TECS 2013: Beijing So Far

BusinessChinaGlobal PerspectiveTravelTECSStanford

Where have the last few days in Beijing gone?

Early on Monday we headed to Peking University and got an in-depth tour of Stanford’s unique center on the university's campus. Built to the tune of 7 million US dollars, it was clear that no detail was spared in the center’s completion. The design and architecture combined traditional Chinese elements with many western styles particular to Stanford, including palm trees and intricately painted wooden rafters with images of the quad. Then there was, of course, the giant frosted glass Stanford logo...

After lunch and presentations from the director of the center and a Stanford GSB professor, we headed out to Tsinghua University, China’s other well known prestigious university, where we toured campus, got a look at different research groups and had a short round-table discussion with CS and other students.

Our schedule was jampacked on that first day, and not surprisingly every day since then has provided a similar experience. Wakeup call is at 6 am, breakfast by 8, and traveling by 9. After meeting with executives and other professionals at businesses during the day we have been bussed through an hour of gridlock traffic (which makes LA traffic look like a breezeway) to grab dinner at a local restaurant, get home by 8 pm, debrief as a group, and fall asleep by midnight. Repeat. Falling into this rhythm while adjusting for jetlag has been a struggle, but I don’t think I’d have it any other way. We’ve been able to meet some amazing people at companies that are doing great things in China.

For example, on Tuesday we visited our first businesses, which included Volkswagen China Group, IBM China R&D Lab, and Innovation Works. Yesterday we met with engineers from Lenovo and Baidu.

So, now I have to be honest. When I first sat down to reflect on the last few days I wrote 5 pages and hardly made it through the first day of trips. Every single one of our activities has been powerful and taught me something new, but still I find that my brain is overloaded with information. I haven’t been able to fully digest everything that’s been said or synthesize the nuances of what I’ve learned. However, I don’t mind sharing what I’ve developed so far...

At our first meeting with VCG we learned that foreign based companies can't actually set up business in China to sell products without a joint venture with a Chinese-based company. Companies are also only allowed two JVs and each JV can't partition more than 50% of profits to the foreign company (in this case VW). The rest of the VCG presentation seemed straight out of an investor relations meeting, with lots of talk about market share analysis, industry growth over time, competitor strategy and current strategy for VCG. This type of focus on quantitative metrics was not specific to VCG either: other companies like IBM, Lenovo and Baidu have provided their fair share of “persuasive investor material.”

This actually isn’t a legitimate complaint since the analysis they’ve provided has been essential in familiarizing ourself with China and the landscape of business here. It has become quite clear that China is rising -- in other words, its GDP is catching up with America, more of its population is coming online to transact, the eCommerce trade is gaining momentum ... the list of metrics describing this ascent goes on. Some notable numbers?

China’s GDP growth was averaging 7.8% annually

China IT Market Position:

$645.6 billion US market
$163.2 billion China market

China’s urbanization trend:

1990 -- 26%
2011 -- 51%
2020 (Expected) -- 55%

Throughout our conversations some important questions and thoughtful points have been raised. For instance, the Stanford GSB professor at Peking University challenged us all to consider why we came to China. “Why China?” he asked, and, “Why not any of the other countries in the world?” It has been an important thought that I’ve come back to: Why exactly is China so special in today’s context?

At IBM, VP and Lab Director Matt Wang spoke on the importance of understanding Chinese society and the reality of its situation. In another moment, Matt said, “Know the countries [US and China] and learn beyond the books, beyond the math and beyond the problem sets. Its easy to see that the US and China are the two biggest economies in the world and it is essential that more citizens become global and begin to understand both markets, understand both places, and interact with both sides of the world.”

Lenovo and others emphasized this point of reciprocity in the learning process. For example, one Lenovo representative talked about the company’s strategy in developing mutual understanding.  Lenovo requires its executive team to speak in English during regular meetings for practice and to help the company develop a better global culture and the necessary skill sets among its leaders to interact with the world. They’ve also done everything they can within the culture of the company to break down traditional barriers of trust and communication with the free flow of information. The CEO of Lenovo even stood outside the headquarters on his first week and required every employee to call him by his first name, an unheard of practice in Chinese business, which is largely predominated by top-down hierarchy and displays of respect and face. There is no doubt in my mind that this action led to better understanding from all the teams at Lenovo and deeper respect from its employees.

Similar lessons on business and leadership filled our other meetings with VGC, IBM, Innovation Works, and Baidu. I wish I could spend 100 pages going into the details, but instead, I think I’ll finish for now by summarizing some important thoughts:

  • You can’t fully understand the problems of population until you see a city like Beijing first hand.

  • Don’t take human infrastructure and basic services for granted!

  • Chinese students are incredibly global and much smarter than American media credits. More surprising is that most of the students at Tsinghua university wanted to study abroad after they graduated with their bachelors degree. At Peking and Tsinghua more than 70% do so, and more than 30% go to the US in particular. This indicates a radical difference in how students in the US and China approach higher education. Some of the “best” students in segments like CS and IT actually end up with the largest firms -- this is not the culture that I have come to know in Silicon Valley.

  • China is growing economically in ways that are not captured by numbers alone. It has to be experienced through the lens of interaction.

  • Foreign companies operating with JVs in China seem focused on volume and extending the supply chain.

  • Entrepreneurship in China has high barriers to entry. It’s risky and innovation lags behind America for both cultural and political reasons. What’s most important, however, is that this is changing rapidly. Companies like Innovation Works are driving this change and it is absolutely for the better!

  • Chinese companies are seeking a global presence.

  • Similar to America, the companies that were most appealing (to me!) had strong core values, genuine mission statements and were creating real impact on people through their work. The environment also seemed FUN. This point especially is so important: It’s hard to be successful if you aren’t having fun.

  • Expanding Chinese companies face the difficult of protecting Chinese market and their core competencies while also learning how to penetrate new and unfamiliar markets -- this often leads to mergers in order to leverage existing products and customer channels.

  • Successful companies in China expand carefully. They know their limitations and approach growth with caution.

  • You have to focus on quality, not quantity.

  • A culture of creativity is highly necessary.

  • Sooner or later, whatever you learn will come back to you.

  • Never underestimate the power of presentation skills.

Phew! That was a lot of information.  After lots of reflection and great conversations with my peers I came upon an interesting focus among the business executives we met. When asked what were their underlying reasons for coming back to China they all agreed that making a big difference in the world and being close to their family were the two primary reasons. Despite all these “key understandings,” lessons learned, assumptions or genuine discoveries, it is heartwarming to know that fundamentally Americans and Chinese are much more similar at their core then most realize.

*TECS 2013 is short for my adventures with Stanford University's TECS two week immersive business and technology program in China. Over the next two weeks I am travelling from Beijing to Shanghai and meeting with incredible businesses along the way. All posts from the program will be tagged.