Recently in China Category

The WSJ today had an article about research on workers in China. It turns out that Chinese people care about more than money. Hmmm. That took research?

If you dont know the concept behind Maslow's hierarchy of needs, you should. In a nutshell, money is the most important thing in your life until you have enough to satisfy your basic living needs of food, shelter, etc. Even with the migrant workers mentioned in this article, that amount of money is surprisingly low.

It stands to reason that every human being has a desire to be connected with others and to have their life mean something. Beyond the salary and the benefits, jobs give us something to belong to, something larger than ourselves to be a part of. Whether we are aware of it or not, most of us need that association. We need a tribe.

I am glad that research is showing that people, whether they are in China or the West, are more alike than they are different. In China's case, it is also interesting to consider how quickly the culture may be changing compared with say India or Latin America.

Misunderstanding the Chinese Worker

Western impressions are dated -- and probably wrong

By KATHRYN KING-METTERS and RICHARD METTERS

July 7, 2008

Wall Street Journal

Ask multinational firms to describe what motivates Chinese workers, and the responses are remarkably consistent: Money is the only thing that matters.

"Chinese have zero loyalty to their employer," one executive at a manufacturing firm told us. Said the general manager of a Shanghai hotel: "The most important motivator is money."

But those perceptions may be outdated and wrong.

Some of the disconnect between Western managers and Chinese workers stems from the fact that multinational companies formed their opinions of Chinese labor from their interactions with migrant laborers, whose main goal is to make enough money to give relatives back home a better life. Migrant workers account for a big chunk of the work force in China's special economic zones -- areas with more liberal economic laws where Western companies first set up shop in the early 1980s.

Although Western firms have since expanded into parts of China where workers have different goals and values than those of migrant laborers, many Western managers continue to cling to the belief that all Chinese workers value salary equally. Research conducted by academic Geert Hofstede decades ago and repeated in classrooms and by consultants ever since points in the same direction.

We believe, however, that major cultural shifts in China have changed workers' attitudes dramatically since Dr. Hofstede collected data on China in the mid-1980s as part of a world-wide study into how workplace values are influenced by culture. Major societal shifts -- the result of policies such as China's one-child rule -- have reduced the role of family, government, religion and neighbors in social networks. And with fewer opportunities to be part of a group or something larger than themselves, many Chinese workers are looking to their employers to fill that void.

Everywhere you look, markets are setting new records and going to new places.

US GDP is about $10 trillon a year or about one half of the global GDP so we have a big lead over everyone else but China is changing things very quickly indeed. Just look at that chart since Bush took office!

The Internet was not conceived or designed to become the commercial juggernaut that it is today. The dilemma is that as the Internet grew, its flaws as a commercial platform became more apparent at the same time it got harder to fix because there are increasing numbers of systems to migrate.

Even though scientists have been designing new systems, you cannot just install a software patch and reboot. It's just not easy to rebuild an airplane while its flying.

So what event will be large enough to force a dramatic shift in Internet architecture? It could be China.

I have heard Lefties in the USA basically call China the devil because they have the audacity to do exactly what we have done instead of doing better than us.

On the one hand, I share their concern for the environmental damage caused by a billion Chinese consumers. On the other hand, I understand that China's main concern is jobs.

It is too easy to criticize others from the wealth and luxury of our country. In the world outside of the Star Trek Federation, people need money to feed and cloth their families. Starvation kills you in a few weeks but pollution takes many years...

Just this weekend I heard that 1 job in 10 in our country is directly related to the auto industry. If anything, I would expect the USA, with all of its power and wealth, to lead the way in stopping car use. I find it disingenuous for us to blame China for something we cannot do ourselves and I dont see any signs of us changing.

This article does a good job explaining the economic issues around cars and pollution. And we can expect to see the $7,000 Chery cars for sale in this country soon.

Having never been there, China is a land of mystery. We are constantly hearing things about China. They are taking our jobs. They are fabulously poor. They are fabulously rich. And on and on.

This is one of those articles that points out how poor China is in comparison to the USA. Half the country does not have heat! Bringing China to the standard of living we enjoyed in the 1950's is a Herculean task (and a huge market opportunity). Last I heard China was building over 100 new power plants, this year!

With all the talk of outsourcing in this country, it is easy to forget that the developing countries taking our jobs have their own problems.

Cheap money and easy lending has caused housing prices to explode in the US. What will happen in China as the world rushes to invest there at any price?

The Chinese government is making some efforts to avoid finding out.

These articles and three others that were too old to include further illustrate the flow of massive amounts of capital that is shaping the global economy today. From VC money into China, real estate investment in South Africa and foreign investment in India, the money game today is global.

I live in the state of Washington, which recently tried to implement a basic skills test in high school called the WASL. Parents are fighting WASL tooth and nail. Apparently it is some sort civil rights infringement to ask students to actually learn enough in high school to pass a test.

If your kid cannot pass a basic skills test, what on earth are they going to do for a living? They will never be able to compete for the high technology jobs that China is now courting, or the manufacturing jobs that have already moved to Asia. There will always be some service and manual labor jobs in the USA but will these kids be willing to work for less money than the steady stream of illegal immigrants form Central America? I doubt it.

I just dont understand American parents who dont put a priority on hard work and achievement for their kids. While we argue about student's "rights" and blow our money on Iraq, our international competition has their eyes on the prize, are patient and willing to work for it.

Low Costs, Plentiful Talent Make China a Global Magnet for R&D

By KATHY CHEN and JASON DEAN

March 13, 2006

BEIJING -- Multinational companies, drawn by a huge and inexpensive talent pool, are pouring money into research and development in China -- a trend that promises to broaden the country's huge role in the global economy.

The total number of foreign-invested R&D centers in the country has surged to about 750 from 200 four years ago, according to China's Ministry of Commerce. And in a survey of multinationals published in September by the United Nations Conference on Trade and Development, China was by far the most frequently cited location for R&D expansion, well ahead of the U.S. and third-place India, China's chief rival as an emerging innovator.

Giving impetus to the R&D expansion in sectors from biotechnology to pharmaceuticals to semiconductors is China's government. Having enlisted foreign investment to transform China into a manufacturing powerhouse over the past few decades, Beijing now is mounting a campaign to strengthen domestic innovation that could help push the country into more advanced niches of the global economy.

In his annual report at the National People's Congress in Beijing, which ends tomorrow, Chinese Premier Wen Jiabao said the central government will increase spending on science and technology by nearly 20% this year. "China has entered a stage in its history where it must increase its reliance on scientific and technological advances and innovation to drive social and economic development," he said.

China's State Council, or cabinet, recently said the country would seek to boost R&D investment to 2% of gross domestic product in 2010 and 2.5% by 2020. At a news conference Friday, senior officials outlined tax breaks and other tools they plan to use to meet that target. Last year, total R&D spending in China -- not including foreign investment -- reached $29.4 billion, rising steadily from $11.13 billion in 2000, according to the government.

China faces numerous obstacles to joining the ranks of the world's innovation leaders -- beyond its weak intellectual-property protections. Research spending is still small compared with that of developed countries; the U.S., for example, spends about 2.7% of GDP on R&D, compared with 1.3% of GDP in China last year. And much of what is spent in China still comes from foreign companies: Less than a quarter of Chinese midsize and large enterprises had their own science and technology institutions in 2004. Of China's high-tech exports, valued at $218.3 billion last year, nearly 90% was produced by foreign-invested companies, according to the Ministry of Commerce.

Still, the R&D trend is bolstering China's position relative to other developing countries, particularly India, which is also seeking to build its innovation abilities. India's total domestic spending on R&D rose an estimated 9.7% to $4.9 billion, or 0.77% of GDP, in the fiscal year ended March 2005, according to India's Ministry of Science and Technology.

Among China's draws, he says: the relatively low cost of hiring engineers and researchers; a huge talent pool, including five million university graduates annually (one-fifth majoring in science or engineering); and China's own huge market of 1.3 billion consumers. China offers its students abroad incentives to return once they graduate, including generous research grants and chances to run their own R&D projects.

Just a little add-on to a thread I started earlier.

I dont see a huge threat at the moment but it opens the possibility for a group wanting a superior technology (Europe) or a group wanting superior control/censorship (China/Arab League) to build a new network domain. The new system could interface with the original Internet but it is interesting to ponder a "second mover" advantage in this type of market. China in particular poses an interesting concern as both their alphabet and government (not to mention size) are so different.

In Threat to Internet's Clout, Some Are Starting Alternatives

Rise of Developing Nations, Anti-U.S. Views Play Role; Pioneer Sounds the Alarm

A 'Root' Grows in Germany

By CHRISTOPHER RHOADS Staff Reporter of THE WALL STREET JOURNAL

January 19, 2006

More than a decade after the Internet became available for commercial use, other countries and organizations are erecting rivals to it -- raising fears that global interconnectivity will be diminished.

German computer engineers are building an alternative to the Internet to make a political statement. A Dutch company has built one to make money. China has created three suffixes in Chinese characters substituting for .com and the like, resulting in Web sites and email addresses inaccessible to users outside of China. The 22-nation Arab League has begun a similar system using Arabic suffixes.

Last quarter I had two teammates from Taiwan. I was fascinated by their laptops. They had the same WindowsXP, the same black plastic, and the same keyboards... except that all the "text" on their screen was not only Greek to me - it was Chinese! How the heck did they do that?

Looking more closely at their keyboards, one noticed that every key had at least 3 labels on it. It was fascinating and I started to feel a huge gulf between my PC experience and theirs. Without learning Mandarin myself, I doubt that gulf will shrink much but its good to know that it is there.

This article on Slate reminded me of my experience a few months ago.

What Does a Chinese Keyboard Look Like?

How they type in the PRC.

By Daniel Engber

Tuesday, Feb. 21, 2006

Google has launched a self-promoting Chinese-language blog, not long after unveiling its controversial Chinese search engine last month. According to the Washington Post, China already has as many as 16 million bloggers. How do you type Chinese characters on a keyboard?

You use a piece of software called an "input method editor," which allows conventional-looking keyboards to produce the thousands of characters used in written Chinese. There's no standard system, though, so two Chinese keyboards may not look exactly the same and they may not function in the same way.

In the Peoples' Republic of China, most computer users type out their Chinese in transliteration, using the standard Roman alphabet keys on a QWERTY keyboard. To generate a character, you type out its sound according to the same spelling system—called Pinyin—that represents the name of China's capital with the word "Beijing." The computer automatically converts the Pinyin spelling to the correct Chinese characters on the screen.

China finds oil in Saudi Arabia while gas prices rise (again), Ford shrinks and Iran tells us to stick it. Quite a Monday.

Ford Posts 19% Profit Rise, Unveils Restructuring Plan

A WALL STREET JOURNAL ONLINE NEWS ROUNDUP

January 23, 2006

Ford Motor Co., the No. 2 U.S. auto maker, said Monday that it will cut 25,000 to 30,000 jobs and idle 14 facilities by 2012 as part of a restructuring designed to reverse a $1.6 billion loss last year in its North American operations.

The cuts represent 20% to 25% of Ford's North American work force of 122,000 people. Ford has approximately 87,000 hourly workers and 35,000 salaried workers in the region.

The plant closings, which affect seven assembly plants, will eliminate capacity of 1.2 million vehicles. Ford currently can build 4.5 million vehicles a year in North America using 43 parts, stamping and assembly plants.

China Will Strike An Energy Deal With the Saudis

By SHAI OSTER Staff Reporter of THE WALL STREET JOURNAL

January 23, 2006

BEIJING -- China and Saudi Arabia are expected to sign a wide-ranging agreement today on energy cooperation amid Beijing's quest to secure more energy resources vital to fuel its fast-growing economy.

China, the world's second-biggest consumer of oil, has been seeking to tighten economic and political partnerships with its major oil suppliers across Central Asia, Africa and Latin America. Its quest has taken on added urgency since 2004, when the country's oil demand surged about 15%, helping underpin the biggest rise in international oil prices in a generation.

China's oil imports from Saudi Arabia have roughly doubled in recent years, from 12.5 million tons in 2002 to 22 million tons for the first 11 months of 2005.

West Talks Tough With Iran, Treads Lightly

U.S., Europe Seek a Security Council Role, But Too Much Pressure Could Backfire

By CARLA ANNE ROBBINS Staff Reporter of THE WALL STREET JOURNAL

January 23, 2006

WASHINGTON -- As U.S. and European officials press to have Iran brought before the United Nations Security Council, they are also promising that Tehran won't face serious punishment there -- for quite a while.

Iran has few friends left after deciding to resume efforts to enrich uranium, a process that could advance it a big step closer to being able to build a nuclear weapon. But there are reasons the move toward international penalties might not be swift. As the Organization of Petroleum Exporting Countries' second-largest producer, Iran has considerable economic leverage. It also may benefit from the "Iraq effect." There is widespread anxiety that any U.N. action -- unless carefully constrained -- could open the door for another U.S.-led war.

There's Little Margin for Error

Fuel Pressures Keep Prospects For Economic Growth in Limbo As Investors Begin to Seek Cover

By E.S. BROWNING Staff Reporter of THE WALL STREET JOURNAL

January 23, 2006

Now, with oil back near $70 a barrel, Mr. Herrmann is beginning to hunker down again. So are a lot of other investors. That helps explain why the Dow Jones Industrial Average fell 213.32 points Friday for its biggest one-day percentage decline since 2003. With the current bull market now more than three years old, the question is whether the economy can improve enough to get people like Mr. Herrmann to feel good enough to start buying stocks again.

"We don't have much margin for error," Mr. Herrmann says. "We can't afford to lose two million barrels a day being exported out of Iran."

What worries him is that the problems weighing on the economy "won't go away real soon." It isn't just that expensive oil serves as a tax on consumers and businesses alike. Interest rates have been rising as well, and the two together are damping growth. "I don't think $70 oil translates into a huge economic problem," he says. "But who says it can't go to $80? Who says it can't go to $90?"

This issue will be interesting to watch.

On one hand we have Dell, Walmart, and safety of the US Treasury bond.

On the other hand, we have the World's most brilliant minds on international diplomacy. The people that have wow'd us with the ability to think beyond Cold War ideologies and past vendettas as illustrated by their insightful and effective policies in Iraq, Israel, Palestine, North Korea, Syria and Iran. Not to mention the President's endearing and repeated use of the word "uhhmm" in his role as the Voice of Freedom.

I think I will be betting on Walmart.

U.S. Increasingly Pursues
Two-Track China Policy

Economic, Security Goals Yield Approach Combining Engagement, Containment

By JAY SOLOMON Staff Reporter of THE WALL STREET JOURNAL

November 17, 2005

When President Bush visits Beijing this weekend, he will face a foreign-policy conundrum -- how to stay friendly with a China that has become America's fastest-growing trading partner and one of its biggest sources of capital while guarding against a potential military threat from the rise of a strategic rival.

One administration answer: "congagement," in the language of some policy wonks, a mix of "containment" and "engagement."

The dual approach accommodates competing agendas. American companies ranging from Dell Inc. to Wal-Mart Stores Inc. are increasingly dependent on China's low-cost manufacturers and are eager to tap the country's vast domestic market. Last year, total U.S. trade with China grew 28% to $245 billion, and China is second only to Japan among America's foreign lenders.

A Treasury Department report released yesterday found that Beijing's lending role continued to grow in September. Chinese holdings of U.S. government debt rose to $252.2 billion from $248 billion in August. (See related article on page C1.) Though that investment helps keep American interest and mortgage rates low, it makes Washington vulnerable to China's potential dumping of dollar-denominated holdings.

American defense planners, meanwhile, have grown increasingly suspicious of China's military buildup.

I'll say one thing about the President: He thinks big and likes to set records. If he can break $617B this year, I say we go for a trillion next year!

Seriously though, at what point does this trade deficit become a real problem? Every year of the Bush presidency, the gap between the things we sell to other nations and the things we import from other nations grows larger. So far this issue just seems like more meaningless numbers to the American public.

I say meaningless because, like our embarrassingly low savings rate, trade numbers dont cause anyone to change their behavior. But one cannot borrow forever. At some point the bills come due and those bills to finance our debts are paid with tax money.

No one is going to want to raise taxes to pay our interest payments but we seem to make fewer goods in this country every year so what will ever happen to reverse the trade deficit? Monthly exports are about $100B and imports are roughly 70% higher at $170B. That's quite a gap.

I recently had a talk/argument with someone about China and the environment. Her position was that China is choosing to destroy the environment for the whole globe and that they could choose not to. My position was that China's main concern is jobs and that they will clean up their industries, namely coal, when they can afford to. (Which is basically what we did 20-30 years ago.)

This hybrid issue could be very interesting to watch. On one hand, China lacks a robust research/marketplace. On the other hand, it also lacks an entrenched status quo to resist changes.

Another article on how business is changing life in China.