Chinese Business Culture, the Hooch House, Assembly Line, Acrobats and Back to Hoi Hai Park for more Jams!
Today started out back in our Lecture hall at Tsinghua University. Dr. Steve Zou gave an inspiring lecture that really pushed the class to think and participate, unlike many American lecturers I’ve experienced. Dr. Zou explained the quintessential business philosophy that exists in Eastern business culture, Guanxi: pronounced G’wann-chee. Dictionary definition:
“Guanxi” literally means "relationships", stands for any type of relationship. In the Chinese business world, however, it is also understood as the network of relationships among various parties that cooperate together and support one another. The Chinese businessmen mentality is very much one of "You scratch my back, I’ll scratch yours." In essence, this boils down to exchanging favors, which are expected to be done regularly and voluntarily. Therefore, it is an important concept to understand if one is to function effectively in Chinese society.
There are certainly fundamental aspects of guanxi that encompass corruption. In the classroom it became clear some of my colleagues were initially having a hard time wrapping their brain around this concept. Corruption is actually a standard part of business in China, it exists, and it’s blatant…. In general it is JUST DIFFERENT (key concept for my American audience… it’s not fair to say good or bad in cultural ethical differences) from Western business cultures. On the other hand I’m not naive to think corruption isn’t relatively mainstream in Western business culture I just know enough that it isn’t public and happens behind closed doors and away from regulators. In China there aren’t regulations for business and quite frankly, things get done!
To establish your guanxi in China you have to first find a local agent or partner to gain access to the overall network. This is essential for doing absolutely any business whatsoever. Without guanxi you could be selling plants that fruit gold and you wouldn’t get the time of day! Once your guanxi is established the network you now have access to is not just one network, rather all the networks connected to all the other networks. Business dealings and favors are reciprocal and require nurturing like a relationship between husband and wife.
Dr. Zou discussed strategic risks and strength about entering the China’s market and what they have to offer. Who better than an Economics professor at a Harvard level institution in Beijing China to discuss this topic with…. Seriously this was such a privilege!!!
Risks: Over expansion, entering the wrong market with the wrong product, currency instability, and political risk.
Strengths: Resources, large scale economy, support from government, flexibility/social network (guanxi: greasing palms etc.), business management combines East and West styles thus making the best of either worlds or “Harmony”.
NEXT STOP…. The Distillery…. For business school purposes of course =p
The Distiller was a really great tour, having taken a Brew class at IUP it was really awesome to see the rich history of Chinese liquor’s origin and how many of the techniques used are traditional. Whether you are a drinker or not, historically alcohol manufacturing is one of the most ancient known traditions to mankind and has built empires and sustains civilizations. I couldn’t really understand some of the nuances about the process however I could see what there were doing in terms of loading the grains, steaming and germinating, brewing and fermenting etc. etc. This tour was important because it highlighted a very blue collar business with lots of manual labor involved. From the brewing process all the way to the assembly line…. I joked to myself how I probably just walked by the Laverne and Shirley of the plant! OK so I’m sure all you really care about is what was the liquor like… well we tried different aged liquor and… well… it seriously tasted like moonshine. I mean I’m pretty sure they were filling up the delivery truck gas tanks with this stuff…. I didn’t see a pump station nearby anyway! It was fun though, and so of course the tour ended in their “Gift Shop” where we all got some souvenirs.
After getting “Fueled up” we appropriately went to the Hyundai auto plant. This was awesome; I’d always wanted to see a real live assembly line in action. What made this tour especially interesting is that unlike U.S. auto plants, there were significantly less robotic components in the assembly process. Here are some fun stats: 2,280 cars put together a day. All cars made here were strictly for sale in China only. No warehouse for storage so everything is “Just-in-time” ordered and stored in the plant. Supplies are delivered every single day. From start to finish assembly the car, including painting takes 18hrs. the cars being assembled were made to order, it was not all the same car being made at one time, instead we saw every different type of model all mixed up. The only thing actually made at the Hyundai plant was the car engines, every other component is outsourced. This plant has 118 suppliers. I was walking around a car plant with 20 American girls, the first thing I noticed was how many workers were able to do the entire process of their job while not even once looking at what they were doing with the vehicle.... it was pretty funny.
The ride back into the City city was jaw dropping. Let me paint a picture for you: Ok so you’re in an American suburb and there is a new development being built. You can tell it’s a development because the streets are paved, the sidewalks are laid and the general infrastructure of street lamps and power sources are clearly built…. But maybe there is only one or two homes actually built or maybe just the frame is erected. OK, so we’re back in China, imagine the new development scenery… except it’s on either side of the road as far you can see in all directions for the entire 30 minute ride back into the immediate Beijing City. What I saw made the Atlanta housing boom look like nothing.
Prior to the show I sat down for a nice Sushi dinner near the theater. The Japanese restaurants in China are beautiful and the food was excellent. FYI, if you order a salad is sure to ask them not to crack a raw egg on top… that’s how they do it here! The Acrobat show was pretty cool, it was mostly all the same acrobat tricks most people have seen on television; however I really did appreciate seeing the talent and skill in live action. Interestingly enough, the thing I was most fixated on was the blatantly obvious enormous surveillance camera hanging exactly where a chandelier would hang in a Western style theater.
After the Show I went back to the hotel to freshen up and then I hopped in a cab and took off toward Hoi Hai Park in hopes of playing some more music with the locals. Not only did I find a different bar to play at, however the musicians were even better and the bar crowd really loved it. In fact to make things even more fun, I ran into my new friends from St. Louis and was able to introduce my Carlow pals to them. Another amazing night in Beijing…. I am really starting to fall in love with this city!
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