Americans like to think of themselves as entreprenuers and builders.  Okay, fair enough, we are.  No need for false humility.  But so are others, particularly in China. 

My hot cup of jo’ this morning tasted particularly good due to how much enjoyment I received while reading this front page Wall Street Journal article, Tools of a Minster To Modern Seamen: Cash, Phone Cards.  Now THIS dude can teach an MBA student, a business prof and business schools a thing or two about being an entreprenuer; only he does it for Providence and not cash (okay maybe he has his weak spots re: profitability, but even entreprenuers are entitled to be do-gooders).  But give this man (of God) credit — he can flat our spot a niche market in Hong Kong and serve it in a way that others are not, and talk about a poster child for the marketing precept of “knowing your customer”!

PS — as a follow up to Professor Ramezani’s talk and your econ courses, see this very relevant China Law Blog post of earlier today, “Why China Grows So Fast.”

It’s both. No debate on the first category. Re: the second, as just one example, the gentleman from Nike that recently visited the Ofalea College, Mike McBreen (Director of Nike’s Global Operations who also spoke at our winter undergrad graduation ceremony), told us during a luncheon that 80 percent of what Nike makes in China it in turn sells there in its domestic market. Mike was probably the best and most intellectually engaging (and convincing, yet humble) business speakers I have heard in years.

This Wall Street Journal article, For Some Manufacturers, There Are Benefits to Keeping Production at Home, does a nice job highlighting for you what type of manufacturing moves to China and what type tends to stay home here in the US. To gain a feel for how the services industry and market for foreign firms is developing and set to take off in China, see this recent China Law Blog post, China New Investment Rules ….

Submitted By: Ashley Smith

Dr. Hu Weimin is a doctor in Loudi, China. He specializes in hypertension, one of the main killers in China, and high blood pressure. He provides about 7,000 poor Chinese with free medical advice and provides them with extremely cheap prescriptions. He does all of this out of his own clinic, a clinic that is an old coal shed outside the Loudi Central Hospital. Now you may be asking, “Why is his clinic outside the hospital?” Well, Dr. Hu has been banned from the hospital and shunned by the rest of the doctors. Why would a completely public service oriented doctor be kicked out of the hospital? Because Dr. Hu is bad for business.

Two thirds of the people in China cannot afford medical insurance and have to pay out of pocket every time they need medical attention. What makes this worse is that not only do doctors get a base salary but they also gets a bonus for each prescription written, test ordered, and operation performed. This has caused most doctors to write completely bogus prescriptions to inflate their own salary and it’s all at the expense of the poor and rural populations of China. The people of China have voiced their opinion and they want change. The Chinese government claims that medical reform is a top priority but has yet to do anything about it. It seems as though they can’t do anything about it because the power the hospitals hold outweighs the voice of the public ten fold.

The hospitals do not want change for the same reason the Loudi Central Hospital does not want Dr. Hu to practice medicine. Every person that chooses to see Dr. Hu for free is a prescription that the hospital will not write. It is money the hospital will never receive.

This article appeared in the Wall Street Journal on January 16, 2007, and here are some of the questions I asked and that you may want to think about while reading it:

• How does China’s medical system and health care compare to ours?
• What caused these doctors to care more about the money than the people they are suppose to be helping?
• What can the government really do to create a more public service oriented medical care system? If there are ways to change the system why haven’t they been done sooner?
• How is this lack of medical care going to effect the aging population of China?
• The prescription drug companies know their medications are being over prescribed. Do they have a responsibility to step in or is it really just a matter of business?
• On a side note, why has there been such a rise in hypertension, blood pressure, and other cardiovascular conditions in China? Could it be all that beef McDonalds is trying to promote?

[Professor Carr Addendum: I thought it was interesting that three students chose this article. A good article and choice. I publish all three posts here, because you can compare and contrast which parts of the article they found interesting, how the article struck people differently, etc. See also the related earlier blog post Not All Is Well in China: Access to Health Care. I also have a question -- will economic and geopolitical superiority in the future also in large part be determined by which countries deal the most effectively with these types of health care issues?]

Submitted By: Steve Rodger

Providing health care to over 1.3 billion people is a feat that doctors, hospitals and the Chinese government deal with daily. It seems that any single person able to make a significance difference in improving the health of thousands in any population should be lauded. While this is the case for a Chinese doctor, Hu Weimin, he is also being shunned by hospitals for interfering with their profits. Dr. Hu is harmful to the hospital businesses in China because he provides widespread free advice on the most common treatable illnesses in his home region of the Hunan province. In a country where citizens pay more out-of-pocket for health care than any other nation in the world, it is seems appalling that hospitals discourage preventative medicine.

Currently it seems that some Chinese hospital management have a primary focus of commercial profit rather than public service. While hospitals recognize that they need reform, it is unfortunate that financial incentives bring corruption into these environments of healing. Bonuses are given to doctors who prescribe laser surgeries and certain Chinese & imported drugs. Doctors profit directly from this reward system, which provides a substantial part of their salary. A fateful byproduct of the greed stemming from doctors trying to make a better living includes the mis-prescription of drugs. Though this probably occurs from time to time in the US, it is a scary thought to think a doctor could be misusing their medical expertise to profit… While any business has a necessity to prosper, hospitals are organizations which have moral obligations to put the people first.

Since millions of Chinese can not afford health care it is critical that preventative medicine be more widespread. While Dr. Hu is hero leading the way, saving lives and substantial amounts of revenue, he is also causing major headaches for hospitals. Perhaps hospitals should help Dr. Hu’s cause and create preventative programs to teach the masses easy ways to alleviate commonly treatable sicknesses. When do businesses go too far to make a buck? Should the government be policing these hospitals to minimize corruption?

[Professor Carr Addendum: I thought it was interesting that three students chose this article. A good article and good choice. I publish all three posts here, because you can compare and contrast which parts of the article they found interesting, how the article struck people differently, etc. See also the related earlier blog post Not All Is Well in China: Access to Health Care.  I also have a question -- will economic and geopolitical superiority in the future also in large part be determined by which countries deal the most effectively with these types of health care issues?]

Submitted By: Bonnie Morse

Imagine that while walking in San Luis Obispo this morning you slip and break your leg. You go to the hospital and are told that, before the doctor will look at your leg, you must pay $200 for the X-ray, $100 for the cast, $50 for pain medication, and an additional $40 if you want to splurge for crutches. You only have $20 in your wallet. What do you do?

While many Americans will never face this type of situation, the answer is much different in China. A recent Wall Street Journal article described how China’s health care system is structured so that patients must pay for medical treatments before they receive them. With nearly two-thirds of Chinese lacking insurance, many people cannot afford to receive proper medical attention. Additionally, the privatization of hospitals has created an incentive to prescribe expensive medications and administer costly tests. For instance, doctors receive additional income for ordering CAT scans and laser surgery. Prescriptions in some cases have been shown to make up 60% of a hospital’s income.

A side effect of China’s health care structure is that maintaining steady revenues from patients is overshadowing the need for “preventive medicine.” Teaching better eating habits to prevent problems like hypertension reduces the amount of patients that will later need to be treated at a hospital. However, this also decreases a hospital’s income.

One of the most obvious topics this health care system relates to is ethics. In particular, what type of responsibility do hospitals, businesses, or countries have for providing adequate health care? While a doctor’s duty should be to treat patients, they cannot be entirely blamed for this situation. A system that makes hospitals earn a profit off of patients is bound to create a conflict of interest. But what can be done to change it? Should Chinese companies offer affordable health care insurance for employees? China acknowledges that the health care system is in trouble, but should hospitals become entirely funded by the government? Ultimately, answering these questions is critical for both the health of China’s people and the country as a whole.

[Professor Carr Addendum: I thought it was interesting that three students chose this article. A good article and good choice. I publish all three posts here, because you can compare and contrast which parts of the article they found interesting, how the article struck people differently, etc. See also the related earlier blog post Not All Is Well in China: Access to Health Care.  I also have a question -- will economic and geopolitical superiority in the future also in large part be determined by which countries deal the most effectively with these types of health care issues?]

* Thursday, January 18 from 11:00 am to 12:00 pm, Room 114 — OCOB Finance Professor Cyrus Ramezani will discuss “Recent Developments in Chinese Financial Markets”

* Thursday, February 1 from 11:00 am to 12:00 pm, Room 114 — OCOB Management Professor Colette Frayne will discuss “Managing People in the Global Environment: A Look at China”

* Thursday, February 22 from 11:00 am to 12:00 pm, Room 114 - Cal Poly Architecture Professor Rob Pena, attorney Michael Jencks, CEO Neil Lahey of Deventec, Inc. Solar Energy, and Cal Poly OCOB Accounting Professor Kate Lancaster will discuss “Looking at China Through the Lens of Sustainability”

* Friday March 9 from 10:00 am to 2:00 pm, Room 201 — Henry Lane, CEO of Dioptics, a SLO company that sells sunglasses around the world with its suppliers are located in China, will discuss “Managing the Global Supply Chain”; and Ray Bowman, Logistics and Shipping Expert will speak about his field (note we will again try to visit the Port of Yantian and Logistics Center in Shenzhen)

Submitted By: Victoria Whelan

I thought this Wall Street Journal article was interesting since many of us are taking Marketing this quarter. It will be interesting to see if Dunkin’ Donuts can pull off pushing tea and donuts (flavored to China’s liking) instead of coffee and donuts that we think of when we hear their name. It might taint their brand image since they are eventually trying to revert back to coffee and donuts once they get market share. Starbuck’s is doing the complete opposite and pushing coffee during their large expansion plan in China (see Starbucks Pours It On In China).

Great article on the Starbucks in the Forbidden City in Beijing (and the power of blogging) in Friday’s Wall Street Journal. We will visit the Forbidden City on our trip.

Is this an example of globalization, or, the erosion of Chinese culture?

I am also curious … if you were the person at Starbucks who had to make the call re: whether to put that store in the Forbidden City in the first place, what would you have decided, and why? What if you were the person at Starbucks with this flap now sitting on your desk — what call would you make re: keeping this store in place or removing it, and why? Oh, and by the way, after your boss at Starbucks gives you one of these tasks, he/she says as you head out the door at the end of your meeting “Make a good decision. Don’t screw this up,” and that’s all the guidance you receive. To help your analysis here is a related WSJ article, Starbucks Pours It On In China, which will help you learn more about Starbucks’ strategy in China.

Welcome to being a manager and a decision maker in business, where this mess is now on your desk to own and clean up (or screw up to the detriment of your career), and not the underling below doing the grunt work who gets to go home at 5:00 pm.!

You know those big blue bins you roll our to your curb each week in SLO? Ever give pause to consider where all that plastic and paper you put in them goes? Try … China.

One of your classmates in the MBA program works for a local firm that helps process these materials at Cold Canyon Landfill just outside town. As I understand it, your plastic and paper/cardboard is culled out then shipped (by truck or train) down to Los Angeles, where the middleman sells it to a Chinese firm who then loads in onto a cargo ship bound for China. What happens to it next? Check out this wonderful NY Times article about one of the richest ladies in China and her recycling business and firm, Blazing a Paper Trail [subscription may be required].

What I love about this article is that it highlights yet another example of how their are some really, really, smart people out there who are very entrepreneurial making a lot of money doing things like this that some snobs in business would consider to be too lowbrow for them. Also, what a great article highlighting good sustainability practices. … paper/plastic used in the US, put on a ship to China, recycled, then used for packaging for products that come right back to California, and then the cycle starts all over again.

Check out my earlier related post relating to plastics/MBA Polymers, and this Forbes article China Launching Green Buildings Project, and this NY Times article Venture Capital Nation: A Light Bulb Goes On, and China Starts Thinking ‘Alternative Energy’.

And this issue and article relate directly to what Professor Ramezani asked you last week — what opportunities can YOU spot to jump in on to make a living and make the world a better place as capital, labor and investment moves around the world?

In my other life as a full-time practicing attorney a referral from a client or colleague always felt good. It still does.

The China Law Blog recently did a nice post on our blog and trip. Click here to check it out.

Independent from the fact that they published this unsolicited post, I love the CLB (and some other blogs I check regularly). Their writing is very good, the topics always timely and interesting (at least to me) and they always have a wonderful macro view of business/business transactions that business people and MBA students can learn a lot from. And, I have no problem plugging the CLB folks in return by noting that Dan Harris and Steve Dickinson are excellent attorneys and a credit to the profession. Indeed, they are the kind of good guys you would want to have a beer with.