Mark Kolier’s Blog

Archive for July, 2011

I have learned a new expression on this trip to China from people that live here – ‘Life is cheap in China’. This has been said to me by westerners and Chinese alike. The recent high speed train crash was an example of that as the controversy over the death count continues as does the way those that perished are being buried. If you follow the news in China you see examples of this every day – people perishing in strange accidents on the roads, on escalators and other public venues. While there are more than 1.3 billion people in China that should not be an excuse to cheapen the value of people’s lives.

And while the above may be the case with life in China, most other things in China are becoming more expensive. The cost of food, shelter, and clothing are all skyrocketing as the Chinese government tries to keep a lid on the worry of runaway inflation.

When it comes to business I have found that Chinese companies are not yet accustomed to the idea of paying for consulting services. The Chinese corporate focus is so strongly based on making money fast that hiring and paying experts seems unnecessary to them. After all many Chinese companies are still finding great success and growth in their businesses without implementing western expertise and best business practices (or as they say in still British influenced Hong Kong – best business practises).

Yet in many of the Chinese factories I visited on my trip this week (I think it was something close to ten), there was an increasing understanding of the idea that perhaps the Chinese companies are not experts outside the China marketplace. Things that worked prior are not working as well now and there are signs that new practices and strategies have to be implemented. It will cost more than the Chinese have ever paid before – but paying something when you are accustomed to paying nothing will always be a hard pill to swallow.

Doing business in China is very different than any place I’ve done business before in the west. The cultural aspect weighs heavily in everything that occurs. One example is tea. It’s a good thing I like tea because in nearly every meeting I would consume not three cups of tea (apologies to Greg Mortenson author of the controversial best seller ‘Three Cups of Tea’) but 10 cups of tea and then on to the next meeting where the same thing would occr. There were days that I drank thirty cups of tea! I sometimes felt that the expression ‘all the tea in China’ was underrated.

Things will continue to get more expensive in China as the overall living standards increase. I’ve noted before that the U.S. will become more competitive as the Chinese and the rest of the world’s standards of living rise. Yes there’s still a long way to go in many parts of China and the world for that matter.

So while things get more expensive in China I am hoping that the most precious thing of all – life itself, also gets more expensive and soon. I will be leaving Hong Kong in the morning but know I will be back in China very soon. Xian zai, zai jian Zhong guo.

It’s been 6 days since I came to China this trip and I am more convinced than ever that China is racing forward on all fronts to be the leader in anything and everything it can lead. The recent news of the high speed train crash is some evidence that China may be overlooking some very important issues in her effort to reclaim (in the eyes of the Chinese) her rightful place at the top of the world (remember the world’s highest mountain, Mt. Everest, is in China).

I had another amazing dinner tonight with some more new friends who are executives for very successful companies. I was amazed to hear them talk about the reports of the train crash and how the Chinese government is holding back on information. The official report is that 38 people died in the horrific crash over the weekend. My colleagues feel the number is closer to 800 and that eventually the real story will have to be told. And the reason for the crash may be linked to China’s rush to get their high speed rail system up and running while in the process leaving out some very important safety guidelines.

Things are happening fast here in China. Cities are built in rapid fashion, at times without a notion as to who actually could afford or be interested to live there. People work 100 hours per week although at times the lines between work and fun are blurry. The need to get to know business partners before any business engagements is different in China than anywhere else I’ve ever been.

Driving a car (or in my case riding in the back seat) in China is a true adventure. People cut off other people constantly and talk on their mobile phone. They also cross four lanes of heavy traffic to exit all with only horns blowing but no gestures of ‘friendship’ like you would see in the U.S. This may be due to the fact that most of China’s drivers are new and not yet as cynical as they are in the U.S. By the way – China made 2 million cars last year which makes China the world’s largest car manufacturer, yet only 1 in 100 Chinese own an automobile.

It’s as if China is experiencing what the U.S. went through from 1950-2000 but they are doing it in less than half that time. There are bound to be problems when you consider the scale issue of a country that is more than four times the current population of the United States.

Every day I do business in China there are so many meetings (and I drink so much tea my eyes are floating all day as seemingly every company has a tea set and the first that happens is the host makes tea – it’s extremely civil BTW – but it’s good thing that I really like tea), that I have to make notes as I go and write them all down at the end of the day. Having four or more meetings in a day over a period of 15 hours is not unusual.

Yes China has grown up in a hurry and is moving so fast it is nearly vibrating. It’s exciting, nerve wracking and I am thrilled to be here and am sorry to be leaving so soon even though I will have been gone for nearly ten days. Two weeks in China is barely enough. It passes at the speed of light.

I’ve been going to Las Vegas for more than forty years (my sister and I went so many times before I was eighteen we knew the Sands hotel very well). I am not much of a gambler but I do play a little from time to time and like casinos and the vibe of Las Vegas for a few days every few years. So when I planned my trip to Hong Kong and then Shenzhen I asked my friend Tom if we could make a trip over to Macau. He readily agreed and had been there a couple of times himself.

We took the high speed catamaran-ferry (about a one hour ride) from Hong Kong to Macau on Saturday. I was very interested to see Macau for myself. Now a Special Administrative Region (SAR), Macau was administered by Portugal for 442 years until it was handed back to China in 1999.

There has been some casino gaming going on in Macau for many years but over the past ten years giant, ornate casinos have sprung up in Macau. In fact the Wynn hotel in Macau generates 65% of the total profits for Wynn Gaming. There’s an MGM Grand Hotel and other familiar names like The Venetian (run by Las Vegas Sands) and the Four Seasons.

We went to the Venetian because there was an air-conditioned bus was right off the ferry landing and it was hot and free. I’ve been to the Venetian in Las Vegas so I was eager to see how much the concept was copied. The answer was – a lot. The casino floor is a big giant room, in fact the largest casino room I’ve ever been in and Foxwoods in Connecticut had a very large room when it opened but I believe they have parceled that room into smaller rooms now.

The shops and canals and restaurants were reminiscent of the Las Vegas version. But it was immediately noticeable that there were more than a few things missing in the overall casino experience. First the room lacked energy and sound. There were no slot machines ringing, no music playing and the people at the tables seemed bored. Perhaps it was a bit because it was 3PM on a Saturday afternoon but I think that’s the way the Chinese roll in Macau. No free drinks at the tables as the cocktail waitresses (dressed in the Vegas style short skirts) served up bottles of water.

The restaurants in the hotel were good and relatively inexpensive. The stores were expensive just like in the Venetian in Las Vegas but they were not crowded. The overriding sense I had was that the people were not having all that much fun. This may be what the Chinese government wants although Macau is still very profitable however maybe China does not need the money as much as it used to?

They have shows in the casinos and apparently Lady Gaga recently performed there. But what I really found interesting was that during Chinese New Year (normally February) the Chinese hop on planes in droves and head to Las Vegas (which is great for Las Vegas since it’s a normally slow time of year and it’s been a long hard recession that Vegas has suffered). Apparently Chinese people do notice that lack of energy and that something is not quite the same in Macau.

I am glad that I went and saw it for myself but have no real need or desire to go back. There are some remnants of Portugal’s influence around but not enough to make it more of a destination. A watered down Las Vegas just doesn’t have that much appeal to me. I bet you would feel the same.

Each time I visit China I am struck by how parochial the news is and the people are. This week the Chinese government made a public statement suggesting that the United States should extend the debt ceiling in order to maintain world confidence in its economy. It was hardly a magnanimous suggestion considering the China is the single largest holder of U.S. treasury bonds. A U.S. default on it debit would be very bad for the Chinese government.

China also announced this week that it had purchased an old aircraft carrier and was refurbishing it. This should not be seen as any kind of threat to the U.S. but for some reason it did cause a bit of consternation in the world community.

Asia is a very big place and China more than has its hands full managing what is seen as an overheating economy (despite reports that several Chinese factories have declared bankruptcy in the past couple of months – that sure does not sound very socialistic to me). I’ve noted it in prior postings that China is open for business. And it’s open all the time. The idea that China is attempting to ‘defeat’ the U.S. (economically) and ‘win’ is not apparent in anything I’ve seen or heard.

Walking around Hong Kong on a steamy Friday afternoon the hustle and bustle of a vibrant city was exhilarating and impressive. I walked through the mall at Times Square near Causeway Bay and it was filled with shoppers who were not window shopping – they were buying and buying at top end stores. While there were some westerners the bulk of the shoppers were Chinese.

In the U.S. the current ‘recovery’ appears to be moving in super slow-motion. While China focuses on continuing to develop an economy based on increasing domestic consumption, the purchasing power of Americans remains a powerful force. However, it seems to not be quite as powerful as it used to be.
As the quality of Chinese-made goods continues to improve (and the costs increase), what concerns me is China looking to other countries to sell its products while it tries to stir domestic consumption. The U.S. should not be threatened by China’s rise. In truth the U.S. might want to be more concerned that the Chinese will begin to ignore the U.S. if we don’t get our act together soon.

Being ignored is the road to being irrelevant. I’m not saying the U.S. is even close to being irrelevant but I don’t think I’d feel very good about the U.S. being ignored by China. Do you think that could happen?

It’s 4AM on Thursday on the U.S. East coast. But it’s 5PM Thursday in Japan – a place I have been to several times but not in a couple of years. I sit in the Delta SkyLounge at Narita International Airport and look at tarmac on a sunny afternoon. A typhoon has finally lifted and there’s sushi and Asahi beer nearby.

I’m in Japan all right but not really. I can shop in the duty free shops, watch Japanese television (of course I speak virtually no Japanese), and eat Japanese food. However there are no kimonos, no sight of the remarkably organized flow I see everywhere in the streets of Tokyo. It is fastidiously clean here in the lounge which is so very Japanese.

I am on a layover from New York to Hong Kong and as the saying goes am just passing through. It was nearly a thirteen hour flight to get this far and I have a four and a half hour flight to go after my brief two and a half hour layover. Two movies, three meals and a little sleep have me feeling pretty good at this point.

I am scheduled to arrive in Hong Kong at 10:30 PM Thursday night local time which is 10:30AM East Coast time. It’s doubtful I will be able to go to sleep when I arrive. So I probably won’t. I have a series of business meetings mostly all next week so for the next few days I will get to enjoy Hong Kong and Macau before I set off (via MTR subway into China) for Shenzhen for the week. The World University games are slated to be held in Shenzhen next month so I expect the city (of 14 million) to be buzzing in preparation.

However for now I am in a country I truly enjoy but can only watch the planes arrive and depart while I make believe that somehow I had a little taste of Japan. I am here but not really here. It doesn’t count when you just pass through does it?