Posts filed under 'Hong Kong'
“Stranded …”Friday, June 27 … How to begin?
We opened a rainy day in Shanghai with a visit to a local Subway store. The visit was led by their operations manager for the Subway stores in Shanghai and the surrounding province. He was incredibly personable and accommodating, and he took us on a tour of three other nearby Subway stores. As part of their localization strategy, Subways in China have a lobster-salad sandwich, in addition to the classic menu from home, which is surprisingly delicious! An interesting business point he highlighted is Subway’s ability to locate multiple stores within close proximity without cannibalizing sales from each other. This is due to the different market segments that each store targets. While one of the stores located at a major Shanghai landmark is geared mainly to tourists, the nearby shopping center store targets more local shoppers. Another nearby Subway store caters almost exclusively to daily office workers. This was an excellent and informative visit. It also made a number of strategy, legal, marketing, operations, HR and leadership issues we studied in our various courses come to life. A big shout out from Asia to our Cal Poly alumni (you know who you are!), for helping set up this visit for us and for all you do for the college and its students. We really appreciate your time and support. This was a fantastic visit and learning experience.
After leaving Subway we were dropped off at the Shanghai Maglev train – a commuter railway which is actually the world’s fastest train. The train levitates on electromagnets, and reached a top speed of four hundred thirty-two kilometers per hour while we were riding it. The sole purpose of the train is to provide rapid transit between the Pudong district and the Shanghai International Airport. The conventional one hour car ride is accomplished in only fifteen minutes on the Maglev. Through this ride and experience, we caught a glimpse of China’s future infrastructure plans, as we were advised it plans to build similar lines along its eastern seaboard.
Once we got to the airport the fun really started. An international business trip wouldn’t really be complete without a world-class travel debacle, and this one was a doozy. First, we discovered that our Shanghai-Hong Kong flight was drastically delayed due to the typhoon near Hong Kong, and thus would undoubtedly miss our connecting flight to Delhi. After eleven of us checked our baggage in to the airlines, Cathay called an “emergency staff meeting,” suspending all baggage check until 8:00 pm. The eleven of us that did have our baggage checked had already passed through customs, and were enjoying a leisurely meal in the airport food court, and had no idea that the rest of our group was stuck back at the baggage check area. After a couple hours and multiple indecipherable airport pages from the rest of the group we made contact via instant message on someone’s laptop. We were then escorted backwards through customs in order to reconvene with the rest of the group, earning us a rare “canceled” stamp on our China visa. Once back at the check in area we waited for baggage check to reopen and were reissued boarding passes, as our first ones had been voided. Then we re-entered Customs and security, and eventually boarded the aircraft about five hours behind schedule. We did not arrive in Hong Kong until 2:30 am.
Upon arrival in Hong Kong the leaders and translating students spent about three to four hours diligently working with the airline to try and get our group on to the next flight to Delhi. The problem was there were almost no flights departing for Delhi for the next two days and the airline would only be able to guarantee seats for twenty out of the forty-six people in our group. The remaining people would have to fly standby with no guarantee that they would get a seat. Many of us slept (or tried to sleep) on the ground near the check in counter. As the airport geared up for the morning, the twenty randomly selected people who were guaranteed seats left for the gate, while the rest of us hung out in the food court, dreading the coming day of standby status. Minutes before the flight was scheduled to leave, we were greeted by the good news that twenty-one more of us had found seats on the morning flight. However this meant that five people would be left behind to wait for a later flight departing that night.
The forty-one of us that did get on the flight gratefully touched down in Delhi at around 3:00 pm on Saturday, twenty-five hours after arriving at the Shanghai Airport. As we staggered out through Indian customs, many of us spotted our luggage on the nearby carousel. As the minutes ticked on, however, the students who had been deemed standby began nervously shifting our weight. As the last pieces of luggage arrived on the carousel, our fears were confirmed. All standby students had lost our luggage. We proceeded to a counter where we filed a complaint form, which was then hand copied and recopied by the local authorities. We then met our Indian hosts, and were finally brought to our Indian Hotel, where we were able to take a very welcome but cold shower.
This past day served as a wake up call to a facet of doing global business that can be a real challenge — airport and travel delays. It clearly takes the right type of person and employee to be able to hang with these types of travel bumps and challenges.
June 18th, 2008
A hat tip to Gary Chou for sending me the below link. I am a National Geographic subscriber, remember the below issue coming out and reading it, but I forgot to put up a post and the issue had since disappeared into the mess on my office desk at home.
Click HERE to check out these great pics on China’s Instant Cities (the photo gallery link is on the right side of the page; the commentary by Peter Hessler is top notch, as is all of his work - e.g., Two Years on the Yangtze). And reading this very good Wall Street Journal article, On the Move: Chinese Officials Want More Farmers to Migrate to the City; But They Are Also Aware That Migration Brings Problems, will put these photos into a good big picture context for you.
Finally, last month, April 2008, National Geographic published a special issue only on China called, China: Inside the Dragon. Check it out. Again, some great short pieces by Peter Hessler and the usual amazing pictures. You can also click HERE to listen to the China Business Network’s recent podcast interview of the Editor-in-Chief of National Geographic Magazine, Chris Johns, about this issue on China. I also had no idea National Geographic is read by 40 to 45 million people each month. Cha-ching. And talk about a company that has put on a clinic for others re: how to manage and build its brand ….
Enjoy.
Prof. Carr June 13, 2008 addendum: see also this related post on instant city Shenzhen I just made (Shenzhen is located in southern China).
May 18th, 2008
Submitted By: Simone Michel
South China was once known as the world’s factory floor. Plants used to spring up like mushrooms and seas of workers would wait in front of the gates in hope of being the lucky one to get a job. Lately, this picture has started to change. Many of the big gates remain closed due to rising costs and shifts in Chinese government policy, knocking hundreds of smaller factories out of business. Some of the factories that are still in Guangdong province, watching how their profit margins disappear, are considering moving to lower-cost countries such as Vietnam. According to this 1,000 shoe factories closed in 2007.
Many reasons come together: Companies are losing money because of the rising value of China’s currency, making it more expensive compared to the US Dollar. Furthermore, raw material prices ballooned and not the full percentage of this price increase could be passed on to customers. Tax shields for foreign companies were abolished. Inflation returned to China last year as well, letting cost of labor rise faster than productivity. As a rule of thumb, foreign managers in Shanghai have to raise wages by 10 percent every year, otherwise their employees give notice.
But rising cost is not the only reason factories have gone bankrupt. On one hand, workers can now find more jobs elsewhere than ever before and South China is experiencing a labor shortage. Furthermore, the workers that can be found are unskilled. On the other hand, China’s government is making it harder on these factories. After encouraging cheap manufacturing for more than a decade, the regime wants to push investment toward high-tech. The goal is to have more sophisticated factories with higher-wage jobs. China is following Japan and Taiwan, countries who have both started out at the low-end and climbed up the manufacturing ladder to the high-tech end.
Furthermore, the government changed labor policies at the beginning of this year. Chinese workers are starting to get aware of the working conditions and are now demanding higher wages, overtime pay and improved safety. The second broadcast of NPR’s China series highlights nicely how the new law is requiring businesses to give workers written contracts and pay compensation if they’re fired.
With more and more workers pressing their rights against their employers, a supplier’s market of labor and rising costs, the factories are forced to come up with new ideas. Do you think the factories in Guangdong province have to shut down because of all these external influences or do you think it’s their own responsibility because the concept of lean production has never played a role in China’s past?
March 16th, 2008
Submitted By: Naomi Guy
The air is hot, sticky, and dirty. Your throat becomes itchy and a bad taste arises. What do you do? Well, in China you better not spit. Renmin University in China has created a Civic Index to measure the “civility” of their cities and gauge progress as the Olympics draw near. The index analyzes behaviors such as spitting, littering, and line forming from over a quarter million observations and surveys. According to this article, Beijing has been decreasing this behavior, but not as drastically as required before the Olympics. In 2007, Beijing scored 73.4 points, up from 69.06 in 2006 and 65.21 in 2005, but not up to the 80 point target. Changes were brought about using both positive and negative reinforcements ranging from flowers to fines. An example of an interesting (yet somewhat derogatory) program is one to promote the peaceful forming of lines. On the 11th of each month (standing for 1 after 1), uniformed officials swarm upon bus stops and subway stations waving flags at everyone to ensure they line up. The program was created by Zhang Huiguang, director of Beijing’s Capital Ethics Development Office. She is now better known as “Ms. Manners”, and claims that changing these bad habits before the Olympics is “crucial in providing a cultural and historical legacy to China and the world as a whole”.
So what’s the big deal? It seems obvious that any country would want to look as good as possible for the hundreds of thousands of tourists expected for the Olympics. Well, we all remember back a few short years ago when SARS was a major health threat. During that time, officials tried to stop spitting in public to help stop the spread of the disease. Sadly, more effort has been directed into putting on a clean image for the Olympics than protecting the health of the country, and the world, just three short years ago (article). A fairly drastic change in behavior has occurred in the past year to create a new image, three years ago, when lives were at stake, it was hardly a difference.
So why is this? Did the government not care as much about health, or were people too stubborn to believe the threat of SARS? Is an external image more important than internal wellbeing? Would you expect this behavior to be true outside of China? Do you agree with Ms. Manners that these changes are crucial to providing a legacy?
I’d like to leave you with this statement by, Zhang Faqiang, vice chairman of the China Olympic Committee, “Ultimately, China’s modernization rests on the quality of its citizens.” Do manners truly make a quality citizen? and can that lead to modernization? I’ve know some key American inventors with little to zero etiquette…
February 26th, 2008
A hat tip to Dan Harris and the China Law Blog for this lead ….
Here is a really, really interesting power point presentation by advertising giant Ogilvy on consumers in China’s Tier II and III cities. Some great stuff in here that will relate to what you are studying or will study in your MBA marketing class this winter quarter (e.g., branding, market segmentation, packaging, impulse buying, distribution channels, price sensitivity, who makes the family buying decisions, etc. anyone?). This material also highlights why so many foreign firms are trying to get into the market there — the consumer class and their spending power in these lower tier cities are on the upswing. This presentation is worth spending a few minutes to click through and study. Doing so, via this compare and contrast measure, also helped me better understand the marketing of products here in the US. Once in China, as you walk in and out of stores, and as you bus from A to B and look out the window, you need to think back to this material and connect some of the dots as related to your coursework ….
February 6th, 2008
