“It’s not what China can do for you, it’s what you can do for China.”

“It’s not what China can do for you, it’s what you can do for China.” This quote from one of our speakers to me defines what China is on so many levels. When he first said it, he was talking specifically about doing business in China, but I now realize that it extends beyond business and it is a mindset truly ingrained into so many Chinese and evident in their actions. It is this mentality that has shaped business ventures, government policies and day to day interactions in China. I also see this Chinese collectivist mentality as an enabler for their rapid economic growth and recent accomplishments.

Actions speak louder than contracts 

A few of our speakers talked about business negotiations in China. It is not a run in and run out sort of deal. It takes time, and often much more than what foreigners are used to spending. Our speaker noted that this process was a test of character. The potential partner wants to make sure that you can handle the stress and are willing to take the time to invest in the relationship. I think it also relates back to that quote. The Chinese want to make sure that your intentions are not one sided, but rather you care about your partner and are willing to do what you can for them. This is what every partner wants of course, but it seems that acting upon this idea is what is really important.

Signing a contract shows little sign of character. While going out to visit the partner, spending hours with them at a dinner table, being understanding of their wants and needs and trusting their word shows that you are dedicated and determined to reach an agreement that is mutually beneficial and you trust them to do the same.

Emphasize and focus the business around creating value for your partners and customers  

What is important is not what a partner can do for you, but rather what you can do for them. The emphasis is on providing something unique for your partner, rather than concentrating on what they will give you in return. Therefore, the focus is on creating value for your partner or customer rather than concentrating solely on your own profits or personal benefit.

Many companies entering China do not create a unique value proposition for their customers and partners. They simply try to implement their US business model in China, without genuinely making adjustments. Their China strategy, however, should look very different than their US strategy, because they are serving a different market that finds value in different areas. The companies that fail to deliver this unique value to their customers or partners are the ones that are not focusing on what they can do for China, but instead are lost in their own agenda. Ultimately, these firms end up losing out.

The central government and people have China’s well-being in mind

The government and its people have great aspirations for themselves. They want to grow, improve the standards of living and live in peace.  This sounds like every country I have ever heard of really, but the commitment in China is incredible as is the overall coordination by the central government. Before going to China, I think a lot of us were a bit skeptical of the Party and their strategic plans. Relocating millions of people to build up infrastructure or favoring an industry in one area over another all seemed to make me feel a bit uncomfortable. Economic growth sounds great and all, but these are people we are talking about here.

Then again, we often forget that these things happen in our own country. It just happens a lot more in a country with one billion extra people and in a country that did not develop their infrastructure over time as their population grew around it. I know not everyone is happy about the sacrifices they have to make, but many Chinese share this mentality that they are helping to build something bigger, which in the end will benefit all of China.

Another observation is that the central government really does have China’s best interests in mind. They are focused on doing what they can for China, rather than finding out what China can do for them. Yes, there are accounts of government corruption and Party members that take advantage of their power. However, overall, I would argue that the government is doing good things for their people and have good intentions. Their unified approach and long term vision allows them to make impactful decisions that have been instrumental in building up infrastructure, driving the country’s growth and helping people improve their standards of living.  There are many challenges they will need to address in the future, but they are moving in the right direction in regards to many of those difficulties.

China’s collectivist mentality has accelerated growth 

It seems that whenever you engage in a relationship in China, it is best to have the “here is what I can do for you” approach. When bargaining at a local market, incentivizing employees to come to your company with added benefits or bringing your children up to care about the family as a whole instead of just themselves, it seems that this collectivist mindset is widespread.

I am convinced that this mentality is a reason that China has been able to accomplish so much in such a short period of time. The people are united around common goals rather than attached to their own agenda. When you get millions of people supporting one long term vision, then that’s when you start to see some pretty amazing things come from it. China still has a long way to go, but I am impressed with their effective and original approach towards development, and am optimistic about their future.

The media’s negative portrayal of China needs to be seriously adjusted 

Now I am trying to think of what I can do for China. I haven’t quite figured it all out yet, but there are a few things that I think can help with right now. The twisted perceptions of China in America need to stop. We need to be less afraid of China and more enthusiastic about the US-China relationship. There is so much opportunity in working together, and the Chinese see and believe this. They want friendly competition, but also mutually beneficial relationships to improve the lives of both Americans and Chinese. The negative US attitude could cause us to miss out on growing together and achieving much more than we would apart or in direct competition. Americans need to have more of the collectivist mindset and see what we can do for China, in order to develop a strong, lasting relationship.

Hopefully sharing my insights on China can help provide a new perspective for the people I know at the very least. Below are a few other random observations:

1. China is smoggy, yes. But through the smog and the clouds, that sun is strong, so watch out. Also, China does recognize that pollution is a problem. It is just difficult to regulate and incentivize 1.3 billion people to live green and control their pollution emissions. Regardless, reducing pollution and going green is in their 10 year plan, and if I trust any country in following through on their goals, that would be China. I am sure we will see proof of that soon.

2. Yes, China’s healthcare system is in trouble as their population ages, but honestly which country’s isn’t right now.

3. People in China love Americans and want to meet you. They are so welcoming. Walk into a bar and I am sure a tray of shots will not be far off. You will be asked for your email address or even your US phone number. In whatever way you feel comfortable communicating, talk it up. These people live such interesting lives and come from the most diverse backgrounds. I learned a lot about China by these random conversations. You will only be hurting yourself by shying away.

4. You can definitely get by without knowing Chinese, but I wish I knew it. It is very easy to navigate (at least in the cities). However, we were told there are little nuances to the culture that are difficult to catch unless you understand the language, so I am working on it now.

5. China is a beautiful country with a bit of everything for everyone. I was beyond impressed by the various mountain ranges, rivers, skyscrapers, parks, KTVs, clubs. No matter what you like to see and do, you will find it in China.

There is so much more to say. This trip exceeded my expectations in every way. I end it being even more curious about China than before. This might have been my first trip to China, but it will not be the last. Thank you Trey, Denise, Gigi and UVA for making all this possible…

Word count: 1498

On my honor I have neither given nor received aid on this assignment.

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Don’t forget to give back

When the majority of banks in China are state owned, it makes doing business in China a bit more challenging for the foreign bankers. In Hong Kong, Matt O’Neill from Citibank came and talked to us about the reality of the situation and their attempts to have a stronger presence in China.

We have learned throughout the weeks that having government support can really help propel a company forward and allow them to grow. If you don’t have that support and are competing against other firms that do, then you can quickly find yourself in a difficult situation. This is one thing that Citibank realized and took measures to address.

First they partnered with a government bank and invested in this relationship years back. They then used the Shanghai bank partnership to help build infrastructure within China. These two efforts helped China grow and put Citibank in good favor with the government, because they realized Citibank was truly investing in China and supporting the country’s efforts toward economic growth.

Citibank did something good for China and they returned the favor. Walmart did a similar thing for Japan and also experienced a positive impact. After the tsunami, they dropped prices of the top 1000 most popular products, which really helped the people. These actions gained them support from the people and government, and drove sales. This is an important thing to note for future business relationships. Making the investments in the country and with the government helps build support that can truly pay off if done well and genuinely.

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Chinese Political Power Dynamics: China GIE Final Paper

Our group chose to investigate political power dynamics from the 1950s onwards.  Our readings and discussion focused on the past and present systems of power and politics in China.  When picking our books, we attempted to find readings that would help us examine how political power has shifted from the age of Mao to the current system of state capitalism.  Our objective was to distill and summarize what this evolution means for Chinese business, society, and policy (both foreign and domestic).  Finally, we compared our readings to the actual experiences we had on the ground in China in order to formulate our own opinions.

In understanding China’s political power dynamics, we started at the very beginning: the Communist Manifesto”. This book was read to try to understand the fundamental ideologies of communism and how those ideals have shaped Chinese social, economic and political practices.

The theory part of the book made a very convincing case in arguing that the forces of production drive the evolution of production relationships. The succession of societal structures, from primal to feudalism and then to capitalism, is driven by the saturation of economic development space that is allowed by the incumbent institution, and every evolution of the production relationship frees up more forces of production and thus propels the economy to go further. At the end of this road, the book predicts, there is communism, where finite resources are perfectly allocated and social production is maximized.

As Deng Xiaoping once quoted, “development is of overriding importance.” It is safe to argue that on the highest level, a true communist is to believe that communism is the destination and the way to get there is through economic development and overthrowing production relationships that limit society from moving forward. This is radically different from Western ideologies where democracy, private ownership, and other values enable individuals to pursuit their interest, which in theory do not necessarily align with the interest of the society.

The difference in the fundamental values is the root cause of the differences between the Western Laissez-faire approach to economics and the central planning approach of communist parties. As we have observed in China, giant infrastructures even cities can rise up over just a few years and outdated structures can be torn down without much hesitation. With the awareness of unique ideology of communism, it is easier to understand why central planning and strategic investment is at the core of all economic activities and politics revolve around economic growth.

Communist theories, in part, drove Chinese political leaders to focus on economic development and growth. However, the country’s political identity has strongly been influenced by Mao. “The Little Red Book” as it was known during the era of Chairman Mao’s prominence, is the quintessential work of Chinese communist thought. Mao’s assorted quotations, ranging from topics including “Classes and Class Struggles” to “War and Peace,” provide a fascinating backdrop to the understanding of Chinese political identity in the modern day.

Though the work is largely a piece of strict propaganda, there are some revealing truths amidst the calls for worker uprisings and class struggles.  The sense of national identity and pride that Mao instilled within the early People’s Republic of China is quite evident throughout the work, and it is especially interesting in context with our first visit to China. Even those who we spoke with in China who had a less than flattering view of Mao and Mao’s policies admitted to us at various times that his contributions to national identity were immeasurable in their contribution to the greater good of China.  Additionally, so much of what Mao discusses or cites in his various quotations has to do with looking toward the future and assessing what it will take for China to emerge to the upper echelons of nations.  Seeing China where it now, compared to where it was only fifty or sixty years ago and the development that Mao was calling for, is a fascinating way to appreciate just how far the Chinese have come in the last half century.

This sense of national unity that Mao helped institute has been instrumental in driving the country’s foreign policy and building global political power. The book “On China“, by Henry Kissinger, noted that under Mao, China asserted itself as one of the Eastern leaders and became more aggressive with its foreign policy decisions. Due to China’s insistent and united decision making under the Communist Party, tasks were completed more effectively, such as allying with the United States during the Cold War, thus having a major impact on global political power.

Kissinger also outlines another facet important in current and ancient Chinese foreign policy and military strategy: “strategic encirclement”, which consisted of psychologically outwitting opponents in order to gain a relative advantage over them. From this, Ross noted that the Chinese treat foreign policy decisions like games. This directly fits into Chinese culture; whether bargaining for goods in markets or surviving extravagant Chinese business negotiations, the Chinese have a very game-oriented culture designed to gain a relative advantage over their competitors. Losing in these games can result in a loss of face, crucial in importance in Chinese culture. Therefore it becomes extremely important for foreigners to acknowledge and understand China and its game-oriented society to understand their foreign policy.

It is also important to understand the inner workings of the Party in order to see where the political power lays today, how decisions are made and how the people view their political leaders. In The Party: The Secret World of China’s Communist Rulers” Richard McGregor looks into the history and development of the Chinese Communist Party over time.  Although the book provided a strong collection of information about the past and present internal dynamics of the Party elite, Robert did not like the overall approach of the author.  During McGregor’s description of the CCP, he focused almost exclusively on the negative aspects of their secretive existence.  Whether focusing on widespread corruption, describing land seizures, or depicting an increasingly aggressive Chinese international policy, the author tended to neglect the positive aspects of the CCP.  Over the past month, we met with a number of businessmen and even some politicians who discussed the party and its impact on the Chinese economy.  What we have heard, over and over, is that the true end goal of the Chinese Communist Party is to maintain a peaceful society and grow the economy.  We are sure that the government in China is not perfect, but, in the end, we think their goals are ultimately aligned with the people of their country.  This book is an example of the American media’s tendency to portray China as a massive threat rather than a growth story that remains in progress.  Not much is certain about China’s political future, but our experiences in China have left us feeling like optimism is a perfectly acceptable disposition for Americans to harbor over the country’s political system.

Sarah also felt similar sentiments after reading the book “Will the Boat Sink the Water: The life of China’s peasants”, that focused on the difficult lives of the 900 million peasants in rural China. The book was an assortment of terrible stories on corruption, abuse, and suppression of the peasants by local governments. It brought to light many of the difficulties the central government has with implementing policies on the ground, hundreds of miles away from Beijing. Additionally, the peasants are starting to gain a voice and fight back against their local overseers. Their uprising could seriously impair China’s growth trajectory and challenge the Party’s power.

However, after travelling to China, it seems that more is being done than the authors took into account. While Beijing will face great hurdles in trying to implement many of their policies, they recognize that the contentment of their people is of the utmost importance. They understand the conditions of the people need to be improved and their concerns need to be addressed. China has already been highly successful in bringing millions out of poverty and at an astonishing pace.

Furthermore, one thing Sarah noted in all of the stories on the peasants is their overall faith and confidence in the Chinese central government. They recognized that their local governments’ terrible actions were not in line with the Party’s wishes, who wanted to help them. The national pride and unity that Andrew noted penetrates all areas of the country and is strong even in the rural countryside. This is a significant advantage China has over other developing countries. The people know that everything is not perfect, but they generally believe that the Party has good intentions, and that hopefully over time the government’s investments toward economic development will pay off for all of China.  Therefore, their uprising and potential to challenge the Party’s political power does not look like a viable threat at the moment.

After reading these books, we came up with a few observations about China’s political power dynamics that have been important in their impressive development story and will continue to be significant as they progress further:

1.      China’s political leaders have a deeply embedded focus on economic growth

 2.      Generally speaking, the country has a strong national identity and is unified by this pride 

3.      The government has an aggressive yet unified foreign policy that reflects their game-oriented culture

 4.      Chinese political leaders are often misrepresented in American media, but their intentions are aligned with their people

5.      Political leaders face significant challenges in controlling local governments and improving rural living standards, but they are making efforts to do so and an uprising seems unlikely

Overall, using our analysis of the books above combined with our month-long visit to China, we were able to establish solid opinions about Chinese domestic and international political power dynamics since the 1950s.  In some cases, we thought our books helped us to make sense of the current state of affairs, but in others we thought that the authors had missed some points.  Regardless, we believe that we are leaving China with a better and more positive understanding of the country’s politics, power structure, and general social and economic trajectory as a whole.  Our experiences here have been amazing, and we all hope that our departure does not indicate the end of our Chinese adventures in life.

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Reflections of China: To understand you have to go

The one quote I heard during my trip through China that resonated with me the most was: “You have to be here to understand.” After a month travelling through the different cities in China and Hong Kong, I couldn’t agree more. The combination of the customs, the atmosphere, the people, and the history is something that cannot be fully appreciated reading from a text book or listening to a lecture. In order to truly understand China you really have to go.

One of the things I learned is in China, everything is negotiable. This relates to all forms of life from large business discussions to haggling with street vendors. The fixed pricing and concrete contracts of the West do not apply in China. If you want to buy a piece of jade or if you want to buy a company, you need to be able to negotiate. I think this is a direct result of the Guang-xi (or relationship) system in China.

There have been differing views on the importance of relationships in business in China versus other areas. We had some speakers saying building business relationships in China is essential and far more important that in western culture. Others said that relationships in business are always essential and China is no different than any other country. I think that China has had too long of a history being referred to as “the others.” People from the west hear of this land of opportunity and try to take their fill. But if you try and work with China with no benefit to China, you will get nowhere.

So the concept of relationships and the concept of Guang-xi is merely China’s assertion of self interest in the global economy. They already have had a history of being taken advantage of through the Opium wars of the 1800s and the Chinese have a long memory and don’t want that to happen again. The long process of building the relationships with Chinese businesses is a way for the Chinese to know who they are dealing with. The Chinese want to know if the business ventures the westerners are seeking will really help the local Chinese.

From my experience, relationships in business are much more important in China than the developed markets. In the western world all of the major transactions and business dealings have been codified to the point where some complicated transactions can be carried out at arm’s length. This helps with the efficiency of running a business, but you can lose out on the relationship-side of business interaction. The Chinese have not codified business transactions and thus it is all about negotiation. The Chinese have a different concept of time than the western world and they are willing to take the time to know their counterpart.

This is why western expansions into China so often fail. They do not take the time to make a relationship with the Chinese and they don’t understand that to be successful, they need a value proposition for the Chinese as well as themselves. The failures of western business ventures into China often come from a point I have been trying to make throughout this reflection: they don’t know China because they haven’t spent time here.

My previous opinions of China and its policies have been fueled entirely by the Western media. And after my travels through China I have come to believe that many of these “intellectuals” have never actually been to China. On the topic mentioned above, I went into China thinking the Chinese were “sneaky” and looked to take advantage of the world. I now know it is merely the Chinese’s attempts to keep the prosperity of China within China. Another point of interest that I think the Western media has wrong is the role of China’s government.

The Chinese government is almost the polar opposite of the government of the USA. The communist party runs the show in China with ultimate power and the role of planning the Chinese economy. From the Western perspective, this system can seem dominating and corrupt. However, in the fledgling years of China’s economy I could not imagine a more effective system. The Government always had China’s best interest in mind and their actions over the last couple of decades only enforces this.

When we met with the local government in Guangzhou, the foresight they had into the development of their region was amazing. It shows a vision that is only possible with state capitalism, deciding which areas to invest in and what regions will support what economic sectors. The government is able to look over the region as it would a business, seek the competitive advantages of the region, and then act on it. The western market system would have these areas organically arise which is great for overall competition and value, but not as effective when you want your region to grow.

China has an unbelievable amount of people, and before the 1970s they had almost no economy. So in order to rise above the poverty line and level out with its global competitors, China needed to grow, and fast. With a democratic system like in the USA, there is no way China would have been able to build up its infrastructure fast enough with a clear unified vision. China needed to be led with an iron fist to achieve the growth they have had.

The question moving forward will be: can the growth continue? After seeing the unprecedented growth China has achieved and the entire infrastructure built in such a short amount of time, one can easily say the China system has been ridiculously successful. But China has just risen to be a middle income country and now growth needs to make way for efficiency. The capitalist market system of the west has been successful because it creates competition which in turn fosters efficiency and innovation. The state capitalism system of China was great in their growth stage but can it create efficiency?

In order to look into China’s future, we also need to discuss the past. Through my travels in China I have learned that China has a long history, and a long memory. The current culture of China has been formed by thousands of years of history. For the majority of human history China was the superpower in its sphere of influence and the Chinese remember this. I feel the ones in the world who are least surprised about the rise of China are the Chinese. To them this economic explosion is simply a return to glory.

This determinism in the Chinese culture has good and bad effects. The Chinese have great optimism in their growth and the whole country is complacent with an all-powerful government to keep this vision alive. However, there is also a hierarchy and self-importance that could hinder future growth. China has been very successful in keeping the prosperity of China within China. But when China matures and becomes a true international player in the global markets, will they invest for the benefit of the world outside China. Will they truly open their boarders to help the global economy as a whole or will they try to keep it all within China? The Chinese have always believed themselves to be the center of all cultures, but when the global world becomes diffuse and the “centers” of the world disappear, will China be able to survive?

In order to understand China you have to go there. China is not the mortal enemy of the USA locked in a zero-sum battle where only one can win. The Chinese are not a primitive people that cannot understand the processes and customs of business in the west. The Chinese are a developing economy, and they just want to assure they can grow to their full potential. If anything, the USA should look very positive towards China because economics teaches us the most value comes from voluntary trade, and the Chinese are our biggest trade partners.

China is still in their industrial growth stage. They are not less sophisticated and they certainly aren’t less smart than the west. I found myself constantly comparing the Chinese system to the USA system back during the industrial revolution and there are many striking similarities. The Chinese are simply not as far in their development, but for where they are they show great potential for the future. The Chinese government is full of the brightest people in China and the growth they have created in the past decade is unbelievable. The Chinese are growing fast, building up their economy, and have the whole history of the rise of the western world to learn from. China is going to continue to grow fast, and if the Western world wants to gain an increasingly essential trading partner they are going to need to learn about this rising country. And as I said to start this essay, the only way to learn about China is to go there.

Word Count: 1497

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China’s Rapid Ascent

After spending the last thirty days in China, I have had a number of personal experiences that have provided me with insight into how China has come so far over the last three decades and where it is going.  The three issues that I learned about were the diversity amongst the different sections of China, the transition to a market economy, and the rise of entrepreneurs.  The diversity among the different regions has created unique problems, but also opportunities to solve these problems with new ideas.  The transformation to a market-based economy is serving as a catalyst to the Chinese growth and it will only help them going into the future.  The growth of entrepreneurs across the country has led to many new products and will continue to drive innovation.  Being able to witness all of these factors has contributed to my understanding of the Chinese market and how they conduct business in it, and I predict that these issues will only accelerate China’s ascent to the top.

 

From the minute I stepped off the airplane in Beijing to the minute that I got on the return flight home, I found China to be one of the most diverse places that I have ever visited.  The diversity that existed in China is extremely unique and it was a key factor in learning more about the makeup of each region.  Each region, city, and district had its own distinct culture and this made visiting each location a special experience.  From a personal standpoint, I noticed the vast difference between Shanghai and Chengdu because of my adventures around both cities.  Shanghai is an international city where western brands are prevalent and English is spoken by a large amount of the populace.  On the other hand, Chengdu is a developing city that has a long way to go before we can consider it to be modern.  Also, both cities even have their own dialects, so that adds more to the differences between them.  Both of these cities have also taken on a different role in the Chinese economy where Shanghai has become the financial capital of mainland China and Chengdu has become an inexpensive place to live along with invest in real estate.  From a professional standpoint, Shanghai has companies such as PriceWaterhouseCoopers and one of the largest container ports in the world, but Chengdu is becoming home to more manufacturing firms because of the cheap labor.  Both of these cities, along with every other city in China, are different in many ways and that is why China is such an interesting place.  Every location encourages individuals and businesses to be inventive in their strategy to capture market share.  This does mean a much more complex business environment, it also means more opportunities to drive innovation and create new products.

 

China, over almost the last three decades, has been slowly transitioning from a planned economy to a market economy.  This transition led by the Communist government has been methodical, and that is the reason why the Chinese economy has not experienced serious repercussions that we witnessed in Eastern Europe after the fall of the Soviet Union.  During our journey throughout China, I noticed a number of examples that demonstrated where we are in this transformation process and try to predict where it is going.  My first true encounter with the market economy was in the Silk Market during our stay in Beijing where I was able to bargain with merchants for goods.  This micro-economy is the perfect example of people, the merchants, working hard in order to benefits themselves, but also helping us, the consumers, because we are getting the goods that we want.  Everyone during the transactions that occur in the Silk Market is usually better off because we trade something of value for something that we value more.  If this were a planned economy then the merchants would not be as willing to trade because they would not be the ultimate benefactors.  From a professional outlook, the market economy has led to high levels of GDP growth and contributed to the rise of the Chinese middle class.  This growth has also managed to entice many western firms to enter the Chinese market and has turned China into the second largest economy in the world.  We were able to meet with executives from Citibank, Lowes, and Ernst & Young who described China’s rapid ascent and how as the economy continues to open, we should see more Chinese businesses expanding their ventures into the western hemisphere.  The idea of a planned economy is still prevalent in China through their use of State-Owned Enterprises which control the major industries, but that is also changing.  The government has already privatized many of the smaller businesses that they used to own and that has cleared out many of the efficiencies that existed in those enterprises.  As the Chinese economy continues to open up, we will see more growth stemming from this market economy and more consumers being better off from the resulting benefits of a competitive market.  By being able to witness this transformation in process, I have been able to gather a better understanding of a Chinese economy and how far it has come.  The Communist Party has done a tremendous job of opening up the economy, and it has, for the most part, helped many Chinese citizens to be raised out of poverty.

 

As more citizens have gained access to capital, we have seen a rise in the number of entrepreneurs coming out of mainland China.  These entrepreneurs are innovating and coming up with new products that are not only helping Chinese citizens, but are also being exported to different corners of the world in order to solve similar problems in those areas.  During our trip to the Youlian spice factory and subsequent meeting with Mr. Liu, we learned that he is a prime example of an entrepreneur that has gone from having nothing to one of the largest spice manufacturing operations in China.  He began his business by selling spices door to door, but he also learned more about business and mass production along the way.  He started using modern production technology and principles of business to guide his corporate strategy, and that led to their current position.  All of Mr. Liu’s success would not have happened in a planned economy, so the continuing transition to a market economy will only serve as a catalyst for a new group of entrepreneurs.  We also witnessed the ingenuity of Chinese engineers at Jetta when we were shown that they came up with a personal pet in the Pelo, which is a robot dinosaur that responds to human interaction.  The design and engineering for the Pelo came solely from the Chinese team, so there are certainly new inventions coming out of mainland China.  We also learned from a banking professional that many more Chinese banks are starting to make loans out to entrepreneurs in the countryside so this indicates that new ideas will not be limited to the cities, but from all over the country.  As I learned more about these entrepreneurs across China, it gave me hope that we will see better products coming out for the Chinese and world consumers.  As we move into the future, the Chinese will not continue to be known as the best copycats of the world, but they will be another source of original ideas that are going to help solve the new problems that the next generation will face.

The lessons that I learned in China were numerous and priceless, but I walked away with three lessons that really helped me to understand the Chinese market.  The diversity amongst the various sections of China, the change from a planned economy to a market economy, and the increase in entrepreneurs are all factors that have driven and will continue to the Chinese market.  The differences among the regions has formed a unique situation where many more problems are present, but also a lot of room for new solutions to these issues.  The conversion to a market-based economy is serving as an agent of change for the Chinese market.  A new generation of entrepreneurs across the country has led to many new ideas and methods that will drive production in the future.  Thomas Friedman described how the Chinese, among people from other developing nations, are racing us to the top, and after I can see that much more clearly after being in China for almost a month.  Being able to observe all of these things has added value to my grasp of the Chinese consumer and the market, and I truly appreciate how far they have come along with look forward to how this country of over one billion people will progress into the future.

Word Count: 1465

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Building a brand in China: Citibank’ Strategic Direction

Citibank, one of the first banks to enter China, has steadily seen growth in its banking business and it is currently gearing up for even more expansion.  Their plan is to leverage a combination of technology and banking services in order to give the customer a better experience because Citibank is at a disadvantage when it comes to number of locations in Asia.  By enhancing the customer’s experience, Citibank will be able to build a brand which will appeal to a growing number of professionals in the Chinese economy despite being limited in its reach across Asia.  Citibank is partnering with Google and another technology company in order to give clients a better banking experience.  This is where Citibank has a natural advantage, so it makes sense for them to take this approach.  Western companies are respected and looked upon in China, so this should be an easy task for Citibank as it builds more branches in the mainland.

Citibank is not like any of the other Chinese banks because it does have the backing of the Chinese government and it does not have any natural advantages.  They do have an advantage in that they are a western bank, and that brings a certain level of respect with the name brand.   However, they have made certain strategic moves that have enabled them to become one of the most respected banks in China.  One of their customers even remarked that he knew that he was successful when he started banking with Citibank.  Their name brand is another thing that Citibank can leverage in order to gain more clients because the Chinese, like other consumers, care a lot about being able to work with the best.  Also, in order for Citibank to continue growing in China, they will need to continue making connections with officials in the government because they control the banking licenses that Citibank needs to establish locations in China.  The Chinese market is not getting smaller any time soon, so the larger Citibank can make its client base then the better off they will be as more Chinese citizens gain access to western banks.

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Guanxi – Relationship building on a global scale

There is a lot of literature available on doing business in China, and the one thing that all of the writings emphasize is the importance of Guanxi, which is essentially the importance of networking or relationship building.  On the other hand, we heard an argument at an Ernst & Young presentation that competence comes second to networking.  As I have reflected on the merits of ranking one above the other, I have discovered that they are not mutually exclusive.  A professional cannot give complete priority to networking because his or her level of expertise may start to lag which would mean lackluster performance if one did get an opportunity.  Also, a professional cannot give his or her full attention to competence because the lack of sufficient connections could result in fewer opportunities to gain meaningful work.  Any student that is about to enter the job market needs to consider these two factors because not being mindful can result in missed opportunities, but being aware of them can open doors to new and exciting work prospects.  As this generation of students entered an even greater globalized society, the importance of networking but also being capable enough to do the work cannot be emphasized enough.

As I have looked more into the connection between guanxi and competence, I have found that networking gets an individual the opportunity to showcase his or her work and competence ensures a job well done.  Once an individual can get into the rhythm that I just described then more meaningful work will surely come his or her way because they will develop a reputation for doing excellent work which will bring more work.  In order to get ahead in China or anywhere else in the world, a professional has to carefully balance the development of his network and remaining knowledgeable in his chosen field.  There are many opportunities for individuals in modern society who have mastered the art of balancing these two factors, and these prospects will only grow as companies look for greater talent across the globe.

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It’s not easy being mayor

The Panyu district in Southern China is one of the fastest growing areas in the country, and the leaders of this district would like to see this growth continue. We visited and learned about the emergency management system, government services building, and the government council hall during our trip to Panyu. All three of these places play a key role in the governance of this district, and will play an even larger role as activity in the district grows and develops. The emergency management system has made it much easier for those working in public offices to identify and address any concerns related to public safety. The government services building serves as the central location for all government related services such as issuing business licenses, addressing tax related issues, and other public services. Finally, the government council hall is where a lot of the high policy levels issues are discussed and decided on, so this was the location where we met with the district mayor and his cabinet.

The district mayor was Mr. Lin and he began the presentation by describing some of the initiatives his administration was engaged in. We learned about how they have developed a higher education community in order to raise the amount of science and technology being developed in the district and to attract new companies to the region. Mr. Lin and his colleagues understand the value of education and they are doing everything in their power to make their district successful. They have also written into their five year plan that they want to increase green technology. This emphasis on green technology will not only drive new companies to this region, but also help these companies save money and be more efficient. As we look for where in the next growth opportunities are going to come from, the Panyu district in Southern China is a location which has a government that is willing to accommodate new business ventures in order to see mutual growth and prosperity.

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Manufacturing in China

When Americans think about manufacturing abroad, we have this vision of raw materials going into a “magic” black box and coming out finished.  However, on a recent trip to Jetta manufacturing, this myth was put to rest.  Our trip to plant began with an introduction by engineering team and they spoke with us about issues related to the research and development of products.  The team provided insight into how products are designed and what kinds of issues they have to keep in mind because they want consumers to like their products.  Many people believe that the Chinese are not innovative with their products and designs, and that may be true to some degree but the engineers at Jetta are slowly proving that saying false.  After our discussion with the engineers, we visited the manufacturing plant and we were completed surprised by what we saw.  The products were not being fed into a machine, but hand produced (for the most part) by workers.  Jetta had an extremely efficient assembly line which produced products at a quick rate because all of the employees were trained to do one process in the production line really well.  This plant ran like a well-oiled machine, and the managers do not see production going down anytime soon.

This visit provided me with two key insights.  The first is that the Chinese are becoming more innovative day by day.  The engineers at Jetta built their own successful products and they have helped others succeed in the development of their products.  This innovation should help Jetta as they expand to their own product line, and try to gain market share in new categories.  The second insight was about how manufacturing is no longer about producing simple goods, but about how complicated products are being broken down and into simple tasks in order to enter mass production.  Being able to produce something like the origami stroller is not an easy task, but the employees at Jetta are getting better at it day by day and are ready to move on to the next “smart” product.

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Reflection: Tanvi Patel “The World is Flat”… so lets be more competitive

When I first decided to choose the China track I did so because to me, it made the most sense. I want to go into the business world, and everyone around me would repeatedly say, “The Future is China”.  Yet I never stopped to think about China as a whole; the culture, the people, the government, and the thriving economy. I saw each as a separate part.  This trip helped me learn and think about the whole China, a new, unique, and constantly changing China, with real people, and real stories, both good and bad.

 

Before my trip to China I have some preconceived notions about China. I saw “made in China” labels, and assumed little to no work or money was put into the object, and I saw the growing economy a result of open trade and huge amounts of people. I never thought of the individual, the actual person who was working for a higher education, to one day own his own business, or the person working hours and hours in the factory to make this “made in China” object. During this trip, we saw the actual factories that produced the “made in China” label that is so infamous in the Unites States. Really, to me, the whole process would be the exact same as in made in the U.S, except that the wages I assume are much lower than would be paid for in the U.S.

 

Starting the trip in Peking gave me a good background on China. However, the university could not teach me as much about the culture and people as much as I learned in person. I did not know at all what to expect, and was taken aback when the first photo was taken of me. It seemed so odd that people would want to take pictures of our group, some without asking. But I soon realized that unlike America, China is not diverse at all, and seeing a group of foreigners makes us stand out. I also realized that race is a large part of one’s identity in China. Beijing was also where I experienced my first night club in China, and right then and there I learned something new about China, the Chinese can drink.

 

But in Shanghai we had our first business meeting. In the following cities in our trip we really learned a lot about Chinese business, and the influence of the government as well as free trade over business including, knock off brands, multinational corporations, home grown entrepreneurial ventures, and more. What I took away from this was the importance culture has, and interlinks with business. In America we notice numbers and results, but in China, networking and status matter more. To me this can be useful, but also very hurtful to those at the lower income level. I felt that within China, the social hierarchy is built so that everyone is improving, but many of the lower class have less access to socio and economic change. Social stratification is very common in China in fact, and this to me, was a downside of living and doing business in China.

 

 

During my trip in China I saw some areas that I did not agree with, and some areas, which impressed me greatly. The cities were growing extremely rapidly, and the living conditions are also improving. However, I saw a culture that still had many backwards ways of thinking in some areas, such as the view of status, race, and even freedom. I appreciated the youth’s new ideas, and openness to new culture however, and am very interested to see the future changes in China, both economically and also culturally. It seemed that within China, many people appreciated the new growing middle class, and the higher standard of living. However, little was ever mentioned during company visits, of human rights. I believe that the growing middle class will help the government reinforce their power until a certain point.  I am leaving China with a whole new view, and understanding of China than when I entered. Still, I have many questions about the way China does business, and the morality of some of the issues revolving the government and certain business practices.

 

Overall, China proved to be friendly and modern. The many stereotypes of China being a cold or calculated culture proved wrong overall, although within the business world, little was mentioned about human rights, and more was mentioned about the increasing minimum wages. Yet I still wonder if our group got to see the best of China, and missed out on another side. Coming with a large UVA group, we were treated with respect and of utmost importance throughout our trip. We spoke to American business leaders who spoke highly of China, but left me wondering if they speak highly of China because they are receiving large profits and benefits from the government that many others do not get. I realized that doing business in China from an Americans experience is completely different than doing business from the experience of a Chinese person as well.

 

What I took out of this trip, in one paragraph, was that China is going to become  huge player, economically, and culturally, in our world. We need to figure out how to work with China, but also should not be blindly accepting to a government that may lack laid out human rights, or allows rules to be bent easily. I am a little nervous with the growth in China, both for the environment, and for the Chinese people. I hope that the government looks past the numbers, and remembers that with growth, comes reformation, as we have seen in history. With that all said, this is also a very exciting time in the world. The world is changing rapidly, and we get to become the key players who can direct the change, and shape a new world. It is very exciting and fortunate that, as Thomas Friedman says, “The World is Flat”, but this also means we need to become better and more competitive players in this world.

 

Word Count: 1016

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