Archive for Entrepreneurship & Business
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!
February 10, 2007 at 4:28 am · Filed under Uncategorized, Entrepreneurship & Business, Tourism, Business Climate
As I mentioned in the blog below, there are certainly issues that need to be worked out in China’s travel/tourism industry. In the following article, these are elaborated on, even to the point of suggesting they are real problems that could undermine China’s ability to grow its tourism industry.
Tourism Skills Shortage in China
onrec.com
As a long time resident in China I have had the dubious privilege of watching the tourism and travel industries develop rapidly over the last decade. The development is the good news but the pre-development stage was a bit of a struggle for us all.
Over the last week I have read a number of articles indicating that China is going to move from being the world’s 4th largest tourism destination, with 124 million inbound tourists per year, to the world’s 2nd largest tourist destination, with countless more. This will happen over the next 10 years and it is great to hear. It means real change in people’s lives; overseas travel for people in China and the arrival of literally millions of tourists for upcoming events like the Beijing Olympics(2008) and the World Fair in Shanghai (2010). The downside is that there will be an inevitable shortage of skills in the tourism and hospitality sectors because the growth is massive and exponential. Businesses will suffer, and in fact are suffering right now because the growth has already started. Hiring volumes are huge and the cost of candidate identification and assessment is high when the salaries on offer are below the average for all other industries. At present there is a clear shortage of Travel Consultants in China. This stems from the exponential growth of the travel industry and the fact that so few people in China have actually been abroad in the past. In an exponentially growing industry the number of people with 10 years experience tends towards zero, and the travel industry certainly follows this path. It is very difficult in China to find someone who knows about the difficulties experienced by travellers who arrive at Heathrow(London) or JFK(New York). This is simply because so few people have actually been to either of these airports. Go back only a few years and it wasn’t even possible for someone in China to get a visa to go to either location. So, for example, it is very difficult for local Travel Consultants to really understand that you need 4 hours transit time when changing terminals at Heathrow. It’s hard to even envisage when your comparison is the small airport in your local city. And more importantly, it’s hard to effectively advise your clients when their travel plans involve multiple locations and different time zones. In effect we are looking at a skills shortage that can never be solved with simple training. The hospitality industry is a little different because it has been growing strongly for more than 10 years. So strongly in fact that it is often seen as a great training ground for other industries like sales, marketing, advertising, PR etc. Hotel people are much sought after because their language skills are developed, they have excellent presentation and they understand customer service in a very deep way. They can transition easily to selling advertising space or managing PR events for corporate clients. Unfortunately, the hospitality industry is now growing at a rate where training cannot keep up with the buildout of new hotels. Occupancy rates in hotels in China are thought to be over 70% and in many cities it is hard to get a hotel room, even when there is no major event going on in that city. Room rates have gone up significantly too. The tourism industry in China is already racking up over US$300 billion a year in turnover. It employs about 17 million people and is growing at about 9% per year. So the logical consequence of this is an ongoing struggle to recruit, retain and motivate staff. A struggle that will only get worse in the short term. The danger is that if this problem is not solved, the industry will not reach its potential. This has huge consequences when travel and tourism combined currently employ about 10% of the entire China workforce. Having the tallest hotel in the world is good, but filling it with qualified staff is much better.
I don’t necessarily disagree with the issues discussed in this article, I just don’t see them posing as big of problems as he makes them out to be. China’s churning out the tourism/hospitality students at a rapid rate and the ones I know and work with are fantastic people, with excellent English and service skills. If they come straight out of undergrad this smart and well-trained, I’m sure they can learn and develop great management skills as well. As such, headhunting those truly capable tourism/travel middle and senior-level managers may just be great business idea.
February 10, 2007 at 4:06 am · Filed under Entrepreneurship & Business, Tourism, Entrepreneurship, Business Climate
Check out this report from the UNWTO:
WTO: China Will Become The Largest Travel Destination By 2020
February 5, 2007
The World Tourism Organization says that by 2010 China will exceed Spain and become the world’s second most popular travel country, and by 2020 it will become the largest travel destination in the world.
The Madrid-based organization says that despite the appreciation of RMB value in 2006, China’s inbound tourists increased by 6% in the year and reached 49.6 million.
WTO Secretary-General Francesco Frangialli and Marketing Information and Promotion Department director Johann Kestner both estimate that China will see faster growth and will exceed Spain in the next four years.
Frangialli says that China, which has abundant capacity in tourist reception facilities, will probably surpass France by 2020 and become the most popular travel destination in the world.
WTO statistics show that China’s outbound tourists increased from 20 million in 2003 to 31 million in 2005.
Wow! With so much growth, that means there’s a huge opportunity. And I’m already in China! Especially in China, where the industry is not nearly as developed as in the US or Europe, there are so many issues yet to be worked out, such as service, transportation, language difficulties, the intimidation factor, etc. So now the question is, what is a good business plan to take advantage of that report?
The problem with businesses in the travel/tourism industry is the margin is tiny. People start businesses and work in the travel/tourism industry for the sheer love of travel and helping others to travel. The barriers to entry in this field are quite low, buyers power is high (brand recognition is low), and the threat of substitutes is high. (Porter’s 5 Forces.) These factors combine to keep margins in this industry quite small.
Nonetheless, I, like so many others want to start a business in the travel/tourism industry, particularly related to China. I’m starting to brainstorm and have a couple of ideas, but I welcome any others however wacky they may be. Feel free to offer suggestions or business ideas in the comments below.
January 31, 2007 at 4:53 am · Filed under Entrepreneurship & Business, Tourism, Entrepreneurship, Learning through Foreign Cultures, Traveling
This interview by a China blogger with an—dare I say—expert on Chinese outbound tourism is quite interesting and very informative. Roy Graff’s business concept is brilliant, just wish I’d thought of that. Tourism is fundamentally a good thing and Chinese outbound tourism helps to reduce China’s astronomical trade surplus. And I’m all for speeding up the ADS (Approved Destination Status) procedure, especially so that countries like Canada and the U.S. will benefit. With the recent opening of the Los Angeles VCB office in Beijing, places like LA and Vegas will certainly be among the first American cities to benefit when the U.S. finally obtains ADS. But the question is, are they ready? Can they handle and service that many Chinese tourists? Do they have the cultural sensitivity? Do they have the language skills? Certainly, with large Chinese immigrant communities (particularly in LA) they have the food to satisfy Chinese tourists. But what about the activities they will do and the fact that the majority of Chinese people can’t drive? These are the issues that Roy Graff and his company, Ccontact, help overseas tour companies and destinations work through in their China strategy. How genius is that?
In the interview Roy Graff said he expected the trend in outbound tourism for experienced Chinese travelers to be
More people will choose to stay more time in a single country or go on ‘theme’ tours, such as cultural Europe, sports activities etc.
In this case, I’m going to have to disagree with the expert. I don’t think Chinese tourists are going to choose ‘theme’ tours, unless that theme is shopping. The Chinese usually aren’t interested in culture when they travel overseas, evidenced by the fact they travel in large groups which minimizes interaction with native peoples, they refuse to eat local food, and their favorite activity is shopping. A large part of the appeal for the Chinese to travel overseas is to impress friends and relatives back in China with where they’ve been and bring back designer goods and photos to prove it. Therefore, I expect the more well-traveled Chinese will seek out iconic places like Los Angeles where they can go to Disneyland and Universal Studios or Vegas where they will stay in the MGM Grand and say they’ve rubbed the lion’s foot and gambled in Vegas. And after that, they will look to more exotic destinations like Africa and even Antarctica. Despite the fact the Chinese people shun the sun, they are surprisingly in love with places like Hawaii and the Maldives.
Although Chinese outbound tourism has huge potential and will do a lot to expose the Chinese, one group, or one solo traveler at a time, to the outside world, I have to say I’m more interested in inbound China tourism. Hence, why I have a Shanghai shopping business catering to inbound tourists and work in a local hotel that receives many foreign guests. (Just a clarification: outbound tourism is people of the country being mentioned going abroad for travel; inbound tourism is people of other countries visiting the country in discussion. For example, my family would be China inbound tourists, whereas my colleagues wanting to go to the Maldives are potential outbound Chinese tourists.) This is why I proposed doing research on and working with local governments and the China National Tourism Administration to promote to foreign tourists the appeal of remote inland locations such as the Dragon’s Backbone Rice Terraces in Guangxi or Shangri-la in Yunnan. But alas, my proposal was not accepted; instead, here I am offering Shanghai inbound tourists custom shopping tours as well accommodations at a local boutique hotel.
Yay! Power to tourism! Power to entrepreneurship!
January 25, 2007 at 5:47 am · Filed under Uncategorized, Entrepreneurship & Business, Entrepreneurship
Saturday night, Andrew and I sat at a bar discussing how we could get our picture on the cover of Entrepreneur magazine, ie what either of us could do to become a successful entrepreneur. Not long after this conversation, a few USC alums walked in, including a couple who have started a number of their own businesses. The coincidence of this situation got me thinking about all the entrepreneurs I know in Shanghai. This led me to think that perhaps this wasn’t so much coincidence but rather a very expected situation. If it weren’t for the fact that we are in constant contact with entrepreneurs, we probably wouldn’t have been having the conversation at all, and with how many entrepreneurs we know in Shanghai, it’s not all that surprising that at least 1 would walk in.
Even though we didn’t come up with the next big thing, we do know plenty of entrepreneurs we can call on to ask for advice when we do. As such, I’ve decided to make a list of all the entrepreneurs I know in Shanghai.
Alex Cureton-Griffiths – Shanghai Networking News — www.shanghainn.com
Camille – Fashion Design
Charlie Chen – Swisstar Communications Consulting — www.swisstar-global.com
Chun Xu (USC alum) – Kingsway Investment Advisors Co. Ltd — www.kingsadv.com
Daniel Benefield – One Stop China, Ltd — www.onestopchinasource.com
Dave Whittingham – Consulting
Dilong Zhao – Black Card Life — www.blackcardlife.com
George M. Felbinger – China Golden Source Ltd. — www.chinagoldensource.com
Josh Steinberg – Software/Technology
J. (a USC alum) – Teavalize — www.teavalize.com
Keith Wang – Custom Printing
Kevin Chen– A social networking site for China
Lawrence Liao – WizHouse Consulting — www.wizhouse.com.cn
Marcus Lee – Ewarcus - www.ewarcus.com
Maria Trombly – Source Media — www.SecuritiesIndustry.com
Michael Bulter – an English teaching company — www.uru.net.cn
Paul Kung – Pacrim Martec Company — www.pacrimusa.com
Robert Tagg – Herbert Software Solutions, Inc — www.herbertsoftware.com
Sean Regan (USC alum) – Axis Industrial — www.axisindustrial.com.com
Toffler (USC alum) – Shop My Shanghai — www.ShopMyShanghai.com
Wen-Lee Ying (USC alum) – A wedding consulting and services company
Zhijie Wang (USC alum) – Shanghai Double-PhD Info-Tech Co. Ltd — www.haiguichina.net
If I forgot to mention you and your business in this list, my apologies. Please add your information in the comments section below.
December 4, 2006 at 4:14 am · Filed under Uncategorized, Knowledge and Experiences, Entrepreneurship & Business
As I sit at my job, I think it’s all right. The job itself is actually pretty good, yet I can’t help but wonder, is this it? I know I’m doing it for the pay and the experience now, because I know I’m young and have many opportunities ahead of me and I just need the experience first, before I can move on. Then I look at my colleagues, some of whom are the same age as me, but most of whom are older, have worked here for a longtime, maybe have kids or are about to have kids and I wonder what they think. I don’t see passion in their faces or hear it in their voices; many of them work 6 or 7 long days every week and I wonder why they do it, especially when they seem so listless. They clearly aren’t here for the experience, so I wonder if they are ok with the situation or if they’re (secretly) hoping for something better, or is it simply part of their mindset (rooted in Chinese culture) to just suffer through their boring jobs to provide a better future for their children.
In the past few months here, I’ve started exploring the attitudes toward work, entrepreneurship, and employment situations across cultures. What keeps people forcing themselves to get up and go to the same dreaded job every morning?
For example, my Dutch friend, Maarten, works in a large, well-respected Dutch company in Shanghai. He has commented to me that the Chinese employees that he works with are about as listless as my colleagues, but yet, in the mindset of many Chinese, having a secure, well-paid job at a big foreign company like that is the career goal in life. Despite the fact that these employees have attained the perhaps ultimate goal, they seem as bored in their jobs as anyone else. In fact, many of them (as reported to me) waste most of the day chatting on the Internet. Likewise, if we had Internet, I believe my colleagues would likely do the same thing. If you’re that bored with your job, is it really worth the security? Shouldn’t work challenge you, interest you, and make you believe you’re working toward a larger goal?
In Europe, much as Maarten described the goal being in China, people seek an employment contract with a big European company. This situation provides security because European employment contracts are hard to cancel. It also offers good pay and the possibility for advancement. If you have a good job, with the security in Europe, and are possibly on the management track, you have no reason to seek an alternative. You have the rest of your working career, including nearly 3months of paid holiday per year, already planned out for you. You have attained the ideal situation. There’s no reason to look further.
In the US, on the other hand, even if someone has a well-paid job, though by no means nearly as secure as those in Europe, nor with nearly as much vacation time, they often do wonder, is this it? They may look for a new job, with a better position, a higher salary, more responsibility. They wouldn’t be content to be just secure. Or, as is the American ideal, they may consider entrepreneurship. They may decide to take their skills and knowledge and experiences and go out on their own, to start their own venture. Entrepreneurship is the driving force of the American economy and small businesses are also the country’s largest employer. In this regard, the US is very different from Europe, with its risk-taking, pioneering, and entrepreneurial spirit.
Now back to China…where, between these two extremes, is China? In my experience, China is far more entrepreneurial than Europe. Some people start businesses at a young age and others, like many Americans, also get bored in their jobs and after saving enough opt, too, for the entrepreneurial route. I’m not sure that China is quite as driven by the appeal of starting your own business as Americans, but nonetheless the interest is certainly there.
So, then, what has happened to my colleagues and to Maarten’s colleagues? Are they too much a product of the Cultural Revolution, where they fear any success may be instantly stripped from them? But then, how has China produced so many extremely successful entrepreneurs in the last 15years, including the world’s wealthiest woman? It’s more likely they haven’t been exposed to the concept enough to consider it a possibility. And also possibly, that they’re willing to tolerate boredom 8hours a day in exchange for security, or in the case of the managers, long hours and hard work just for the sake of providing a secure life and steady income. And for some, they may not have the resources and capabilities to take a risk and go out on their own. It’s not a simple question to answer. Perhaps it’s the same thing that keeps many Americans stuck in boring jobs with mediocre pay…but what is it?
As for me, I certainly don’t plan to be ‘stuck in a boring job with mediocre pay’ my whole life. There’s far too much life to live and world to see for me to be willing to spend 8+ hours a day working for someone else. I just hope my own businesses will make progress fast so that I can be working for myself sooner rather than later. On that note, its time to put some effort into China Resources ASAP…
November 30, 2006 at 12:21 am · Filed under Uncategorized, Knowledge and Experiences, Entrepreneurship & Business, Entrepreneurship
As I embark upon starting another business, this time with my friend Rola, it seems time for another entry on entrepreneurship. When I think of entrepreneurship in China or am asked why are you here or asked how long will you be here, I recall a brief quote from The Wall Street Journal. (The WSJ is an excellent publication with many interesting and in-depth articles about China.) The article in the WSJ was read to me a couple of years ago by mom, already knowing my interest in China. The quote, as I remember it, is: “If I were young and fluent in Chinese, I’d go to China and get rich.” This quote inspires and pushes me to look for new opportunities because I AM young, trying to become fluent in Chinese, and just as capable as anyone else. Furthermore, since being in China only 4 months, I’ve likely met more entrepreneurs here than I had previously in my entire life.
Granted, this guy’s quote was referring to China’s boom days of the 1990s, but with annual GDP growth still exceeding 6%, I think it’s still a great time to be in China. Now, perhaps may be even better that the 1990s because there’s slightly more transparency in the government and government regulations regarding businesses, as well as the opening up to foreign competition as a result of China’s WTO accession. Not to mention, Chinese consumers are getting wealthier, with more disposable income, and presumably, there’s also been an increase in B2B spending.
So, when foreigners ask me, how long will you be here, I’m tempted to offer them that quote and respond with ‘as long as I can make money.’ When Chinese people ask me, ‘why are you here?,’ I’m hesitant to offer that quote, lest it sound exploitative and too counter to the ideals of communism. But on the other hand, my native Chinese teacher helped me improve my response to this question from 赚钱 (’make money’) to 赚很多钱 (’make lots of money’), so… 
When discussing this quote and my intention to make money in China, my friend said to me, but can’t you make money back home or anywhere? And I get that response a lot. Well, it’s kind of like the stock market–some are winners, some are losers, and some offer slightly better returns that others. You just need to know how to allocate your time and money wisely, and for me, right now, that’s in China.
November 6, 2006 at 4:42 am · Filed under Uncategorized, Knowledge and Experiences, Entrepreneurship & Business, Business Climate
Having read numerous books and articles on contract negotiations in China, I thought I had a good familiarity with the process…until it came time to negotiate my own (employment) contract. A common theme among literature discussing contract negotiations in China is after all the issues had been discussed and settled, the Chinese partner comes back to the table and starts renegotiating various issues as if they had never been settled or they were having second thoughts or were trying to extract additional concessions from the foreigner. This exactly happened to me. All of terms of my employment were discussed during my interview, about a week later I was presented with a contract (even after I started working), and I reviewed it. Generally it looked fine, though there were a few details I wanted adjusted, but still I would agree to it. Then they came back to me and say ‘Oh wait, there’s a mistake in that one. You are supposed to work 6 days per week.’ I’m sorry, there’s no way that’s a mistake. That’s a huge mistake to make. That’s a difference of 50+ days per year. Not to mention it’s against Chinese labor laws, which limits the work week to 5 days and 40 hours.
Though they wrote it off as a miscommunication, I took it as a contract negotiation tactic and came prepared to meet them at the bargaining table. In Chinese negotiations, one must be extremely patient. The Chinese don’t have the same sense of urgency to meet market demands, nor of urgency to beat competitors to market, nor of being bothered by the extreme amounts of time that can be wasted in negotiating contracts. They’ll outlast almost any foreigner on patience just waiting for the concessions they hope for. At this point, having remembered what I read about contract negotiation in China, I was prepared to bargain hard but also be as patient as necessary until my legs collapsed under me while working.
As I discussed with other friends working in China, the Chinese try to extract as much out of the foreigner as possible. This is true in Joint-Ventures as well, where the Chinese partner tries to retain as much control as possible and get technology transfers, etc. As far as employment, in the case of someone I know, they’ve asked her to apply for and teach an additional class and write all her own teaching materials (which of course they will keep and use in the future). According to her contract, presumably, she must follow all reasonable orders, but is doubling your teaching time when you’re already teaching 15-20 hours per week reasonable? But if she doesn’t do as they say, she will be fired and in doing so also lose her chance to obtain her masters degree. The company fully knowing this, is using this to their advantage, to extract extra effort from the foreigner without any additional compensation. Though according to my contract I must work unpaid overtime (if necessary), I have no intention of being sucked into one of these schemes, especially not before I’ve even signed my contract. Therefore, I’m prepared to stand my ground on this issue and ensure a manageable work week.
Perhaps because of the industry or maybe the Chinese are becoming more reasonable or perhaps because this company has done employment contract negotiations with a foreigner before or perhaps because they value me, there was no need for all my anticipation. The GM came to me the next day and said ‘you only want to work 5 days, that’s fine. Just work hard.’ Wow! So reasonable. Today the HR Mgr came to me and didn’t seem very happy I would only work 5 days per week, but since the GM agreed, he had no choice. (Was this another negotiation technique? His disapproval of the situation? I thought HR people were supposed to work for the benefit of the employees.) Nonetheless, a satisfactory end result without the serious negotiations I anticipated, but I did drop the other contract issues I qualms about as a 5-day work week is far more important to me.
So my advice is, seek out other’s advice and experience to the greatest extent possible before going into any contract negotiations with the Chinese. It may save you a lot of money and headaches. Then, be prepared for anything, from the most outrageous demands to the most reasonable compromises and if you find the other side meeting you half-way, respond with appropriate accommodation.
November 1, 2006 at 4:10 am · Filed under Uncategorized, Knowledge and Experiences, Entrepreneurship & Business, Business Climate
China is almost totally a cash-based society. This is particularly true in rural and western China where they lack the banking infrastructure to process any kind of transactions other than cash. This is slightly less true in Shanghai. As a society so heavily reliant upon cash, a number of things amuse or annoy me:
- Why do the banks have such short hours?! Yesterday I rushed from work to HSBC to try to get there by 6pm so that I could get enough money to pay my rent. However, my effort was in vain…they close at 5pm. I complained to the manager, what good does it do anyone who works a normal schedule for the bank to be open from 9-5 and NOT issue ATM cards? He told me to come at lunch. I was like, if I had that kind of flexibility in my schedule, don’t you think I would. Then he said if you’re a Premier customer we may be able to help you on the weekends. Well, I’m not. But I complained, HSBC in HK is open on weekends to all customers, why not in China. Seriously mister, this is China, you can’t be paying your staff that much money so just pay a few of them to stay an hour longer. I figured it was just an evil attempt by HSBC to keep my money a little longer until… So learning my lesson from yesterday when I needed to go get cash from my ATM (and chose the location where the ATM is only open when the bank is open) I made sure to get there before 5pm. However, this bank closes at 4:30pm and is Not open on weekends either! How do people function in an economy where they must have cash but the banks aren’t open convenient enough hours to provide it to them and where some banks don’t issue ATM cards?
- People carrying around giant wads of cash. Although I’ve seen it in Mainland China, the most poignant example I can give is when I worked in the hotel in HK. Mainland Chinese tourists would come in and pay for their rooms in cash (perhaps because they didn’t have credit cards). When a room costs about US$250 per night and someone is staying for (for example) 5 nights plus tax and service charge that comes out to about US$1500. When the largest bill in Chinese Yuan is approx US$10, that’s a lot of Yuan! To be exact, that would about 120 paper notes! I don’t know if you’ve ever held that many paper notes at one time but try simulating it with regular paper sometime to find out how thick that is. Then imagine these nouveau-riche Chinese men carrying around Louis-Vuitton men’s purses filled with stacks and stacks of Yuan in them. To go from the ridiculous to the sublime, now imagine a not very rich Chinese man (or woman) carrying around that much money in a plastic grocery sack.
- They check every single CNY50 or CNY100 for the embedded security features. As if it was worth every counterfeiter’s effort to copy approx US$6 notes, every single person (except foreigners) checks in detail–and under a blacklight, if possible–every single RMB50 or 100 note. When someone hands over the kind of cash discussed in the previous paragraph this is a very long and tedious process. As if that weren’t enough,
- They count multiple times, with machines and by hand, to check that there are indeed that many bills. When the Chinese man paid in for his JW room in cash the entire process took at least 20min because of the checking and recounting. This morning when I went to pay my rent (not only did I need my passport and I don’t know why) the woman machine-counted my 34 notes twice, then proceeded to hand-count them again as if the fact that I’d counted them, my roommate had counted them, and the machine had counted them twice was not good enough for her.
My reason for writing all of this is to point out the ridiculousness of it and to suggest maybe the Chinese government can design, print, and circulate a note larger than RMB100. It seems to me it would save everyone a lot of trouble from the counting to checking multiple bills for validity to not having to carry so dang many notes around. Or perhaps they can just extend the banking infrastructure and institute a system like Hong Kong’s Octopus Card or at least make the country more credit card friendly.
Last night as I was having dinner with some fellow USC alums, he asked me if I wanted the receipt and I responded, no, why do I care about the receipt? Rarely are you given a receipt unless you ask for it. In restaurants when you ask for a receipt it actually means you’re given scratch cards totaling the amount of your bill. You scratch the end of the paper and most of the time it says ‘Thank you;’ however, I received one in which I won RMB5 and I’ve heard of someone else receiving RMB20. You simply return this to the restaurant and they give you the money. Hey fantastic for me, free money! Someone recently explained to me the purpose behind receipts in restaurants. It’s a way for the government to actually track the restaurant’s revenue and collect taxes from it. I’m not entirely sure how the system works but in a economy so much based on cash (and to some extend evading taxes), it seems to work. The customer wants the possibility of receiving free money so they ask for the scratch receipts, the government then knows approx how much their bill was, and then the company pays taxes on that amount. It’s really an ingenious system if you ask me.
However, this is not the reason the guy last night at dinner asked me if I wanted the receipt. He was not so excited to scratch the receipt himself; he had another reason. He explained to me that as foreigners living in China (and legally employed with a work visa and residence permit) any money we spend in the country, whether for rent, food, dry cleaning, taxis, even plane tickets back to our home country (presumably bought a local travel agency) can be applied to reduce our taxable income by that amount. If you figure the average foreigner here spends at least 75-90% of their income (because really there’s not much to save and when converted back to our home currency any savings would be so little it’s just not worth the sacrifices in lifestyle we’d make here) then that spending amounts to a fairly sizeable reduction in taxable income. Hey, I thought that’s crazy but that could seriously lighten the tax burden for any expat when we start getting a percentage back for each Starbucks we drink. 
I’m not sure why the government does this, perhaps to encourage foreigners to spend here and support consumption in the domestic economy but also to reduce the stress on the pegged exchange rate if all the foreigners started exchanging their money.
It seems there’s no sales tax here, nor any bed tax (for example, on hotel stays in HK). Attempting to explain sales tax or a bed tax to hotel employees who’ve never left the country was definitely a challenge.
If the country could establish a more omnipresent banking system it would reduce the need for such things as the scratch receipts to track restaurants’ taxable revenue because more people would use credit cards. And of course this would apply to stores/shops as well when they start accepting credit cards. Now, even places that accept credit cards may charge the customer extra for using a credit card (especially on small purchases) because the store will not only have to pay the credit card processing fee but also tax on the revenue (because the credit card transaction is traceable by the govt).
Banking, money, and taxes in China, what a complicated situation. Just hope HSBC will give me an ATM card next year…
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