Nearly a year ago, I launched this blog as a way to organize some of my thoughts on the US-China relationship in an effort to find clarity on issues that I’d started to consider while living in China and during graduate school in New York City. I did not expect more than a few readers to drop by, nor was I entirely comfortable with conveying my opinions in a public forum. However, the process of thinking and connecting online immediately drew me in, eventually leading to many in-depth conversations offline. So, after talking with hundreds of innovators and entrepreneurs at the US-China intersection in the last year alone and learning so much along the way I feel, well… a bit dumbfounded… and extraordinarily grateful. However, it is time for me to move forward with the questions that originally led me to blog- to work with them either in a doctoral program or through independent research or some other means. So, I am currently focused on the application process for grants and schools while hunting down progressive foreign correspondent positions on the off chance that miracles do happen. Therefore, I have decided to put my blog writing and interviews on hold in an aim to make the *theme of this blog* a larger part of my life and my career.
Blogging- and social media generally- are amazing pathways for exploration and discovery, but sometimes it’s necessary to turn off the faucet of information in order to let the mind quench its thirst. Someone I very much admire once wrote that “technology has made our perspective more global and tolerant, our access to information easier, our self-definitions less confining. But, the more complex and sophisticated our systems of lateral access, the more we sacrifice in the way of depth.” Based on my own experience, I think he makes a very good point- one which is difficult to swallow in an age that has largely forfeited contemplation and privacy for urgency and 24/7 engagement. Where’s the balance? I hope that my time away from blogging (and Twitter and Facebook and LinkedIn and…) will give me greater perspective on that question as well. And, who knows, maybe I’ll blog about it next year…
On that note, I want to extend a big *THANK YOU* to all who have dropped by over the past year; your thoughtful comments and emails have always fueled this blog, as many of my posts originated from your questions and suggestions. Blogging has forged friendships, conversations over coffee, and even the occasional argument… Blogging has opened the doors to a new US-China community bridge, a community that I believe will lead the future of US-China relations. Simply put, I am very thankful to have had the opportunity to engage with you and I look forward to more dialogue in the future! And, of course, many thanks to all who participated in the interviews and collaborative posts… I think it’s most appropriate to wrap this up with some wisdom from those who are on-the-ground and in-the-know…
On Business and Investment…
Chinese Brands In America: A Conversation with Scott Markman, President of The Monogram Group
“The scale of this opportunity and the amount of companies in China that have the means to consider this would dwarf anything that we have seen from Japan and Korea combined. Many Chinese companies are actively considering the prospect [to build their own brands in the US] but because of cultural issues, very few have taken the leap to put into place the infrastructure and investment. They are looking for other models to follow. Companies like Lenovo and Haier were among the earliest to do this, and other Chinese companies are now sitting back and waiting to see how successful Lenovo and Haier are before they take the leap into the US market. Today is more about potential than reality.”
Head West, China: An Interview with Private Equity Consultant, Song Jin
“There is one major challenge for every Chinese company and it is that they don’t have enough talent to manage cross-border transactions, not to mention managing a US company. In terms of China’s private sector, I would say that they have a slight advantage over the SOEs. One reason is because these privatized enterprises are market driven, and another is because their decision-making process is much faster than the SOEs. However, a state owned enterprise has a huge advantage: they are backed by the government and government-supported banks, which means that their resources are much larger than in the private sector. But, whether state-owned or private, the biggest challenge all of these companies face is lack of management talent.”
China-US Insights on the Future of the Auto Industry: An Interview with Automotive Experts An Qingheng and Bill Russo (Part 1)
Chairman An: “What will power future automobiles is still a difficult question. Will it rely on clean diesel, hybrid technologies or something totally different? Different specialists have different viewpoints. In fact, with traditional energy resources decreasing day by day, all parties have reached the same understanding: that new energy should be developed to power future automobiles. Concerning which technology should take the priority in different points of time, every solution has a reasonable rationale. History will tell us who is right.”
Bill Russo: “The Chinese automotive market is still very young, and in many cases the producers of vehicles that are sold in China are also fairly early in their development stage. What has happened over time is that, as the market has grown, more and more technology providers have taken note and looked at China as a place where they can localize their product. So, for technologies such as clean diesel, hybrid and electric vehicles – you will find that China does not lead the technological development. In fact, Chinese companies are not leaders in the development of any major new automotive technology.”
China-US Insights on the Future of the Auto Industry: An Interview with Automotive Experts An Qingheng and Bill Russo (Part 2)
Chairman An: “The American market is massive and free. It’s reasonable that Chinese OEMs would like to enter this market as soon as possible. It’s rather a question of whether this can be achieved after 4, 5 or 10 years. Rather than forecast when can we make the entry, I think that it’s more appropriate to talk about how to make this happen. Chinese always say that: “The practices of precedent are the lessons of descendent.”
Bill Russo: “While Chinese firms have learned very quickly how to assemble cars and source parts, they are very inexperienced in the vehicle development and synthesis process. An automobile is a complex engineered system that requires advanced technology and know-how in testing and validation in order to achieve a world-class standard of performance, fuel economy, safety, and quality. You need to achieve a certain level of world-class benchmark targets in all of those areas. Quite frankly, a company that’s only built cars for maybe a little more than a decade probably lacks the skills to optimize the finished product.”
Interview with Sam Goodman, China Entrepreneur and Author of “Where East Eats West: The Street Smarts Guide to Business in China
“I jumped in head first. At the time, I was 25 years old; I was overflowing with confidence and brimming with ignorance. My advice is, do your homework and find a mentor. There’s many people who have already done it- find out directly from them what they did right and what they did wrong. Learn from people who have done it before. I’m not really the corporate type and I can’t say that I’ve seen many corporate types take the plunge outside of the corporate world. The skills that you need as an entrepreneur are quite a bit more varied than what you will find in a corporate setting. It’s not the nature of corporate design to give you all the tools you will need as an entrepreneur.”
Q&A with Serial Entrepreneur, Richard Robinson
“I was working my way around Europe for a few years in the early 90’s and I became enamored with the idea of overland travel and read most of Paul Theroux’s train travel books (Paul happens to also be from my hometown of Medford, MA). I got excited at the prospect of an overland trip from Europe to Asia via train so in late 1993 I hitchhiked from Switzerland to Prague and then went by train from there through the Ukraine to Moscow through Siberia and Mongolia to Beijing. I had a ‘China epiphany’ upon my arrival and I’ve been hooked by the Middle Kingdom ever since.”
Go West, China! (Includes an Interview with International Lawyer, Dan Harris)
“The biggest mistake I see is that the Chinese company thinks that because its Chinese employee lived in the United States for ten years, that person knows everything he or she needs to know about doing business in the US. That person is an international lawyer, a labor lawyer, a real estate lawyer, a litigator, a corporate lawyer, an accountant, a chief financial officer, a human relations specialist, a marketer, a publicist… I am working with a Chinese company who has an extremely bright, capable person at the helm, but this person gets grief whenever he tries to bring in outside experts for assistance. [The attitude is] “why do we have you if you need help?” So, what are the drawbacks? They are too numerous to mention, but all you need do is assume that the legal work, the accounting work, the tax work, the marketing work, the human relations work, and the PR work are all being done by someone who doesn’t really know what he or she is doing.”
Interview with David Mair, COO of China Connection Global Healthcare and China Healthcare Fitness and Culture Experience
“It’s really a combination of diet, exercise and traditional Chinese medicine that Aimin Hospital draws on. The calorie-controlled meals they serve are strong in terms of volume, but without the heavy oils and sauces that you often get in China. At the same time, the participants each have their own personal trainer; each participant receives two rigorous training sessions per day and traditional Chinese medicine, including acupuncture and herbal treatments. This approach is designed to create and maintain a higher than normal metabolic rate while staying within a healthy range.”
Interview with Bill Russo, Automotive Industry Expert (Part 1)
“The forecasts on China have always been wrong. If the forecasts say “the middle of the next decade,” I’d move that up to within the next 3 years. One of the barometers that economists typically follow is GDP growth per capita – also known as purchasing power parity. The number that signals when a market has reached a level where domestic consumption can sustain an industry on an ongoing basis is US $6,000. If I go back a few years, China’s GDP per capita in 2001 was US $1,000. In 2008, it was US $5,943. This increase signals that China has arrived as a sustainable domestic consumer market. You have enough citizens and enough wealth that people can afford big ticket items like cars which can sustain growth for a long period of time.”
Interview with Bill Russo, Automotive Industry Expert (Part 2)
“The value proposition for new market entrants usually starts with affordability and evolves over time after the brand is accepted by consumers. The fact of the matter is, much of the content in our cars increasingly comes from China. Because a greater percentage of the total cost of a car is in the manufactured components, there has already been a significant movement of the production of supplied parts to China. A lot of the components used in cars today either are or can quickly be manufactured in China. This is purely driven by the efficiencies gained from sourcing in China. So, people are all waiting for the Chinese car to arrive. What they don’t realize is that a great deal of the Chinese car they’re waiting for is already inside the one they are currently driving.”
Interview with Alistair Nicholas, Founder, President and CEO of AC Capital Strategic Public Relations
“The question – will we see a rise in China’s risk profile because of the economic crisis? Absolutely. If a company has a factory in a small town that is likely to see social unrest, it has a potential exposure. If a company is about to close down a factory somewhere, which will entail redundancies, it has a bigger exposure. A few years ago I worked with an American company that was shutting down a factory and was surprised when local townspeople surrounded the factory and held its foreign management hostage and the local government was doing very little to help. The problem was partly caused by the fact that they had neglected to communicate effectively with their workers or the local government prior to the announcement to close. It was resolved in the end – but some thinking about communications beforehand would have helped a lot. Foreign companies that may need to rationalize in the market because of the current recession need to give proper thought to how they communicate with government officials, the media and internally. Failure to do so could see them punished in China for a long time to come.”
Interview with Sam Lee, Entrepreneur and Recruiter
“I am a Singaporean Chinese. I know the language and celebrate many Chinese festivals. Yet, I am not a ‘Chinese’. It’s very different doing businesses in these two countries. To list some: -Singapore thrives on transparency in doing businesses; China thrives on Guan Xi (relationships).
- We follow rules and regulations. China has all the rules & regulations but little enforcement.
- In Singapore, business is like 100 people with professional fishing gear fishing simultaneously in a small pond. In China it is like 100 people with enthusiasm and devil-may-care attitudes fishing in a big lake.
I am still learning about China. The good news is, my dear partner is using this statement less frequently on me now: “Sam…you don’t understand how the Chinese think…..””
Interview with Edward Zhong, Project Chief of Changshu Economic Development Group
“We have encountered some cultural gaps with expats, but those were not significant problems- mostly they were communication problems. Gradually, in our experience, [effective communication skills] have increased with expats, we now understand their way of thinking and doing things, and we don’t see any problems anymore in working with them.”
On Policy and Politics…
Interview with Greg Anderson, Finance/China Specialist and Ph.D. Candidate at UCLA
“Aside from the obvious, which would be typical business analysis with competent management at the top of the list, clearly there is a role for government in China. Unlike in the West, there’s not a whole lot of distinction between state-owned and privately-owned companies, in terms of government influence. Now that GM is an SOE, it’s understandable that the White House taskforce is going to have influence on how that company is run. People may question the viability and rationality behind this, but no one questions that this is the way it’s going to work. In China, being a private company doesn’t mean that you can completely ignore the government or that the government is not going to have any influence. I’m finding that the leaders of both SOEs and private companies in China must have the skills to manage political relationships. I’m working on a couple of stories along those lines that [highlight] examples of how leaders of auto companies in China didn’t value their relationship with the government and ended up paying the price.”
Interview with International Lawyer and Foreign Corrupt Practices Act Specialist, Richard L. Cassin
“I’m always somewhat skeptical with official statistics coming from China. The bureaucrats have a tendency to report figures that support the government/communist party. And, because there’s been an anti-corruption drive on for a few years now, lower-level officials may be producing statistics to show positive results. That said, however, corruption is still a huge challenge in China. Outright bribery is still common across all industries. But it’s not clear how much impact it’s having on development. Western investors have compliance programs and usually believe (sometimes incorrectly) that they can deal with the risks.”
Interview with Malcolm Moore, Shanghai Correspondent For Telegraph
“You have to ask why people talk to journalists. In some cases, normal people speak to journalists because they have a grievance and they want to get it off their chest and they’re hoping that a little bit of coverage will ease their way in the future. Companies and government officials speak to journalists because they have something to sell. We are a medium for people to transmit their ideas across. In China, nobody has anything to gain from speaking with the foreign media. If you are a peasant and you’re pissed off, speaking with the foreign media could get you severely beaten or imprisoned. If you are a government official, speaking with the foreign media could cost you your job and if you are a company, speaking with the foreign media could severely hamper your prospects in the business world. So, I can understand why people are reluctant to speak to me.”
Interview with Ted Naganawa, US-China Strategist
“Many people are concerned with China’s rapid ascent, but not really as an economic threat. The term, economic threat, was probably coined to describe Japan in the 1970-80s, which practically posed no security threat to the United States. Today many people are concerned because China is potentially an overall threat to the United States. A good example would be the ongoing currency controversy. In 1985, the United States pressured Japan to let the yen appreciate considerably thereafter, the result of which perversely affected Japan’s export sector and created the bedrock for the subsequent burst of asset bubbles and decades of stagnation in the Japanese economy.
The United States could afford to pressure Japan that way, because Japan was only an economic threat. If the United States employs the same measure against China, and, as the result, China’s economy stagnates for decades, sending hundreds of millions of Chinese people back into poverty, I doubt it will be contained in the realm of economic policy.”
On Culture and Education…
A Life Transformed by China: A Conversation with Saul Gitlin (Part 1)
“I can’t even begin to describe to you how different it was in China overall in 1982 and how we were treated as foreigners, as compared with today…Imagine standing at the end of Nanjing Lu on the Bund in Shanghai and looking at Pudong. As far as the eye could see, there was farmland- there was nothing on the other side of the river. Today, Shanghai residents themselves don’t pay any attention to foreigners, and anyone in Shanghai who does is immediately recognized as a domestic tourist.”
A Life Transformed by China: A Conversation with Saul Gitlin (Part 2)
“Maybe most people define their career in terms of, “I’m a banker,” or “I’m an insurance agent,” or “I’m a telecom guy.” I define my career another way. My career is defined by China, by Chinese, by Asia.”
A Conversation with Andrew Hupert, Professor on International Negotiation and Founder of US-China Forum
“Part of my inspiration came from Chinese bulletin boards and chat groups where Chinese students are talking to one another about these topics, but there’s no Western participation at all. They tend to just go around in circles and aren’t really improving. Then, the American students entering China tend to come in with their own preconceived notions about culture. They think that they are being very open-minded but [in reality], they are just patiently waiting for the Chinese students to act exactly the way that they do. These two groups really do want to engage in a cross-cultural dialogue, but there is a structural impediment. With US-China Forum, I’m trying to create a structured environment where they can at least get a look at how the other side sees the world.”
Interview with Jenny Bai, Founder and CEO of The Red Connect
“In terms of crossing over and exporting China’s “coolness factor,” I think someone in the middle is needed. China could be “cool” in the U.S. tomorrow, but that depends on what happens with branding. In China, I feel like the idea of branding is synonymous with the idea of face, both of which represent a reaction to an emotional trigger. China is obsessed with luxury brands because it equals status, but what China doesn’t have yet is the history behind its branding, like the U.S. does. Take kaixin001.com, for example: a fiercely popular online community for young people and a great project overall. How do you introduce it to the U.S. and translate it into an American-friendly product? You need someone who understands how to cross such a product or concept over, without losing the Chinese element, which oftentimes means keeping the Chinese people who are associated with it.”
Interview with Xujun Eberlein, Author of “Apologies Forthcoming”
“History is the joined consequence of individual actions. If we could dissect history like an organism, we would see a huge diversity in individual behavior and motives. Yet when we look at the history of different cultures, there is a tendency to focus on commonality rather than diversity within people. Such a tendency is most pronounced when there is any discussion of “good” and “evil.” Those actions that seem to us to be wrong, or abhorrent, are thus attributed to people with evil hearts. People do things for a very wide variety of reasons growing out of strongly distinct cultural upbringings. Individual personal accounts are one of the best means to counter stereotypical thinking.”
Interview with Jason Walker, Tea Maven
“After living in a foreign culture for an extended period, it becomes harder to distinguish between the cultures. You intuitively adapt to the situation and people, not always consciously aware of the changes you’ve made. I adapt my behavior to be with my Chinese in-laws and my Tennessee family.
One of the biggest lessons I learned was the notion of being “in relationship” with the people around us, and what that means within the two cultures. Both greeting a stranger on the street and responding to a colleague’s subtle change in mood are means of acknowledging inter-connectedness to the people around us. Awareness of differing sets of values for relational transaction better enables a person to connect to others, build trust, and collaborate more effectively.”
Interview with Toffler Niemuth, Owner of Shop My Shanghai
“Overall, I’d say there are fewer misconceptions about China now than there were a few years ago. Many people don’t expect the level of development, and all the sky scrapers they see when they arrive. That’s quite a big shock. They also don’t expect the cities to be as clean as they are. More specifically related to shopping, some people think *everything* is cheap here, but it’s not. Not only is Shanghai in general getting more expensive, but there’s a huge duty on luxury goods, and on some non-luxury foreign brands as well. China is not the place to buy real LV bags or Omega watches. Even Nike clothing can seem overpriced here depending on the strength of your home currency.
On a brief trip to China, you only get a taste of the country, nowhere enough to unravel its mysteries. China is such a complex society, with a rich multilayered history that a short trip to China isn’t going to make clear.”
Interview with Yi Lu, Linguistic Consultant at Handsome Translations
“If you can afford the time, I would say a good command of your business counterpart’s native language would always put you in an advantage over your rivals because that knowledge naturally draws you and your Chinese partner closer. It is a universal human reaction in interpersonal relationships. Even if good proficiency is not possible, on the other hand, some survival Chinese would save you a lot of trouble in private life when you are in the country. Cantonese as a dialect is gradually losing the kind of prominence it enjoyed say 20+ years ago. In addition, the catching up of the mainland economy, closer ties and more frequent travel between the SAR and the mainland have given rise to a popularity of Mandarin study among Hong Kong natives. I should say the Mandarin proficiency of Hong Kong intellectuals has picked up significantly in comparison to Guangdong mainlanders, who read and write Mandarin fluently but still habitually shun it in speech in favor of Cantonese.”
Collaborative Post: What Makes China Uniquely Cool?
Robert Aiudi: “I would hope that China’s coolness and uniqueness stays in China. It makes for fun, fascinating and wondrous travel. That said, China’s coolness is already available around the world in several places. In NYC, I love to go to Chinatown and see old and new China, buy food, see new fangled products, see the newest cell phones, hair styles and hear some funky music alongside family associations, incensed temples, and Chinese lion dances.
All that said, I have a feeling that as Chinese marketers, PR professionals, among others get more savvy about penetrating Western markets, we will begin to see more mainstream Chinese “cool’ things. I think it’s going to follow a similar path to Japanese goods. I remember when “Made in Japan” meant junk, low quality products. Now Sony, Fujitsu, etc etc are world class brands.”
John Yang: “Lifestyle goes with value system, China will start to export its value as it grows stronger and more and more foreigner learning Chinese, and then export lifestyle brands. People have tattoo of Chinese characters. Its characters and styles have also been used in design. HP Mini 1000 Vivienne Tam edition series is one of the latest one.
Chinese food, silk, tea, art-works all have great potential. They need a company to commercialize it abroad.”
On Social Responsibility and Our Global Future…
China’s Energy, China’s Power: An Interview with China Energy Specialists, Elizabeth Balkan and Chris Brown
Elizabeth: “I would characterize the US-China position on climate change not as being at odds, but as perhaps differing in terms of their perception of responsibility. While I think China and the US are equally committed to being responsible and active players in combating climate change, there’s a difference between the United States position on how China should address climate change, and China’s position on what it should do. It’s been repeated many times, but the controversy surrounding historical vs. current emissions and gross vs. per capita emissions remains. Depending on how you read the numbers, China can either look really good or really bad.”
Chris: “Jim Rogers from Duke Energy recently talked about how much they’ve done with carbon capture and sequestration, which holds huge potential for China. I think it gets more difficult with some of the renewables. Having said that, First Solar in Inner Mongolia is involved in this massive utility-level solar project and has brought in its own engineers while incorporating knowledge from the Chinese side.
I’ve been very impressed with how smooth the technological exchange process has been on this First Solar project- so far. But, they’re at the very beginning stages so of course, policy vs. implementation problems could still occur.”
Interview with Joel B. Eisen, Professor of Law and Fulbright Lecturer in China
“Looking back at the start of my trip, I had many preconceptions about China that were too simplistic or otherwise just downright wrong. For example, I had tended to think of China as an unrepentant polluter, but that does not square with the earnest efforts I observed to try to reconcile growth and environmental concerns.
I found myself thinking a lot about the Western-centric lens through which I’d previously viewed China. There’s a lot that’s been written about China by Westerners and I think much of it suffers from the same uninformed approach I’d had before spending time there. China is a place where you need to spend a lot of time before really understanding it, and the biggest surprise to me is just how little I know after five months there.”
Interview with Mihela Hladin, Founder of Greennovate
“First of all, basic awareness moved a step ahead with all of the “green” talk around the Olympics. But, in general, Chinese people think that a lot of these challenges are so huge and that individual participation is not worth it. When we are talking about the carbon footprint or green technologies- these are all very big terms. Without providing basic information, it’s very hard for them to see how they can be a part of the solution. We took the principle that, if you communicate about the environment in a simple and positive way, you get a lot of people on board. Also, as everyone knows, government has great power in China. For example, last year when they banned the plastic bags, it happened immediately. They announced this plan in April and in June they banned them. Nobody thought this would happen; it’s not even happening in the Western countries yet.”
The Fifth Annual Clinton Global Initiative Meeting, Calvin Chin and Qifang’s New Commitment: A Collaborative Interview
“There will be a natural gravitation towards looking for sustainable business models. [In China], I anticipate a lot of social innovation because of this added pressure- we can’t go for the typical non-profit models. The analogy that comes to mind is the way that video games in China faced a constraint, which was the inability to sell physical copies or cartridges because console games were illegal, or CDs/DVDs because people would just pirate them. So, there was a lot of creativity. It’s hard to do a non-profit in China, but socially-minded entrepreneurs and philanthropists will look for models elsewhere, as we did. We looked at Kiva and Grameen for inspiration, but to make it work in China requires fitting into [the country’s] constraints.”
Interview with Casey Wilson, Co-Founder of Wokai
“In a lot ways, there are two different Chinas. There’s a China of the cities that is growing at a very quick rate and then there is a China of the countryside. When you look at the current situation, the average income of individuals in the cities is at about US$6 a day, but in the countryside it’s less than US$2 a day. The urban development rate is at 9.6% a year while in the countryside it’s growing at about 6% a year. If we zoom that out in twenty years, we could have a situation where people in urban areas are averaging a salary of US$12,000 a year whereas in rural areas, they are earning less than one-sixth that amount and essentially existing in poverty. They get stuck in that cycle where they don’t have the funds to send their children to high school or college and their children [repeat the pattern]. When you look at the world, China still has the second largest population of people living under the poverty line and if that issue will not be addressed through the natural process of economic development, there really needs to be new models put in place to support the other side.”
Until next time… And thanks again for reading!
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