Submitted By: Nic Dominguez

Readers of this week’s Economist might have trouble sleeping at night after witnessing the intense cover art combined with the leader “Angry China.” The editors have summarized the recent tension into one simple and foreboding conclusion. The Chinese people are angry. International protests over everything from assumed human rights violation, environmental degradation, political corruption, and of course Tibetan independence have all surfaced in the last few months. The reaction of the Chinese people with the aid of the Chinese government has been their own outcry for respect. Although this conflict in itself is very frightening, the Economist makes it clear that the consequences of such tension for the Chinese government of are more dire than media rants from the West and bitter feelings at home.

In order to funnel this anger into something more constructive the CCP has stirred up notions of nationalism among the populace. The Economist has paraphrased the government’s statements that “China will be restored to its rightful place at the centre of world affairs. According to the editors, the CCP has forgotten that an angry population is still a threat to stability even if it is angry at the outside world.

“There is no doubt genuine fury in China at these offences; yet the impression the response gives of a people united behind the government is an illusion. China, like India, is a land of a million mutinies now… Prepaid phone cards. Herein lies the danger for the government. Popular anger, once roused, can easily switch targets.”

The Economist proposes that the CCP will not be able to sidestep the core issues plaguing the minds of the populace. If the anger turns on the government the wisest step would be to handle the problems of pollution, corruption and human rights violations without hesitation or hostility.

I know this blog has beaten the issue of alleged Chinese government brutality and the future of the Chinese political system to death. However, this lesson in cause and effect should not be disregarded. The protestors on both sides must consider what the retaliation of the other side will do to the international environment. I know most of us do not want to see an alienated Chinese state in the coming years. That outcome would be dreadful for us and the Chinese people. My view is that Nationalism is a dangerous road for any country. The CCP may want to consider a steadier road to travel. At the same time the outcry of anti-Chinese protests in the West does nothing but force the CCP into a corner. It comes down to a simple childhood lesson, whether you are yelling for change, yelling for patriotism or yelling to save face, yelling doesn’t solve anything.

Johnny Cash was the man, as was his classic song, Folsom Prison, where he sang of a man hearing the train round the bend as he sat in prison for killing a man in Reno and longing for his freedom. An American icon. I listen to some of his music on my I-pod while walking the dog. The Man in Black aside, there are Western outsiders who think various stakeholders in China, including those in government and/or business, can just wave their hands or flap their lips in China and make things/change quickly happen in the place.

But get real.  Let me show you and give you some visual perspective using a train of what it is like to live in a world of 1.3 billion people and try to manage them. Click HERE, and look, I know this is a train station in Japan, not China, but I can tell you I have experienced this scene in Guangzhou, Shenzhen, Shanghai and Beijing so project what you see and imagine it’s China.

Still think China can turn on a dime into a western style democracy, or stop IP violations or become an environmental Sweden overnight? Does this visual picture help you better understand the emphasis on Confucianism and “the group” in China versus “the individual”? (Notice how these passengers act and say nothing/very little as they board the train and they are not getting all up in arms and yelling “hey, buddy, get your g*d**m* hands and body off me!’ as many Americans would do and blow a gasket over.)

As we travel in China or India this year, take off your business hat and become a social scientist/anthropologist — look for and study these types of things and try to better understand them (not raise that Western nose up and judge them). It’s gonna be a great trip …

“And I’m stuck in Folsom prison, and time keeps … draggin’ on. But that train keeps a roollllin’ … dooowwwwn to San Anton’ ….” - Johnny C.

Submitted By: David Zarcone

When it comes to consumer electronics, prices only seem to go up when a new technology is revealed or next-generation products are introduced. However, consumer electronics (CE) will be going up across the board this year. What’s the reason for the price increase? CHINA! Click here to find the Yahoo! article.

Numerous factors are contributing to this incredible increase, according to well-placed sources, including the rise in manufacturing and material costs. At the moment, China is the production center for the majority of CE partly due to the cheap cost of labor. But this might be coming to an end; China is bettering its relationships with workers by introducing new labor and protection laws which in turn pushed labor costs up 15%. On another note, one thing to blame is the Olympics. Many factories are shutting down in June to help clear the air pollution. Additional reasons include higher oil prices affecting shipments to the US, factory relocation in China from south to north, and finally, the biggest reason of all: the falling US dollar.

The US dollar just isn’t what it used to be, and the exchange rate between the US dollar and the Chinese Yuan has gone down since the beginning of the year. It has fallen about 10% in the last year, so basically Chinese companies now earn 10% less than they did a year ago due to falling exchange rate.

When asked about this problem and ideas of possible alternatives, a US manufacturing executive said “Some have mentioned Vietnam, but we are talking about consumer electronics. China has the infrastructure. There really isn’t an alternative.” At the manufacturer’s level, prices in China are up 8-20%, and the US retail prices will follow shortly, so stock up on your new cell phones and laptops before it’s too late.

Oh really?

And let me guess … all the products you buy are made in America and there is no value in seeing where the products we buy are made, right? Or the investment funds your stock broker dumps your money into will have no cross-border asset investments tied to China or India, right?  And there are no services you might be able to develop and one day offer in China when/if supply exceeds demand here, right?

Hmmmm.

In any event, I think most folks get it, but I do overhear this comment a few times most years. In fact, a few weeks ago I had someone in my office making the very argument that is the heading of this post and that if they had to go on the trip and “bear” it in order to graduate on an accelerated basis, they would buck up and make it through.

Double-hmmmm.

I understand where people are coming from and they mean well when they make such statements, and I am pleased they remain outward looking enough to still enroll in the course and undertake this field trip. Perhaps what they are really saying is, “I have no desire to be an expat.”

Fair enough, as the expat life is not for everybody. But I still push back against said statements, and will continue to do so, because I think said statements miss an important point and shows a disconnect with what is happening in the world and about what the term “international” means in the year 2011.

To reiterate what I noted in our early information sessions — the goal of the trip is to not turn you into an expat, although that may be the natural result of this experience for some.

Rather, some of the main goals are:

1. To better understand how the world’s business, economic, political and social puzzle fit together. You can’t do that from a book or by having coffee at Starbucks in SLO town, Santa Barbara, LA or the SF Bay area.

2. To better understand how, even if you/your firm elects to focus inward and continue to emphasize only California or US markets, there is a high probability your competition will use and leverage China and/or India against you. Thus, if you remain on the sideline, in time, your competition will kick your butt, there, or here. For every person who has made the above statement, I can point to one of their competitors who are somehow leveraging China or India to their detriment.

3. This is a big one. You can/will return to the US and … surprise! … you will be better at your business here at home because you traveled to places like India and China to study business, to see what is happening there first hand which will in turn help you separate fact from urban legend, and you gain a deeper understanding of why. If you really pay attention and ask lots of questions and go into both countries with total humility (meaning let them do the talking and you just listen), you might even pick up some best business practices from the Chinese or Indians.

4. How do you know the day won’t come where your boss walks in your office and says, “I need you to take the next red-eye to Guangzhou or New Delhi” and he/she picked you because he/she heard you have been to one of these places before on business? Will you jump at the chance and opportunity of a lifetime and in turn become the firm resident expert on China or India, or, will you run for the hills and miss an opportunity that may never come your way again?

5. Finally, one day you might decide you hate your job and working for “the man” and decide to start your own business. You will need capital to do that. You will find that if your idea is decent, potential investors will look at your business plan and ask, “why is there nothing global or relating to global expansion or strategy or how to respond to the global competition here?”

I could go on, but you get the picture and in summary, read this post, “Top Ten Reasons Why China Matters To You” from pundit Thomas Barnett. He says it better than I ever could (or have tried).

His list highlights why in the year 2011, an educated person cannot convincingly argue, “I am not international” or “I am not going to work international.” If you make such a statement, be aware that there are a number of people in the world that will look at you askance and even question your intelligence and the value of your Cal Poly degree and/or what you learned here (as an undergrad or grad student).

At least I would ….

To close, here is a great quote from Coca-Cola’s current CEO, E. Neville Isdell (Biz Ed, May/June 2008, pages 19-20):

Question by interviewer: If you were to come into a business classroom for a day, what would you want to say to business students?

Answer: I would want to teach students to understand different backgrounds, cultures, religions, and perspectives, even if those perspectives are antithetical to their own. If student’s don’t listen to and understand other people’s points of view, it creates misinterpretation and confrontation. It certainly will cause them to lose business opportunities. They should never give up their own principles, but they need to be able to find common ground. It’s what all good business leaders do to move business forward. Its’ what all good negotiators do to come to solutions.

Prof. Carr May 5, 2008 addendum: See this related article that just appeared in the NY Times, In Inner Mongolia, Pushing Architecture’s Outer Limits. The money quote in the article (as I have also had students with an architecture background argue that “they” don’t need to know or be “international”):

Indeed, Mr. Ai said, pointing to the architects who had traveled thousands of miles looking for work - “These days, it’s the architects, dressed in black, who are the tribe of nomads.”

Read the article, and you will see why.