Beijing and a glimpse of China

Imagine a dark smoky lounge, lit by red LEDs in aluminum wall panels, a stage act finishes and white screen lowers. Huge monitors and a projector fill the room with P!nk’s classic. No I’m not Rickrolling you — http://www.youtube.com/watch?v=rTlWqW6fSYc . Yes, an East meets West (or vice-a-versa) evening out in Beijing. But I’ve jumped ahead.

Wednesday morning I have the school holiday play for my oldest at 10am and my flight to Beijing is at 11:30am—so I was planning on a close cut. Tuesday night I get caught up through the night on US/EU work and ready for a taxi pickup at 8:30am. Head to the embassy and get the visa—w00t! And back home (the school is literally 50 yards from our house) and to the school. Ears delighted by versus of “Kluggy nee, kluggy nee geirscham San Niklaus” and other favorites (did I mention it’s an all-Irish [gaelic] school?).



Ten minutes of insane cuteness and I’m heading back to the taxi and towards the airport. I turn on my audiobook magic—Twilight New Moon—and woah! I’m at the airport with minutes to spare. Rush through security (no checked bags and prechecked in). On the way to the gate pickup an expensive whiskey gift for our potential client and chocolates for Yuanyi and our translator. In the waiting area New Moon back on, brain shuts off and bam last call for Siegel please come to the gate. Heh—I’m here! On the plane and my sardine-class window seat. New Moon does its thing and I’m awake in Frankfurt.

(Dublin’s security squeeze, a classic all-cloudy Irish day, my sleep-deprived lilted eye “look”, and Frankfurt)



Frankfurt is the cleanest airport I’ve been in next to Munich and Zurich. So big the employees bike from one end to the other. A half hour’s walk takes me to the little Chinatown wing of the airport. The number of westerners is nearing zero. Grab a bretzel and my last western salad for the week. Boarding! This time a big plane.



Same game for me. Earbuds in and brain off. A quick wake to get water and notice the—what’s that—frozen Gobi desert? Whatever it is it’s going on forever.



OK—enough of the plane. Arrive in Beijing airport and notice some pair programming—err—immigration form unison reviewing. Yes it’s a theme.



And that box there? That little box has some buttons. Take a look:



I don’t know how many international travelers have enough hutzpah to arrive in China and press anything but “Greatly Satisfied.” I did. OK. Finally. China!



Hard to get bearings on China. Beijing is a city of 30 million and just went through a massive cleanup to prep for the Olympics. The locals say all the modern buildings (like those above) were built in the last 5 years, but as a visitor all I seem to see are the modern buildings. Maybe I’m on the Disney-fied path through the city showing all modern and clean and hiding the underbelly?
Next—to Swissötel. Note triple-checkin-pairing. FTW.



Now, in Japan I had my first taste of true conglomerates. Companies like Sony that own an entire ecosystem—from the electronic know-how making the Walkman™ to the production teams producing the content. Or Daimaru department stores constructed by Hitachi equipment (a sister company). Using Hitachi automatic doors and Hitachi elevators. And the other department stores—like Takashimaya—running their own sister company infrastructure. Elevators and credit card financing by Mitsubishi (the elevator company) and Mitsubishi (the bank).

China gave me a healthy serving of this master-allied-planning. New shiny buildings orchestrated together on tight timeframes. Huge well-built subways (from the surface at least) everywhere I wanted to go. Everything was made in China. Not just the stuff I expected to be made in China, I mean everything—cameras and phone handsets (no US brands necessary!)—LCD monitors (no Dell needed!)—ATMs (and awful usability guidelines from a good decade past)—even the cars (Hyundai logos, but built in China).

Basically—it was swap “China’s Longterm National Interests” for “individual competing business interests.” Or at least to me, in my brief time to absorb China’s movement.

What’s the strategy? China’s population is over 1.2bn. The Country’s power appears to consolidate such that one person, currently Mr. Hu, is able to make a large number of strategic decisions reflected across the entire Country. For those interested, here’s a helpful diagram (http://en.wikipedia.org/wiki/File:Chinese_political_system.jpg). The Chinese also love and trust their government. Those I met did and statistics appear to agree. 97% of the Chinese people trust their government vs 37.3% in the US. And something unexpected to me—83% of Chinese think their Country is run for the people vs 36.7% in the US. (Stats from Robert Shiller of “Irrational Exuberance” fame).

They are incessant savers. Statistics say greater than 30% of gross earnings is saved (at personal and national level) compared to our negative savings rate. When I asked what my small sample group would do with being gifted a day’s earnings? “Save it.” How about a month’s earnings—wanna buy something? “Nope.” A year’s earnings? Still no takers. Definitely a different twist to what I expected from my Western mindset (buy a new Macbook Pro anyone? just me?).

By having a culture of saving, China is cash rich. This is entirely intentional. China has been using years of US trade surplus to raise the standard of living for large portions of China. This was encouraged by policy—linking the Yuan to the dollar meant that no matter how much USD went to Asia, we’d never feel an increase in pricing. And China didn’t mind—a decade or two of leveraging their massive work-ready population means they have been steadily and steadily getting stronger in the purse.

The mandate now appears to be—“go up the foodchain” for every business vertical and deliver everything in China, by Chinese companies (see Li Ning below). This means taking a hit on quality, performance and usability to learn by doing—and owning the know-how. This isn’t just in the approach to cars, buildings and electronics—they are saying “No” to Oracle DBs and AppServers and looking at what open or adoptable replacements they can own within their bounds. BTW, the logical extension here—if this is pulled off—is that China becomes incredibly self-sufficient, has a huge personal and country surplus.

Amazingly—I remember the late 80s and the Japanese “invasion” buying up our baseball teams to chunks of Manhattan based on a super-powerful Yen. At the time, I was a sushi fan and liked Japanese gameshows (and their focus on education). Hey—having Japan invested in the US might help us more than it hurts! I just hoped they didn’t want a refund after they got a case of buyer’s remorse. As it turns out, Japan’s taking over the US didn’t pan out (Japan had it’s own housing-financing-banking-bubble that is still clearing). Maybe China will have to watch for the same thing. Nobody ever expects the Spanish Inquisition?

If nothing does come by surprise, and they continue a steady and calculated path forward, they will arrive as an organized and educated global power. Their population will have a reasonable standard of living possibly greater than many Westerners (is it just me seeing those “feed an American” banner ads?). They will be able to decide whether they want to continue to provide producer capacity to foreign brands—or instead their own (they really do make everything I’m wearing, my computer, my desk, …). And we all can be encouraged to look at the value of being a Westerner.

When opportunity and education are leveled I see a more connected world—and a globally leveled standard of living. Maybe “The World is Flat” run backwards—its supposition that communication and distribution systems have allowed the West to export our economy to developing nations also meant that developing nations have sent back to us their standard of living.

But I digress…

I’ve checked in and wanted to freshen up with a haircut. The hotel stylist was happy to oblige, no English spoken!

The haircut was so bad (I’ve got proof) I tried to take a photo in process—but I wasn’t subtle enough to make it happen. Here’s my fresh China haircut:

  

No that’s not wind. That’s the style!



OK. Day one still and when in Rome, do as the Romans do! I’m a 2-decade vegetarian with adventure at heart. In Beijing (aka Peking), I was going to have Peking duck.



And phew. That’s a lot of duck. Greasy, greasy, gamey duck! Good. But a lot of duck! In fact we had the 431,817-th duck served at that location. w00t!



Then a little street market where being white means “I’m ready to pay 10-20 times what anyone from China would actually pay for this stuff.”



Then a real win. In one of the big downtown shopping plazas, there’s two Nike stores and then this amazing store called Li-Ning. It’s awesome. Great athletic wear. Incredible quality. Cheap! And a beautiful location. It’s all Chinese too! And this guy? He’s welcoming me to take my pictures outside.



Why’s Li-Ning interesting to me? Because it’s the next step of our modern global commerce pipeline for China to own. Today:

1. Nike sponsors athletes, places ads, you want to buy NIKE.

2. Nike finds the lowest cost-effective place to build NIKE products, thereby maximizing gross margins—say 95%+ in shoes.

3. Producer-Country locked into production-role since branding and marketing talent not evolved within their borders.

China is at the next step:

1. Li-Ning sponsors athletes (China’s 1990 Olympic Gymnast is… Li Ning!)—providing all the Beijing olympics athletic wear and reaching abroad sponsoring Spanish and Swedish athletic teams. If you are in China. You prefer Li Ning over Nike or Adidas.

2. Li-Ning has its own cost-effective production and would thrive in the huge margins set by foreign-weighted pricing. Even at China-friendly pricing, the quality is amazing and the styles are fresh and compelling. Note that little things like the YKK (Japanese brand) zipper (look at your US-branded apparel and you’ll see YKK on anything over $100)—are replaced by KCC. Beautiful quality and my money’s on it being another Chinese company.

3. Now Producer-Country benefits from all the margin. They benefit from decreased costs for their management, sales and marketing. They benefit from making a profit in a weak currency (the Yuan)—which means any sales outside of China will be redefining to the world’s other brands locked in the old model.

Why don’t I think I’d say the same thing 10 years ago? Mainly because we’ve had Chinese brands before and in my mind they have been associated with poor design, drab (someone I met said China had 3 colors for all clothes in their childhood), not well branded and in the end their apparent value was low enough that we’d buy our known and marketed-to-us brands instead. Not anymore. I love my Li Ning. Note btw, that this is Li Ning’s logo (it makes a nice swoosh on the side of a shoe):    



Flipping a few slides. There are birds in cages. Like dozens of them in the small strip of road between the Swissötel and the neighbor building. Dunno.



Then a bit of work stuff… off to bed—and up for a bit of sightseeing. Tieneman Square with my coworker and translator:



The Forbidden City (one of 9 “gates”). Think The Golden Child:



Then to some lunch, where I put aside delicacies like “Man and Wife Lung Slice” and “Bittern Duck Tongue” for some tofu and vegies:



And then dinner is upon us. My host gets word I’m a veg and books a buddhist vegie only restaurant. I—uhh—ask for a beer (no alcohol). It was very stylish. That’s the parking attendant. Tarp to enter (did I mention Beijing was COLD!).



Had a great dinner!

I’ve learned—China need be on our radar if it can be. Pressures may be so large or internal that we won’t get the time of day. But then again—looking at where China is at in their development, we can do some really cool things. For instance. Baidu—the Chinese eBay? Not that far of an implementation from eBay! Zhanzuo.com? China’s Facebook clone with 7mn users? There are huge open markets in China that are absolutely unaddressed. They have a growing “chuppie” class (I didn’t make that up!) that’s going to be as large as the entire US population in the next decade. From SaaS to platforms to networks, there’s huge end-user value to bring to the market and I’ve become intrigued by opportunities to leverage what we do into a fast-moving internet Wild West.

*Now—politics here—China isn’t doing everything right for everyone. I can’t say we in the West do either. The people I’ve met in China were heartfelt, warm and well-intending. As China gets a clear voice for the Century they must be able to work through their pains—just as the US will have to work to get through ours. I do believe it to be a fact that the East will be teaching the West for the 21st century. It cannot do anything but good to establish outreach and open doors to learn and take part of their growth. *

Finally. Work done! We hit the bar. And there we go. UK, US and Russian pop videos blasting away. Absolutely bizarre. We hop bars and there’s a great singer who calls me out as I type away on my iPhone. She says it’s awkward to be in a foreign country not knowing what people are saying, so here’s a song you’ll understand. Norah Jones! Hah—she belts out Norah Jones. Too funny.

One more hop to the last bar (we’re lightweights one beer each bar!)—and there’s a duo of Chinese men next to us. RATTLE RATTLE SMACK! We look over and they flash 5-3 and 4-4 with their fingers. They’ve got cups of dice and are getting deeper in loss into a big bottle of Chivas Regal Scotch. OK. Time for bed and an early flight home!



Bye Beijing Airport!



Bye pairing dudes!



Ahh! That last row of the 747-400. Seat 41. No reclining. Oh boy! Just 9 hours. Did I mention it was freezing?