Microsoft Word -
MBA6080_20110221.docMBAC6080W Business Field Trip – Beijing & Tianjin, CHINA
Personal Reflections Report
Andrew, CHAN Chi Hang..........................................................................................................................................
17
Benjamin, CHIANG PeiChia.....................................................................................................................................
19
Brian, LEE Ho Yan.....................................................................................................................................................
22
Davy, YIU Wai
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42
Jessica, ZHOU Wenchuan
........................................................................................................................................
65
Joyce, YIP Ka Yee......................................................................................................................................................
75
Marisa Chantal, POHL............................................................................................................................................
115
Ryan, KOO Kyung Min............................................................................................................................................
124
Tony, LAW..............................................................................................................................................................
149
Tony, NG Tung Wing..............................................................................................................................................
157
Yoji, OKADA
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172
Alex, HO King Chung
(yuán qí, Origin)
About 10 months ago, it was March 10, 2010, I met Mr. Kenneth Mok (the Administrative director of the CUMBA
program) for the MBA admission
interview and I still
remember his first
question was why CUMBA program
attracted me. My answer was pretty simple, "just because of
the course has
the China business concentration
and the business study trip which will enable me to decide if I should move to China to continue my career."
As the local kid who was educated in Hong Kong when it was still the British colony, then studied in the university
in England, witnessing the transfer
of sovereignty and working in
an international company, I
have many exposures and mixed
feelings when I worked with the
colleagues and companies from China.
Cultural and
policies differences are the major issues but the more important is that, I suddenly realized that I am the hare in
the "The Tortoise and the Hare"
story. Ten years ago, I was
travelling to Beijing to provide
training to my colleagues and
recently I am always the
student and trained by my
colleagues from the Mainland.
I am also amused by the
size of the projects in China.
Last August, I was in Shanghai
to conduct a project experience
sharing session with the clients from a China tier2 bank and
I started my presentation: "The project that
I am
going to share is the biggest teller system in HK but the capacity is not able to support half of your customers in
Shanghai."
The schedule of the trip:
Pretrip meeting I (Oct 9, 2010)
Briefing and "Doing business in China" by Mr. Fu Qiang (President, Yuanheng Biotech)
Pretrip meeting II (Oct 9, 2010)
Group presentation on how we are going to study
Business field study (China) Date
Dec 6, 2010 Dec 7, 2010
Dec 8, 2010 Dec 9, 2010
Dec 10, 2010 Dec 11/2010
Visits/Events Olympic
stadium Water Cube
)
)
My first lesson learnt following the government's policy
The business field trip
started with the
first meeting at Oct 9, 2010.
Instead of just a briefing of
the logistic arrangement, Professor
Fu also invited Mr. Fu, the
President of Yuanheg Biotech Company
and a very
experienced businessman to join the session. Mr. Fu shared his experiences and some tips on doing business in
China. His advice is: follow the government's policy if you want to be successful in China.
During the entire business study trip, this advice was proven correct again and again. ENN () is a very good
example. The company started as
a liquefied petroleum gas distributor
and transforming into an innovative
clean energy company and growing rapidly. Capital steel gave up the core factories and spent 5 years to move
away from Beijing city to align with the government policy, and enjoy a new strategic location (first large scale
steel factories that builds at the seashores) to help the company to extend to the overseas. Google China the
company that withdraws the core
business search engine from
China market because of the
China internet
policy, is looking for new business opportunities and still staying in China. I still remember when my coursemate
asked about the future plan of Google China, the answer was "We will see what we can do."
We all understand the theory of "sail against the current" () and therefore Mr. Fu's advice
is easy to
understand. But what if the personal believes do not match with the government's policies? Do we still follow?
MBAC6080W Personal Reflections
Page 6
This dilemma is one of the major reasons why I would like to join the trip and understand China better. Chinese
government's policies definitely are not
the devil's
ideas but some may not be well accepted by
the Western
world. We were lucky that we had a lecture on "National Governance in Transition
" at
the Peking University by Professor
XU Xianglin , who introduced the
complex Chinese government
structure and the difficulties to
ensure the consistency in policy
execution from central to provincial
governments. More importantly is that
Professor Xu highlighted that there
is no similar scale of
transition/transformation happened before
for China to reference and
follow. Therefore, the
transition/transformation must be proceeded
careful and slowly. And, we
could not apply the standard
that
defined by the Western world to judge whether China is doing good or bad.
Together with the above "lessons,"
I do believe I should spend
more time to understand the
Chinese
government's policies and the strategic direction in order to enable myself to develop a career in China. "We will
see what we can do" also
reminds me that no matter what
kind of business opportunity, I
should always
remember my beliefs and find something that "I can do" ().
My second lesson learnt leaders, management style and corporate culture of the
stateowned companies
We visited four stateowned companies during the trip. Before the trip, the
images of stateowned companies were
traditional, conservative, old
fashioned, bulky, not efficient,
and they did not care about
the business results and ("meal
in a
large pot", a Chinese term to describe people
in communist society sharing the
results together without differentiating the individuals’ contribution). After the first visit to Shougang (), my
understanding of the stateowned
companies was completely changed. Our
visit was the last one Shougang
Beijing factory would ever offer
as the company was moving away
from Beijing to Caofeidian .
Immediately I was thinking the company was forced to follow the government's green policy. It gave up the base
and spent a large amount of money to relocate to another location. During the visit, I was amused by the scale
of the relocation and the position of the new factory. Caofeidian was a small
island in the Bohai Bay ()
and recently developed as an
industrial area by land reclamation.
Shougang has built a port inside
the new
factory so that the company can
immediately ship the heavy steels by
lower cost ship transportation to other
cities or other countries. What a strategic move! No wonder why the leader who led the tour had reminded us
to pay attention on the future prospect of the company instead of the recent business results.
MBAC6080W Personal Reflections
A safety reminder to tell the
employees to remember not to
ride bicycles inside the factory
for the sake of the family
happiness and harmony.
The last production in the Shougang Beijing factory
After the trip, I spent more time to study this "mega migration of a steel factory." The project started
in 2005
and the company spent 5 years to build the new factory and relocate the staffs and assets. The "relocation" plan
matched with the company's maintenance
schedule and therefore the
company built the new factories
and
relocated those retiring factories one by one without a
large amount of new
investment. The new factory has
the biggest blast furnace () in China and the design is mainly focus on recycling, for example, about 97% of
water can be recycled and reused. It is also highly efficient and only requires 20% of the original staffs to achieve
higher yield. The original factory area in Beijing will be redeveloped as a residential and commercial area which
will provide a good business opportunity
for Shougang in the
redhot property market. Therefore,
the "mega migration" is not just
to fulfill the government's plan
but also introducing a large
amount of new business opportunities
to Shougang. It is a winwin
situation which the government will
benefit from the green environment
in Beijing, more tax contribution from Shougang and the successful "mega migration" project is a
good reference for the future consideration on how to relocate the other 46 large steel companies that located
in the cities.
Another stateowned company that we had visited was BNBM. BNBM is a construction material supplier and it is
one of the largest
in Asia. The company has spent a
lot of resources
in research and focus on the high quality
products. We were shown a "Lego house" which
is long
lasting, elegant and the price
is reasonable. With the
rapid economic growth in China, citizens are becoming richer and it is easy to predict that the "Lego house" will
become a popular product shortly.
MBAC6080W Personal Reflections
The wall of the "Lego house". It looks thin but
it is very effective in reducing noise and keep
the house warm.
The "Lego house"
With the above 2 examples and other companies that we visited, I found that the stateowned companies are
longterm oriented instead of focusing
shortterm wins. The companies have
strategies on how to grow the
company and how to meet the government’s expectations. They are no longer bulky, inefficient and traditional.
Back to the Shougang "mega migration" project, the company has not laid off any staff because of the relocation.
About 100,000 staffs were reallocated to other factories or projects. That made me start to think that may be
is actually a nice culture of the stateowned company. Western corporation are managed by the system
and many Chinese corporations are still managed
like a family. The Shougang
leader told us a story about a
retired staff still returning to
the factory and contributing his
knowledge and experiences every day.
The
Shougang factory area that we visited contained schools, hospital and other facilities to support the staffs' daily
activities. Instead of just
maximizing the profit, many Chinese
companies are still willing to
spend more
resources for the staffs
in order to win the
loyalty. Look back to the Foxconn
incident that happened in 2010,
may be what the staffs
really need is not just
the high salary but also the
cares from the company and the
feeling of "a home."
Other than the companies,
I am also impressed by the
leaders of the stateowned companies whom we met.
Most of them already have
master or doctoral degrees. They
are open minded and willing to
share the knowledge. Mr. Hua
from Tianjin Teda Construction Group not
just
shared his point of view on
the Chinese
property market but also gave us a good
lecture on value
innovation and the uncertainty
in customer demand
by sharing his projects with us. The way he developed the estates is more advance and conscientious than the
developers in Hong Kong.
The trip has introduced a new
image of stateowned companies
to me. The management style and company
culture that I observed during the trip has inspired me to rethink about the nature of the corporation is not just
making profits. May be there are still many things that I did not see or know as we were not staying long enough
but, by
just observing the materials that the
leaders presented to us and the way on how they responded our
MBAC6080W Personal Reflections
Page 9
questions, I am sure that there
are many things for us to
learn. Mr. Hua reminds us to
read more books
especially on economics
is a very good advice to us as MBA students. Other than the above, the role of state
owned companies in the government policy execution is also important. We would not be able to see the blue
sky in Beijing if Shougang
insisted to stay in the Beijing
city. The society would become
unstable and
unemployment rate would increase if the 100,000 employees were not being handled properly.
My third lesson learnt West Vs. East
There are more and more foreigners working in China. Mr. Cory Grenier from Lenovo is a typical example. China
is still a developing country and needs many experts
from all over the world.
In our trip, the professors that
gave us lectures are all returnees
from overseas. On one side, we see the culture mix as many
foreigners are
working in China, learning Putonghua, trying to adopt the Chinese culture and at the same time, many Chinese
are studying in overseas and then return to China and local Chinese are learning the western cultures quickly. On
the other side, western governments are trying to push for the RMB appreciation, pushing China to import their
products and the Western media are sometimes wrongly report the Chinese government's policies or news. Full
of contradictories.
I do not find a real solution from the trip as the West Vs. East conflicts are easily to be spotted during the trip
when there were discussions on
the environmental
issues, RMB appreciation and government policies. There
are many different understandings on those sensitive topics which, including myself, are sometimes involved in
debates. There are different points of view and most of the time the debates were ended with disagreement. No
matter who is right and who
is wrong, with the globalization, the West vs. East conflicts are not good for the
teamwork and as managerial staff, we need to ensure the harmony within the team.
Before I could find out on how to manage this conflict solution, I would like to study more about China in order
to minimize any misunderstanding before
I can explain and discuss with my
foreigners colleagues. During the trip,
I already found many
misunderstandings on the Chinese
companies and when we had the
final presentation
to summarize what we have learnt
from the
trip, our Germany coursemate was
trying to share
some of her point of view but once she started to speak, we misunderstood her meaning and thought that she
was challenging China's environmental policies. After we briefly explained, she told us what she really wanted to
say was the data that we presented was not what she used to see or read in Germany. She raised the concern on
the western media not providing the full set of information and that always creates misunderstanding on China's
policy. We could not change
someone's view point but better
understanding and better communication
definitely is required to resolve the culture conflicts.
Summary
What we have learnt from this business trip is much more than the three points that I summarized in this report.
Other than that the above three lessons learnt have fulfilled my original objective, the trip has motivated me to
further study the business environment in China and enrich my experiences on how to work with my colleagues
MBAC6080W Personal Reflections
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and clients in Mainland. An important thing that I have learnt from the trip is the "" (relationship) and "
" (face). Professor Wu from Tsinghua University reminds us that these are the two most important elements
of doing business in China. And, those require a long time to build.
China is still a developing country and has already created huge impact on the globe. The size of the markets in
China has never appeared before and it will be a great experience if I can be involved. I am looking forward for
this golden opportunity to work,
learn and practice what I have
learnt in China and
contribute myself as a
Chinese.
Actually this trip is my first time to Beijing as well as my first visit to a Chinese company. Because China is getting
more and more important in understanding world economy, I wanted to see and feel from this trip what made
them so powerful, what are they doing now, and where are they going now. I think I got some hints about the
above questions from this field trip, which is very helpful to me. I want to talk about the hints I got from this trip
in this report.
First of all, China seems to be the same as United States in 19th century, land of opportunity. As it is growing so
fast, there are a lot of chances in almost every industry in China. In Tianjin, we had a chance to meet successful
entrepreneurs in there. The one I met is doing five businesses at once, which was very impressive to me. And I
also met with a Korean in Beijing who is running his own business in Beijing. Both entrepreneurs I met in China
have one thing in common: the belief that China has a lot of opportunities. The entrepreneurship itself, I think, is
the one that will make China much stronger in near future.
Second, it is common that
developed countries are better at
service area than developing
countries. Like
everybody else in this class, I was shocked by the service in Haidilao hot pot restaurant. As I am wearing glasses,
they gave me a piece of cloth to clean glasses. And
I asked an employee where Citibank ATM
is. As he cannot speak English
and I am not good at
Chinese, communication was difficult.
Nevertheless, he brought me
downstairs and showed me
some ATMs, where I could not
find Citibank ATM. However, he said
sorry to me
several times with sincerity
in his face. I have never experienced nor have expected such kind of service
in my life. Haidilao is
definitely creating a new
business model in its
own way. And I think
there may be another
Haidilaos in many service sectors, which can increase overall service level in China.
In the class at Tsinghua University, we had some dispute between Western students and the professor. That was
a very good chance for me to understand what Chinese and Western think. I felt in this small dispute that China
is more rational than what Westerners think. It looks as if Westerners are worrying about their position as China
is growing so fast and that
is the reason why China
is reluctant to appraise RMB. However, the real reason of
their weakness in business lies
in their own reason not
in RMB. So I
really agree with the professor
that US
should go back to basic and fix their own problems. It seems to me that they understand others well as well as
themselves.
Finally, as a Korean, I saw yellow dust many times in spring in Seoul, which is originated from China. Whenever
there was yellow dust, we saw what’s going on in Beijing in TV news. It was so serious that I thought Beijing will
be thick with yellow dust before
this trip. However, when I
just arrived in Beijing, I was
somewhat surprised
about the fact that
it was not so bad. After visiting Xin’Ao group and Ecocity,
I was able to find a hint of this
change. China is really trying
to keep their environment. It
must be difficult to chase two
hares at one,
MBAC6080W Personal Reflections
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maintaining growth rate and keeping environment. However, many Chinese seems to agree with the
idea that
these should be chased at once, which I think is important to the world as well as China.
In conclusion, this trip was very good chance for me to grab some hints about knowing China. Every step that
China takes is getting more and more important than before. So this trip also helped me by reminding me that I
should know more about China.
MBAC6080W Personal Reflections
Preface
I had never been to Mainland China before the China business trip. What I knew about it came from my second
hand experiences such as books, news and conversations with Chinese classmates. They are good sources
for information, but I wanted
to see and feel how it
is with my own senses because
I hope to work in Mainland
China after the graduation. Through
the trip, I got to have
some understandings about China and
Chinese
business, though 8 days were not enough to apprehend all aspects of them. My understandings, however, might
be confusing
to other people because I concluded
that China is difficult
to define as one word. Like Yin Yang
(), it sometimes appears to have two opposite aspects at the same time. It is a socialist country while it has
harshly competitive market. Some of its technologies are as much advanced as many developed countries while
some part of the society is still remaining same as developing countries. It has also high level of diversity thanks
to its large population and territory. Generally, I would make an argument about what makes me think like this
and in the end I would add my opinion about cultural conflicts.
Socialist Market Economy
One of
the words explaining Chinese economic
system is
“Socialist Market Economy.” When I
first hear this
word in a China finance class the last semester, I felt as if it is a kind of contradiction though I knew China was
doing well in terms of “Market
Economy”. In my understanding,
socialism economy is controlled by
the
government and capitalism economy is controlled by open markets. For me, China is basically a socialist country,
though there is no perfect market economy in the world. I was wondering how much China is socialist and how
much China is market friendly.
On the way to the Hotel from Beijing International Airport on the first day of the business trip, I thought I had
found out a clue
to grasp what “Socialist Market Economy
in China” means.
I saw Volkswagen, Benz, Toyota,
Hyundai, Honda and especially Audi running on roads with Chinese local brands’ cars. To my surprise, the foreign
automobile brands seemed to account for a lot of portion in cars on roads. South Korea, although it has defined
itself as a market economy
county, has not given a much
opportunity to foreign brands in
its automobile
industry. Local companies were supported by South Korean government
in the beginning of
the business and
have been protected de facto more
than companies in other
industries by it. Considering
that South Korean
market is relatively very small and a lot of foreign brands’ cars are produced in China by a kind of jointventure
companies, I have found Chinese automobile market more open and face freer competition than that of South
Korea.
MBAC6080W Personal Reflections
Page 14
On the other hand, I had heard that most of big steel companies are state owned and their reform is made by
the Government. During the visit
to Shou Gang (Capital Steel),
I made a question to the
speaker whether its move to
Tangshan in Hebei province has
to do with a national plan
to develop north eastern China
and he
replied it does. The company seemed apparently controlled by the Government. However, it is not the case that
there is no competition in the
market. I have strongly felt
that Shou Gang is also trying
to improve its
productivity and technology to provide customers with high quality products so that it can survive in the harsh
Chinese steel industry1.
A market is important
in market economy because
it causes competition, and
therefore offers efficiency to a
society. Market economists believe that planned economy would damage function of markets and consequently
harm overall efficiency of the society. On the contrary to their beliefs, in China, competition in markets seems to
be vivid even though economy
is planned by
the Government. Personally, I think
the Chinese government is
doing well because many Asian countries have achieved their economic success being led by governments, and
stateowned companies contributed a lot to a nation’s fast growth.
However, more important things in this report are business aspects and in that viewpoint, I have felt doing the
business in China in is not so easy in contrast with the belief that China is the land of new opportunity seeing a
myriad of foreign and
car makers. At the same time,
I felt that a private company
cannot compete with
companies controlled by
the Government. For example,
I have heard that Shou Gang
sometimes provides its products at
low prices to boost the other
industries. Mr. Fu Qiang also
said during his presentation
that big
companies in terms of revenue are almost Government related companies and a private firm should get into the
area that they don’t exist. In conclusion, I felt extremely competitive free markets and extremely government
leading industries coexist in China.
Between a developed country and a developing country
China’s GDP per capita in 2009 is 3,648 US Dollars.2 Actually, it is relatively less than several developing countries.
However, China is one of a
few countries that have succeeded
in
launching a manned space ship and a
lunar probe. In business, Google,
most brilliant internet company,
still keeps its office in China
in spite of the censorship
issues and Lenovo has acquired
IBM PC division, which owns a high
technology in manufacturing
laptops. During
the visit, Xin’Ao ENN
shows advanced technologies
in Green Energy
industry and BNBM also shows its
technology is not so far behind
its global competitors from developed
countries. Seeing these
companies, I felt that China had already become a developed country.
1 According to a chinaknowledge.com, there are ten major players
in the steel
industry and they account only for slightly
more than 50% of the production. In South Korea, POSCO, the biggest player in the industry takes up 60% of the production.
2 Korean National Statistics Office
MBAC6080W Personal Reflections
Page 15
hospital. In contrast to its
size, sanitary status was not so
good. Especially, a
bathroom was worse than I
expected. It was very surprising to me that hospital’s sanitary was not good enough to protect patients’ health.
If it is a normal building, I could understand it because I have used extremely dirty toilets many times in South
Korea. However, hospitals should be different from other buildings in sanitary because they must do their best
to avoid secondary infection
inside hospital buildings where more germs and viruses are hanging around than
normal buildings. I don’t think that hospital managers have not set up proper sanitary policies. I believe that it is
highly likely that the policies are not obeyed well due to systematic flaws or insensibility of hospital workers.
In addition, driving habits of drivers in Beijing is different from those of developed countries. I was almost hit by
a car a few times when
I was crossing a street at a
crosswalk because drivers didn’t
care about pedestrians
though it was a stop light for them and there was no traffic jam. These experiences of mine make me think that
many people are not faithful to the basic rules.
Admittedly, faith to basic
rules saves a lot of cost
in doing business. For example,
if workers do not abide by
security policies of a company, business secrets of the firm could leak to its competitors, therefore management
have to spend much money on watching its employees. And if workers do not much care about standards of the
product quality for their convenience, low quality products would harm the reputation of the firm some day and
it should be a great amount of cost in the future.
Diverse markets in one country
As everyone knows, China has over 1.3 billion of people. I’ve heard that in human history, we have never seen
this kind of single big market
emerging. European Union has around
900 million but it consists of
several
countries. The United States, which has been the biggest single market, has around 370 million of population.
However, it is the true that China is one homogeneous market?
One country is one market. This was my basic idea and I had never thought about it in depth before the lecture
about Chinese marketing in Tsinghua University. One part of the lecture was that life style in Chinese cities are
not the same, and
therefore marketing strategies should different.
It is very interesting
to me because South
Korean cities are usually not considered different markets though there are some differences between them. On
top of the professor’s explanation about it, I think basic factors like extensive territory and big population make
distinct marketing strategy worth conducting. As for China, physical distance between cities
is not comparable
with that of South Korea, so it could cause clear differences of natural environment and people’s way of thinking.
One of my Chinese friends who
came from Chengdu has told me
that women in Chengdu have elastic
skins because of high humidity
in Sichuan province. On the
other hand, Beijing is vey arid
because of the winds coming from
innerMongolia and Siberia. It
is highly
likely that the needs of women
in two cities for cosmetics are
different and if I were
a marketing manager of a cosmetic
company, I would have to conduct
different
marketing strategy in two cities. Moreover, the population of each city is significantly big and 12 million people
MBAC6080W Personal Reflections
Page 16
live in Chengdu and 17.5 million in Beijing.3 If they are small markets, distinct marketing is not efficient. However,
I think it is not the case in China and even if it is not efficient right now, I anticipate it would be in the near future
as GDP per capita of Chinese cities are rising rapidly.
Conclusion
It is often said that there
is no competition and efficiency
under the planned economy. However,
the competition in China
is as harsh as a capitalist economy even
though some industry
is under the government control.
I’ve watched a documentary about Chinese history and
I heard from it
that Deng Xiaoping said that
there
is no capitalist economy without planning and no socialist economy with markets.
I think Deng Xiaoping
made a totally brand new “Socialist Market Economy” concept based on this idea. Foreigners like me who knows
only about western economic system might have trouble understanding it because this concept has never been
tried in other countries. However, it has been working very well and I think one wanting to do business in China
must understand it to survive there.
As with economic system which
has characteristics of Socialist
economy and market economy, China
has
characteristics of developed countries and developing countries simultaneously. I think China would make a fast
improvement in a
lot of aspects, but businessmen need
to consider where China currently
stands in aspects
relevant to their business. A great diversity that comes from the history and regional features of each province
should be considered as well.
Andrew, CHAN Chi Hang
I have learnt a lot from this trip and I find it very inspirational. I have learnt many different things from each visit
during the trip which I did not expect.
There were four visits that I found particularly interesting that I wanted to share. They are the visits to Google,
ENN, Tsinghua university lecture, and Lenovo.
I have my own brand that focuses on manufacturing camera lenses for digital cameras. I tried my best to learn
something out of each visit so that I can apply to my own business.
The Google visit was very interesting. I learnt that you couldn’t use the same business model that is successful in
one county and directly apply
it to another country. The speaker explained to us Google’s
initial strategies for
the US web browser market and how
it did not work when applied
to
the China market. Consequently Baidu
took over by filling in the gaps. My brand is quite successful in the US and European market. However, it has not
been too successful in
the Asian market.
I originally planned to do the
“do noting approach” like Google.
I thought
it just needed more time to spread. However, I changed my mind after
listening to the efforts Google
had to go through to strengthen
its attractiveness
in China. Asian markets need a more attractive pricing than
US and European Markets. It
is very difficult for
the manufacturer to have a price
cut. I’ve now changed my
strategy and attracted Asian distributers to carry my brand to target the Asian markets.
The trip to Lenovo was very
interesting as well. In a way
I felt some sort of resemblance
to the roots of the company.
Lenovo, formally known as Legend, continually gives back to the community. It felt
like a very right
thing to do and so I’m also implementing donation from sales of my company to nonprofits upon returning to
Hong Kong.
At the Lenovo talk, the speaker addressed
issues such as
to why they might have a
low customer satisfaction
despite having such innovative products. Lenovo is priced at a premium over its competitors at the professional
notebook class. When there is difference in price, consumers expect problemfree computers. I learnt from this,
for a growing brand, it is important to have a competitive price as customers’ expectations rise in correlation to
price.
Lenovo is a very traditional brand but they are now making many efforts to involve style and innovation in their
products that is usually not the current brand image they have. They showed us the before and after photos of
their designs of their must
current lineup. This shows
that brands within China has now
evolved and the
element of the design are highly valued.
I was
in Copenhagen for the Europe study trip
last year and during a
visit to the designer Dustbin they said design never goes out of fashion. During a visit to Norman Copenhagen
the speaker said design adds value to a product. Companies in China are known for cheap packaging, zero design.
Lenovo is a role model
for a Chinese company going
through globalization and this
is a huge break through.
MBAC6080W Personal Reflections
Page 18
Lenovo has their own Ideapad line and their new and innovative items show that they are ready to accept new
challenges. This
is a huge breakthrough for any Chinese company. Usually design means added manufacturing
cost and therefore a higher retail price. Lenovo’s products do seem to have a premium over its competitors. In
the short run the public will view it is a premium in terms of comparable specifications. However, in the long run
people will start to realize they are paying for the design and not a premium for comparable specs and this is a
great move!
The third talk that really inspired me is the talk at Tsinghua University.
We were taught about online business
on taobao.com.
Prior to the talk I always had an impression that there is no space for growth and earnings for sellers on taobao.
Entry to the market is low and everyone can easily become a seller on taobao. There are hundreds to thousands
of sellers that may sell the same product. The competition one has over the other is a cheaper price. Due to this
issue, I was unwilling
to explore the
taobao market opportunities. The sample case
the lecturer gave was the
Japanese brand Uni Quo. They did not have much business when they opened up their online store. However,
when they made the exact same website on taobao, sales went up dramatically and surpassed the annual sales
of their certain stores within two weeks! I was really surprised when I heard about this. It seems like I have left
one kind of
seller out. The manufacturer is
the winner whoever ends up selling
their products. I suspect the
future trend of online sales will be taken over by all the big brand and manufactures, as they are the only ones
possible to sell a product without competition.
The other speaker at
the Tsinghua University
told us about the Chinese network
card manufactures. One is
Huawei and the other is ZTE. Their main strength is low cost. At the moment, one of the strength of my brand is
high value at a
low price. However,
I was really afraid the
low price
image will stick and the brand will not be
able to increase the price in the future. I raised the question on this issue and I was told Chinese can enter the
market easily because they are willing to work harder for a
lower price. However, when they have 80% of the
market share they can consider price
increase. I found this talk very
inspiring and upon returning
I have been working hard looking
for worldwide distributors for my
camera lens. It feels very weird
recently as my sales
volume increased dramatically with my price drops but at the same time I am earning about the same as before.
What I have gained is more exposure. However, I trust what I have learned and will put it to execution.
Overall I am very satisfied with what I have learned in the trip. I’ve managed to apply many of the things I have
learnt into my business and that was my primary goal in terms of the learning outcome for the trip!
MBAC6080W Personal Reflections
Benjamin, CHIANG PeiChia
Lenovo success & BenQ fail
In 2004, Lenovo announced that they would buy PC department of IBM by using 1.25 billion U.S. dollars. Also, in
2005, BenQ, a Taiwanese computer
company, announced that
they would buy mobile phone department of
Siemens and Siemens would give 250 million E.U. dollars
to BenQ. Both of mergers and acquisitions had
the
same target, building a global brand
in PC and mobile phone
industry. However, Liu Chuanzhi, CEO of Lenovo,
successfully merged PC department of IBM and made Lenovo one of world's top five brands
in PC industry. KY
Lee, CEO of BenQ, made BenQ’s mobile phone out of the market.
Mr. Liu would like to reflect
IBM highquality image to the
Lenovo computer. This strategy was
not fully successful and made
Lenovo lost a lot of
international market share. But Lenovo
could be compensated by
growing China market. If we compare the market situation that BenQ faced, the market share of mobile phone
which Siemens occupied was continuingly declining. On
the other hand, Lenovo's expertise
is in cost control. Therefore,
Lenovo could use low cost
product with IBM image to
create a good market position.
At the
beginning, BenQ also wanted to use the low cost way to produce mobile phone in China. They wanted to close
Germany plant
instead of spending 1.5 million E.U. dollars every day. Nevertheless, Germany union protested
and then created a
lot of negative news. Finally,
the value of
international brands decreased rapidly. And the
losses of mobile phone department in BenQ were 600 million E.U. dollars in 2006. Comparing the two cases, we
know that Mr. Liu and Mr.
Lee both are ambitious people
in setting up a global famous
company. Mr. Lee
overestimated the risk tolerance for BenQ, but Mr. Liu made the right decision for Lenovo.
When I visited Lenovo, I found that Lenovo has high degree of internationalization. There were a lot of foreign
staff and local staff also could speak fluent English. I think that is because Lenovo established dual headquarters
in
the United States and China when
Lenovo acquired
the PC department of IBM. This
strategy made senior
management and external contact of the international community still retains intact. And a lot of local staff have
opportunities to make relationship
with foreign staff by using
English. This helped the company
build its
international image, as well as maintain the stability of the original international customers. Besides, local staff
must have
international view and good English skill because
their superior could be
foreign. They need these
professional skills to make
their boss to see
the results of people’s efforts. For example,
the CEO of Acer is a
foreign person, not Taiwanese. After Acer’s board of directors
invite foreign person to become
the CEO, this company really
transferred from a Taiwan company
to an
international company. Based on Lenovo and Acer
cases, I believe that appropriate
proportion of foreign workers in
the company could help company
internationalization quickly.
MBAC6080W Personal Reflections
China view v.s. Western view
“Exchange rate”
is always a hot topic during this economic situation. Certainly, we always discussed this topic
with professor when we got the lecture in Tsing Hua University. A lot of Chinese students and Western students
debated whether RMB should appreciate. Most of students who come from Asia would agree that their national
currencies should not be appreciated
to avoid recession
in export. However, other
students who come from
western countries would think that they undervalued currencies result
in the imbalance of
international trade.
We also could find that it was not easy for western students to give up their insistence. If we could watch CNN
and BBC news every day, we would find that the news is always reported in western point of view. They always
give a lot of criticism about Chinese government. Under such statements every day, foreign people finally would
be persuaded that undervalue RMB is so evil and unfair.
Therefore, I suggest that a lot of foreigners need to read the book “China’s Megatrends—The 8 Pillars of a New
Society”, which was written by John Naisbitt and Doris Naisbitt. In this book, they would make western people
understand that China
is a very special country due to
its culture and
its huge population.
In the past, people always prefer
to use western view to
analyze China. People
think China need to follow
the western step to develop
country. However, Naisbitt suggested
that Chinese government should
develop the country by
themselves, instead of western rule. If we review the example of Japan, it followed western rule to appreciate
its currencies quickly. As a result, the Japan economy has already fallen down more than ten years.
I always believe that Chinese government should appreciate RMB slowly.
It could assist Chinese economies
in successful transition. On
the other hand, it could
also make Chinese society maintain
stable situation in the future.
If RMB appreciate too fast,
it would cause millions of people
lose their jobs and cause a
lot of social
problems. Finally, this situation would not be good for other countries. A stable China is really helpful for global
economies.
“Democracy” is another important topic which is always discussed by a lot of western people. I totally agree that
democracy and freedom are
a basic human right.
Is westernstyle democracy suitable
for China? I think the answer
is negative. It is not suitable
for China. For example, Taiwan is
the first democracy country
in Chinese society. However, in
the past
ten years, Taiwanese economy did not have any
significant progress. Congress
fought every day. During election
time, anonymous
letters and violence occupied
the headlines .The problem
was democracy made a lot of battles between the two parties and then economic develop was stopped. At this
moment, the critical issue for
the Communist Party of China is
how to prevent every Chinese
person from
starving. It is not easy to find a solution, which could make everyone have a job to support his/her family. Based
on Taiwan’s experience, the process for democracy could create social unrest for a long time. This result is not
the Chinese government can afford at this stage. On the other hand,
imperial rule has been practiced
in China thousands of years. In
culture and idea of Chinese
people, the thinking of democracy
could change their
everyday life. Therefore, China must find its own way, which is suitable for the process of democratization. This
process may last
for sever decades. But,
I always believe
that a stable China is good
for every country in the
world.
MBAC6080W Personal Reflections
Page 21
Based on the above discussion,
I think Chinese government should
solve economic problem first and
then promote political reforms. With
the further opening up the media
and economic, many contradictions will
become even more serious than
before. Imbalance in economic and
social development makes serious gap
between poor and wealth people. Government and the laws are not perfect, making it possible for government
officials to corrupt. The future of China is able to successfully take policy to address these issues and last stable
development. Not only for China itself but also for many developing countries around the world, it could be of
great significance.
SinoSingapore Tianjin Ecocity
China’s Change and the future
The Forbidden City Today
MBAC6080W Personal Reflections
Page 23
Steel Manufacturing in China The Great Leap Forward and the ShouGang Steel
Factory in Beijing
Page 24
Chinese steel nowadays accounts for more than 30% of the global steel production. ShouGang indeed started to
produce steel during the Great
Leap Forward (or you may say
it’s a consequence of Great Leap
Forward). ShouGang today
is a successful company with revenue over 100 billion Yuen every year. The factory
in Beijing
where we visited was still producing on the day, although it was to close entirely the following day. The facilities
looked old but it was huge and I had never seen such a large factory (First time I saw heavy industry production).
I can see the hard work
that people put in during the
‘Great Leap Forward’. I appreciate
the vision of Mao
although it failed at the very first beginning. We did start producing steel because of the ‘Great Leap Forward’.
There is a Chinese idiom
‘, ’. The successfulness we saw
today comes from the
failure of
Great Leap Forward.
Cultural ChangeCultural Revolution, Google and Scholars in China
In 195657, China did encourage open criticism and welcome different points
of views. Chinese intellectuals and
scholars returned from overseas helped
with reconstruction. On the other
hand, open criticism always led
to the instability of the
leader. There was a different
view for developing China
within the Party in 1960s. The leader, Mao, in order to further strengthen his
position, purged different views. He started the cultural revolution. He made
all people worship him, published little red book of Mao’s selected thoughts,
set up red guards. During that
period, he controlled people’s
thought,
blocked the information, destroyed books and killed scholars. Some scholars
nowadays argue that if there was no cultural revolution, China would at least
be moved 10 years forward. In the past, our thought had been depressed.
Page 25
EcoCity Today Leader’s vision
EcoCity is a green city that is rarely found in the world at this
moment. EcoCity will have ambient
air quali