Archive for Entrepreneurship & Business
August 4, 2008 at 8:04 pm · Filed under Uncategorized, Knowledge and Experiences, Business Climate, Learning through Foreign Cultures, China News
As of yesterday all the food & drink vendors and retail outlets in and around Shanghai’s subway stations have cleared out their inventory and closed. No more grabbing breakfast in the subway station for me. 
They’ve even put tape over the doors to make sure no one sneaks anything inside. Some larger, more established outlets are still running, such as McDonald’s.
How do they decide who stays and who gets closed down?
Do they compensate the stores that are forced to close?
June 29, 2008 at 6:06 am · Filed under Uncategorized, Knowledge and Experiences, Tourism, Business Climate
This article published this last week on Yahoo, entitled Olympics could be a bust for Beijing hotels, confirms many of my predictions:
China has spent a reported $40 billion on new infrastructure and stunning venues, hoping to impress visitors with a modern city when the games begin Aug. 8. But the lack of reservations could shake the city’s hotel industry, which has more than doubled its five- and four-star hotels offerings to 160 since Beijing was awarded the Olympics seven years ago.
Ha declined to reveal his hotel’s occupancy rate, but he expressed concern over a report last month from the Beijing Tourism Bureau that showed five-star hotels were 77 percent booked, and four stars were at 44 percent.
Well, the occupancy rate was higher than I’d heard, but still not great when you consider,
Some five-star hotels are in good shape — at least during the Olympics — because they secured reservations from Olympic sponsors or Olympic committee delegations.
[…]
“They need to come, and they have no choice to turn back now,” Sander said. “They have put so much money down, they cannot draw back.”
Even all the greedy apartment owners are finding themselves not only without sky high Olympics rentals, but with no tenants at all.
In response to questions about visas,
“Beijingers will enthusiastically welcome foreign tourists,” said Zhang Huiguang, director of the Beijing Tourism Bureau. “But for terrorists and troublemakers, we’ll unite and fight against them.”
I like the use of the term ‘troublemakers.’ China is openly acknowledging they’re not just worried about terrorists but also about protecting their image. As such,
Students have been targeted too, because the government fears they might side with political activists if protests erupt during the games.
Anyway, just read the article, and if you have Olympics tickets (or know someone who does) but aren’t going to use them, I’m already here and I’m happy to buy them from you!
May 11, 2008 at 2:16 am · Filed under Uncategorized, Knowledge and Experiences, Entrepreneurship & Business, Entrepreneurship, Business Climate
You’re planning your next internet company, you intend to reach out to a broad audience-the whole world, so where do you base it-West Coast of the US, Europe, or China? (This is by no means a comprehensive analysis of this topic.) These are a few thoughts I have on the relative advantages of each location, based on what I know about the SNS (social networking) for language learning industry, including my Shanghai-based employer.
Advantages of China–
- Lower cost structure (labor, facilities & equipment)
- Huge market, the Chinese love their interactive, instant gratification web apps
- Entrepreneurial spirit, try anything, wild west gold rush mentality
- VCs (Venture Capitalists) may be looking more at China’s internet players because China now has the most internet users in the world, and China’s internet players have more solid histories of revenue flow than Western internet players
- Western students will intern for free just to say they’ve worked/interned in China, ‘the hot new place to be’
China’s distinct Disadvantage
- Relatively inefficient, unproductive programmers, engineers
US’s Advantages–
- High quality technical staff
- Proximity to Silicon Valley & VCs
- Proximity to a lot of tech conferences where you can meet VCs, influential bloggers, potential partners
- Ample opportunity to get your message out because of proximity to influential tech related media
Europe has similar advantages as the US, but not on the scale they exist in the US. There are some tech conferences in Europe, there are VCs in Europe, but the media coverage for tech stuff is relatively limited in Europe.
America’s & Europe’s distinct Disadvantage–
- High costs of labor, office space, infrastructure, etc
In conclusion, Europe seems to offer the fewest benefits. Not surprising, the cost differential makes China a very attractive place to base your start up. The US is the best for getting very influential and widely seen English-language media coverage.
Perhaps the optimal solution is to have the marketing/PR person (or firm) in/near Silicon Valley, the technical team, led by a capable Western project manager, based in China, and the executive going back and forth.
If you thoughts on aspects I’ve overlooked or other ideas, please post them in the comments section below.
April 13, 2008 at 6:35 am · Filed under Uncategorized, Entrepreneurship & Business, Business Climate
As Facebook looks to its Chinese users to translate the site into Chinese, the expectation is that Facebook will soon enter the Chinese market. Facebook tried to enter China previously through acquisition of an existing Chinese social network but nothing came of the negotiations. Will Facebook have more luck this time? Or better yet, will Facebook be more successful than other overseas internet companies have had trying to enter China? (See below slide show) I think Facebook may have somewhat of an inside track with current overseas Chinese studying in universities who’ve already gotten onto Facebook. Maybe those users can help it ‘go viral’ in China. Facebook already seems to have developed a small user base among outward-looking, international business-oriented young people. I know many have sought to be my friend on Facebook, regardless of whether we’d met or not.
Perhaps the better question than whether Facebook can scale in China, is whether it can successfully monetize in China the way China’s own social networks have done. Facebook does not make much money on advertising currently. Chinese social networks, on the other hand, have different revenue models making them more profitable than any advertising-based model developed by Western-based social networks.
Another concern I have about Facebook offering a Chinese-language version is whether that will make it yet another target on the government’s internet block list. The Chinese government already blocks more Chinese-language sites that are sensitive than English-language sites, for example wikipedia.en is sometimes available but wikipedia.cn is never available within Mainland. Therefore, if Facebook is offered in Chinese, that makes it even easier and more accessible to Chinese users, including groups for or against T_bet independence, F_lun G_ng supporters, etc, as well as other sensitive information contained in pictures and videos on Facebook. My Facebook profile is already frustratingly blocked in China (for some unknown reason), I don’t know what all of us expat Facebook addicts would do with so much spare time we’d have if Facebook was totally blocked.
Slide show about the difficulties foreign internet companies have had in China by Jonathan Haagen (Economist Intelligence Unit)
March 25, 2008 at 5:53 am · Filed under Uncategorized, Knowledge and Experiences, Entrepreneurship & Business
China’s internet firewall has been working in overdrive lately in the wake of the crackdown on the Tibet protests. Last week Google video and Youtube (owned by Google) were down all week; Youtube came back online on Sunday. Google News in English, news.google.com, was even down for a day! Last week, I also ran into other screens and filters that normally don’t impede my surfing of the net in China, indicating that indeed, China’s internet censors were working overtime.
Despite all the blocking, what I found interesting is that my Chinese colleagues knew about the situation in Tibet even before I did (I wasn’t really watching the news when it started). Many of them had also seen videos of the situation before all the videos sites got blocked.
Though the Chinese government has only temporarily blocked international videos sites such as Youtube, it’s taking a harder stance with Chinese sites and forcing many to shut down altogether. To escape a similar fate, Google has and continues to filter its news.google.cn results for searches in mainland China.
If all this is frustrating to you, try a new Wiki site called Wikileaks which is dedicated to getting information in front of the public eye. Wikileaks released many videos and photos of the Tibet situation, and is, not surprisingly, blocked. However, a simple proxy server will solve that problem and the videos are a lot easier to view than Youtube’s were all last week.
If the great firewall of China still hinders your movement around the net, options include the Firefox plug-in Gladder and Tor, a volunteer relay system that allows users to surf the web anonymously. Tor may be just the answer we China-based, avid internet users need to have full access to the information available on the internet.
March 11, 2008 at 5:31 am · Filed under Uncategorized, Knowledge and Experiences, Entrepreneurship & Business
The number, type, variety, and frequency of Beijing 2008 Olympics’ advertisements is simply astounding. In the lead up to the 1996 Olympics in Atlanta, I don’t remember nearly so many advertisements relating to the Olympics. Granted, I wasn’t in Georgia or even Atlanta, but then again, here I’m not in Beijing either. I was, however, in Athens just a few weeks before the 2004 Olympics there and the number of Olympics-related advertisements doesn’t even come close to approaching that of Beijing’s Games.
There are corporate advertisements as well as public service advertisements and also simply the use of the Olympics name and/or logo. In the corporate world, everyone from global companies to local companies, health-enhancing to health-damaging products, computer, and pot noodles are all associating themselves with the Olympics. UPS is an official Olympics sponsor and is using its advertisements to convey its global presence, particularly its presence in China. (Notice the Bird’s Nest stadium. Picture from a Beijing subway station.) 
Amway is also associating itself with the Olympics, to build an image of offering beneficial health products to Chinese consumers, suggesting that taking Amway’s products could make you healthy and fit like Olympics athletes. 
Chinese brands are also trying to create an association with the Olympics, such as Bank of China, pot noodles (yes, there really is an official pot noodles sponsor), a new housing development in Guilin, local Beijing-based brewer Yangjing (in addition to the two other beer companies, Budweiser and 
Tsingtao), and even southwestern China’s Guangxi Tobacco Company. Why the tobacco company is associating itself with the Olympics, I haven’t really figured out. Sure, the Olympics is a recognizable brand name and association with the Olympics might lend credibility to Guangxi Tobacco Co, but are cigarettes really meant to be associated with the world’s premier sporting event? Not to mention, smoking is going to be banned in all indoor locations in Beijing during the Olympics, so how do you sell cigarettes when there’s no smoking allowed? (Notice the use of the Bird’s Nest stadium, a smoke-free zone.)
Corporations aren’t the only entities tapping into the brand power of the Olympics to spread their message, the government is also taking advantage of the event. Public service campaigns even in cities as far away as Kunming are using the Olympics to help convey their message. From billboards showing how to queue to slogans encouraging community spirit and neighborliness, all convey their message with the help of the Olympics. 
Everywhere you look, you are reminded of the Olympics: the Beijing Babies are on China Mobile recharge cards, store windows display the 5-ring 
logo, even seat covers come imprinted with the Beijing 2008. Dar Es Salaam, Tanzania wasn’t even too far away escape Beijing Olympics ads.
The English-language Beijing 2008 Olympics website agrees that advertisements featuring the Olympics are numerous. So why are there so many advertisements and reminders of the Olympics? Because it’s an important event. Perhaps all the references to the Olympics attest to the Chinese people’s pride in holding such an event and its rare opportunity to showcase China and all its glory to the world. Perhaps because this is the single most important globally-watched event that China can control and use to make a positive impression on the world. Perhaps the Beijing Organizing Committee has allowed more sponsors and suppliers for these games than either Atlanta or Athens allowed. Perhaps advertising is just that much more prominent in China than in Greece, but certainly not compared to the US. What else explains the fact Olympics advertising has been prolific in the lead up to the Beijing 2008 Olympics Games?
March 4, 2008 at 9:12 pm · Filed under Uncategorized, Entrepreneurship & Business, Business Climate
I recently heard a story about a German-owned travel company in Shanghai from a friend who works there. The company has been operational in Shanghai for 5-10years. When the company started, China forbid foreign-owned travel businesses so the company operated as a ‘consultant’ who just also occasionally booked trips. (Note: This has changed somewhat since China began implementing the policies of the WTO.)
The company had 4 Shanghainese employees, who kept wanting more and more money for less and less work. One of them was the flight specialist who had good relations with the airlines. Each time she booked another trip, she kept pushing the airlines to give her more and more commission, in addition to pushing the company to pay her more. Eventually the company had to let her go. When she left she took the entire database of clients with her, then contacted all of them and told them not to use the German-owned company anymore but instead to go through her.
One of the other, now former, Shanghainese employees disgruntled over not being paid more, goes to the police. One morning she brings the police back to the company and the police demand that the company hand over its server. The company refuses, saying the police have no search warrant nor other documents allowing them to take the server. However, the company can’t do anything, so the police take the server.
The 4 Shanghainese employees get together and go to the labor and work bureau and complain that the company never paid any social security for them. Throughout the term of their employment, the company offered all of the employees the option of paying the social security into the system or giving it to the employees as part of their salary; of course, all of the employees wanted it as salary. Now, these employees come back saying the social security was never paid for any of them over the last few years. As such, now the company has to repay all of these 4 employees social security again for the entire length of their employment.
Operating in China is difficult, whether it be because of employee issues or government and legal issues. This company was by no means operating strictly in the legal realm, which of course is difficult because there are so many gray areas in business and law in China. But that made them vulnerable when other issues came up.
November 9, 2007 at 11:26 pm · Filed under Uncategorized, Entrepreneurship & Business, Entrepreneurship
For the non-lawyer among us, forming the legal entity for a new business can act as a small roadblock in the early stages. In China, formation can be a much larger roadblock, especially as a foreigner trying to navigate countless ministries, language barriers, develop the necessary guanxi, and just generally figure out how the system works.
Due to this, my idea was to have my business started in China in the name of a local partner who’d be responsible for all government, incorporation, and tax issues while leaving me with execution and operations side of the business. In fact, its much easier for Chinese to start a business (in China) than foreigners. Indeed, Chinese persons only need CNY1 to be able to start a business. Anyway, I thought this was the best plan, but then questions of selling, repatriation of profits, etc started to creep into my mind so I sought additional advice.
A fellow American entrepreneur in China suggested I incorporate a holding company in Hong Kong which would then open a wholly foreign owned subsidiary (WOFE) to operate in Mainland. This allows the HK parent company to be bought and sold without ever touching the subsidiary and therefore having to deal with title transfer in Mainland (apparently a nightmare).
I cross-checked this advice with another Australian entrepreneur in China who said this only works if you have operations in another country. According to her, the Chinese government doesn’t allow this method if you don’t have operations in another country, which I have no intention of having (initially, if ever).
Further research suggests I may not be eligible for a WOFE anyway as I intend to ’sell to the Chinese market,’ well, more accurately provide a service to expats (and some Chinese) within China but I guess that’s still the same. According to that same site, my local partner could act just as I had in mind: “The local partner […] may be a silent partner who was acquired by the foreign firm simply to gain domestic market access.”
A different site suggests that information is outdated and therefore “With China’s entry into the WTO, these conditions were gradually abolished and the WFOE is increasingly being used for service providers such as a variety of consulting and management services, software development and trading as well. […] The advantages of establishing a WFOE include: Capable of converting RMB profits to US dollars for remittance to their parent company outside China.” By comparison to the Chinese who can start a business with CNY1, a WOFE requires registered capital of USD120,500.
Guess its time to consult a lawyer. In the meantime, I welcome anyone’s advice who has had experience with this.
November 8, 2007 at 7:22 pm · Filed under Knowledge and Experiences, Business Climate, Traveling
In my air travels both domestically within China and internationally on Chinese airlines, I have been incredibly disappointed. After yesterday’s flight on China Southern, I realized I didn’t need to be disappointed with all Chinese airlines, just China Eastern and Air China, because China Southern does a great job and does things ‘right’ where the other two don’t. For example:
- China Southern did NOT make me walk on the tarmac in Beijing in 40degree F weather
- CE & AC always let you freeze (or roast as the season may be) and waste your time by making you walk on the tarmac and then take a bus for miles to the terminal because they are too cheap to pay for a gate & a jetway
- China Southern’s PA announcer spoke English well enough and clear enough I could actually understand what she was saying
- China Southern’s plane was the newest plane I’d been on in a very long time
- China Southern gave me a comfortable amount of leg room such that I wasn’t squashed into the seat in front of me
- My last flight on AC was so crammed that I couldn’t open my laptop fully even when the seat in front of me was upright
- My bag arrived on the carousel before I’d even gotten there! Perhaps this is only a compliment to the fact that China Southern actually had a gate, but still it’s great service compared to the normal 15-20min wait I have with CE & AC.
China Southern certainly deserves praise. My only 2 complaints were, the food was not very tasty (which I think is because of the airport catering company, not the airline catering company) and the flight was late (only 20min though). All-in-all, I’m very pleased with China Southern and I’m glad to know that some airline in the Chinese airline industry differentiates itself positively.
February 14, 2007 at 4:39 am · Filed under Uncategorized, Knowledge and Experiences, Entrepreneurship & Business, Learning through Foreign Cultures
(Well here’s a very strange situation…I wrote this Sunday night. It got posted to my website and was even imported into Facebook. But when I looked at my website on Monday, it was gone! Either someone deleted my post or my content management system lost it. I have no idea how either could happen, but I was not happy that I lost an entire post. Then today when I was looking at my FB profile, here it is, saved in FB and not all my writing has been lost! So happy. Now if only the mystery could be solved. Anyway, on to the story…)
Gan Bei
Well last Wednesday was definitely an experience in Chinese culture, specifically Chinese banquets and drinking…
It all started at lunchtime–that’s right, at work, in my uniform, being served by the people I teach English to, lunchtime at the hotel. Out hotel hosted some out-of-town Chinese guests for lunch, about 24 people. Everyone was given a wine glass. My boss made the introductory toast and we finished our first glass of wine. Then the others at the table started 1-by-1 going to my boss and each ‘gan bei-ing,’ ie cheers and then finishing off their glass of wine, followed by tipping their glass to the other person to prove they’d finished it. Not long after, they started coming to me! each 1-by-1 to gan bei–that’s 11 people, including my boss. Then my boss told me to go gan bei with the 12 individuals at the other table, needless to say I thought I might pass out just from shock that he suggested such a thing. Let me remind you, I’m still wearing my uniform, including my name tag, sitting in the middle of my employer’s banquet hall being served by my colleagues. Thankfully the manager of guest company suggested 1 round of gan bei was sufficient for the whole table rather than individual by individual.
Well that was a nice buzz to get me through the afternoon and on to the next gan bei event.
Our company New Year’s party happened to be that evening as well, a total of about 20-22 tables in the largest function hall. The festivities started fine and relaxed, appetizers were served and the many Chinese speeches began. Then some meat dishes were served and after that, it all began again…I started with a nice Spanish drink called tintoria de verano, a mixture of sprite and red wine, and cheered my table, only 1 swallow, no need to finish the whole glass. I thought I’d go to a couple of tables where I personally knew others and do a cheer with the table–maybe 2-3 tables at most. So it starts fine, another swallow of my mixed drink with the front office staff and 1 with the 1st table of housekeepers and 1 with the first table of F&B where I finished my mixed glass. I thought I was done–my glass was empty and I thought I’d gan beied with everyone I knew. Well it seems many other employees recognize me even if I don’t know who they are, which is not surprising given I’m the only white employee. Little did I expect this was only the beginning…But then I was pulled into another table and complained ‘oh my glass is empty,’ no worries, they have an entire bottle of red wine, nearly half of which they poor into my glass. And with this table, it’s not just 1 swallow, its the entire 10-oz glass of red wine. What a painstaking endeavor. As soon as I manage, after about 3-4 tries, to finish that glass, I’m whisked off to another table, which doesn’t offer wine, but rather Maotai, Chinese whiskey. Fortunately, I convince them shot size is enough to gan bei and that goes down without too much pain. And away I go to another table–was it wine they gave me or something else? I don’t even remember, but after that it only got worse. Another full glass of red wine and the manager at the table pours herself 1/4 of what she gives me but expects me to match her in 1 big gulp. My body is starting to resist. The wine won’t pass my throat. It takes me 4 tries, and someone taking a 1/3 of my wine and lots of begging off before I can finish that glass of wine while standing at that table. The next table, another group of F&B people–where did they all come from?!?! pours about 4-oz of maotai in my glass and they expect that to be taken as if in 1 shot–are you kidding me?!? That stuff smells worse than rubbing alcohol! At first I try to take a large gulp, my body fights it but I manage to get it down, hardly made a difference in the level in the glass. Again, same thing. Another time. Each time my sip is getting smaller and smaller until I’m just pretending to open my mouth. Then, with about a 5′2″, 180lb boy, they make me wrap arms (champagne wedding style) to drink to finish the last of it, but of course I can no longer tolerate this in my throat so I merely pretend. Fortunately that was entertainment enough and they don’t seem to notice I didn’t finish my glass.
Then another table wants me, I beg off, promising to comeback after I settle down. I go back to my own table to rest and get something to wash my mouth out and my new manager says ‘ahh let’s gan bei now that she’s back!’ But first he looks in my glass and goes, ‘you can’t drink sprite, that’s not real gan bei.’ I let him have a whiff and he reels backward not expecting a nose-full of pure alcohol. He decides maybe I don’t need to finish the remaining 1.5-oz in 1 large shot and let’s me off easy–thank god. I pour the rest out and look around to my sales colleagues for sympathy. It’s there.
Not more than 5minutes later, someone else that I can’t recall ever having seen in my life comes to the table and asks if I’d do the honor of gan bei-ing with them. How can I refuse? It would be downright rude. And there’s a bit of shock and admiration from my sales colleagues and cheers from the table who I’d accepted their invitation. I finish a small glass of wine with them and think, well, that wasn’t too bad after the maotai, but haha they had other ideas. They decided that that wasn’t enough and they were going to add a full glass of beer on top. I don’t drink beer, absolutely not. Therefore, at that point, I’d simply had enough. No matter what invitations to other tables I was offered, I was not drinking anymore. It was certainly not one of my drunkest nights but not a pleasant experience by any means. Who ever thought drinking terrible Chinese wine (or whiskey) was a good plan?
That was my day of gan bei. 1 finished glass after another. I’ve lived the experience of the Chinese drinking culture and I will be happy not to have to do it again. The next day, the China Daily featured a survey claiming that nearly 70% of Chinese don’t like the high-pressure, finished glass, gan bei style of drinking. Hear Hear to that!
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