China’s newness to prosperity and the wonders of things like all-you-can-eat buffets and boat cruise dining can make for some interesting YouTube videos.  As China becomes more “modern” so will some of the dining etiquette. But for now “buffet” remains a contact sport in mainland China on a par with a rugby tournament.  See this YouTube video to see what I mean.  And you thought that traffic in LA, the Bay area or Seattle could be bad?  Think again.  Click HERE to read about this recent 60 mile traffic jam in China.

The size and scale of emerging markets like China and India, including their immense populations, can be overwhelming to many Westerners.   Get ready to adjust your sense of personal space and distance when we travel to China!

“Yo’ dawg,” as some say.

Click HERE and HERE (scroll down a bit for this second video) and check out this NPR story and two short videos on rap daddy Eli Sweet, who is breakin’ it down in Chengdu.  For some time NPR has been running such spotlights on China and its growing influence on the world.  I have enjoyed many of these features as I sip my morning cha.

But the purpose of this post is not to suggest that we travel to China to admire and hang out with rappers.

Instead, and notwithstanding the artistic and cultural intrigue of these videos on our man Eli, this post recognizes that Eli the rapper is an entrepreneur and in business, regardless of whether as an “artist” he will cop to such a label.

To be more specific, his hometown of Atlanta appears to be over saturated with rappers, he sees a possible need for what he has in another place - an emerging market called China — he is trying to fill said need, and he is trying to make money doing it (gotta pay the bills).   MBAs could no doubt teach him a thing or two about business, but he could also teach them a thing or two about guts, stepping off the ledge, getting on the plane, and seeing where moving out of one’s comfort zone can take you.  That too, is an unappreciated part of business.

There are also two money quotes in the first video I want you go back and replay and listen to closely.  First, where he says, “There is always a possibility [here in China] that you will see something today that you have never seen in your entire life”.  And second, “I didn’t come [to China] because I thought that the life would be better than it was in America.  I came here because I couldn’t envision a great life for myself in America.”

I agree with most of that, but I am not sure that I would agree that a great life cannot still be had in the USA with some hard work and luck.  But you get the point — emerging markets such as China present business opportunities that we either don’t have or may no longer to be able to reasonably access in the West.  One of the reasons we go to China is to explore its business opportunities (and challenges).

So welcome to the first of these online readings, videos and assignments I give you during the academic year.  They will help bring you up to speed on some of the “China basics” and they will also help keep the drumbeat of China fresh in your mind during the academic year.   Once we arrive in China, I don’t want that to be the first time you have given any thought to this trip, the firms and industries we will visit, China, and/or any of its history, culture and business practices.

We will rock and roll once our boots hit the ground in China, the pace will be fast, and the days long, hot, humid, and challenging.  But this trip and course will also enrich and reward you, both personally and professionally, if invest in yourself and put in the necessary time, work and effort along the way.

Cal Poly MBA students, “Welcome to the People’s Republic of China, where, as the saying goes and as you will learn, anything is possible, but nothing is easy.”

- Professor Carr

Check out this Wall Street Journal article on McDonald’s Strategy in China. It’s a hoot to read. Who would have thought beef could be sooo “sexy”?  Yaaaah Baaabby!

On a serious note, I will try to get you into a KFC, Pizza Hut or McDonalds or two while were are in China or India. This article does a great job laying out some of the differences you will see there in such stores, and why, and how to localize these types of multinational products for an emerging market.

For example, after reading this article, you should better understand why you see chicken (and fish) everywhere in China (and dog in Canton, now Guangzhou), and not as much beef (too expensive for most folks).

Your thoughts?

I know some people who consider dollar stores to be beneath them. I have heard elitists mock those who shop as dollar stores as being white trash (WT).

I love dollar stores. So, yes, I guess you can call me WT. Really. Go ahead. It won’t bother me as I have been called worse. I can get lost in a dollar store killing time. I like the people who work there. I like their business model. I also love swap meets. I can take my two young daughters to a dollar store, let them spend an hour running around looking for things (I always frame it as our “own treasure hunt”), I buy them each the promised one item (and resist their screams and pleas for two or three items each), and I come out of the store with only a $2.14 bill — that’s the cheapest baby sitting venue you will ever find (aside from a public park).

Plus, it’s educational in that it teaches my kids to practice their letters, words and numbers by reading labels, boxes and packages, they have to make priority decisions in the midst of a mad scramble to decide what they want to select (as I tell them “girls, only eight minutes left until the bell to go home rings!”), it gives us a chance to talk about where the goods in the store come from, where China is and how far away it is, why pops goes there each year, they learn how to address an adult respectfully and with confidence when they take their item to the cashier, etc.

Here is a great Times Online article (”To China For the Holy Grail: A Price of 99p”) about a day-in-the-life of a British buyer in China buying product for dollar stores (yes, folks, most, if not all of what you buy in a dollar store comes from China). Amazing stuff. Talk about a cut-throat business where margins are tight and the line between profit and going broke is razor thin …

Dollar stores, golly gee. WT, I guess that be me.

Post by Professor Jay Singh.

The below videos provide you with foundational information to get you thinking about India, and business issues related thereto.

1. India Rising - (10:14 minutes; ABC News)

An interesting commentary on the reasons behind the emergence of India as a global leader. Check out the comments by Nandan Nilekani, CEO of Infosys regarding the number of applicants applying for IT jobs with the company. The Indian IT industry has a reached a point where they are now starting to employ US graduates. This largest and most diverse democracy is identified as the most pro-US country outside of the US. Comments by Thomas Friedman, the author of The World is Flat, illustrate his sentiments on the peaceful nature of this country as well as the tremendous potential that he sees in the population that comprises of 700 million citizens (that is almost 2.5 times the US population) under the age of 35. The video also explains how entrepreneurship does not bias against the poor in India.

2. India Shining by Colin Mutchler (6:04 minutes)

A narrative by a professor from INSEAD business school with campuses in France and Singapore. He mentions his experiences from a class that included 20 students, 2 professors and several entrepreneurs, business persons and venture capitalists in the cities of Mumbai and Bangalore. Phrases used tro describe India in this video are functional anarchy, chaotic democracy, lumbering elephant, and 20th century head on a 19th century body. It also mentions how the rapidly improving services sector in India is causing a brain gain rather than a brain drain. Up to 70,000 business leaders from the likes of the Silicon Valley are heading home annually to take advantage of the booming economy. The quote at the end of the video very aptly summarizes the professor’s experience.

3. Amitabh Bachchan recites India Poised Anthem (2:13 minutes)

Amitabh Bachchan is the biggest super star the Indian movie industry (Bollywood) has ever seen. He has also had his fair share of successes and failures as an entrepreneur. When he speaks India listens. In this video he truly motivates the Indian population to feel a sense of pride and optimism. He talks of optimism versus skepticism that is India.

4. Taj Mahal (8:31 minutes) (do search noted above)

Should we again be able to add India into the trip one of the treats for all students on the International Business Trip, 2009 will be the Taj Mahal that has recently made it into the 7 wonders of the world. This beautiful mausoleum, made entirely of white marble inlaid with semi-precious stones, was built by Emperor Shah Jahan for his wife Mumtaz Mahal over 400 years ago. More information on this a UNESCO World Heritage Site (1983) is available here. Enjoy the toe tapping bollywood music in the background.

5. Indian Institute of Technology, Kanpur (8:22 minutes)

The Indian Institutes of Technology (IITs), are an elite group of seven autonomous engineering and technology oriented institutes of higher education established and declared as Institutes of National Importance by the Government of India. The IITs were created to train scientists and engineers, with the aim of developing a skilled workforce to support the economic and social development of India after independence in 1947. Admission is very competitive, given the huge population of India; the undergraduate acceptance rate through JEE has a low ratio, around 1 in 55, with about 300,000 annual test takers for about 5,500 seats. Imagine that!! The IITs were ranked third-best worldwide for technology, after MIT and University of California, Berkeley.

This video gives an excellent overview of one of the institutes.

6. The William Jefferson Clinton Science & Technology Center (6:23 minutes)

While the video titled Indian Institute of Technology, Kanpur helps illustrate the high standards of engineering and technology education in India, this video provides an example of the paradigm shift in mass education in the world’s second highest populated nation. Vinod Gupta, an IIT’ ian, moved to the US to seek a career as did a record 70% of his fellow graduates (this is what they mean by brain drain, which has dramatically decrease to about 30% in recent years). With President Clinton’s support he established a school that helps provide cutting edge education in science and technology at high school level to over 550 students from nearly surrounding 31 villages.

7. India ‘Vision 2020′ - A Creative Documentary (7:21 minutes)

This documentary provides a vision of an India in 2020 where:

The annual GDP growth rate will be 9% (presently at 6.8%)
Only 10% of the population will be below poverty line (presently at 25%)

Nuclear power stations will provide 20,000 MWe power
Remote services will contribute $133-315 billion in revenues to the Indian economy

This documentary may have romanticized some of the facts but is not too off from the future that is India.

8. The Simpsons - India Outsourcing (7:28 minutes)

This episode was good enough to cause belly splitting laughter but it appears to have been recently removed. This episode makes light of the outsourcing issues that had the pundits in the US running scared not too long ago. Last heard, Homer was deported from India wonder why …

What are some of your takeaways from one or more of these videos?

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).

I am impressed and humbled by those who do non-profit work who can stretch a few dollars a long way to make a significant different in the lives of others. A good example of this is Tom Stader at The Library Project. Tom is one of the entrepreneur panelists I have lined up for you to have the opportunity to meet in China, should you elect to attend and participate in the hutong event I set up for Sunday, June 22 (see your info booklet for more information and the cost).

Click HERE to see his amazing pictures of a recent school in China where he and his team delivered and set up a library (you need to scroll down a bit to get to the pics). The joy on the faces of these kids is inspiring and beautiful.

What business questions can you think of to ask him when we meet with him?

Prof. Carr April 29, 2008 update: Click HERE to check out the latest delivery Tom and his crew made to a school in the An Hui Province in China. The kids in their band uniforms are priceless.

Submitted By: Mark Fairman

For nearly three decades, foreign investors had reaped huge benefits from their geographic locations in the PRC. Tax Holidays in provinces along the Eastern seaboard (Shandong, Jiangsu, Fujian, and Guandong) have allowed for large imbalances in exports between regions—as well as imbalances between foreign and domestic firms.

The initial tax holiday allowed manufacturers to pay no income taxes for their first two years and taxed only half of the standard 25% for the next two. Also, duties and taxes for exports of foreign manufacturers are differed indefinitely. Along with the ridiculously cheap cost of labor, tax exemption has been a major draw for foreign investors over the past years.

This situation sounds great for companies moving operations abroad, but the Chinese government has started phasing out these exemptions (except for high-tech firms and R&D) at the beginning of 2008. They are doing this to allow a more level playing field between the eastern provinces and the central and western provinces of China, as well as an attempt to upgrade their manufacturing model by luring in more high-tech firms.

So what does this mean for a young entrepreneur thinking of doing business in the PRC? One solution to this problem might be to locate facilities in the central provinces of Chengdu and Xian, where the Tax Holidays are still in effect. Of course, with this move, there is weaker transportation network and no direct port access. Do the benefits of this move outweigh the costs? Are there business opportunities created by a shift in manufacturing locations?

For a more in-depth into the particulars of the 2008 tax reform, click here.

Gifts are a big deal in China. It’s part of the expectation and game.  In historical China, one brought gifts to the Emperor as part of the expected “kowtow”; today, it may take a different form — in dealing with the Chinese government you bring foreign investment or technology or evidence that you are committed to China for the long term and not to rape and pillage, take your money and make a quick exit for home, etc. for its blessing and regulatory approval. And for your friends and/or business colleagues one often brings personal gifts as part of building guanxi.

See this LA Times article, What Gift To Bring to a Nation That Makes Everything?, that reiterates the importance of gift bringing and giving in China, and further reinforces two other points I make below - make sure your gift is not made in China, and personalize, personalize, personalize.

You will be organized into teams and assigned to several companies (see the FAQ and/or Information Booklet for the details). As part of the firm visit, your team will be expected to purchase, bring and present a gift to the noted manager(s) (again, see the FAQ and/or Information Booklet for how many gifts you need to bring per firm). The FAQ document has some good information on gifts. Please go back and re-read that question. You will need to give firms something nicer/better than a Cal Poly t-shirt or polo.

If two teams have been assigned to a firm, no need for both teams to each bring and give a gift. Instead, collaborate and work it out re: who will get the gift, wrap and pack it, how you will share the cost, etc.

Several weeks ago I was in Barns and Noble. They had some killer sales on picture books. I picked up two gorgeous picture books about China and one on India for about $12.00 each.

I noticed that B&N had some very nice picture books on SLO Country Wineries, so I bought a few to hand out as gifts when I traveled there in March.

I also noticed that B&N had some other killer picture books about California, Big Sur, Yosemite, etc. Some of these picture books I noticed were on sale, some where not. (Also, perhaps El Corral Bookstore has some nice picture books about Cal Poly? — check it out. Borders bookstore in the Madonna Plaza may also have some nice picture books.)

If you divvy the cost of a company gift between four people (or eight people if two teams have been assigned to that firm), this should not break your bank. See the FAQ and/or Information Booklet for suggested maximum budget per gift. The amount is not nearly as important as the thought and the connection to you (see below).

It is important that the gift you choose be an extension of you and who you are.   It does not have to be a picture book!  I just note the above as an example.  The personal thought and touch counts. The gift should also NOT be something made in China, and it can, but is not required to be, tied into your home and where you live. A nice California, Big Sur, Yosemite, Cal Poly, etc. picture book might be a good idea to bring as a gift, and easier to carry and pack than other potential gifts.

Note that for a China gift, per the Information Booklet for some of the firms you need to stay away from the SLO County Winery picture book, as I already gave that to a fair number of people you will meet in China. (But for India, it can/still will work nicely.)

As a personal note, when I made my first foray into China years ago, I brought Central Coast wine. In my own arrogance and western ethnocentricity, I thought, “Wow, are they going to be impressed with SLO County wine — after all, it’s great stuff and we are God’s chosen people here in SLO town.” One major problem, though — wine drinking has not yet taken over China like here, so I could tell they viewed said gift with a “ho-hum, big friggin deal, what’s this?”

So, if it was me, I would stay away from wine as a gift (it’s also a pain to pack and carry, and can break and if red wine, your clothes will be trashed). But for some reason picture books, even of a winery or vineyards, they seem to like and appreciate.

Wrapping Your Gift:

This important.  I REPEAT — WRAP YOUR FRIGGIN’ GIFT.  How you wrap a gift, and the care you take to wrap it and the quality of its presentation is also a big deal in China.  The above LA Times article also signals this.   How a gift is wrapped is a part of external/outward “face” in China. Thus, you need to make it look good when you wrap it. Color of paper is important (again, see FAQ document; red is a safe color). Color, packaging and how it looks is part of the romance you are bringing and trying to offer to make yourself look attractive and sincere.

As long as your gift does not contain metal, you can wrap it and put in your suitcase and TSA will likely not make you take it out and unwrap it so they can see it (but I cannot guarantee that what the white shirted storm trooper may/may not do!).

WARNING: if you put it in your carry-on, then definitely don’t wrap it as there is a good chance TSA will make you take it out and unwrap it!!!

Another option - you might wrap your gift once we are IN China, by bringing and packing your wrapping paper and tape with you, and then you wrap it in the hotel room (I have done this a time or two). Once we get to China, finding a place to buy wrapping paper and/or tape in a quick manner is unrealistic and you likely won’t have much time to go on a gift wrapping paper and scotch tape hunt, so I would not plan on that.

Need More Info?

Tap into the expertise of your colleagues and classmates!  They can give you good ideas and suggestions. You would be remiss if you did not touch base with them on this.

For India, the same rules and expectations noted above apply.

Again, the SLO Country Winery book will work well for India, but I have already given out a number of these to folks in China that you will meet so if you go with a picture book for the China firms, gotta pick another picture book if you go that route …

Submitted By: Matt Sprecher

As the Olympics near and China continues it’s push towards economic prowess, a road block has appeared in the form of inflation. In a recent New York Times article, China’s recent inflation hike is analyzed to uncover the cause for distress within the Chinese government. With the Olympics less than half a year away the eyes of the nation have switched from the games in Beijing, to the potential political backlash coming from the lower class citizens of the country:

”I’m concerned that there will be demonstrations. The government must recognize this,” said Robert Broadfoot, managing director of Political and Economic Risk Consultancy Ltd. in Hong Kong.

With all the sub par conditions that exist within the poor farm communities this inflation has created a new world of concerns. Throughout this article Chinese officials and others concerned with the situation give insight in to how this problem may be fixed. One person comments that it will stay high, in light of the recent crop troubles caused by the terrible storm of recent months. What do you feel is the way for China to get over this small speed bump? Will this all just iron itself out, or does the government have to start worrying protesting from lower class citizens? Could this be the straw that breaks the camels back human right’s wise? How will this affect the Olympics? Lots to think about, lots to discuss. Any thoughts?