China Competes

I was then introduced to a medium-sized IT companies. The CEO and all senior level managers were all post-80’s. Yes all of them except the CEO had not reached the age of 30. And the CEO was only 31! It’s almost like a technology company in the Silicon Valley. Having said that, their business was based on the old and tried relationship cum technology application instead of innovation. If you’ve ever been in direct contact with any Chinese companies, you know their ambition is much bigger than entrepreneurs in any other Asian countries. There are simply too many business opportunities in China. For smart people they can easily seize any one of these available opportunities and become rich - very rich indeed.

The next day I was back to Shanghai to sign a contract with a Sweden-based training company. Just like most multinationals nowadays, they’ve selected Shanghai to be the location of their Asia Pacific headquarters, not Hong Kong. Did Hong Kong lost its lustre as a favourite place for company headquarters? I believe so. The market is not there. All eyes are on China now. Hong Kong only has a better legal system now, and all other competitive advantages that were there in the 90’s gradually disappeared – Higher quality human resources, better financial system, and more advanced infrastructure. Infrastructures like highways, airports, public transportation are easy to catch. Hong Kong still has a slim edge over Shanghai in terms of financial system. At least its currency is freely convertible to foreign currencies, and there is no control of currency flow in and out. Some companies may not care too much though, as they keep reinvesting their income into this huge market.

Human resource quality, however, is the most obvious area that Hong Kong has lost its advantage. Hong Kong used to be known as an international city, then ‘Asia’s World City’. My worry is one day it will become just one of many ‘China’s international cities’. Do managers in Hong Kong possess international perspective? You got to be kidding me! Maybe those over 40 years of age still have more international exposure. Over the past 13 years since Hong Kong was reunited with China, it’s tried very hard to become a domestic city of China. People may say the future is China so it is natural Hong Kong turns its eyes to the Middle Kingdom. By doing so, however, competitors of Hong Kong have also changed from Singapore and Tokyo to Shanghai, Shenzhen, Guangzhou and Beijing. What can differentiate Hong Kong from these competitors, and what advantages does Hong Kong possess that can help it compete? Unfortunately there does not seem to be any. The youngsters in the Yangtze River Region are well educated. Their English are slightly poorer but not that far behind. Their international exposure is as much, if not more than, as their Hong Kong counterparts. More importantly, they have a strong sense of purpose and will to succeed, which people in Hong Kong and particularly youngsters are lacking.

Let’s get back to my partner training company in Shanghai. The President was a Swedish lady who started this office eight years ago. She was very proud of what she’s achieved. She told me her daughter and son both spoke some Putonghua, and would be volunteer workers during the Shanghai Expo. More and more foreigners are heading to China. They are preparing to stay there for a long time, if not for good. They all feel the dynamism and strong growth atmosphere there. As one of my foreign friend from Australia once said, “It’s a once in a lifetime experience to be in a high growth country like China. I’ll be there for experience, if not for fortune.”

We are probably lucky to have the chance to witness all these historical changes in China. It is not yet in the big league but close.

Career in China!

Wuxi is a very different city from Shanghai. Shanghai is a metropolitan with more than 20 million people. Skyscrapers are everywhere. Wuxi is much quieter and in my opinion more livable. That does not mean that it is not economically active. It used to be an area with major heavy industries. And now it’s trying to turn itself into a technology hub. The local government has pumped tons of resources to kick start a technology sector, including building several science and technology parks. As CMMI is a top priority service, my friend was invited to set up a consulting company there a few years ago to support CMMI certification of IT companies in the Yangtze River region. Although there were plenty of incentives, I do not want you to think it was an easy decision for a professional in Hong Kong to uproot himself from a city he had lived for most of his life to an entirely new environment. The fact that his wife and almost grown up kids are staying in Hong Kong merely illustrates his determination.

To operate a company of similar scale in Hong Kong, we may be talking about a few hundred thousand dollars per month.

This may be a topic professionals including project managers in Hong Kong have to think through. There are plenty of opportunities, both business and professional opportunities in China. The living standard in China is also rising rapidly. Are you willing to give up, at least temporarily, your nice and comfortable living condition, even your apparently higher salary in Hong Kong, to move to a fast developing economy? When I say ‘apparent’ I mean the real living standard in China, based on the decreased nominal salary, can actually be higher. An obvious example is monthly rental for an apartment. You may be able to pay only RMB 2,000 for an apartment in a newly built and furnished low-rise building with good living space and all daily necessities including appliances, air-conditioners, TV, Internet and phone. In Hong Kong the same apartment can cost you HK$ 25,000. Adding to that, there is a real opportunity for you to ride along the fast-moving economic train, making much more than you currently do in Hong Kong in a few years’ time. If you are lucky, you may even become rich (say the company you work for is publicly listed).

The next day I went to his office in one of the science parks. The park also houses a Carnegie Mellon Technology training school, IBM, and numerous multinational and local technology companies. My friend’s company was nicely located on the second floor of a typical no-frill (minimum but still nice renovation) building, with a reception area, an executive room, a reasonable-sized meeting room, and multiple cubicles. He hired around 10 employees. That’s almost a dream office for a small company. In Hong Kong if you want the same setup and number of employees you may be talking about HK$300K per month. But in Wuxi we are talking about much less, one-tenth maybe. I guess we can pretty much conclude that the high rental and salary level in Hong Kong really kills lots of industries, including those high end knowledge-based ones. Yes you may argue with me using those archaic no-intervention theories of free economy. But the truth is when property prices in Hong Kong would eventually go down due to lower demand, many industries would have disappeared. Maybe part of the reasons why property would eventually go down is simply nobody wants to live there anymore, hmmm…

Carnegie University has a campus in this science park.

China Rising!

I went to Wuxi and Shanghai of China last week to visit an old friend and business partner. My friend used to run a CMMI consulting company in Hong Kong but moved to China two years ago. My curiosity prompted me to go there and see for myself what could have tempted him to such a drastic change. It’s also partly my other business commitment that I had to be in Shanghai for a meeting with another business partner that week.

So I took the first flight on a Sunday morning, right after my last workshop in March. I started with a lunch gathering in Shanghai with two of my former colleagues at AT&T. They are still in the ICT industry and doing great. One of them became a senior manager of a US-based telecom, and another a senior technology professional of a global technology company. Both of them seemed to be in buoyant mood, just like any other professionals you would meet in China. They are optimistic about the economic growth and future prosperity of China. Like any other Shanghainese citizens, they were amazed about the trend of property price there. None of them would bet the price would go any higher, but they would not bet against it either. They just knew one day property price would go down, though nobody could tell when. At the same time, I could also feel the slight dissatisfaction of most people about the vast discrepancies between the ‘haves’ and ‘have nots’. Better wealth distribution is really a big problem in China.

Swamped with people in front of the Bund; Only later did I know it's the day of re-opening after extensive renovation works of the Bund for the upcoming Shanghai Expo.

My friend picked me up at the Shanghai train station. The new Concord train was both quiet and comfortable, despite lots of people trying to get onto one of the many trains running around in the Yangtze River region everyday. Compared to the train trip which was really relaxing, the time spent in the ticketing office was far too tense, and unnecessarily long. Most ticketing booths were automatic, and one thing I really admired was people started to get used to staying in a line now (that’s something I was really pleasantly surprised and liked.) Having said that, there were just too many travellers. Well Chinese constitutes one-fifth of the world population so one thing you would not be able to avoid was people.

No it is not demonstration! It was just a popular tourist place near the Bund. Chinese people are much more disciplined in public place and beginning to demonstrate good everyday etiquette.

To be continued...