Silk Road International Blog

So now that it’s all over, what’s next?

First a couple of comments on the 0lympics and then some application to doing business here.

I’ve said for 8 years—this will be the best Olympics ever—and it appears that it was.  Was there any other choice?  With more police than foreigners in the capital, control of the weather, no protests (no iTunes), people so happy and proud of China you’d think you were in Disneyland instead of a “real” country.  It was bound to be perfect.  Congrats to the Chinese.  They’re proud of themselves, and that was the goal.

Best Olympic quote, by David Zweig, China expert at Hong Kong University of Science:  “I think there was over-expectation from the West,” Zweig said. “China was authoritarian on the way into the Games and it will be authoritarian on the way out.”  This is likely to be the case for many years to come—can your “China strategy” deal with that reality?

Second best Olympic quote: “This is the beauty of dictatorship: They can do many things that other countries cannot do,” said Guoqi Xu, a historian and author of the book “Olympic Dreams: China and Sports, 1895-2008.” “You have to remember they even controlled the weather. No other country would do this.”

The sad thing is not that China held an honestly great event or took the most golds but that Thomas Friedman (NYT, The World is Flat) and others are jealous of the Chinese govt’s ability to “get things done.” They whine about the fact that in democracies projects can’t move as fast (due to unions, human rights, legal statutes, contractual obligations and other worthless democratic bullshit).  They think that infrastructure and events are more important than people and freedom.  Pathetic really.

So now that it’s over, what has changed about working in China?  Nothing–except maybe the attitude of your Chinese supplier.

You still need to ask the right questions to the right people.  You still need to be on the ground as much as possible and you sill need to QC, test and recheck everything.  But now, you’re not so hot any more.  China “has arrived.”  At least in the minds of 1.6 billion Chinese.

Hopefully there are a few other things that we all learned from the 0lympics too  First is that China is GREAT at presentation.  Know this before you go into a factory.

Second, the priorities of your China supplier are most likely NOT the same as yours.  You may be “partners.”  You may be working for the same physical end results.  But do you know what their expectations, goals and priorities are?  If you don’t, you’re going to be on the short end of the stick when it comes to price/quality/timing/etc even if you do get what you asked for.  Know your partner or, like the IOC, you’ll get caught with your pants down when the final product is revealed.  Third best quote about the 0lympics (but I can’t remember the source): “Probably not much will happen (with the Chinese gymnasts issue).  The IOC just wants to get out of China in one piece.”

Finally, English didn’t take as a permanent fixture in China, so you’d better hit the Chinese lessons again.  I’m a big proponent of people learning Chinese.  Not only is the only way to assure you get exactly what you want, it’s polite and it shows commitment on your part.  And, as the medal numbers suggest, it’s probably just future smart.  Besides, it’s not that difficult—honest.  Maybe you’ll never be able to write, but with computers now, you don’t need to.  If you can sing you can speak in tones and there is no conjugation of verbs!  Grammar is pretty simple.  Besides you’ve got more than enough available tutors who are all dying to trade you English for Chinese lessons–just go to Starbucks, sit down and start smiling at people.

Here’s a great example of what you get if you speak Chinese.  This is a great site, by the way.  I don’t always agree with some of Jon’s politics, but he plays basketball, speaks Chinese and is here for the long haul, so he must be a good guy.  As for the blog, great language postings (most of the time), good business-applicable comments (some of the time, even though it’s not his focus), a fun blog with some fantastic language tools (all of the time)–check out the pages other than the blog.  No, I don’t know him.

A couple of other sites for either beginners or intermediate learners of Chinese.  Serg has a great site with simple lessons that start from beginners to advanced.  He updates them weekly and you can buy worksheets and activities too.  CSLPod is one of my favorites.  You’ll have to have at least some basic Chinese to use this, but once you’re past 102 level you can lean current events vocab on your own.  You can get both of these in pod-cast format too on iTunes (not blocked any more–Yeah!  And yes, I bought the T!bet album just because it was blocked–no such thing as bad publicity, eh?).

*The title quote comes from my kids’ favorite Disney movie, The Emperor’s New Groove. (OK, it my favorite Disney movie.)  At the beginning of the movie, the emperor is changed into a llama.  In the end, while trying to change back to a man, he gets changed into a number of other animals, one of which is a llama, again.  Thrilled to back to “normal” he says—Yea!  I’m a llama again!  Welcome to China after the 0lympics.

Update–some other Post 0lympic Articles of value.

Washington Post

Asian Sentinel

International Herald Tribune

Open Democracy

WSJ Online

SECOND UPDATE. One more GREAT!! Post 0lympic article from the Times Online.  This backs up my contention that many (under)educated (or extremely liberal) journalists wish they could just “fix” the rest of us without having to deal with the democratic processes.

Tags: Business, China, Culture, Politics by david
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I’ve written a number of times about Inland Western China vs. Eastern Coastal China and the advantage and disadvantages of each and how to decide where to locate.  There are certainly hundreds of other city and country specific comparison pieces online too.  Some of the best are at the All Roads Lead to China blog, in particular the reports on China’s Other Cities.  This last week, once again, Richard Brubaker at the All Roads Lead to China blog has listed out some great questions and comparisons between China and Vietnam.  Read the full post here.  Dan at (China Law Blog) beat me to commenting on this.  His post is here.

We regularly get requests for info and pricing/production options for factories in Vietnam and other SEA destinations; we have an office in Thailand to take advantage of these very opportunities.  In the last couple of years we’ve done work with factories in Thailand, Vietnam, Malaysia and Cambodia (as well as China, Taiwan and South Korea).  Each project not done in China had a specific reason: some for tax/tariff issues, some for publicity, some for price and availability of materials, some for quality concerns and some because of existing relationships.

Regardless of the product though, the process of supplier (and city, country) selection is one of the most important things you can invest in pre-production.  Oddly enough, I find that it’s often a secondary thought for folks coming to Asia for the first time.  Often times visiting a trade-show is given more time than selecting the correct local for manufacturing.  I can’t stress enough how important the location you select can be–it will affect everything from price to how you negotiate that price; from what materials you use and their quality to the quality and experence of managment and labor.  This decission should be investigated and invested in (yes, spend $ on chosing your supplier) as a major priority in the production process.

Brubaker asks several great questions of those considering a move:

1. What’s your China platform?  This is a serious question and the one that most people get wrong.  Honestly, are you here for a single production run, to buy stock items, or to set up a manufacturing base/logistics and sourcing center.  More than one of the “fix it for us” projects we’ve done is because someone that should have a presence here is using a HK trading company to manufacture custom product.

2. Where is your market?

3. Where are your competitors?

4. Where are your suppliers?  News flash–moving to an ASEAN country is not going to get you away from Chinese suppliers.  In fact, the Chinese are probably both the suppliers to and the largest investors in your ASEAN factory.

5. Is your product high tech or high labor?

6. Were you previously compliant?

I would add a couple of additional questions to this list.

1. Why are you considering moving?  Really.

2. What are the domestic and international tax/tariff structures where you are considering moving to?

3. Can you find the professional support (staff, legal, IT, translation, etc.) that you’ll need?

4. Are there outside factors (environment, social compliance, media) influencing your move and will these really be resolved by moving somewhere else in Asia?

There are of course tons of other product specific questions that you’ll need to ask (and answer) yourself.  But Brubaker’s advice on the various areas within China and his comparisons in his post give you a great starting point.

Tags: Business, China, Thailand by david
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I spent the weekend at the Olympics—hey, since I already had a visa, why not?!  Here are some thoughts from that experience.

The number one topic in Beijing?  Michael Phelps.  Way to go, Michael.

I’m really disappointed in Hong Kong.  First, Pearl TV wouldn’t even mention the name “Chinese Taipei” in live broadcasts when they won a medal (bronze).  That was disgusting and weak.  There is still supposed to be a free press in Hong Kong is there not?  Second—what the hell happened to your own Olympic team?  Where are they?  Where’s the local support?!  In Hong Kong (except for one Manulife Insurance ad) everything is about Mainland China’s team.  If I was on (or related to someone on) the Hong Kong Olympic team, I’d be insulted.  If I was a Hong Kong citizen I’d be embarrassed.  Finally, as late as 5 years ago it was possible to get around in English in HK if you didn’t speak Cantonese.  Now, it’s Mandarin.  Even with the Olympic prep, English skills are down in public venues and service industries.  This of course is just an informal opinion from my experiences here with a client and my sister (neither of whom speak any Chinese) over this last weekend.  This was one of Hong Kong’s advantages—along with logistics, banking, freedom and adherence to international norms and standards.  It only took 10 years for Hong Kong to become just another Chinese city.

As one foreigner we meet buying tickets in Beijing said: “There aren’t any places to hang out and party.  This must be the Serious Olympics.”

Pins, which were so much fun to buy and trade at previous Olympics (LA and SLC), were incredibly hard to find here.  I asked a number of people for pin trading/buying spots, but no body really knew.  Bummer.  The one guy, from Texas, who had cool pin brought it from the US and was passing it out to people in China—it’s loaded with religious symbolism and he obviously wasn’t here to collect sports pins.  I find it ironic that other “Christians” justify breaking the laws of other countries for a “higher cause.”  Nice guy though.

Meet a couple from the Netherlands who were thrilled that they were “winning a medal a day!”  So what’s the most important—total golds, total medals or just having a great time?

Beijing was cleaner and had less traffic than I have ever seen before.  I have traveled here for business/pleasure at least a couple of times a year every year for the last 5 years and this was a completely different city.

I have never been to Beijing and seen so much sun.  After the rain, the weather was so good I got sunburned at the baseball game–really.

The architecture in Beijing is amazing–it was a beautiful and different from any of the other 10 plus times I’ve ever been there.

The taxis and taxi drivers were so clean.  Kudos to whomever thought to give all the drivers new shirts (and showers).  Unfortunately, the manners and English lessons did not take so well with some drivers, sorry to say.

Chinese fans may not know much about all the sports in the Olympics, but they are, at least very active fans.  But the volunteers leading (the same) cheers over and over again did not, despite their diligent attempts, make the games more fun.  But maybe there’s hope.

I asked a friend of mine whose company did some work on the Bird’s Nest what it was going to be used for in the future.  He told me that the stadium was built so quickly that there are serious foundation problems and the government will close it after the Olympics and have to do “billions of RMB” worth of repairs before it can be used again.  Surprised?

Thankfully most people have been very safe (except for the dead and injured Americans, of course–my condolences to the family).  But I have to say, security was a HUGE pain in the rear.  Not because it was there, but because it was different every time.  Airports, museums, event venues, all had different standard, and it seemed that some people got it worse than others.  Sometime suntan lotion was OK, other times not. Ditto for iPods, computers and SLR cameras—the fact that I had a laptop, SLR camera and iPod in my bag was an issue for the baseball security folk, but not for football.  Open umbrellas were not allowed in any of the outside venues but were permitted/ignored everywhere and made jumping up and down a potentially painful experience at the baseball game.  The same 3oz. toiletry bottles made it though 4 different Chinese airports last week but not out of Beijing on our last flight?!  Which brings me to…

Foreigners (white) were more than welcome in Beijing.  People went out of their way to smile, help and welcome me and my sister.  But black foreigners got not so much love and other Chinese almost none at all.  It was really too bad, we overheard more than one (back) foreigner complain about the treatment he had received.  And my (Chinese) wife was NEVER allowed into any event seating without being checked/searched/wanded.  Not once was my ticket checked after security at any event (5 games in all) but she was stopped every single time.  Security at Tiananmen Square, volunteers, helpers on the street corners, no one treated her as well as they treated me.  Tells me that the “changes” in China are temporary.  Unfortunate.

Not one of the “sold out” events that I attended or anything I’ve seen on TV has really been full.  Here’s what others are saying.  I couldn’t agree more.  Scores of people at each event are selling tickets—and if you’re willing to miss the start you get them for just double face vale (Y100 to Y200 RMB).  We even had friends who bought tickets for the opening ceremony for less than $100 each.

I feel so bad for Liu Xiang who not only got hurt but who doesn’t get to compete in the race he’s been preparing for more than 8 years.  The idiots in China who are angry with him for getting hurt show that the games in China are not about sports or individual athletes, but about national pride for most people here.  Here’s one take.

One last thought.  Outside of China do people of other nationalities “feel proud” to be a member of their respective countries when they watch the Olympics?  I love the sports, I love the US, but watching Phelps or USA men’s basketball team win doesn’t make me any more patriotic.  I’ll admit I love cheering for the US teams/individuals.  But I don’t love the US more or less when the events are over.  Am I jaded as an American?  Am I just used to having international exposure while Chinese are not yet?

Tags: China, Culture by david
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Whether you live in the US or China, human nature is often the same.  People, when they are well fed and have $ to spare, care about different issues than those that are hungry.  Now that there is a middle class in China, some people are starting to realize that money is not the answer to everything.

What journalists will hopefully learn in the two weeks that they are here is that there is a LOT of money in China and it’s not all tied up in 0lympic projects or “communist” work units.  While most Chinese are, at this moment, overly patriotic (and justifiably so), life will return to relative calm in the coming months and people will start to talk about politics, other countries, the slowing down of the Chinese economy and the NCAA College Football Season (OK, not so much) with a little more economic rationality and a little less flag waving.

One reporter I know asked me “So why don’t the Chinese people do something about their government?”  The answer is easy–most of the Chinese (middle class) people that get in the press have never had it so good!  Money, money, money–it’s the global language, it reaches across cultures and it certainly makes capitalists out of red-flag waving Chinese.  Outside of some land grabs (T!bet and my fishpond, just to name two) there are at least 400 to 500 million that have little to complain about.  They have a better legal system then they’ve ever had.  They have more money than they’ve ever had.  They have the highest growth rates in the world.  They have a rapidly expanding consumer culture with increasingly more options from all over the world.  They have access to more education and information than they’ve ever had before; thanks to the (censored) Internet.  They have both the economic and legal (passports are an option for many/most) opportunity to travel and study abroad.  They are honestly proud of their country and have the money to spend to make their families happy.  Not everything is roses.  But on balance, it’s so much better than it was 100, 50, 30, even 15 years ago.

The issue in the US in the next 90 days is slowing developing into the price of gas and the economy.  But for me, it already was.  International trade, taxes and general economic policy is what the election is about, professionally.  Ditto for most investors and big business folk.  Why? Because market forces are more logical to deal with than random government policy.  Most American individuals agree: “A new Gallup Poll shows that no matter what their income or political affiliation, an overwhelming majority of Americans prefer economic growth over income redistribution as the best way to fix the economy.” USA Today.

So which of the two completely less-than-average presidential candidates is more likely to support trade and a strong economy?  John I-don’t-know-about-economics McCain.  I just pray he doesn’t learn.  His voting record in the past is very pro-trade and I’ve love to see 8 more years of that.  If I stay over here for the next decade and he keeps on not doing anything to change the trade policies in the US it could be a pretty inocuous vote for me this year.  (Pretty pathetic that my voting criteria is now: who will do the least amount of damage, huh?).

If you are doing business overseas and will not be home for the election you should still vote.  Here’s a link to an Org that is doing on-line voter registration.  DISCLAIMER: The site is really a plug for the Democrat Party (ugh!) and my mother might kill me for sending people there–but it’s a very easy way to get an absentee ballot.  And no, the American Embassy is NOT easier.  Don’t even get me started on American Citizen Services, a.k.a. American Citizen Abuse.  Just try to figure out that form/double envelope!

So stop wondering when money is going to “change China” or even if China is going to change–it’s probably not (for more on this, read this book).  Take advantage of the once in a lifetime opportunities going on here–to make money, to make a difference, to see the 0lympics, learn a bit about another country.  And remeber to vote at home.

Tags: China, Culture by david
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I have maintained for 8 years now that Beijing will host the most spectacular 0lympics ever.  There is no other choice but to have the best/biggest/cleanest/…est/…est.  That’s how things are done over here.  It will be grand (est), to be sure.

But that doesn’t mean that I agree with what’s happening. I’ve been pretty negative about the “don’t politicize” excuse for what is already extremely political.  I live here and I see the “non-0lympic” China and know that what tourists and NBC will get this year and what the other 340 days of the year offer are completely different.  I still think like that.  But here is a worthy alternative perspective–questioning not China, but the 0lympics themselves.  NYT Letter From Beijing.

But, I’m going to the games.  I bought tickets.  I’m giving my money to The Chinese Man.  Hypocrite or Opportunist?

I was not planning on going–until no one else could get visas.  I then realized (last week) that not only were tickets available for almost every event but that because of the visa issues, hotels were available too.  Since I have a visa already and many factories are closed for at least a couple of the 0lympic days, I’m headed to Beijing next week.  My Chinese wife (and my sister from the States) with me.

So maybe I should be a bit more critical of the 0lympics and less of Beijing.  True to form, they really just played the system better than anyone else.

Related 0lympic/Business side notes.

Yes, many factories will be closed for much of the 0lympics or at least taking the weekend of the 8th off.  If you are lucky enough to have a visa and be doing business here this month, check your enthusiasm and personal patriotism at the boarder.  I’ve been shouted down at non-0lympic sporting events for supporting Team USA (2006 China Basketball Challenge).  Of course, while not in factories I’ll be purposefully wearing Red, White and Blue every day for the next three weeks.

Outside of Hubei Province doing business in China shouldn’t be affected too much this month.  Yes there will be a few days off this first weekend and visas are hard to come by, but that’s about it.  The real problems were in May/June when factories pushed non-0lympic orders out of production to get things done in time for the Games.

Tags: China by david
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