA alum GeFei Li, who has bridged his knowledge of both Chinese and American business and culture into an incredibly successful set of companies. He talked about how many business people approach China with preconceptions or as the enemy, most of whom fail. Approaching business in China requires a new open-mindedness and a willingness to look at this as a win-win partnership. Letting the trolls dictate your goals or agenda is a recipe for disaster. It's not easy to let the pains from old wounds impact your judgment, but it's critical to look forward and find a way to view the world from today's viewpoint, with a vision towards the future. The trolls are in the past, and the past can't be changed.

The China Hangover

About an hour into long international flights, the flight attendants begin to move down the aisles serving drinks. If you're interested in getting some sleep, it's often helpful to have an adult beverage, and soon enough you're nodding off. But occasionally the cart comes by too often, or the turbulence prevents you from sleeping and upon arrival your head feels like the plane just landed on it. Flight hangovers are no fun.

For some of us, we're in the middle of a slightly longer hangover. In this case, we'll call it a "China Hangover" and it has less to do with a headache and more to do with a comparison. The comparison between the freedom and pace that we experienced over the past two weeks in China, and the pace that our world moves here in the United States. Having never experienced this before after international travel, I'm not sure how long it will last. My sleep is constantly interrupted by thoughts of China. I sit at work frustrated by the unnecessary barriers we put up to get things done. My thoughts during my morning and evening commute are filled with concepts for new businesses that either involved China, or adopt their strategies and attitudes towards business.

China is an amazing place. The past two weeks were incredibly eye-opening. This is a hangover that I'm not sure that I want to end anytime soon, because it's forcing me to look at the world in a completely different way. What I do with this new viewpoint will be the most interesting activity I undertake in 2009 (and possibly 2010). Getting back there is now high on my priority list, and probably needs to become an annual event (in some manner) to build my knowledge and contacts.

The Dynamics of the China Trip (Part I)

Thinking back on the overall trip, there were certain dynamics that stand out as being really important. The first is the order in which we visited the cities, and the second is the breadth of the students on the trip.

I'll start with the ordering of the cities. Coming over from the US, I'm sure we all had pre-conceived perceptions of what we'd experience in this new land. Living conditions, food, the response from the local people, how well we'd adapt to the culture, the role of the gov't, etc.. Beijing exposed us to the crossroads that Chinese culture is experiencing, with the mix of incredible growth and modernization (high-rise, buildings, roads, factories) and the 100s or 1000s of years of culture that still exists in the City Walls, City Moats and neighborhood hutongs and villages. But Beijing is also the center of the Chinese government, and to a certain extent it felt like a giant maze. Trying to get anywhere was cumbersome, there was never a direct path. It constantly felt like we needed to move in concentric circles to eventually reach a destination. And then once we were there, the business meetings often felt like a painful slog of formalities and interpreters. Combined with the newly inhailed pollution, Beijing initially felt like a shiny toy (on the outside), but a visit to a grandparents house on the inside. But then an interesting thing happened, we got outside the shiny parts and were allowed to explore. We sought out the older parts of the city. We sought out the local people and native culture. And we found places like Black Sesame Kitchen and and other places that embraced their past and were combining it with the new.

As we left Beijing and travelled to Xi'an, I sensed that there was some skepticism about the remainder of our trip. There was also a sense that the size and scope of China was so overwhelming that we might be too small to experience enough. Xi'an provided a nice change of pace. While it was a city of 8.3M people (the size of NYC), it didn't feel as dense. It felt more like Chicago. A big city, but further west and away from the crowds of Beijing. Xi'an showed us a new pace of growth. Xi'an is a city steeped in 3000 years of history, the origin of the legendary Silk Road, but here is was trying to become the new gateway to China's west. While Beijing had grown up, Xi'an was adding a new city area the size of Winston-Salem or Raleigh in 10-12 locations. Cranes were everywhere you looked. But Xi'an still had it's history. The Terra Cotta Warriors. The Big Wild Goose Pagoda. The Drum and Bell Towers within the ancient city wall. It had retained it's past, and was trying to build a new set of history. Overall the pace seemed to ebb and flow slightly better than Beijing, but that would all change as we got move on to Shanghai.

Traveling south to Shanghai, it almost felt like we entered a completely different China. Shanghai was new and huge and sprawling. Shanghai was not about history or tourism, it was all about being a center of business and an international metropolitan area. With 35M people, spanning an area the size of Delaware, Shanghai is massive in scope. Shanghai was our first experience of a China that had adopted many westernized ways. Transportation was a free-for-all, but it was fast paced. The business meetings moved to a different level, as the scope of the companies increased and we got insight from exPats on their experiences doing in Asia. The views of the skyline and the water were stunning, especially at night as the Asian obsession with neon was in full effect. The diversity of Shanghai was evident, as many of our group expressed a regret that we didn't have an extra to experience more of this incredible city.

Our final journey took us off the mainland and over to Hong Kong. A British territory in 1997, this felt the most like home. Hong Kong is like NYC with a British (and Cantonese) accent, set along the water and amongst the mountains. Language was no longer a barrier. The business meetings we again face-paced and engaging with exPats or Hong Kong locals.

About halfway through the second week, somewhere between Shanghai and Hong Kong, it started to dawn on us that the trip Mike Lord had created was the perfect blend of experiences for us to truly experience China. It started out slow and formal, highlighting the differences of doing business on the mainline. It showed the importance of local relationships (ours was with Kathy Guan of CITIC Travel), and the customs of interacting with State Owned Entities (SOE). We experienced the challenges of navigating in a country with a massive population and a communist government that needed to manage the growth in a controlled manner. As the trip progressed, we stated to see more freedoms and change, and we continued to see how capitalism and communism were intertwined. By the end of the first week, many of our preconceptions had been proven wrong, and we began to truly understand the incredible energy that was here. If we had experienced the cities in the opposite order, it would have been like driving a Ferrari at 150mph and then suddenly hitting the brakes to go down a one-land road. It would have created frustration. By putting the itinerary in this order, we were forced to experience eastern China first, to get outside our comfort zone and to learn to adapt. Only later woud we partake in the China that had an aspect of comfort for us, and we were all better for it. We had adjusted to the culture, the expectations and the nuances.

The Dynamics of the China Trip (Part II)

[Part I]

The other critical aspect of the trip was the breadth of viewpoints from the group. Composed of 35 students from 5 different MBA programs (in Winston-Salem and Charlotte), the group had very interesting dynamics.

• The spread in age between the youngest and oldest was 25 years.
• The mix of men and women was probably 60/40.
• The mix of groups was fairly evenly divided amongst the five programs, so there was a level of familiarity but also a desire to meet the other members.
• The backgrounds were diverse - Bankers, Accountants, Architects and Engineers. Consumer Products, High-Tech and Higher Education. Small Business Owners, Non-Profit Adminstrators and Real-Estate Developers.
• Parents, Husbands & Wives, Expecting Couples and Students heading off to Internships.

With all these viewpoints, there was never a lack of questions, opinions, disbeliefs and curiosity. The older exec students hasseled the younger full-time students about their lack of experience, and then expressed sentiments of jealousy or remorse at how easily they could move their lives to China (if desired) in a heartbeat, without the responsibilities of families or children. The entrepreneurs were constantly taking notes, looking for an angle or an opportunity to engage in these incredible markets. And the professors repeatedly provided a mix of learning, experience and wonderment as they took in new experiences for themselves.

35 people. 35 experiences. All being shared in real-time, all being processed with confusion and wonderment. The diversity of the people was the other critical element to making this such an incredible journey. Those 35 people now have a new bond together, and a foundation for a lifetime of possibilities. What we all do with those experience will each be different, but I expect that we'll all look at life (here in the US or elsewhere) in a new light because of this trip.