We have returned to the USA!

Six cities, over 16 firms, several universities, and numerous cultural excursions in 18 days.

Below you can read about Days 1-17 of our journey. Overall the firm visits this year were excellent.

I view the trip and course as a success, but I define “success” differently than perhaps most would.

First, let me note that this was an excellent group. Collectively, the “got it”. I appreciated their effort, maturity and professionalism on the trip, including their willingness to put self aside for the greater interests of the group.  They collectively worked hard, bucked up when travel bumps appeared, they rolled up their sleeves and were proactive in their learning and the questions they asked. This group was much more active than past groups in practicing some of the simple things of business like the exchange of business cards, networking, and starting to cultivate relationships with people they met abroad. This was great to witness, as it was one of the learning goals for the course.  Collectively, they were outstanding ambassadors for our country, college and university.  I am very proud of them and their efforts.  In many instances, because of the professional way they conducted themselves, they changed the perceptions of Chinese and Indians about Americans in a positive, productive way.  I felt honored to witness such an exchange and it made me feel optimistic about the future.

Some students found they really liked China and/or India. Some discovered they did not. Some students came to see China mainly as the factory of the world; others concluded it’s a market and/or both. I think many came to realize that with respect to India, nice roads and trains do not necessarily make a country — it is the people that make a country. As an example, during their off-the-clock free time, a number of the students went to a nice night club and witnessed Hindi, Punjabi and English music and songs being seamlessly played and connected, as the crowd danced with delight. For me, this is a true symbol and metaphor of India and its strength — the Indians adapt and are self sufficient, lack of infrastructure and all, and they make it happen and succeed, and all while not making a big deal out of their success. We just don’t see this happening as much, in my view, in the West.

Some of the innovators in our student group spotted tremendous business opportunities amidst the chaos of China and India; while some of the traditionalists in the group seemed flustered, stressed and/or intimidated by the chaos one finds in China and India. This trip was a great testing ground for for both subsets.

Sometimes students found that on a trip like this the plane or bus is on time and comfortable; other times not. Some tolerated the food and some even liked it (particularly in India!). Some discovered they could thrive in the difficult physical circumstances that China and India and international business presents; others found that mountain hard to climb.

There is no doubt that throughout this trip we saw ample anecdotal evidence to support Fareed Zakaria’s hypothesis and argument in his excellent, thoughtful, and recently published best selling book, The Post American World; to wit, that it’s not that the USA is in decline so everybody needs to sit back down and stop stressing out about that myth; it’s just that other countries like China and India are on their way up and we need to learn how to deal with it and partner with them.

The health of most held up, but some did become physically ill due to a cold, fever or the food.  I was very thankful nobody was quarantined as we entered mainland China.

All seemed to develop a deeper understanding and appreciation of the sacrifices that overseas employees and their families make when a firm sends them to make headway into a new market and the unique business opportunities that can be found for a forward leaning business thinker in a place like China and India in relation to the West.

We caught a break with the weather in China - it was not as hot as usual and the pollution was not nearly as bad as usual in Beijing. In India, it was fairly hot and humid, and it pushed each of us. We were also lucky in that in Bombay (Mumbai) it did not rain that much, even though it was/is monsoon season there.

The students also picked up several best business practices from the Chinese and Indians that they can bring back with them to the West (e.g., in China and India, the guest, client, etc. are king and attention to them matters; in India, they even have a saying relating to this point - “the guest in your house is a god”). They also caught a good glimpse of the type of people they need to hire who they can send and who can thrive in the markets of China and India, particularly if/when they conclude getting on said plane ride is not for them.

Most students appeared to be humbled and impressed by China and India and their people and talent; while some may return home skeptical; and a very small minority might even return home with a mistaken Western ethnocentric belief they are somehow smarter, better looking/prettier, or superior to the average Chinese or Indian national or manager who speaks broken English (and man, oh man, is this latter minority in for a wake up call someday).  All seemed to reach a deeper understanding of why China and India and the US need to work together to solve future geopolitical, business, societal and environmental problems. Should we elect to not partner with these countries and their peoples to solve the challenges of today and tomorrow, we do so at our peril.

Some students saw China and/or India as needing the USA for some time; while others concluded that China and/or India will in time throw down its crutches of needing the US, begin to walk on its own and in time run and be true contenders on the world stage, possibly even surpassing the US in the economic and geopolitical spotlight. Others described what they found in China, a communist country, as being full of pure, raw, unfettered capitalism at its best (and sometimes its worst); while others saw more of a mixture of a system made up of government monopolies that protects certain players and industries. Comparing “communist” China with hyper-democracy India was an outstanding learning experience. Most seemed to develop an appreciation that whether one likes China and/or India or not, an educated MBA and MS in Industrial Technology needs to better understand how they fit into the global value and supply chain.

In other words, everybody who made the effort had the opportunity to test their talents, beliefs, values, biases, egos and professionalism in some way, shape or form, and the trip was a microcosm of the real world that no textbook, case study or professor in a classroom can teach.

Most of the above are also some of the very types of issues, questions and items we had hoped students would grapple and struggle with when we started to plan this trip a year ago, and I do not believe for a minute that one can teach these types of lessons sitting and staying within the confines of comfortable Cal Poly and San Luis Obispo, California or even the United States for that matter.

I also encourage the readers of this blog to check out the reflective post-trip journal entries that I require each student to make, as over the next few weeks they will load that document onto their personal trip blogs you can/will find on the right hand column of this blog. Good managers and leaders take time to reflect on what they have learned, where they have been, and where they are going. Click and read away as their post trip reflections come in. Having said that, I have learned on this trip that the true power of their learning experience will likely not fully hit them for another year, maybe two or three.

These 32 Orfalea College of Business graduate students were provided with an on-the-ground opportunity to see, ask questions, experience and witness first hand some of the pros and cons of: (1) China — the world’s biggest start-up and turnaround; and (2) India — the tiger struggling to break free from its leash and at the same time finding that it is the very leash holding the proverbial tiger back.

We also had the opportunity to develop a deeper understanding of what globalization is all about and some of the challenges that will face the business firms and governments of tomorrow. Each of us was able to confirm and test some of our preconceived notions about business, capitalism, communism, China, hyper-democratic India, and themselves, and debunk others. These students should also now have the ability to understand and analyze, at a sophisticated and nuanced level, the next front page article they read about China and India and business that appears in the Wall Street Journal, Financial Times, New York Times, Business Week, The Economist, et al. and be able to understand why it’s a front page story and be able to separate fact from global legend and urban lore. This ability to do so will set these students apart from the average American and businessperson, and even most of our politicians, who blather on and on about China or India when they know nothing about it, they have never even been there to see these places for themselves, and/or they could not find said places on the map if their lives depended on it.

Of course, how, when and whether this group of future business leaders leverage the knowledge and experience gained through this trip during the next phase of their lives is up to them. At the Cal Poly Orfalea College of Business, I can represent we have done our best in this regard. I am confident they will make the best of it. This is a talented group of young men and women. They give me great hope for the future.

A big, big shout out and thank you to all who helped us on this trip. THANK YOU! Again, our firm visits this year were top notch and incredibly engaging.

As for me, I am bone tired and jet lagged. But a nice thing about this trip for me is that I always feel a deeper love for home — meaning the USA, SLO and my house and family — each time I return.  Traveling abroad for such a long period of time also, as the saying goes, “helps me remember who I sometimes forget to be”, and I am thankful for such a crash review and reminder course.  The next few weeks I plan to get away from work and spend time with my family. I also plan to take a break from China and India and blogging for the next month and I don’t plan to make many (possibly any!) posts during that time.

Until then, thanks again to this wonderful group of 32 students.  They made us proud at Cal Poly.  And they were a lot of fun to travel with.

Note:  To see/read Day 11-17, click on the ‘Previous Posts’ link below and keep reading.

Team Three:

Back on the road again after an eventful time in India. India was quite interesting, but I am glad to be moving on. The country was a whirl of energy, life, and color. Chaos embodied. It seemed to me on leaving that some things really haven’t progressed much from colonial times, with white foreigners coming to pillage cheap labor this time instead of silver and jewels. Still, according to many Indians foreign investment seems to have brought a better quality of life to many people. The British however used this excuse and in reality there are many, many more people who are desperately poor and don’t seem to be on the receiving end of India’s growth spurt. However as with many things this is a multifaceted issue… the perception of progress is in the eye of the beholder.

The Mumbai airport is slightly more polished than the one in Delhi, still there is much to be desired from the likes of a Hong Kong or Shanghai… no worse than LAX however. The flight is a turnaround and it is late. This means that it has not had much time to be cleaned and by the time we are nearing Hong Kong it is absolutely filthy. I was really impressed by the quality of the Indian domestic airline, Indigo, as opposed to an international carrier like Cathay Pacific, though for some reason Cathay enjoys quite a good reputation abroad. Unsure of why their flights to and from India are of a lower standard than the other routes.

We zipped through Hong Kong and somehow made our flight. I am really indebted to the strength of the small women who tirelessly struggle to push my wheel chair up and down so many ramps and through so many security checkpoints.

The flight to Shanghai was short and sweet. On arrival we were greeted by something out of Michael Crichton novel. A crew of technicians in full biohazard gear swept the plane, scanning each person with an infrared thermometer as they went. I feel the gods must have been pleased with us as somehow we passed the check even with the people in our group that were sick. After the initial screen, security and customs were a breeze, with everyone breathing a sigh of relief as we went. Shanghai airport rivals Hong Kong… I was really impressed. That and the 300km/hr MAGLEV train from the airport confirmed in my mind that China is the future. Shanghai makes LA look like an Omaha or Boise. The amount of lights and skyscrapers are amazing. We went for a tourist jaunt up to the 100th floor of the Financial Center from where we could see the glittering beauty of the city in all directions. I am happy to be in China, and my stomach is even happier. We ended the night with food from Sichuan, not extremely spicy Sichuan food, as everyone’s stomach was still a bit tender, however it tasted great nonetheless. The hotel is first class and bed after 30 plus hours on the road is an indescribable heaven.

Note:  To see/read Day 11-17, click on the ‘Previous Posts’ link below and keep reading.

Team Eight:

After a breakfast filled with omelets, hash browns, fresh fruit and fried noodles, we began our business tour in Shanghai with Best Buy. We met down in the lobby and all made the short five minute walk through the streets of Shanghai to Best Buy’s flagship store. We were greeted outside by Rich, a young, Minnesota born assistant general manager who came from Best Buy’s corporate office in the United States. Rich has been in Shanghai for about 15 months, facilitating the successful transfer of the Best Buy culture to China’s six stores. Upon walking in, the hundred or so employees were getting pumped up for the day and gave us a warm welcome with a big cheer. We toured through the four story building, noting some of the differences of the types of merchandise sold only in China such as a much bigger selection of home appliances such as high end refrigerators and electronic shavers. We noticed the prices of most of these items were of equal or higher price when we converted them from RMB to dollars. Rich explained that this is because the people that shop in Best Buy prefer the American brands such as HP and Apple which require import taxes rather than buying the cheaper Chinese brands commonly sold in the streets. We got a demo of their $100,000 media room with a Chinese film involving many drums and traditional dances all on high end video and sound equipment. The storage room at Best Buy was miniscule compared to those in the U.S. and the visit ended with a “Geek Squad” t-shirt given to all of us.

After our Best Buy visit we headed for a brief tour of local Subways. In April, Bill Chillingworth spoke to us about Dash Brand, a Shanghai based company the deals with the exclusive franchising of Subway chains. Bill spoke to us about how the business grew from an initial meeting with his Australian business partner with the exclusive rights to Subway in Shanghai. Dash Brand has used the exclusive rights to build a successful company. Our first Subway visit was located at the entry to a Carrefour Hypermart. We were introduced to Dave and were immediately appreciative of how courteous and welcoming he was. We also met Kurt, the gentleman who heads the Subway stores. The Subway restaurant was incredibly similar to an American store. We did not find culture specific menu items like we saw in India. The Subway facility was small, but was very clean. The employees were polite, efficient, and respectful. The food quality rivaled anything we would have received in the United States. After lunch we visited a second facility for Q&A with Dave and Kurt regarding Subway and Shanghai. The common theme of our discussion was that customer service remains Subways most valuable asset. Dave also discussed Subway’s biggest challenges which include the perception of cold sandwiches and finding profitable locations. We finished our Subway tour with a final stop at the wildly successful Subway restaurant located near Nanjing Lu.

From Subway, we bussed to an online school where Dr. Carsten Ulrich talked to us how he was developing programs and courses which help students to learn remotely. Since most students do not have money to take time off from work to become a full-time student, there is a great need for remote education. I said in some of the basic courses he will sometimes have 2,300+ students enrolled! Though online classes are a great way to obtain education in China while still being able to work full time, the quality of education suffers. Dr. Ulrich admitted that one of the problems with online education is the quality of graduates it produces. Some of the most prestigious colleges in China have shut down their online programs for this very reason and to protect the value of their degree. After a short Q&A session, Ms. Chen talked to us about opportunities with venture capitalists in China. The recommendations and suggestions that were given to us by the VC seemed very similar to ones in the United States, by stressing that it is all about the people when choosing a specific investment. Ideas are a dime a dozen but a good team is difficult to build. In addition she stressed that China is continually moving away from foreign investors and is continually trying to improve its local investment base and investment companies. This provided an interesting view into the Chinese business investing and views that they are slowly trying to wean themselves from being dependent upon foreign money and talent and instead held from within by China’s own people and money.

After leaving the school we returned to the hotel to freshen up and get ready for our China welcome dinner at a local place named Yakshi. Here we were able to encounter another side of the Chinese business culture. After the business meetings people usually go out for dinner to enjoy each other’s company and to seal the deal over a glass of bijou. The glass had a very good time meeting with other local expats and businessmen. It was a very eye opening and fun experience into a side of business rarely done in the United States. In the American culture usually the deal is finished at the conference table or inside the building. In China however as we were continually learning business deals are much more of a flowing and evolving friendship requiring time and effort. And, as in the case of our time at Yakshi, it also involves a bit of “wining and dining” as well.

Team Five:

We all slept in after a hard night of networking the night before. Today we spent most of the day shopping at the Yu Yuan Gardens and Temple. It was a large network of alleys and courtyards with shops lining all sides. Many of us started the day by looking at cheap shoes; most could be purchased for under $5 after some negotiating. Many of them were what seemed to be name brand shoes, but who knows if any of them really were authentic.

Nick C. and Jimmy S. seemed to have a lucky find when a North Face jacket caught their eyes sticking out of one of the clothing shops. They claim the prices started at RMB 850 and that they were able to negotiate it down to RMB 175. Sounds like they used what Dr. Peach taught them in their negotiations class. It took them 20 minutes, and both seemed extremely happy with their purchase. The two negotiators did not stop there though.

They both tried to purchase some new suitcases, which worked out for Jimmy, but not so well for Nick. From There the two were bombarded with people trying to sell watches. Our classmates made the mistake of giving these watch sellers 2 minutes of their time. The watch sellers decided to take 20 minutes and were even dropping their prices without reason. Too bad they had really poor quality watches or else they might have made a sale.

Another highlight of the day was purchasing some soft serve ice cream for a few RMB. It was an extremely hot day and it was well received. We also saw some stray dogs and some other poorer Chinese people. It was a little sad, and some classmates couldn’t fight the urge to give a few coins to the locals. The streets were not too dirty, and we did see some government workers sweeping streets and cleaning it up. We also saw some dogs getting haircuts and baths. It was a very interesting environment and there were rumors about the whole operation having ties to some type of mafia. No one knows if any these rumors have any truth backing them.

Probably the most memorable story came from a group of classmates that had the opportunity to see a pearl shop. Upon entering the shop, they were treated to a show of the worker opening up an oyster to show us how they extract the pearls and how many pearls are actually in each oyster. The oyster that this group saw had 34 pearls inside and each Cal Poly student in this group received one as a souvenir. After watching this presentation many of the students in the group took advantage of the cheap prices and purchased some pearls as gifts for family members and girlfriends. The pearls seemed very beautiful and seemed to be very cheap. They seemed to be about 20% of what the same necklace would cost in a retail shop in the United States. Some of the more entrepreneurial students toyed with the notion of importing these pearls and selling them in the States. Hopefully they learned enough at Cal Poly to make it successful.

After walking around the Yu Yuan Gardens and Temple we bused over to the Bund, a local shopping and restaurant area. We wanted to get a view of the big city and take a few boat tours, but were disappointed when we found out that there was major construction at the place we were dropped off. So instead we walked to the People’s Square and ate some authentic Chinese food with our hosts Matt and Rich. They told us stories and gave us more insight about China. After Dinner we walked around the People’s Square, looked at shops, took a few pictures, got some ice-cream, and learned more from Matt and Rich. Then we walked back to the bus and took the bus home for the night.

Team Two:

After an early breakfast we got into the arduous rhythm of the day ahead of us, leaving downtown’s comforts to go to the city’s outskirts, where most of the factories are located. To our surprise, the streets appeared desolate. It’s probable that most of the population was working at the time. Not knowing what to expect for the long day ahead of us, but looking forward to our first visit, we were excited to receive a very warm welcome by the first company’s entire management team.

The congenial atmosphere – combined with the high level of interaction that we were allowed to have with both the staff and the company’s advanced packaging machines – made our visit one of the most memorable thus far. That should not have come as a surprise since we did our part in taking care of the details before visiting, and the company was well prepared for us as well.

We concluded after spending a couple of hours that went by too quickly, but we had more companies to visit. So we rushed into the parking lot, took several pictures under the cloudy, gray Chinese sky and climbed into our bus. The ride was highlighted by a strong downpour that turned the sky a clear navy blue.

Our next tour was very special since it was led by two graduates from our very own program who found jobs working and living in China. We visited their company, and the tour took us through a typical electronics manufacturing factory, where we ate lunch with the workers and met with their team. For many of us, this was a very insightful visit, since it showed us what two Cal Poly graduates were capable of and how their MBAs had prepared them for the “real world,” even if that real world was on the other side of the planet. Both of these graduates had completed their MBAs the year before, and it was impressive to see them in action after only a year in their jobs. Both talked with us at length about their positions, what it was like to live and work in China, and their successes and drawbacks in the process of moving overseas. Our time with our fellow alumni made many of us current students consider an overseas career much more carefully.

We were then fortunate enough to visit the headquarters of the industrial park that unknowingly we had been in a most of the day. I guarantee that all of our perceptions of an industrial park were turned upside down with this fascinating visit. This “industrial” park included an international science and cultural center, high speed rail, mammoth sized lakes, and housing for over one million people. Parks like these show an important window on China’s reform and to their opening up to international cooperation. Impressively, this industrial park was already housing over 100 Fortune 500 companies.

After our tour, we went to a European hypermarket chain that has made impressive China inroads. The retailer’s strategy was to approach provincial government officials and ensure them of their intent to hire locals and source goods locally (as well as bring in tax revenues). The strategy has paid off handsomely – the retailer now operates over 100 locations despite being levied a hefty fine for having sidestepped Beijing.

But our hypermarket trip was less business and more shopping. We skipped the department stores and stocked up on food for our overnight train ride to Beijing. The supermarket had some exotic offerings – from live turtles to squid jerky. Most students took the ordinary route, opting for instant noodles, chips and cookies. There were a few that ventured into the local produce and deli sections. They might not have been sure of what they ordered, but they loved the taste and the cheap prices.

Next, the group arrived at a packed station lugging luggage and groceries. We boarded the train and were four to a cabin. We spent a while sharing drinks and food in the corridors before calling it a night. Half of us really enjoyed the experience, half weren’t as keen – but the fact remains, the majority of Chinese travel by train, and it was an important cultural and learning experience.

Submitted by: James McMillan

Professor Carr Addendum and Intro to James’ Post: This is a post I asked James to make as a follow up to his earlier post, It’s Called Days Inn in China But It’s Nothing Like It, and For Good Reason (see also the comment thread). (Thank you James, for doing so and for taking the time.) As the below shows, we have found that finding a hotel in India that can accommodate a group of our size is a challenge. Rates are very high, which in turns impacts the price you pay for the trip. Moreover, the current hotel market there tends to be very high end (we can’t afford) or very low end (you will not want to stay there), with not much in between to choose from (our challenge to find and compete to get). Step back and think of this — a country of 1.3 billion plus people, with a hotel room supply of roughly only 105,000. My memory is that China has roughly 1.1 million hotel rooms in the country (see below for James’ US figures — roughly 4.4 million; we are a developed economy with money for fun and travel, while China and India are developing economies and emerging markets with much less money). Please be aware of this planning and business issue and constraint, and, business opportunity, as James touches on below. By the way, there are some very good and understandable macro reasons for this hotel market and supply condition in India and my memory is that your Khana book, Billions of Entrepreneurs, also has a nice chapter (Chapter 4 as I remember — “Fiat and Fairness”) re: how and why real estate development projects can be a challenge to launch, complete and make any money on in India. Be sure to read and think of this post and business environment issue as you read that chapter and as we travel in India and China. Also keep in mind that one (not the only) reason China has more rooms is that it has boatloads of peasants looking for work from rural villages who will work for cheap (in comparison to US wages, that is). The CCP in China is also operating more from a “build and they will come” mindset on the hotel issue. One model is not better than the other, they are just both different.

James’ Post:

>Did you know there are only about 105,000 hotel rooms in all of India while the US has about 4.4 million? If that’s not shocking enough consider that New York alone has about 110,000 rooms and Shanghai has about 135,000. Is it any shock to you that the prices for basic rooms in India are through the roof? With India having almost 4 times our population, why do you think such a disparity exists and why are the business men in India not capitalizing on such obvious demand?

According to some hotel executives, the blame can be placed on the government for not revising decades-old laws that limit the amount of land for sale which obviously drives up the prices. The Indian Railways has vast land holdings that could easily be converted into track-side hotels but at the moment they are just not willing to give these up. According to the Taj group of hotels, a chain with 7,000 rooms in India, the price of purchasing land at an auction is often just too high to make building a hotel financially viable.

For comparison purposes, a similar quality room in Delhi cost on average $187 versus $122 in Beijing. With India already struggling with infrastructure problems it?s no wonder that hotel room shortages and high prices are at the root of India?s lagging tourism industry. In 2005, New York attracted 6.8 million foreign tourists while India only had 3.9 million. This resulted in $22.8 billion for New York and only $6.7 billion for India. To put these numbers in perspective that translates into about $2,850 per New York resident as compared to $6 per India resident.

Fortunately, there seems to be some progress for the hotel business in India but they definitely have their work cut out for them. It is expected that there will be about $6.5 billion invested in hotel building which will allow for approximately 140,000 new hotel rooms to be built by 2010. Some of the hotels expanding into India are some of the worlds best know names (Hilton, Wyndam, Pan Pacific, etc.) that are all recognizing the huge potential.

So before these big corporate hotel companies come in and dominate the market, who?s down to take on the Indian government and start building some hotel chains? It sounds like if the political front could be worked properly, sky’s the limit!

A number of the good, attractive and ‘higher caliber’ and higher visibility trade shows in China often take place in October and April. In China, trade shows are a much, much more prominent marketing and promotion channel than in the US.

One of the drawbacks of the timing of our annual MBA trip to China/India is that it takes place in June/July. Hey, we can’t see and do it all; yet perhaps this year we will get lucky while in the Shanghai area and be able to see one (but I can’t guarantee it as I don’t get to determine when decent trade shows do/do not take place in the Shanghai area!).

When that day comes when you have the opportunity to attend a trade show in Asia, you MUST grab that opportunity, and the following articles are must watches and reads:

YouTube Video on China Sourcing Fair

For a nice searchable examples for worldwide trade shows, click on Global Sources and Global Sources Trade Show Center

Five Tips for Getting the Most out of Exhibiting at Trade Shows

Visiting a China Trade Show

Getting the Most out of a Trade Show Visit in Asia

Selecting the Right Trade Show for Your Needs

What Happens After Your Trade Show Visit?

This video and these articles made me want to go into sales … almost.

Thanks to Dan Harris at the China Law Blog for this lead.

Last year we rode the maglev train in Shanghai to get to the airport. Students loved the whiz bang of the thing. Click HERE to see a post on The Little Red Blog and the the latest internet video on the maglev and its speed. We will try to ride it again this year (can’t guarantee it; always depends on schedule, time we have, routes we take, budget, etc.)

Question that relates to your coursework (e.g., economics), politics and infrastructure development:

Which came first in China, infrastructure development followed by foreign investment attracted by that development, or, more open/liberal economic policies (translation: “pro business policies”) which in turn attracted foreign investment and THEN followed by infrastructure development? Let’s see how deep your understanding of facts, history, business and economics go …

Day 7 – Suzhou to Shanghai

We arrived in Suzhou by train at 6:30 AM and promptly packed our things into our bags, clearing out of the sleeper cars. The walk through the train station was quite a challenge as we maneuvered up and down sets of stairs. We met our new bus driver and headed out to the Lotus Gardens. Suzhou is known as the Venice of the East due to its numerous canals and while the many waterways do add to the uniqueness of the city, the real beauty lies in Suzhou’s gardens. We walked through the gardens for an hour and then met to take a boat ride along the canals. What we thought was going to be a tour of the canals ended up being a 100 yard journey, but luckily the driver sang for us so we didn’t feel cheated out of our money. The short boat ride gave us extra time to spend before we needed to be at our firm visit, so we stopped and walked through a local farmer’s market. The sights and smells were enough to overwhelm many in the group. Live chickens, ducks, fish, crawdads, and frogs were all throughout the meat section. Vegetables and spices of all kinds could also be found throughout each of the many isles of the market. We were greeted by surprised but welcoming faces from each of the vendors and we often heard “hello” or “how are you”. There was a little bakery that sold muffins which ended up being breakfast for the entire group as we got back on the bus to head to the Suzhou Industrial Park.

Our first firm visit was to the China-Singapore Suzhou Industrial Park. The Industrial Park is huge development with 74 Fortune 500 companies, over 100 R&D organizations, commercial and residential space and much more.  Our host gave a presentation that detailed the history of the park and the plans for future developments. He discussed two important economic areas, the Coastal Economic Belt and the Yangtze River Economic Delta, which conveniently intersect near the park.  Our host’s specialty is working with companies to get through what can be a very challenging regulatory environment in China, so his insight was quite valuable. After listening to his presentation and the discussion afterwards, it was clear that China is still interested in high growth. But this growth is no longer at any cost since there are now strict environmental regulations to be able to develop in the Suzhou Industrial Park. After a group picture with our host, we were on our way to our next firm visit, a short bus ride away.

Our next stop was Hip Fung Electronics, an electronics manufacturing service. We were lucky enough to know top management at Hip Fung from a family connection in our MBA class. They organized a wonderful visit which included a presentation, fed us lunch, and provided us a tour of the factory. The presentation detailed the history of the company and which actions have helped to increase Hip Fung’s success. It was interesting to note that once Hip Fung switched to a high mix low volume strategy, they became much more successful. We took this as another example of why lean manufacturing is so important and will only continue to become more popular. The lunch we ate was the same meal that factory workers are served each day and it was quite delicious. After a banana for dessert and the brightest lime anti-static outfits ever, we entered the factory for a tour. One of the first things we noticed was the absence of men on the assembly line floor. Women’s smaller and more nimble hands allow them to be superior at the intricate tasks required for electronics assembly. The factory was clean, organized, and appeared to have great working conditions. A few people in our group were allowed to go see the dormitories where the factory workers live. While the building was minimalist and workers slept six to a room on thin padded wood frames, the general sentiment was that the living conditions were better than expected and were very clean and well kept.

The next factory we visited was Positec, a manufacturer of machine tools and the popular Worx line. We toured both the showroom and factory and were impressed by the massive injection molding systems used to make their products. We left Positec to go visit Plantronics where we watched a presentation about the unique culture of the firm and then toured the factory. The factory had a similar look and feel to that of Hip Fung but on a larger scale and was a LEED certified campus. Plantronics had their complete service chain located in-house and maintained a strong focus on employee total well-being.

After our final visit of the day at Plantronics, we headed to the nearby McDonald’s for people to get food and bring on the bus so that we could arrive at a decent hour in Shanghai. Barely into our journey, the traffic on the freeway stopped completely. The bus driver thought it was better to avoid the traffic so he turned around in the middle of the freeway and drove off the on-ramp. After a few games of “chicken” where our bus ultimately won, we were back on a different road heading to Shanghai. We often hear Chinese people described as adaptive and flexible. This was first hand experience of that phenomenon.

Today provided our first look into the highly-used reference of China as the “factory of the world.” It was quite impressive to see the various scales and technical capacities that the companies operate at. We watched the nimble hands on the production line assemble products that will be on the shelves of retail stores when we return—and it provided that connection in the product life-cycle between production and consumption. While this might not have been a representative sample of the manufacturing facilities in China, the company visits reinforced the idea that this is good for the people. The workers work and live comfortably, and retain an image of pride and happiness.

Daybreak

This morning found us ensconced in our rooms at the Jian Gong Jin Jiang Hotel enjoying a late morning to help recuperate from the busy day prior. The breakfast here is more traditional Chinese fare with dim sum, rice, and chicken included in your am options. With ample time to explore the city, groups of students fanned out to learn more about Shanghai.

Free Time

The nearest subway station is the Hengshan Road station. Some members of our team ventured across town to a market similar to the Silk Street Market in Beijing. Many of the negotiating tactics used by the merchants at the Silk Market were in evidence here, but some new tactics were also observed. Some watch and purse sellers would invite you to a “secret” room located behind their shop where you were lead to believe that better goods were available. Another common tactic here was to offer two different qualities of the same product (poor and best). This attempt to match products with customer desires, and pocket books is representative of the overtly capitalistic tendencies of Chinese business.

In China, everything is negotiable. A price may change from minute to minute, day to day, or from one sentence to the next. Some students observed situations where the price on water went up after other students who arrived earlier lowered the vendor’s supply of water. In other cases, prices dropped dramatically when the customer walked away from a sale. Buying cheap, fake goods may not sound like much of a business lesson, but negotiating in Chinese markets is invaluable experience for American’s like ourselves who have little experience in negotiating price.

Many students also found their way to the Shanghai Urban Planning Exhibition Center. For the Architecture undergrads, this was a chance to peer, and point, and photograph the largest urban planning model in the world (over 600sqm). If you’ve ever seen the “Archies” out on Dexter Lawn at Cal Poly with their models, this is a bit like that, but on an absurd scale. In China, even the models of things are big.

Shanghai Live Market

To contrast the difference in food between tier 1 and tier 2 cities, our first group stop this day was at a live market near the hotel in Shanghai. This market was similar to the one visited in Suzhou, but exhibited a higher standard of cleanliness. The floors were not clean, but they were not awash in effluence as we saw in Suzhou. The smells were strong, but not overwhelming. As always, the storekeepers were friendly - smiling and perhaps amused at our cameras. It’s easy to look at these markets and think “gross” but the food is undeniably fresh. It’s not what we are used to, but you could assemble a very nice dinner from the items available at these markets.

Yuyan Garden/Temple

Our second group stop of the day was at the Yuyan Garden/Temple, located on the outside bend of the Huangpu River adjacent the famous Bund. The road to the Temple was a gauntlet of street merchants. The sheer numbers of people selling goods with the smallest of values is hard to understand, but is important to remember that China the supply of people ready and able to work is high. So where the smallest of demands for human labor exist, it would seem that workers are ready to meet it. A hotel will have people endlessly sweeping the floors and wiping the windows. A park will have security guards standing under umbrellas in what seems like unreasonable numbers, and here at the bund there are hundreds of people working the streets to make a few Yuan. What we would perceive as a glut of labor is not a glut here. Supply and demand.

The temple was similar to the gardens in Suzhou. Traditional buildings, rock work, and lions standing guard at the entrances. The Xianmingju Teahouse was devoted to the drinking of tea, and the benefits of doing so. Mark at the Hutong in Beijing discussed the importance of tea drinking in Chinese culture, and the temple helped demonstrate the longevity of the tradition. In all honesty however, the purpose of the Temple seemed to be commercial. There were thousands of people in the surrounding shops and markets, but few willing to spend a few RMB to visit the historical site.

The Bund

We traveled a short mile or so down the road to a drop off adjacent the Huangpu river for photos and to forage for dinner. Dr. Carr discussed the history of the area, the details of the French Concession (and hence the French architecture here) and the fact that communism was founded in Shanghai. Chinese flags snapped in the breeze over every building here.

The view here is a stunner, and our collective cameras fired with enthusiasm. Under the splendor of these magnificent buildings, the river sulked and rolled in a polluted broth. Many views are contrasting in China and this was no exception. Splendor mixed with squalor. Shine mixed with smudges. Look up and you see some of the most amazing buildings in the world. Look down and you see a price that was paid. The Bund is an amazing place, but it was sad to see the river flowing past.

On past the waterfront we broke off in to smaller groups and found something to eat. Some of us headed to the 47th floor of the Radisson to the Sky Dome Bar. A Tsing Tao will run you about $9 U.S. here. Yet another example of how location and timing influences price. LED lighting is widely used on the skyscrapers here and it presents an amazing effect at night. Perhaps this architectural trend will become more prevalent in the U.S. when some of our architecture undergrads get back from this trip. We hoofed it back to the bus by 9pm.

There’s Your Sign

In marketing, we talk about doing business overseas and making sure to avoid cultural snafus. Kaiser Kuo drove this lesson home when he lectured us in Beijing about the speed with which a brand can be trampled online in China if it is perceived in a negative way. On the flip side, we observed some truly amusing signs (in English) here that bear mentioning. Consider the following:

A business advertises in large letters above it’s store “Keep Moving”

A restaurant hangs a sign that says “The World Famous Home of the Famous”

A wig shop advertises “The real hair false hair specializes in selling”

A t-shirt reads “You, Ms Lee you you how much un”

We chuckle, but there is a lesson here. If you are trying to make money selling to a language that you do not speak - check your grammar. Then check it again. Now pause, before you print your ad and check it one more time just to be sure. We have no doubt that equally embarrassing mistakes are made every day by U.S. companies trying to get their slice of the China pie.

After Hours

There are small details during a life on the road that make all the difference. Several of us walked across the street from the hotel to the Jin Chen barber shop for a haircut or a shampoo. For about $7 U.S. you can get a head massage and shampoo, haircut, and rinse. It’s a 45 minute process. The folks here are pros, and the haircut may help you in your efforts to “go native” with a Chinese doo. Mr. King is the manager, and he has no qualms about staying open an extra half hour to get you taken care of. Hot weather in India is coming soon and we will be working there with cooler heads now.