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Here's a picture I took last weekend. It is now adorning my laptop.

I've had a serial cold for about 2 weeks now, coming on and off. I blame the weather as much as myself for it, cause it can be very deceptive if you're not careful.

Beijing is known for very short spring and autumn seasons. Last year was extreme but people still remember how it went from 20C to 0C over a weekend. This year however, the autumn has endured for longer, with sunny mild days and chilling nights (no central heating yet). This is of course welcome news if you compare to last year, but it is also the kind of weather that betrays you and stabbs you in the back when you're not looking. I made the mistake of falling for it.

Having grown up in Sweden makes you cherish every minute of sunshine. With the sun glistening and the thermometer showing 15C, you can easily believe that a shirt is all you need when going out. Needless to say more, I landed a cold and it's been with me for a while now. I wouldn't say that we've become friends yet, but definetely acquaintances. I am reminded of him every 2-3 days and he in return promises to stay mellow most of the time. In a week's time, there will be salvation.

Next week, on the 15th Nov, the Beijing municipality will start provide heating for the city residents for the 2010 season. I hope a warmer bedroom will take care of my temporary friend.

In the meanwhile, I am also happy that I haven't had to suffer any snow storms...
...yet!

China is the focus of most companies regardless of size, industry or geography. They are all eying the tremendous size and growth in the Chinese market at a time when their home markets are faltering for any number of reasons. To succeed in China, they'll need to understand and innovate for the Chinese market. Here's an example of how China can be different and what local companies are doing.

The summer is upon the Chinese and the hot and humid weather is very interesting sights. Many of the dogs have received a grooming and seem somewhat sad about their make-over. Another is all the umbrellas that all the women are sporting to protect them from the sun, many sold with claims of UV protection. Apart from these obvious differences, there are also some hidden ones.

Chinese homes are not well insulated and often suffer from the extreme weather conditions that the country suffers from. Many Chinese families also don't have or only very sparingly use their air conditioning in the summer, making the indoor temperature of many homes to be about 15C in the winter but close to 30C in the summer .

Food very easily go bad and people have to be careful. The bread that you can buy in super markets have different expiration dates for summer and winter, 5 days and 7 days respectively, to accomodate for the difference. Another very local pecularity are the refrigerators.

Given the large difference between summer and winter and the desire to save energy, manufacturers of refrigerators have installed, in addition to the usual dial, an extra plug for setting the season. The idea is that you should be able to save energy during the winter season and have higher effect during summer. Whether there is an actual difference or not, I couldn't really tell. But the feeling of being in control and a belief that you are saving energy probably convinecd many to buy models with this function.

The Chinese are still very much in love with technology and a longer list of features, whether they will actually use it or not, might tilt the balance when in the shops. The confusion is also helpful to sales people in the market when the competition on price is so intensive.

So whenever you are thinking of conquering this new promised land, you have to understand that it is not simply about pushing the your existing products. You really do have to start by understanding the market and designing new products to match their needs. This may also help you avoid issues of cannibalization as the prices is China almost inevitably have to be cheaper than in your current markets, luxury products aside.

Your watchful eyes in the Chinese fridge.
/Y

This posting is not strictly about China but I thought it has some interesting aspects and wanted to share this with you.

In management literature, you often come across the 80/20 rule or the Pareto principle after the Italian economist Vilfredo Pareto. It is not so much a rule as an observation that many things tend to show this kind of pattern. It is not necessarily the exact numbers but could be 70-90/10-30.

An example would be that a 80% of a company's revenue is to 20% of it's customers or 80% of profit comes from 20% of the products. Outside business, this has also been observed in anything from computer sciences to taxations.

Even in everyday life, people have suggested that the Pareto principle holds true. Someone had looked at a women's wardrobe and found out that they use about 20% of their garments 80% of the time. I don't know if this also true for men, perhaps you guys out there can go home and have a look. Anyway, next time you hear someone complain about having a too small closet, you now have the answer to that problem.

My own personal addition to this is that you get roughly 80% of your drunkeness from the last 20% of the alcohol you drink. I don't know if that is always true, perhaps I should test it imperically.

I guess what this teaches us is to focus on the important things and don't get bothered by the rest that is not important. I wish I knew this when I was at University. Then, I could have read 20% of the book and got 80% on the exam. 

Your watchful eyes, not only in China but also in management theory.
/Y

It's been a while since my last posting which is somewhat unfortunate. I don't want to make excuses for myself but instead tell you about Chinese holidays.

2 weeks ago, China celebrated DuanWuJie or popularly know among Westerners as the dragon boat festival. It is the 5th day of the 5th month in the lunar calender. It is called dragon boat festival because people, usually men, would race dragon boats in celebration of this holiday. This is in commemoration of some ancient person who drowned in this day and people eat a kind of rice dumplings to honour him. Appearently, they also threw it into the waters for the fish to eat so that they wouldn't eat the drowned man. However, the historical and cultural reasons, as often with these holidays, have mostly been forgotten.

This wasn't even a holiday until some years ago when the government decided to preserve Chinese culture and started marking this date as national holiday. Being a date in the Lunar calender, the day always rotates over the week and this year it happened to be on a Wednesday.

You would think that having a day off in the middle of the week is pretty nice, simply feeling little sinfully indulgent with sleep-in mornings and a nice brunch. However, the Chinese government didn't think that was such a good idea, but instead decided to give people 3 days off (Monday-Wednesday). You would think that is almost too generous to be true, considering the Swedish only get one "squeeze day" (you get Friday off if a holiday is on a Thursday). That is correct. They aren't.

What the Chinese government does it to make Saturday and Sunday working days in order to compensate for the shortfall, prolonging the working week to 7 days. Supposedly, people would be able to properly spend time with their families and all that, if it had not been that you get so tired from working 7 days in a row that you actually need 2 days just to be able to do much at all.

On top it all, this isn't even a holiday that is much appreciated, so people end up complaining about having to work during the weekend and not doing anything during the holiday anyway.

I'll not blame the Chinese government for not writing much posts lately, but you can obviously see the reason why I haven't been is simply because I was too tired after the 7-day working week. I won't have this excuse in the future so you can expect more regular updates. Thanks for putting up with the irregular postings.

Your sometimes tired eyes and ears in Beijing
/Y

I came back to Beijing after a week in Shanghai over the May 1st weekend and found that my local noodle shop across the street had closed down. This is not uncommon in China and you can always find shops undergoing renovation on the commercial street near my home. In about a week, there will be a new shop with a new owner. Perhaps a noodle shop, perhaps not.  

This is possible thanks to high mobility of the work force an capital in China. Without a secure work contract, people can move freely between jobs and enterprises between industries. The equipment from that noodle shop could be sold to equipment vendors just as easily as the to new owners, benefiting someone who is starting a noodle shop perhaps in the other end of town. It is also easy to find shops selling seemingly unrelated items, e.g. toys and clothes, just because the owner is trying to get rid of old stock when he decided to switch business.

People in  developed countries often look at China with awe and frustration, amazed by the pace of economic development, vexed by the complexity when trying to understand her. The economic growth has been taking place mainly in the manufacturing industries. and most people can easily spot that wages are about one tenth of what Europeans would earn. What is often overlooked though is the mobility of the work force in China, much different from the socially secured Europeans and Americans now too indebted to move to other cities.  

It has allowed firms in China to rapidly shrink their work force when market demand slumps. Workers can also switch jobs within days if they find a better job somewhere else, in effect setting a market price for the wages. This has historically been to the employer's advantage since the supply of migrant workers seemed endless early last decade. Now however, many industries are struggling to keep their skilled staff, having to pay increasingly higher wages. This is already a problem for many companies in manufacturing clusters along the eastern coast line where competing factories are just next doors to each other.   

Life as a migrant worker is a hard one, especially if the person lacks a technical or personal skill. That's why people tend to do it only for a limited period of time. Most Chinese are also very tradition bound and prefer to live with their families back home. Every Lunar new year will leave factories missing some of their workers and this year was an exceptionally high one in face of uncertainty amid global recession combined with increased government subsidies for farmers and higher food prices. This is also happening in the high end of the scale where the Chinese government is trying to lure back the Chinese technical elite currently working in Europe and USA,  outspending foreign institutions.

I don't think that Europe or USA need to fear the cheap prices. They will not always stay cheap and there is always going to be countries with still lower wages. What should take precedence is to increase the mobility of people. It will be difficult when people are comfortable where they are and incentives to move are small. Going through this transition will therefore be difficult and slow for these countries. I guess things will need to get a lot worse before they can be better.

Until next time.

Your watchful eyes in mobility central.

/Y

Here are some pictures taken when I was in Shanghai.

I've been putting it off long enough. Here are some pictures of Beijing for you to enjoy. Not all days are as clear skied and sunny like these. However,  if I am to post some pictures, you might as well see what it is of.

 

Houhai, a popular tourist hangout for afternoon coffees and after hour drinks. Tourists and native Beijingers strolling along leisurely on a sunday afternoon.

Forbidden city as seen from Jingshan Park. This is the North (back) with all the court houses. This is one of the bluest skies I've seen for the last 3 months.

Yours truly.

I recently uncovered some interesting differences in how Chinese and European people perceive messages and values differently. Here is what happened.

Some time ago, we had a workshop at work where employees gathered to discuss company values. As an aid to get the brainstorming and discussions going, cards with pictures were handed out for people to use. These are meant to trigger associations in the beholder and create more ideas. The associations are often unique depending on the person's experiences and cultural background. I had often different associations than my Chinese colleagues, which in itself isn't surprising. I'll give an example of that really differentiated what I think is a big difference between European and Chinese perception.

One of the cards were of a hand flipping to Aces like in when you play poker. I immediately associated it with the Aces with being the best, no. 1, leadership and so on. All of my Chinese colleagues at the same table immediately read luck into that card.

I started thinking about what the difference could come from. Although Texas Hold'em is not so popular among Chinese, people here are no stranger to playing Mahjong or other card games. Maybe there is an inherent difference between the games because the pieces in Mahjong doesn't carry any inherent value in themselves. But again, they did understand that these were the best cards.

When furthering the analysis, you could see this even in other parts of society. Chinese people, although many times complaining about the increasing costs of living, often are more content with their situation than Europeans do. I believe that e.g. Swedes, among which I often count myself, often feel a more sense of entitlement to things in life. I don't know if this has created a more equal society of if it is due to it. Chinese on the other hand seem to accept their situation in much higher degree. They don't really compare with people of other social classes. There is even a Chinese saying that roughly translates:

If goods are compared against each other, some willl need to be thrown away. If people are compared against each other, some will need to die.

This is perhaps why the Chinese social structure and inherent inequalities can exist. People are inherently more content with what they already have, don't need to necessarily strive upwards and sometimes feel lucky that they are not amongst the worst off. Who will be ones to bring change to society then? You may actually draw some parallells to India and it's cast system.

It would be interesting to hear what you associate with twin Aces.

Your watchful eyes in Beijing.

/Y

This post might not appeal to everyone but it does has a few good points if you manage to read it all the way through.


The first half of the post deals with different types of workers in China while the second half will outline how to motivate Chinese employees to harness their full potential.

Some say that Chinese people are not creative and that workers in companies are mostly content with doing their 9-5 jobs. Another side of China is bolstering a booming economy, driven mainly by Small and Medium-sized companies. We've seen examples of the latter in this blog already when dealing with secondary markets and IP rights - part 1. So which picture is the right one? Are Chinese people full of initiative and passion or are they lazy, lackluster and simple-minded?

The truth is that both sides are right and both sides are wrong. We can take time to discuss each party in detail. Both kinds do exist and their strengths and weaknesses are true on the surface. But probing little deeper, you'll find contradicting evidence.

The entrepreneurs
The so-called entrepreneurs are mostly mimicking an existing product or service. The factor that differentiates Chinese entrepreneurs from traditional Western ones are a willingness to take risks, partly due to necessity (few ordinary jobs to go around) and partly due to low thresholds for market entry (poor regulation of enforcement). The bulk of these operation are family-run organizations, turning a slim profit and can sustain a fair living standard for the family.

The Office dwellers
The main body of office workers are well educated Chinese youths between age 25-35. They hold university degrees and skilled in many ways to do the tasks required from them. They are highly intelligent people who most certainly would score higher than both you and me on a TOEFL or IQ test. They have goals and ambitions in life, much like any young professional anywhere else in the world. Most of these people start at the very bottom of the pyramidical hierarchy structure. Being new to the business world and under pressure from all sides, the new entrants usually are swamped with simple tasks that doesn't require the inquisitory mind of a free thinker. This is the result of many years in Chinese schools, which emphasizes obedience and order in place of criticism and new ideas.

You often see magazine profiles of some successful entrepreneur in China without a formal higher degree or education. So, the entrepreneurs are not highly educated  and the highly educated are not entrepreneurial. Only rarely do you see a mix of the best of these worlds and all too many are non-educated and without initiative. The entrepreneurs don't necessarily need more education as they seem to do pretty well anyway, but how about empowering the young professionals?

The first and foremost is to find their motivation. Today, it is usually tied to financial benefits or some sort. It is natural that these people will strive for things that they have not been able to afford previously. But financial incentives can only motivate some types of people to a certain extent. Those people are also more prone to leave you as soon as a better paying job comes along.

A whole new mindset on talent management is required. Even the newest employee has to be considered an asset and needs to be managed accordingly. Many people have not chosen their career path out of their own will but rather of necessity. Coming to terms with that and figuring out where they want to go it the first crucial step. It is a long process since you not only have to figure out what motivates them and their goals, but also how they can figure it out for themselves.

In doing any of this, one has to understand that the assumption from outset is different in China compared to many Western cultures. Chinese people are brought up to be reserved and not too trusting while many Western cultures teach children to trust others. Chinese youth are brought up as individuals, always competing with their peers while Western youth are taught cooperation and team work. Therefor, winning the trust of a Chinese person is difficult and takes time. They will firstly look towards reaching their goals and sometimes putting that in front of the benefit of the organization in large. This is important when designing award schemes so that people are measured on both individual targets, group targets and organizational targets. It is necessarily a gradual process as it involves changing the behavior of people but delaying it will be a drain on resources as well as the talent pool.  

To end this post with something concrete, I will give an example of what might work as incentive instead of cash awards. Namely, the  possibility of international exposure or experience as a high profile way of awarding your star employees. It would be beneficial to both the employer and the employee, multinationals as well as  for local firms.  Most Chinese talk of about international experience as du jin in Chinese, which literary means coating with gold as it will increase their value and their employability. For the company, the inception of new ideas, practices and skills is learnt could be used to improve operations in China. The difficulty lies in costs and execution. The goals of any international trip needs to be clear from the outset and should be coupled with goals met by the employee. In return, he or she should be empowered to implement and drive improvements for the benefit of the entire organization.

Your watchful eyes in China,

/Y

China is infamous for its neglect on IP infringements. Companies hesitate to move operations to China, afraid of valuable technology leaking out to competitors. However, China is a de facto master copy cat.

It is not only music and movies that is being pirated but also books. Passing by a few expat hangouts, you are bound to meet a guy selling books from a trolley. He, for it has always been a guy, usually carries 1-200 titles, 2/3 Chinese and 1/3 english. The Chinese titles are the always the most popular books at the moment, fiction as well as non-fiction. In the english section, you will also find the Twilight series next to the Harvard Business Review series and the latest on doing business in China. The selection, although wide, is not particularly comprehensive and you do have to go through the entire mess before finding what you were looking for.

At about 10-20 RMB (1-2 Euro) per book, you'll have a hard time figuring out how anyone could turn a living out of it. With complex distribution networks working in several tiers, any single actor is not going to make more than 1 or 2 RMB from each sale. Everything is wrapped in plastic covers which can be opened if you want to check the contents before deciding whether to make a purchase. This market is completely unimaginable considering the low profits and the trouble the sellers have to go through, constantly looking over their shoulders in fear of police checks. It is probably caused by availability of idle people who are either retired, otherwise unemployed or have some extra free time. Many of the prospective buyers would probably tolerate a price point higher still. The sheer number of sellers is driving the price to the absolute bottom.

Another question is of course, to whom is our vendor selling all the english books to? Not many that I know read business books and to an even lesser extent the "nerdy" HBR studies. Did all the Chinese suddenly all decide to pursue a MBA or are the foreign expats to cheap to pay for the legal versions, available in major bookstores, out of their expat packages? ....

Your ears in all matters Chinese.

/Y

Just moved in to a new apartment on Thursday. I used to live outside the city center to be close to work, winter not being the best of times for commuting. Now however, the spring is approaching and it seemed like a good time to move.

About the apartment then, it is roughly 140-150 sqm spread over 2 floor. Basically, I am renting the upper floor which has a big bedroom, living room, bathroom and a terrasse. It's on the 6th and 7th floor of a calm compound and shielded from the noice on the streets, which is somewhat of a blessing here in China. I'll post some pics when I have gotten things in order. The best part of it is probably the 3m ceiling in the living room. It feel very open, although I don't really want to think about how the heating will be in the winter... The terrasse is very nice too, facing south and pretty shielded from wind. I am already planning for some barbeques in the summer, should be perfect as soon as I get a fridge installed upstairs. It would be too far to get the beer otherwise. :)

You can look up "Jiaodaokou, Beijing" in google maps to find out the location.  It's a large compound with 6 or 11 story buildings. Just outside is the old beijing with single-story houses and small courtyards with shops and restaurants. It's roughly 15min walk to a lake with many bars (houhai) and 5 min cab ride to Sanlitun where all the restaurants and nightlife are.

The flatmates seem very friendly, although we've only met 2-3 times. Looking forward knowing them better.

I had looked at several places before this and the process is very frustrating. I told you about people not able to keep time already. Another annoying aspect is unsincere brokers. They put fake pictures on the ad just to lure you into looking at the apartment, and then try to convince you that that's ok or they will fix it later. I understand that it is a competitive market out there, but how do they expect to be trusted by anyone when they behave like that.

On a final note, I also managed to find a new guy to rent my old room. He had only been in Beijing for 2 days and was still living in a hostel. He seemed very happy about the apartment, suiting his needs very well. My flatmate told me that there are many students starting classes in the end of march so there will be no problem renting it to someone. Both were true.

Your voice from Beijing, now with a new flat. :)
/Y

I've gotten tired of looking at apartments in Beijing and most of all I've gotten tired of people who can't keep an appointment.

I grew up with the Swedish way customs of being on time where you should never come early and being late up to 5 min late is ok. While here in China, you just have to shake your head and laugh sometimes. The latest incident left me not knowing whether to become upset or laugh out loud. Here is the story.

A few days ago, I was looking at apartments after work. After having seen 2, the agent told me there would be a third one if I could only wait until 8 pm. By then, it was 7.30 and I was thinking of leaving but since I had already gotten to the area, I might as well see it. The agent call up the lady and she was only 20 min away. Well I thought, and decided to stay around.

Around 8 pm, still no landlady and the agent calls up again. Now, she's only 5 min away and since I had already waited for 30 min, I might as well wait 5 more.

10 min passes and the agent calls up again. This time, she is very close and would arrive in 1-2 minutes. By this time, I was already a bit edgy but there was no point getting upset at the agent so I could only think of something else but my numbing legs in the winter evening.

By around 8.20, the landlady come up to us and complains to the agent about the agent not being able to make appointments and dragging her out in the evening without enough heads-up. I asked myself why she didn't simply decline if she didn't want to come out instead of getting angry but I kept it to myself.

We go up the elevator and up to the apartment. The hallway is clean and the view is very nice, maybe it wasn't a waste of time after all, I thought. Until she calls on the door and nobody answers. She picks up the phone to call the tenants and it turned out the tenants were out and she didn't have a key. This is the kind of thing you would normally want to check up before making an appointment I assume, especially if you intend to lecture someone about how to make appointments. But again, I kept that to myself just in case I wanted to have a shot at the apartment.

When I called back today, it turned out that the tenents were going to extend the contract. So all of us went out there in a cold Beijing evening for nothing.

So much for communication in China.

Your watchful eyes in Beijing.

/Y

This is something I wrote while in Shanghai but never posted due to the internet blockade. Here it comes with minimum edition.

About children and competition

It's been a while since I last wrote and I do have to apologize. This week will hopefully give to additional insight into the lives of Chinese people by illuminating an area that is important no matter where you are. (see my earlier blog at yunfengli.blogspot.com)

Children take up a lot of the political debate in all countries, mostly because the voting power of the demographic segment "Parents" is so large. Here in China, the reason that the topic is so much discussed at the dinner table owes more to the one child policy that was introduced almost 30 years ago. Now days, it is not as strictly enforced but families usually can't afford more than one child anyway.

The competition is fierce among parents for their child to get into the best schools or sometimes even pre-schools. This has driven up the cost of raising children, not even considering all the extra-curiccular activities that is expected. One interesting phenomenon is house prices is higher in areas with good schools, thanks to rules that only allow children living in close proximity of the schools to attend to them. Thus far, all is according to market forces and all is well.

What is interesting is the psychology behind it all. One common phrase among Chinese parents is "Don't let the kid lose at the starting line". Meaning that it is the parents responsibility to prepare their son or daughter for the lifelong race that they are going to face. This has created a huge market catering to the needs of faint-hearted parents trying their best to put their kid ahead.

Most democratic countries and Sweden in particular would stress the equality for all children and sometimes even for adults. People should rather be sheltered from the harsh reality forever and never need to take consequences for their faulty decision. Somehow, this will lead to a friendlier society but is it really how it works? Is Europe or America really as free and equal as we imagine it to be? We'll just have to accept that these should are be measured in relative terms and different societies need to exist to uphold the scale.  

We can attribute part of the difference to much fiercer competition for the Chinese but the simple fact of matter is that parents are no different from each other. I don't believe that Chinese parents love their children more and Swedish ones rather care for other people children and make sure they get a good education. The major difference is that Chinese parents have accepted the status quo while the moral fiber of liberal democratic societies prohibit Swedish ones from doing the same. This has lead to the distinctly different actions taken by both parties.

Both are living under social tabus, one afraid of not caring enough for their children and one of being too selfish. So which way is right for the modern society? I don't know. There probably is no right answer or perhaps both are right. What we need to do is to acknowledge and accept both views. For me, I just know that I should stay away from it all in the foreseeable future.

Your voice, now from Beijing, until next time.

/Y