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Chinese “education”

If you’ve got kids at home, you’re probably worried about, or at least interested in the decisions made by your local school board, PTA and teacher’s unions.  You may even be involved to some extent in the process (kudo’s to you if you are).  At the very least you’re paying taxes and helping you child with homework.

But if you’re doing business in China, there is another school system that you should be at least as worried about: The Chinese System.

In case you had any delusions where this was heading, let me quote from one of the best new blogs on China that I’ve come across, The Diplomat’s China Power Blog and their recent series on Chinese Education:

This system has made Chinese students literate and knowledgeable, but it also has also too many times made them incompetent and stupid. Let me emphasize this: the people best known for their respect for education and love of knowledge have constructed an education system that makes Chinese students, the very same hardworking and brilliant students who dominate international mathematics competitions and science laboratories, incompetent and stupid.

I’ve been making the same points ever since I taught English at university in Chongqing 15 years ago.  Aside from the fact that you should question the quality of any school that gave me an English teaching position, the system in general is not helping China’s future in any way, shape or form.  The best and the brightest (or at least those with the richest parents) are fleeing the country for better schools and “real” education elsewhere–at least they’re getting a lesson in capitalism, eh?!

A couple of personal examples.

1. MA student in English can’t speak to random foreigner on the street.  Has a grammatically perfect 150 page thesis about a book (he later admits) he never read.

2. Parents of 10 year-old student hire professional business translator to write “student’s own” essay for school competition.  They spent a few hundred US dollars on 2 pages of Phd level grammar/vocab that the student couldn’t pronounce and didn’t understand.  They then tried to hire me to “coach” him through it.

3. English teacher starts talking to me on the street, she can’t understand a word I say.  Asks me the same question (“how are you today?”) over and over again but each time translating a different Q&A back to all the people behind her who are asking questions about the foreigner (not knowing that I understood everything they all said).

4. My wife needs to write a thesis to graduate from University in Shenzhen.  She is told to “copy it off line” so that the prof doesn’t “need to spend much time reading it.”  She was told that since her husband was a foreigner, her “English should be good enough.”

5. We have neighbors and employees that have told us that if their kids do not finish their homework, often falling asleep while doing it, the parents will do it for them so they don’t lose points in class!!

There are many books and blogs that have nothing directly to do with foreigners doing business in China.  But many of these other source materials provide significant insight into the mindset of Chinese in general and, in this case, the educated your urbanites that you’ll most likely be working with.  I highly suggest that you read this, if for no other reason than to understand the back ground of those whom your working with.

I’ve detailed the background of bosses:

Factory owner and millionaire, 35 years old, tells me that the road out in front of his factory he built with his own hands when he was in high-school. The local govt required all households to provide unpaid labor for specific lengths of the new road. His father was a teacher and away at school and his mother was over 40 and the only one home. So he had to miss much of one year of high school to fill the State-mandated labor quota. These are the type of people that you’re dealing with in China—you need to know that they can wait you out. They are not intimidated by your pressure. They know they can dump your product in the local markets if you back out. You need to understand that you’re probably not nearly as important to these many factories as you think you are.

and employees:

Nobody in any office under the age of 25 has ever had a job before the job they’ve got now.  Chances are, Chinese people under 35 have only ever worked in one industry in one city since college.  They have never had part time or after school jobs or had to put themselves through college.  They never rebuilt their first car (or any car) when they were 15.  The can’t change a tire, the oil, wiper blades or a taillight.  At home, they don’t know how to change the lights, build Ikea-type furniture or wire a stereo/TV or fix anything when it breaks.  Why?

The One Child Policy and Low Cost Labor.

and even commented on students a few times too.

When I was teaching at a university in Chongqing in ’95 I had a student say something to me that I will never forget, “at least, well, I haven’t forgotten it yet.” She told me that when she was young she had the bad habit of telling the truth.  After getting both herself and her family in trouble a number of times her father sternly taught her this lesson, “Never tell the truth to anyone but your parents.”

This was one of my first major lessons about how different China really is.  There is no “moral code” no “generally accepted morality.”  Not even an overly trite “Confucian values” system in place here, really.  I believe that one of the lasting legacies of the current government will be that they amoralized an entire country.   I’m not talking about the vilification of organized religion I’m talking about the creation of a system that punishes honesty.

But this review of the education system (and indirectly, the students themselves) tells you what’s coming next, what you’re new hires are thinking (or not thinking, as the case my be).  Basically:

1. Students are not taught to think.  In fact they are taught not to.

Western observers say that Chinese lack ‘independence and initiative’ and ‘critical thinking skills.’ Both are true, but another explanation is that Chinese don’t understand ‘process.’ In a society where students’ futures are determined by their ability to get the right answers quickly in three days of multiple-choice examinations, ‘process’ is in fact an alien concept.

2. Students are taught to memorize, finish assignments and obey.

3. From Kindergarten to College, there is very little time to play, date, think, develop personality, etc.  While many students are in involved in extracurricular activities after school these activities are classes, not (sporting) events.  I hate all the homework my 5 year-old already has each day IN PRESCHOOL!

4. Why do 20 something Chinese girls like the same things that 12 year-olds in the West like (Hello Kitty back packs in the US, Hello Kitty cars in Asia)?  Because, for the first time in their lives they can choose for themselves.

Do NOT misunderstand me.  I’m not saying that Chinese are dumb.  Quite the opposite.  They are VERY smart and they will out-test anyone else on the planet.  But they typically don’t out-perform others in random applications of applied knowledge.  Well, sometimes they do.

Westerners typically are (or at least used to be) taught to be independent individuals.  Chinese are taught to be cooperative members of a society.  The differences for how work in an MNC is done, how instructions are understood, how leadership is perceived and how following is affected couldn’t be more disparate either.

I’ve mentioned before the record setting 13-minute silence that my friend once sat through in a meeting with the “best and the brightest from China’s universities” in the boardroom of a VERY large MNC here in China.  He had asked for the 10+ MBA graduates to “brainstorm ideas” for a new program to improve their logistics in southern China.  He asked the question knowing that it would be hard to get them to make suggestions and open up, but then he timed the pause and waited… and waited.  Have you ever been anywhere were 13 MBA’s didn’t talk for 13 minutes?!

In my own company there are two important points in relationships that we recognize and sigh in relief when we pass.  The first is with employees and usually takes about 6-8 months to achieve.  This point is the: I’m going to make a suggestion, contradict my boss, or make a comment that obviously and openly shows I disagree.  I always smile and point it out “Hey, Vicky is finally comfortable enough to disagree with me,” and she’ll turn away, blush and giggle uncomfortably (just like I expect a 12-14 year old back home to do).  But the point is made—she knows that it’s both ok and expected for her to disagree.  It doesn’t change who makes the decisions, but it’s an important point in their employment with us—they are now really valuable to me:  I know they will question me if I do something they don’t think is the best option—and I need that back up to confirm where were going in the often confusing for westerners Chinese environment.

Relationship point number 2, with factories.  It usually takes about 3 orders for factories to come to us and admit: “We didn’t think that you were serious when you told us that you wanted us to call you when there were problems so you could help out.  But now we see that you really do want to help us get it done right.”  At this point I can expect that they’ll call me or a project manager at all hours of the day or night (and they usually do it a couple of times at like 4AM just to see if we’re really serious).  This is a great place to be—trusted.

In both situations there is a process of overcoming cultural misunderstandings that were taught for decades—one, the respect for title over correcting mistakes in public, and in the other, admitting to mistakes early on to achieve better results later.  Neither these two new skills nor the ability to adapt to a fluid situation is natural to Chinese employees but both can be learned (or the inabilities can be UNlearned).   We’ve had employees and factories both tell us that they are uncomfortable with these things, but they understand that that’s how it’s done and they make adjustments (amazing what people will do when there is incentive, aka money, on the line).

Here are the latest posts on education from China Power Blog:

Education in China

The thinking Process

Head Teachers

Education Games

Sometimes there just isn’t a second chance.

It seems to me that one of the hardest lessons that we are constantly teaching factories in China is the sometimes there just isn’t another chance.

Chinese factories certainly know that they usually only have once chance to get a client with a bid or a sample (hence underbidding and Golden Samples).  And factories know that if there’s bad quality product they won’t get any reorders.  They know all this.

But I’m talking about something a bit different.  Once production has started and mistakes are found, it’s usually the position of the factory, after much negotiations, to offer to redo, fix, replace or repair the product.  Of course who pays for this and how long it takes (and who pays for the resulting airfreight costs) are also always up for negotiations.  And here’s where the lesson comes in.

Sometimes a redo, a fix, a replacement or a repair just doesn’t cut it.  Sometimes it’s just too late.  Sometimes the window of opportunity has passed.  Sometimes a missed date is the death of the project.

I’ve seen this happen a number of times, and it’s not all the factory’s fault.  Usually (most of the time) it’s initially the fault of the buyer.  They are on a very strict time line.  They miss a couple of small design/art dates in the beginning but continue to push the supplier to meet the delivery dates originally agreed too.  The supplier agrees, of course, as they want to cooperate and hope to build some type of relationship that will turn into future orders.  They also assume that since they accommodated the client, the client will do the same later.

Now factories always have issues.  Some are small and can be fix with little or no impact on the delivery date.  But some are much larger and change dates dramatically.  But when push comes to shove, the factory thinks that it can bank on the store of good will they have built up with the client.

Only they can’t.

What factories don’t understand is the West’s infatuation with contractual dates.  You know that if you’re planning on getting your product into a any of the box stores you’ve probably got a 72 hour delivery window that if you miss you’re completely out of luck.  Your factory doesn’t know this.  And the factory’s rework is almost never that fast. Further, if you’re shipping by sea you may have already scheduled your goods to go to port on the closing date—meaning if you miss that date you’ve got to wait at least a week to get on another ship.

Because EVERYTHING is negotiable in China, this almost never happens.  Dates are missed and everyone understands, or at least compensates for the change/delay.  I believe that factories honestly don’t get how important (devastating) a missed date can be.

Because it’s such a huge deal to get a factory to take responsibility for problems (just like it’s so tough to get individuals to loose face and admit mistakes) it’s like they assume that just the fact that they’ve admitted to it and will fix it should be the end all of all negotiations.  But sometime sorry isn’t good enough.

What the buyer doesn’t understand is the quid pro quo that is part of the Chinese business culture.  All those little favors are counted and recorded.  There is a very tacit expectation that each one will be paid back.  The supplier knows that they’ll have issues in the future and while no one likes delays, I know that factories love to have a client in their social debt—it makes the inevitable problems so much easier to work through.  This is, of course, if the client understands the implicit cultural expectations.

Often the buyer gets bugged, rails on the factory for agreeing to dates (repeatedly and even after delays) and then falling through.  The factory feels like they’ve been hit upside the head with a frying pan.  They went out of their way to help and this is how they are repaid!?  Now the project is late, the relationship is flushed down the toilet and it’s a fight just to wind things up.

Once it gets to this point the factory has no incentive to help the buyer.  There is no trust at all that the buyer will keep their word.  The buyer just wants to get their money back, which is not only unrealistic but probably impossible.  The opportunity has passed and late product does no one any good.

Bottom line?  If you expect your factory to go out of their way to cover for your “little mistakes” then you’d better be willing to do the same thing for them later.  And later is ALWAYS more expensive.  Plan you time, your negotiations, your requests and your projects very carefully and with as much knowledge/foresight into future costs and delays as you possibly can.  Do NOT take anything for granted and never ask for favors, even small ones, that you’re not willing to return.

Working in China: Where to go, what to expect, and how to do it.

First, Whither Shanghai? As I’ve been saying for years now–Shanghai, smanghai.  Who really needs 18 million people all in one place and all those overpriced-buildings and traffic jams?!  It’s not like the mag-lev is really helping out your daily commute, is it?  Now, I’m sure Shanghai is great for some, but it’s not for everyone–just like China is not for everyone.  Just like with each of your suppliers, you need to pick your city to base your operations and even the country that you’re going to be based in very very carefully.  Research, not hearsay should be the rule of thumb.

Here’s an interesting take on what’s “really” going on in Shanghai.  By the way, the book that they review, I reviewed last year.  And it was already not “new” then.  But at least they got around to it.  The point though, is really this:  just because Shanghai has got the expo doesn’t make it the best option for everyone.

And if you’ve not read “Capitalism with Chinese Characteristics” you need too.  I now think that it’s the BEST BOOK I’VE READ ON CHINA. PERIOD.

Second, General State of Chinese Manufacturing. The demographics of manufacturing in China and East Asia are changing.  And not just changing in slow, cyclical patterns, but rather in large lurching jolts (that most recently coordinated with Chinese New Year).  Here is a copy of an exchange that I had with a colleague from Singapore last month.  His question:

I am trying to get my facts straight about the current state of China’s manufacturing sector. What are the implications of minimum wage increases? Are companies going to start looking to build manufacturing facilities outside of China where there may be lower labor costs? Are there any general trends to be looking at?

I was wondering if you could write back with your understanding of what is happening in China’s manufacturing space, and where you see things headed.

My Response: Wow, that’s a big question.  Let me see what I can do for you.  I don’t have any actual stats.  But I can give you some anecdotal evidence and personal experiences that points to some shifts in Chinese manufacturing.

1. VN and other cheap labor countries are definitely having some effect. Some, not a lot across all industries, but definitely some effect in some specific industries.  The interesting thing is that a lot of the factories in VN that we use are Chinese owned (Taiwan and HK) mostly that have moved from China specifically to VN for the cheaper labor rates.  This will certainly continue in SEA as the govt’s there invest more in infrastructure.  China’s logistics (infrastructure and supplier density) are still so much better than anywhere (but Singapore and BKK) that even with higher labor rates most people can still get what they want here.

2. Tariffs. We’ve worked on 5 projects (2 in VN, 1 in BKK, 1 in India, 1 in Malaysia) where we were there specifically because of the US tariff and duty laws (rather than anything that had been done by China or other specific countries.  I don’t know how exactly this type of thing will continue but it will continue and I know that it has affected a number of industries in China (furniture, plastics, clothing) already.

3. Domestic stimulus and other In-land projects (5-year plans). One of the surprising things that we’re seeing right now (as opposed to before CNY) is that labor is NOT coming back to Southern China and inland factories and cities within China are starting to show up in our sourcing results.  We have had 5 projects in last 3 months that have been delayed specifically because hundreds of people didn’t come back to work in various factories (wood, plastics, clothing, metal—across all industries).  I see two things here.  One is that govt jobs (construction, mostly) is taking up much of the migratory labor.  And with better infrastructure inland factories are moving to take advantage of the cheaper land and (now larger) available labor pool.  This means that costs will rise in Guangdong and all along the East Coast; this trend will most likely continue.

4. Internal competition in general is changing. We’re seeing much more development of markets, infrastructure and general standard of living inland than what we saw even 5 years ago.  The recent growth (off of the East Coast) has been noticeable.  This will, I think, make manufacturing in general in China more like Zhejiang (lots of smaller, family owned, limited int’l experience factories) than Guangdong for the next decade.  It will increase cultural differences/conflicts with foreign buyers, increase secondary costs of doing business in China even though primary COG may go down, and will increase total production times and extend supply chains into new locations.

5. Specific industries. As I mentioned before, it’s hard to generalize to such a big questions.  So, in a bit more detail (without having much more detail!!) there are specific industries that are big in certain locations specifically because of either foreign tariffs or govt incentives.  Much of the furniture industry has all but moved out of China in the last 5 years.  Plastics and clothing are in the same boat.  Tech is located in SZ with pockets in Sichuan, Xi’an and Beijing.  Factories that rely on large (cheap) labor forces and are not demanding for quality or tech (bags, mold injecting) will be leaving GD if they haven’t already.

Finally, the unwritten rules for working in China (yes, and other developing countries too; China-apologists can just keep their knickers on.)

My List of Rules for Working in China.

  1. The number of factory visits you make before and during production directly equals the quality of the product you’ll actually export.
  2. No one cares about your product as much as you do—don’t expect them to.
  3. You will never guilt a Chinese factory into “doing the right thing” if it costs them money.
  4. If you don’t do QC you might as well take your money to Macao (or Vegas or Monaco).  You’ll get about the same odds and have a much better time losing your money.
  5. Never pay any money without doing some (a lot) due diligence first.
  6. Always pull your own samples for QC and testing.
  7. Technology is great, but fax, phone and email are not enough to manage production from overseas.  You can’t do QC via video conference either.
  8. If you (personally) didn’t record it and can’t reproduce it then it never happened.
  9. What you see online and what really exists can be two completely different things.
  10. Quality issues are really money issues.  Every time.  Without exception.
  11. You can have any two, but not three, of the following: high quality product, low prices, quick production turnaround times.
  12. K.I.S.S. your communications over and over again..  Keep It Simple, Stupid.  Remember while English may be your second or third language, it’s definitely your supplier’s second or third language too.  So be VERY clear in everything you say.
  13. Register your product/brand, Research your potential suppliers, Visit production sites, contract-out all specs and details, QC every order multiple times, and Confirm everything over and over again.  Do these things for every supplier, every product, every time.
  14. The more customization your product requires the more problems you’ll have and time you’ll need to get it done right.
  15. Sometimes paying more to get only what you originally contracted for is the best option.
  16. The more time you have to ship your product the lower the cost will be.
  17. Payment terms (Net 30, for example) and INCO terms (FOB, DDP) are not the same thing.  Learn the terms before you buy.
  18. Unless you’re using prison labor, you should always be able to go into the factory and do your own QC.  And even if you are using prison labor, you can still hire local Chinese QC to go in and represent you.
  19. Factory MNC or ISO certification means nothing.  At best, it’s a double-edged sword.  Yes, it can give you an idea of the capabilities of the factory.  But do not assume though, that because they’ve met this standard once for an audit that they meet these standards every time.  Yes, certification means that they’ve been, to some degree, tutored and managed (at least once) by an international team.  But each MNC’s standards are very different.  And an “audit” my have been a 30 minute visit designed specifically to check off a box on a corporate checklist rather than to actually critique a supplier’s capabilities.
  20. Under-promise and over-deliver has not made it to China yet.  So the samples you get are always going to be better than production—expect this or learn to live with disappointment.
  21. Much of what you cut out when you go direct has value—you must make up that value on your own.  QC is the most obvious piece, but there are others too—auditing, social compliance, printing, packaging, licensing, exporting, international shipping, customs clearance, product warranties/guarantees, return policies, etc.  These things will cost you time and money.
  22. Suppliers will NEVER offer to pay for the cost of missed delivery dates.  And they’ll only pay for anything “extra” if they are either contractually forced to or if you have the cash leverage that allows you to withhold payment.
  23. Bad product will NEVER be returned to China for repair/replacement.