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

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

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

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

What opportunities can YOU spot to jump in on to make a living and make the world a better place as capital, labor and investment moves around the world, as these businesspeople have done?

Post Submitted By Chuck Rylant:

Today I noticed an anonymous comment on my blog that appeared to be a spam advertisement for a book entitled The World is Flat? (Spam advertising on a blog is creative advertising I must admit.) The book written by Aronica and Ramdoo criticizes Friedman’s bestseller The World is Flat. Friedman’s book title does not include the question mark.

The spam advertisement directs the reader to a thirteen minute video that criticizes Friedman’s book. Part of that criticism is that Friedman speaks positively about globalization while ignoring companies that “exploit cheap labor in China, India and beyond.” Those who have read, or will read, The World is Flat by Friedman will find the video clip particularly interesting.

This topic raises many questions, some of which have been debated already, but are worthy of discussion. Do you think that corporations are “exploiting” labor in China or do they provide improved working conditions and jobs for otherwise unemployed people? Another question I have considered is whether it is the responsibility of U.S. companies to monitor the working conditions of employees working in China? Many U.S. companies have received criticism because of the working conditions in companies that are Chinese owned, but sell products to the U.S. companies.

I will try to get you to a port facility in China (in Guangzhou, Shenzhen or Shanghai). Visiting such a facility is important because it will help you see the scope of what China exports, especially to California. Also, this is an important part of the supply chain that you need to see, feel and smell as an MBA student — goods just don’t magically appear on the shelf at Wal-Mart, Target and RiteAid.

Click HERE where you can view an image to get a feel for how many port facilities China has, both inland and along it’s eastern border and coast.  Unlike the US, water transport is still a big deal and huge industry in China.

Professor Carr Update: See this related article in the Wall Street Journal, Global Shippers Play Catch-Up In The Information Age. Much in this article relates to what you study in your MIS class, and, you will all study in your Operations course.

Again, I will try go get you into a port facility in China.   Seeing one of those super-sized cargo ships up close alone makes a visit to a port worth the time and effort.

Whether you intend to or realize it or not, most of you going on this trip will one day do business in/with Asia, whether you live there or even if you stay in California.

Rarely will anyone say this openly, but there is a perception among a number of Western businesspeople (not all, of course), including the purported more open minded and “progressive” ones from California, that the Chinese “lie, cheat and steal.”

It is not my role or place tell anyone what to feel or believe. That is up to them to decide, and we all have to deal with those consequences of our beliefs (and the missed opportunities that may go with it), particularly if we are silly enough to make such a statement in public.

Before I open this can of worms, let me make clear from that outset that I am not the “source” of this perception. Nor do I believe it. I merely report what the perception by some is as I have heard it over and over from a number of people. So don’t shoot the messenger. At first blush it seems to me that such a statement or belief, is off-base, it shows a lack of life and business experience, a lack of critical thinking skills, the inability to determine good data from bad, is an over-generalization, etc. I hope we can all agree on that. Moreover, God knows that we have each certainly seen our fair share of Americans who “lie, cheat, and steal”. No country or ethnic group in the world has the monopoly on this, in my view.

Having said the above, one of the things that surprised me with respect to one MBA trip to China is that I think a few students (not all) appear to have returned from China with “some” impression that “you can’t trust the Chinese; they lie, cheat and steal”. When I saw this, I realized that as a professor and college we had missed the mark in some of the pre-trip planning and even during the trip itself by not giving students several “lenses” from which they might analyze and think about this issue before they jumped to such a conclusion. (I am also not sure how one can reach such a conclusion after spending only 10 days or so in any country.)

So, to that end, check out the following recent posts on this very topic: one from the Useless Tree blog (here) and one from the China Hearsay blog (here).  I enjoyed reading these posts and in particular their discussion threads. I learned something new, and I have thought a lot about this issue the past few years.

Any conversation about culture often gets heated (nothing wrong with that), and these posts are no different but the comments do show how complex this issue is to look at and analyze. This information and input from these various people will help better prepare you for what you will see in China.

And after you read these posts, come back here and discuss what these posts and their discussion threads teach you about Asia, China, culture and how it is shaped and perceived, our upcoming trip, and yourself?

And what, in a society, shapes “culture” and business conduct? For example, does the standard of living in a country lead to its culture, or does culture lead to a countries standard of living? (Economic scholars have some interesting things to say about this question; e.g., here is a recent SSRN paper of possible interest you can download for free (”Does Culture Affect Economic Outcomes?”), which relates to this discussion). See also the March 27, 2006 related discussion thread on this blog called “The Role of Women in Chinese Economic Activity“ — students had some interesting things to say on this sub-issue.

Which is more important for you and your future — to understand a culture and look at what forms the behavior at issue, or, to understand how a culture is expressed by those who practice it? Discuss and defend your position.

My experience is that the Chinese have their own sterotypes of Americans — what/how do you think they see us and our culture (in general)? How, in a business transaction, might you take advantage of their stereotypes about you, and is your doing so “lying, cheating, stealing”, just in a different form?

For example, once you see how cheaply a pair of women’s high end brand name dress shoes cost to make in China and how much they are in turn sold for by US retailers to the US consumer, let’s go for a cup of coffee and you can try to convince me that such price gouging by the US retailer … err, I mean what retailers euphemistically call their “markup”, is not “stealing” from the consumers. And yes, blah, blah, blah, I know and appreciate that we all go like sheep to slaughter and pay it, but does that make such business conduct the right thing to do? It may very well be acceptable to do, but I want you/us to at least ask that question.

(I appreciate that you will likely better be able to answer this latter question after we visit English Corner).

Great sessions today with Dr. Whitaker! When you see him on campus or in town, be sure to thank him for his time. See also this recent related Wall Street Journal article that appeared, A Small Firm Takes on Chinese Pirates.

I want you to put yourself in his shoes trying to make a “pitch” to a government official in China to move forward with and support one of their “block and knock” raids. What would be your talking points? In thinking this over, also remember Dr. Morris’ history talk on resistance in China to giving the West another chance to carve it up like a melon — what things would you touch on and/or try to avoid in your pitch to this Chinese government official to convince him/her move forward and help you against one of their own countrymen? For those of you reading James McGregor’s, One Billion Customers, as a hint and for some ideas, be sure to check out Chapter 4 in his book (Dancing with the Dinosaurs).

Also, I want you to give some thought to why IP violations in China are so difficult for the Chinese government to deal with and shut down. Why is this the case? What are the political, economic and social barriers to China doing so? (Here, don’t focus on the Confucian reason often given by the West of “it’s a complement to be copied” — rather, focus on the possible political, economic and social constraints. I think the Conufucian reason stated by many Westerners is a red herring because Confucianism really states the the complete man/women emulates behavior of high moral integrity and character and I am not sure that copying someone else’s work fits that bill).

Finally, for those who also had the good fortune to be in Dr. Anderson’s class and hear Dr. Whitaker talk about lobbying, you were able to see a facet of the cold, harsh reality and landscape of American politics and our system. While in China, when we visit an English Corner, you will likely be asked by one of the locals whether you think the US or Chinese “system” is better. Most of Americans will say, “the US, of course”, but then you will be asked why. If you then give the normal American easy out answer of “we have more freedom” they will push you on that, and then ask “what is freedom?” and “what makes you think we don’t have that (freedom) in China”? What will you tell them in response to both questions that is credible, true, and sincere? Relatedly, an American who has lived in China (Hangzhou) for the last 5 years, Mark Jones, has also done a lengthy, very insightful and thought-provoking peace on freedom, governance and the development of a civil society in China that I would encourage you to read. Though I may not agree with all of his points and a few things he mentions do not match up with my own experience in China, I still thought he made some great points that have caused me to rethink some of my own perceptions and biases re: China and the West. What he writes will also help get you inside the head of the Chinese and better see and undertand how they see the world (including the US) and certain issues (and many thanks to the China Law Blog for bringing my attention to this post by Mark Jones).

If you are interested in hosting a viewing of this show with your classmates at your house, below please add your comment re: the when, where, what to bring, how to RSVP, etc.  Let’s get these going and start to build our foundation for China!!

Please give the below issues and questions some thought as you watch the show, and, then return to this blog post to respond to at least one or two of them (or an item that stood out in your own mind about the show) as required by the syllabus.

1.  One thing that struck me while watching this feature was that a number of the Chinese citizens interviewed spoke of the perceived limitless opportunities that China now offers (many of) its people (admittedly not all).  Yet many Americans seem to believe that most Chinese people are in a constant state of repression.  Even though you have yet to travel there, who do you agree with (at this point in time and your life) and why? 

(In my own travels in China, most of the people I have met are quite proud of their country, content with their lives and optimistic about their future.  I am curious what you think.  See related post on this issue from the Diligence China blog.)

2.  Why do the Chinese elite concur with the government’s “go-slow” reform policy of “crossing the river by feeling for stones“? 

In the show, a wealthy banker talks about how this policy, first coined by Deng Xiaoping in the late 1970s and early 1980s in referring to China’s step-by-step liberalization, makes sense for China.  Do you think the urban elite of China concur with this not because they feel compelled to do so by the government, but because this policy has, at least so far, served them so well?  

Will China be plunged another one of its nightmares of political instability and revolution and dynasty overthrow if the current Communist government loses the tacit support of the Chinese elite (this is also why you need to read a good history on China to learn about how one thing people liked about the Communists was that they at least brought some desired stability to the country after years of turmoil, abuse and corruption by the Nationalists and most people again had food on their tables)?

3.  What character/person in the show would you most like to meet and have dinner with in China, and why?

4.  Though China is not yet a country that is built on the “rule of law” to the extent the US is, it appears to becoming more so each day (see, e.g., this related post from the China Law Blog), and the people are more and more turning to China’s courts to address their legal problems.  These courts do not always rule fairly, but they apparently rule fairly enough for the people to generally believe in and support them.  Do you agree or disagree?

5.  When you see poor uneducated people in Chinese factories create the things you and I buy on the cheap at Wal-Mart, Ride Aid or Target, it may make you feel sad and/or angry and/or disillusioned.  If so, how do or will you reconcile those feelings with your purchases of such products?   What plans do you have to change your purchasing habits, if any?  Do you help or hurt these workers by purchasing such prodcuts? 

Relatedly, upon seeing these types of factories, I commonly see foreigners jump to the quick and easy conclusion that such workers are abused and/or suffering.  That may be, but what additional facts, other than visiting these factories (which we will do), do you/would you need to conduct a thoughtful analysis and come to a conclusion re: where the “truth” is in this complex debate?

6.  Re: the extensive environmental pollution you saw in the feature, many of my friends in China argue that the US/the West is in no position to lecture them on such an issue given what we did to the environment only a century ago when we industrialized as a nation (I even remember as a kid in the 1970s watching on television some American rivers burning, yes, that’s right, burning!, due to their heavy chemical and polluted content).   How do you feel about this issue, who do you agree with, and why? 

Relatedly, why is China and whether it gets issues of sustainability and wise enviromental policy right so important to all of us, the rest of the world and our respective futures?  What can you do to help?  

If you were a consultant working in China on such issues, what “course corrections” or American “best practices” would you recommend to the Chinese that they could realistically and politically adopt and execute?   See also this related and interesting post from Thomas Barnett’s blog (this this one too) — Barnett has written some great stuff on China (what I like about him is that he is not afraid to go against the proverbial tide).  He seems to truly understand world politics and he also understands how countries develop.  He argues (controversially, of course) that before enviromental awareness and sophistication of a society and country can kick in, you must run the unpopular gauntlet of development and the heavy pollution that goes along with it, and that the sooner and more quickly you can move a country into developed country status (China is not yet there) the better chance you have of raising (faster) overall societal interest in environmental issues and sustainability.  See also the related Stewart Brand “The Long Now” post on this blog.  What are the strengths and weaknesses of his argument?

7.  Per Dr. Morris’ November 3 Chinese history session with us, has the CBC, with its title of China “Rises” missed the mark in how it views and reads China (along with those book authors whose title may go along the lines of China “Wakes”). 

I.e., would a more historically accurate title for this CBC show be “China Is Quickly Moving Back To Where It Sees Its Proper Place In The World”?

Check out these Part I and Part II posts on wine in China from the China Law Blog.  Given that we live and work in the middle of California wine country, the following are some of the questions raised by this post that relate to our trip:

1.  Why, and you will see this when we are in China, do you see so much French and Australian (grape) wine in places like Carre Fours, local wine shops and restaurants in China, and such a small California wine presence (including by the Napa wineries)?

2.  What opportunities are presented by the Chinese market for California wineries, and what might they do to better meet the needs of that market in the future?

3.  If wineries in China are starting to take off per the articles in the ChinaLawBlog post, is there an uptapped market in the US for Chinese wine (e.g., isn’t there a business opportunity for someone who can sell Chinese wine to Chinese restaurants in the US)?

As I noted in an earlier post a good friend recently turned me on to The Long Now Foundation which hopes to provide a counterpoint to today’s “faster/cheaper” mind set and promote “slower/better” thinking. Last week it offered free seminar in San Francisco by Orville Schell, Dean of the Graduate School of Journalism at UC Berkeley titled, ”China Thinks Long-Term, But Can It Re-Learn To Act Long-Term?.” I was not able to attend, but my friend was. I am excited to listen to the actual pod cast once they post it (November 1 edit:  it has now been posted!). Below is the synopsis of his presentation that my friend emailed to me.

“China is the most unresolved nation of consequence in the world,” Orville Schell began. It is defined by its massive contradictions. And by its massiveness — China’s population is estimated to be 1.25 to 1.3 billion; the margin of error in the estimate is greater than the population of France. It has 160 cities with a population over one million (the US has 49). It has the world’s largest standing army. No society in the world has more millennia in its history, and for most of that history China looked back. Then in the 20th century the old dynastic cycles were replaced by one social cancellation after another until 1949, when Mao set the country toward the vast futuristic vision of Communism. That “mad experiment” ended with Deng Xiaoping’s effective counter-revolution in the 1980s, which unleashed a new totalistic belief, this time in the market.So what you have now is a society sick of grand visions, in search of another way to be, focussed on the very near term.These days you cannot think usefully about China and its potential futures without holding in your mind two utterly contradictory views of what is happening there. On the one hand, a robust and awesomely growing China; on the other hand a brittle China, parts of it truly hellish.

ROBUST CHINA:

- Peaceful borders in all directions
- Economic, non-threatening engagement with the entire world, including with societies the US refuses to deal with
- 200 million Chinese raised out of poverty
- Private savings rate of 40 percent (it’s 1 percent in the US)
- 300 million people with cell phones, and the best cell phone service in the world
- A superb freeway system built almost overnight
- New building construction everywhere, and some of it is brilliant
- 150 million people online
- 350,000 engineering graduates a year
- One-third of the world’s direct investment
- Huge trade surplus
- And an economic growth rate of 9 to 12 percent a year! For decades.

but also…

BRITTLE CHINA:

- Not much arable land, so a growing dependence on imported food
- Two-thirds of energy production is from dirty coal, by dirty methods, growing at the rate of 1-2 new coal-fired plants per week
- 30 percent of China has acid rain; 75 percent of lakes are polluted and rivers are polluted or pumped dry
- Of the 20 most polluted cities in the world, 16 are in China; you don’t see the sun any more
- Some industrial parts of China are barren, hellish wastes
- Driven by environmental horrors and by widespread corruption, there were 87,000 instances of social unrest last year, going up every year
- The population is aging rapidly, with no pension or welfare, and a broken healthcare system
- The stock markets are grossly manipulated
- Public and official amnesia about historical legacies such as Tiananmen Square in 1989

How can such contradictions be reconciled? The best everyone can hope for is steady piecemeal change. For the Chinese the contradictions don’t really bite so long as they have continued economic growth to focus on and to absorb some of the problems. But what happens when there’s a break in that growth? It could come from inside China or from outside (such as a disruption in the US economy).

It’s hard to look at the China boom now without thinking about the Japan boom in the 1970s and ’80s, remembering how everyone knew the Japanese were going dominate the US and world economy, and we all had to study Japanese methods to learn how to compete. Then that went away, and it hasn’t come back.

The leadership of China is highly aware of the environmental problems and is enlightened and ambitious about green solutions, but that attitude does not yet extend beyond the leadership, and until it does, not much can happen.

That’s China: huge, consequential for everybody, and profoundly unresolved.

–Stewart Brand

I found this post on the China Law Blog re: the marketing of American consumer products in China to be interesting.  I did not know that firms such as UPS, the package delivery company, provide annual reports available to the public about the categories of products they deliver in a particular country.  The UPS survey asserts that Chinese urban consumers, or “Chuppies, have many shopping preferences depending on their age, gender and location, and they appear to have a heavy preference for a variety of quality American products.  The ”most sought after” categories of American goods by these “Chuppies” are: (1) home appliances; (2) consumer electronics; (3) health care products/pharmaceuticals; (4) beauty products; (5) apparel/fashion accessories; and (6) movies, music and books.  This data and information, while broad, would seem to be of interest and value to a variety of American firms seeking to penetrate the Chinese market. 

A good friend recently turned me on to The Long Now Foundation which hopes to provide a counterpoint to today’s “faster/cheaper” mind set and promote “slower/better” thinking. It is offering an upcoming (free!!) seminar by Orville Schell, Dean of the Graduate School of Journalism at UC Berkeley titled, “China Thinks Long-Term, But Can It Re-Learn To Act Long-Term?” You may find this seminar of interest. Once it is loaded into a podcast, I will definitely watch it.

Global Business Network. You may find the following article posted there titled, “Four Futures for China Inc.,” of interest. It addresses the question of whether China’s economic and political power will continue to expand dramatically or will it slow in the decade ahead? GBN’s Jesse Goldhammer and Doug Randall respond in this Business 2.0 article with four possible interesting scenarios.