1

Preparing for China Written by: Taylor C. Veillon

Managing the Dragon Introduction

While reminiscing about a Caterpillar event he attended in 2006, Perkowski discusses the company’s explanation for their Vision 2020 and the seven critical areas of focus required for business success. The seventh and perhaps most unexpected goal was success in China. In discussing the company announcement, Perkowski reflects that though many companies expressed interest in the Chinese market, this was his first real experience with a company “drawing a line in the sand”, indicating that the company’s viability as a global industry leader is contingent upon its success in China. Perkowski’s statement that “China will be the biggest, fastest-growing economy in the world in the twenty-first century” was unexpected but only furthered my commitment to learning about the Chinese market and understanding the opportunities available for a company to become a top competitor in its industry. I can only imagine what China’s abundance of foreign reserves will lead to in the coming years. Perkowski said it best when he said that China’s economic development has foreign organizations feeling a bit like they are “riding on the back of a tiger”; it is dangerous to jump off but difficult to “hold on”. To answer the question “what do individuals and companies of all sizes need to know to be successful in China”, Perkowski said a company “has to develop a strong local management team for its company”; only the organizations with strong local management teams have withstood the Chinese market. Perkowski elaborates to point out several key characteristics about China to keep in mind: decentralization creates overcapacity for every product and highly fragmented industries, slow emergence from the thirty-year time warp that took place from 1949-1978 affects the cost perspective of the country, and the array of income levels demand the best, most current technologies of the world while still accepting more rudimentary technologies in its local markets.

Chapter 1: “Who is Jack Perkowski?” Perkowski’s summarization of his company helps set the stage for the perspective I am to take as I read the remainder of this book. ASIMCO, founded in 1994, is an automotive components company based out of China. With sales of nearly $500 million, 17 manufacturing facilities in eight different provinces, 52 sales offices, and 12,000 employees, ASIMCO’s influence on the automotive industry is “significant” and touches “nearly every corner of China”. Perkowski elaborates to point out that ASIMCO is considered a visionary company for predicting how robust the automotive industry would become in China, and though most of ASIMCO’s capital has come from the U.S., it is a Chinese company through and through. Perkowski explains that unlike many companies trying to leverage global success to enter the Chinese market, ASIMCO is leveraging its strong Chinese base to become a force to be reckoned with in the global market, a distinction that was surprising but also predictable as I continue to learn more about the strength a company must possess to succeed in China. ASIMCO also stands out amongst the crowd because of its factories, all of them run by Mainland Chinese. I appreciated Perkowski’s

2

honesty about his goal for his company: “I won’t be satisfied until I’ve built a one billion dollar business in China”. His transparency allows me to understand his frame of mind and see China from his perspective as I continue through the rest of the book. Chapter 2: Stay in New York or Move to Hong Kong?

Perkowski begins his discussion over his decision to move to Hong Kong by providing background on the events that shaped the city, explaining that the combination of British rule and the entrepreneurial spirit of the Chinese ensured that Hong Kong prospered. He continues to point out that as early as the summer of 1990, people were discussing the handover of Hong Kong from Britain to China that would occur in 1997.Though China was opened to foreign direct investment in 1978 and money began to flow into the country, the Tiananmen square incident scared off foreign entities and left China in a recession only delaying the inevitable “boom” that conditions were leading up to. That “boom” did not take long to occur because even while foreign investors pulled out or were reluctant to enter the market, Hong Kong’s and Taiwan’s businessmen continued to pour money into the country, pushing the GDP up and practically doubling the strength of the stock market in two short years. Perkowski, then, begins to detail his experience in “taking the first step” to break into the Chinese market. One of the initial activities involved attendance at a “Pacific Rim Conference” where his hunch, that China was a robust and opportunistic environment but interested parties were still looking for the “right formula” to succeed, was simply reinforced. His next “first step” was to visit Asia; the fact that they had never visited the country was a bit surprising, but Perkowski and his “partner in crime”, Bill Kaye, worked quickly to rectify that gap in their knowledge. Surprisingly enough, when they asked other professionals for recommendations of places to visit, people to meet, etc., China never came up. Eventually they settled on Hong Kong. The city was still a part of Britain at the time, but was considered “the gateway to China” and seemed like a good starting place. Before they arrived in China, they needed to get their “pitch” together and in doing so learned how China’s younger population compared to more developed countries at the time. Perkowski points out supposedly common wisdom that “older populations save while younger populations spend”, leading to opportunities for unimaginable growth in China. Perkowski continues to explain that to capitalize on that growth, Asian companies would need capital, management, and technology. His experiences helped him understand a key issue westerners were having with breaking into the Asian market. In a place like Hong Kong with well-established infrastructure and comforting business practices, Westerners were unable to achieve a deal flow anywhere above moderate. With the rigors and uncertainty that surrounded the Chinese market, western businessmen were reluctant to even attempt to invest in ventures in China, but Perkowski knew that playing the “China card” was the way to go. In 1991, Perkowski had over 100 meetings to discuss his plans with potential investors but kept receiving the same reluctance in regards to him not being Chinese and not living in China, so he did what he felt was his only option. Jack Perkowski moved to Hong Kong. Chapter 3: A Blank-Sheet Approach to China

As he was working to assimilate himself into his new environment, Perkowski thought “how in the world am I ever going to figure this out?”. While reflecting, he mentions that “he just had to throw myself into it”. He also reflects on the advantages of being “a blank sheet of

3

paper” when he entered China, being able to “take China for what it was, unencumbered by prior knowledge and expectations”. His advice for individuals is to start with understanding basic facts about China and build on them using experience. This surprised me because I feel that “common knowledge” would point people in the direction of “try to know everything you can about something before you get there”. In this case, Perkowski qualifies that a lack of knowledge is favorable. In discussing some of his experiences with his children in China, Perkowski concisely explains his experience in China thus far: the first office in Hong Kong, an office in Beijing, the factories all over the country, and finally to a company with a global footprint. He also reflects about his initial steps to getting ASIMCO “ready for business”. Perkowski describes his “first job” as a responsibility to create the investment vehicle for the organization so that outside investors could be brought in and Perkowski and Kaye could earn some management fees to cover expenses. After pinpointing a gap in the needs of a struggling manufacturing plant in China, Perkowski worked to develop a model to match up struggling Chinese companies with the western organizations that have the needed know-how and capital. Chapter 4: One Hundred Factories in Forty Cities

Perkowski began the year by visiting a “100 factories in 40 cities” with “one purpose in mind: to determine whether the automotive components strategy made any sense, and to prove that I could access deal flow on the Mainland”. His first thought when considering how to approach this exploration was to get the government on “lock-down” with China operated like the United States with a more centralized structure. However, China’s industries are highly fragmented, therefore for long term success, Perkowski knows that he will have to travel to each individual plant and city he wants a relationship with. When discussing the meetings with Mr. Ai and the CNAIC, Perkowski makes the surprising comment that “being well established and well known to certain government entities does not help at all”. He says “in most cases, the work gets done and decisions are made at much lower, local levels. Chapter 5: Eating, Drinking, and Sleeping on the Long March

Perkowski reflects on some of the more personal memories he accumulated during the year he traveled to those 100 factories. From eating every part of an animal to navigating how to avoid drinking excessive amounts of bajijiu and familiarizing himself with key stakeholders for the various factories, the year 1993 and the subsequent experiences that it encompassed hold a lot of funny and serious memories for Perkowski, both professional and personal. Perkowski continues on to discuss his favorite visit from the year 1993, the trip to Nanjing. Set up by his connections to CNAIC, Perkowski was invited to attend three days of touring hosted by a raucous but smart general manager, Mr. Gu. The anecdotal content mostly serves as humor as well as a bit of a warning about the culture in China and the atmosphere that surrounds food and dinner. Though I was aware that these may hold a lot of credence, his story confirmed that food is as important as the rumors indicate. To round out the discussion about his “long march”, Perkowski points out a key distinction about China; its biggest asset of all is its people. Chapter 6: Developing Our New China Management Strategy

In discussing how ASIMCO’s new China management strategy came to fruition, Perkowski provides the reader with a background about the conditions that led to the need for this

4

innovative approach to management. Though it took six months to nail down the first joint venture partnership with a Chinese organization, six more partnerships quickly came together establishing the core of the company. However, once business seemed to have reached a comfortable “cruising altitude”, it appeared, according to Perkowski, to come to a “screeching halt”. A combination of a sluggish automarket and what Perkowski describes as a “head-on collision” with China’s management gap led to what he explains were the darkest years for ASIMCO. Some interesting revelations for me about China include his explanation about the state-run factories that involved both unsanitary and unsafe conditions for workers, his intention to not hire Chinese managers, leaning more toward bringing in trustworthy westerners, and then his use of managers who had not worked in China being what he describes as his “biggest mistake of all”. His advice to succeed in China is to get your best people “there”. Most of the issues ASIMCO faced involved what Perkowski labels as “symptoms of the fundamental problems of doing business in China”. The reluctance of his newly hired Chinese managers to understand and confront the realities that were plaguing ASIMCO’s joint venture factories led Perkowski to realize the two largest questions addressed in this book: “Why was the reaction to adverse economic and industry circumstances so different in China? And why is management in China such a difficult issue?” The result of being able to answer these questions would be a new management approach, called the “New China” strategy and a model for the success ASIMCO would achieve. Chapter 7: Closing China’s Management Gap

Perkowski kicks off his explanation of how he closed the Chinese management gap in his company by explaining that the key to ASIMCO’s development was “identifying, developing, and retaining a local management team”. His original plan for dealing with “the gap” was to hire a team of expatriates under a former manager from Beijing Jeep. However, the managers hired had been removed from the U.S. so long ago that they were no longer in the mainstream automotive industry and were unaware of the latest trends; they also had not been adequately prepared by Beijing Jeep to deal with an organization made up of different product lines from factories all over the country. Another issue was the fact that the managers hired didn’t have the “roll your sleeves up” approach that Chinese employees need to see from their superiors. Perkowski went on to explain that the Chinese have a “show me” type of attitude, going so far as to say “that [the Chinese] all seem to be from Missouri”. Another revelation Perkowski pointed out that I found interesting was that the Chinese do not have automatic respect for individuals who were successful in a more developed country. He explained that the natives understand how difficult and different China is compared to other countries, and they need to see success in China to trust the effectiveness of a manager. Plan A: hiring expatriates did not work. Plan B: converting “old China” managers did not work either. They found that the managers who were mainland Chinese born and raised were too set in their ways. Finally, Plan C was effective. Perkowski said he felt like Coach Noll of the Pittsburgh Steelers, he was dealing with a losing team. Eventually, a profile for ASIMCO’s ideal type of management was defined. It included characteristics such as: open-mindedness, management education, and prior experience in China. The two rules that Perkowski gleaned from his first twelve years in China were that everything is possible and nothing is easy. I like to think that I will be able to take his lessons and apply them to my analytical thought process for the proposal to bring a company to China.

5

Chapter 8: Guerilla Warfare in Anhui ASIMCO’s first joint venture was fraught with trouble and is what Perkowski’s describes

as the most difficult challenge ASIMCO has faced in China. The circumstances included a rubber mold factory in the Anhui Province, a company that ASIMCO held 80% of, a general manager who founded the organization with the town, its people, and its government on his side, and a management transition fit for the storybooks. Fang Yuan, the general manager and founder of the company, was reluctant to concede majority ownership to ASIMCO from the beginning, but his outright violation of the non-compete agreement was the final straw. Though intense planning was undertaken to prepare for Fang’s replacement as general manager due to his creation of a competing company, the fallout was intense and somewhat childish. The power supply was cut on the first day of the management change, the employees did not report to work, and Fang even sent a bus to collect any employees who wished to take him up on his offer to work at his new factory. Fang spent the next few years sabotaging and agitating his former factory and employers. Though I am aware that there are business people like this in the world, I was shocked to hear about Fang’s ridiculous actions. Perkowski looks on the experience with a positive light, focusing on the overall success the company had not having Fang at the helm. Looking back, Perkowski realized that Fang never bought into ASIMICO strategy and the long term way of thinking, a pitfall he points out is common to entrepreneurs and one that did not serve Fang well in subsequent years. Before the management change, ASIMCO did not have a relationship with the local government, being deterred by Fang, but due to the difficulties faced, they now have a strong and advantageous relationship with important officials in Anhui. The positive takeaways and “glass half-full” approach is inspiring and one that I will keep in mind as I look at the challenges other companies have faced while in China. Chapter 9: A Peaceful Transition in Langfang

The next story Perkowski tells is a bit more uplifting though it got off to an equally rocky start. The problems with the joint venture emerged from a badly set up relationship, emphasizing to me that to be successful and do something right, careful consideration at the beginning of a project is essential. The individuals who negotiated with the brake company not only got ASIMCO a bad deal, they also created a lot of contention and resentment of the organization. The lead negotiator played a tough guy routine and undermined a trip overseas for which the Chinese managers had spent a lot of preparation time. These issues showed me that being inconsiderate and overly difficult in negotiations can do much more harm than good. Surprisingly enough, the fight and stalemate Perkowski came to with one of the company’s leaders led to a reconciliation that resulted in a better relationship than before. Perkowski pointed out the Chinese saying that “you can’t have a good partnership until you’ve had a fight”. I hope to be able to apply that insight if I am ever lucky enough to do actual business with the Chinese, and it is important to keep in mind that contention if handled professionally can be beneficial long term. Langfang’s joint venture was/is a positive experience for ASIMCO. Looking back, Perkowski reflects that after overcoming bad advice and actions by his own people, he was able to create a strong working relationship with the Chinese partner. He learned a valuable lesson, to really listen to what the “other side” is saying. He cited the statistic that 90 percent of mistakes made in China are due to misunderstandings and miscommunication, an important aspect of business I aim to keep in mind even while working here in the states.

6

Chapter 10: An Election in Mao’s Backyard

Who would have ever thought that a democratic election of sorts would be taking place in “Mao’s backyard”? Perkowski’s next tale of ASIMCO’s experiences in China is about the succession of one of his general managers, Li Jienan, at one of his most successful joint ventures in Hengyang. He begins his explanation with key advice, even with good intentions from all parties, China is not always transparent. One should be level-headed and non-accusatory in dealing with fallout from contention. The situation involved one of his best managers who had been working with him on a joint venture for more than ten years and had reached an age where he was ready to retire. In describing his familiarity with Li, Perkowski explains the Chinese custom where the first time you meet someone, they are considered a “new friend”, but the second time you see each other they are then considered an “old friend”, an effort to break down communication barriers and breed friendship. Perkowski viewed Li as a true old friend and a genuine “New China” manager due to his easy acceptance of change but old school “roll your sleeves up style” of management. On a different note, I thought Perkowski’s description of “inkfish”, the Chinese’s makeshift agricultural vehicles, was adorable. I hope to get to see one in person some-day. In regards to the story at hand, Perkowski visited the fuel pump factory to deal with the succession of Li as general manager. Upon arrival and questioning of how Li would like to handle selecting his successor, Perkowski was shocked to learn that Li wanted to put the matter to a vote. He proceeded to take him to a room with the already assembled management team for a vote to take place, all of the deputy managers were up for the position. I found this action incredibly well thought out, genuine, and fair. I hope to one day work with a man of Li’s caliber of professionalism. Chapter 11: Building for the Long Term

After about five years of doing business in China, and no longer being in what Perkowski describes as crisis management mode, ASIMCO was ready to step back and take the time to measure the pulse of what was happening in China and the future of the automotive industry in the country. The first step with this new found stability seemed to be to ensure the company was unified in practice and spirit. Perkowski points out that though they had their core management team in place, the company did not have a common culture it operated by. He explained it as “everybody was wearing a different t-shirt, some GE, some General Motors, but Perkowski wanted to give everyone an “ASIMCO t-shirt”. I think this distinction is important, especially for the field of IT and the culture of frequently moving between organizations, consulting for different clients, or even moving between departments/areas of focus within a company. The idea of unifying the team of people I am working with or being aware of my own brand of “t-shirt” is a level of awareness I hope to achieve in the future. Chapter 12: Decentralization and China’s Local Governments

The fact that most things are run in China from the local level was very surprising to me. An important consideration especially for the industry Perkowski’s company is in. Intellectual property is highly prized and fiercely protected, so many companies, just like ASIMCO, start out with the mindset that they need to be well established with Beijing’s uppermost government to have protection for what is theirs. Perkowski has learned and taught others, however, that a

7

more valuable use of their time is to develop strong and perhaps personal relationships with regional and local levels of government. The natural barriers are something I had never thought to consider in understanding how business is done in China. The vast amount of rivers, mountains, and deserts act as natural separators and leads to “strong regional influences” and resentment toward mandates handed down from a central authority leagues away in Beijing. Perkowski aptly points out that each region enjoys a surplus of autonomy; he sums up the way the country is governed by referencing an ancient Chinese saying, “the mountains are high and the emperor is far away”. Perkowski also enlightened me about an interesting practice in China, the value-added tax, and how its existence makes China one of the easiest places to start a business. Chapter 13: China’s Different Cost Perspective

My initial understanding about the “China price” was rudimentary at best and did not expand farther than “you can get things cheaper in China”, end of story. But, Perkowski’s explanations led to some interesting revelations for me about the complexities that lie within every aspect of conducting business, especially in China. In addressing foreigners’ concerns about how China offers items so cheaply, Perkowski explains that the Chinese company may be pulling a “bait and switch” where they throw out the lowest bid and then intend to charge more, may not understand how truly complex and expensive the product is, or may be using a cheaper grade of the raw material in question. However, Perkowski does belie the concern that China’s central government is subsidizing costs so that Chinese companies can flood the global market within certain industries. He goes on to reinforce his assertion with discussion of how the Chinese central government works to bar more companies from entering some industries, thus furthering China’s tendency toward overcapacity. Perkowski’s explanation in regards to the conversion value of RMB was also enlightening. A $100 bill in the U.S. and the RMB 100 are both the highest value of paper money for either country, and though they have vastly different values, citizens consider them similarly in their respective countries. Westerners often go to China and think they are getting a deal in comparison to costs back home, but the Chinese often negotiate to pay less all around, leading to lower input costs, etc. I plan to keep this in mind during my visit. Chapter 14: China’s Two Markets

To introduce the topic of China’s two markets, Perkowski cites the startling statistic that there are likely more automotive component suppliers in China alone than in the entire world. He also pointed out a statistic he heard from a fellow panelist, there are more than 85 million private enterprises in China, three times the amount present in the United States. My first thought at hearing these two statistics is that it must be incredibly difficult to compete with that many other organizations. My second revelation is to be all the more impressed with ASIMCO and its ability to achieve success in such a large pool of competitors. The vast disparity of income levels allowed market segmentation to perpetuate even after Deng opened up China to foreign competition in 1978. An interesting insight Perkowski pointed out was that this extensive amount of organizations will separate based on success in years to come. He states that “to develop into truly global suppliers, China’s component companies need to improve their management structures and put in place systems that lead to consistent quality. Most won’t

8

make it, but some will”, only furthering his point that competition is fierce but opportunity is great. Chapter 15: China’s Technology Gap

The idea to institute quarterly innovation awards was excellent, and calling 2006, “The Year of Innovation” seemed to fit well with my perception of Chinese cultural practices. Also, the disbursement of five scholarships on a yearly basis to the children of any ASIMCO factory worker struck a chord with Perkowski and myself as well. To reach out to these families and show them that the organization they work for truly cares about their success and the success of their children makes ASIMCO stand out in my mind. Perkowski was so moved by the process that he showed his commitment to his employees by being involved in the program. On a different note, Perkowski explains the conditions surrounding the technology gap in China. He explains that its existence today is due to two factors: foreign organizations are reluctant to share their technology for fear of violation of intellectual property rights and Chinese companies still sit in the “make-to-print” perspective that China grew on, giving little investment to research and development activities. In regards to intellectual property rights (IPR), Perkowski points out that issues with IPR often arise from three different conditions: the products have a high selling price but low manufacturing cost, they are easy to manufacture, and they are sold to the retail market. Business to business products are apparently harder to “knock off”; this is something that makes sense, but I had not considered the distinction before. Perkowski explains that this is because businesses are not only looking for price competitiveness but also the quality of the supplier. Later on in the chapter, Perkowski points out that the answer to the question, “what is needed to improve the protection of IPR in China?”, is development of a more concentrated, less fragmented, and more disciplined distribution system. He elaborates to say that this single change alone would trigger immense change in the amount of “flagrant violations”. Lastly, Perkowski points out the comment he hears frequently, “The Chinese can copy, but they can’t create” . I was disappointed in the apparent perception and negative attitude of my fellow world citizens about a country and a people that are a force to be reckoned with. Perkowski seems to share my view as he continues on to point out that this perception could not be farther from the ultimate goal of the Chinese: less reliance on foreign technology. Chapter 16: Establishing a Business in China

The advice Perkowski has for readers about “establishing a business in China” is invaluable in my mind. I have been looking forward to this portion of his book. Perkowski’s first piece of advice was to not be intimidated. Relying on sound judgment, business acumen, and hard work can help a professional unravel the mystery of China. He also recommends that an individual only base their judgments and beliefs on firsthand knowledge; basically, don’t let others’ opinions shape your perception. An interesting revelation I had was about the language. I was truly shocked that he has not devoted any time to bettering his knowledge of Mandarin in a 15 year time span. His reasoning included: his lack of natural affinity for language, the return on investment of the amount of study time required not being enough, and the level of proficiency that would be required for business settings. I feel he is justified in this, but I was thoroughly surprised and would have not expected him to take this blasé position on the subject. I also acquired some key takeaways about Chinese culture. They can be very sensitive; “loss of face” is

9

to be avoided at all costs. They value “mutual trust” in a genuine way; Perkowski went so far as to say that once they know you trust them and they trust you, “there is nothing they won’t do for you”. Lastly, they are incredibly respectful of seniority and authority; something I plan to keep in mind throughout all of my interactions while in China. Chapter 17: Challenges of Running a Business in China Today

Perkowski takes this opportunity to point out many of the major “challenges of running a business in China today”. These include intense competition, dealing with Chinese customers, the global cost/price squeeze, markets, management turnover, distribution, the lack of functional capital markets, and the legal system. Perkowski asserts that in the coming years, the key issue facing business leaders in China will involve management. His advice for keeping the best people is to empower your Chinese managers by expanding their responsibilities, giving them new opportunities within the organization, and providing skill development training. This is an interesting point to make and couples well with his belief in developing a strong, local management team. His commitment to localization and empowerment for his employees appears to have served him well. Perkowski also surprised me with the distinction he made between the transportation of goods and distribution. As China’s infrastructure increases in quality, transporting goods is becoming fairly simple and efficient. Perkowski points out that many people assume moving goods around China is incredibly difficult, and before reading this, I held that same assumption. However, he does point out that distribution in the country can be difficult to manage. His discussion is a continuation of his point from earlier chapters about the incredibly fragmented distribution channels in China, “making it almost impossible to achieve national distributions”. Chapter 18: “Where Is It All Headed?”

Perkowski points out the most shocking discovery, at least for me, in his discussion about China’s impact on the world’s economic state. He sums it up best with the quote: “on February 27, 2007, China sneezed, and the world caught a cold.” I can honestly say that I was unaware of China’s involvement in the economic downturn that America and the rest of the world experienced just a few years ago. In discussing where China and its people will be headed in the future, Perkowski explains how easily the high birth rates in the 1960’s and then the one-child policy in the following year could lead to China becoming the “workshop of the world” as it has done over the last thirty years. However, he makes an insightful comment about how it will not be long before the predominantly young population will lead to the majority of citizens being older. He sums it up best in this comparison: “today, six adults support every child. In the future, one working parent may have to support as many as six aging parents and grandparents.” Another possible occurrence for China would be the transition from “make to print” to innovation. But, to do this, Perkowski points out that intellectual property rights must be protected and trust must be established if China will ever fully make the switch. Lastly, I want to make it clear how thankful I am that this book fell into my hands and that I was given an opportunity to read it so analytically. “Mr. Jack” said that he often draws inspiration by standing on the Great Wall and that “any nation that can conceive such an immense project and then have the patience and perseverance to see it through over a two thousand year period, is not

10

one you should ever underestimate.” I plan to learn everything I can from China and its people, and perhaps while I am standing on the Great Wall, I will find some inspiration for myself.

Discussion of Companies

Aerospace Energy The Shanghai Aerospace Energy Company is an affiliate of the China Aerospace Science

and Technology Corporation (CASC). The company’s product offerings and services range from the exploration, transmission and distribution, to application processes of natural gas. As for this organization’s R&D practices, Shanghai Aerospace Energy actually has a R&D facility that includes the Shanghai Natural Gas Supply Support and Efficient Application Engineering Technology Center and the Shanghai Academy of Spaceflight Technology. The organization has even established a new technology training base which is working to cultivate many technical talents within China to serve the gas industry. I was honestly surprised to learn that the company was founded as late as 1994. I am looking forward to gain firsthand knowledge from an organization so firmly nested in the energy industry in China, at the 20 year stage in their growth, and so fiercely committed to innovation and research. Lastly, I was a bit curious about the “Strategic Alliance” portion of their website. They discuss the City Gas Management & Application New Technology Demonstration & Training Base. The most interesting thing to me aside from the context itself is that it is geared toward developing the capabilities of “mid-senior level talents to boost the gas industry innovation and prepare for international opportunities”. I feel that this organization might be a bit of a “diamond in the rough”, unique in the way it is targeting more advanced professionals and attempting to prepare China for its global competition. US-China Business Council

The US-China Business Council (USCBC) is a non-profit organization composed of about 220 American companies that do business in and with China. The council was founded in 1973 and continues to provide advisory, advocacy, and program services information to its members to this day. The organization has strategically placed offices in Beijing, Shanghai, and Washington D.C. to best serve its members’ interests. It is working to get rid of trade and investment barriers and develop a commercial environment based on rules that are more transparent and predictable. Member companies include Apple, Chevron, Coca-Cola, Deloitte, Fluor, General Motors, Google, and more! They offer information on a variety of relevant and helpful topics including: Chinese media, export reports, and government initiatives. Something that really stood out for me was the China Market Intelligence section. That includes countless stories about how many policies in China are impacting the Chinese people and foreign firms, interactions within the country.

11

CB&I When visiting the CB&I website, one can find the announcement that CB&I is working to

build four new nuclear power plants for the People’s Republic of China. CB&I will be using the technology from a company called Westinghouse to provide the engineering, information management, and project management needed to get these plants off the ground. CB&I supports the initiative to use nuclear power as a cleaner energy source. This will be the world’s first AP1000 nuclear power plant. The organization itself is an energy infrastructure focused company that provides a lot of government services. With 54,000 people across the world, CB&I divides the workload into four operating groups including Technology, Capital Services, Fabrication Services, and Engineering & Construction. I am excited to interact with individuals who are perhaps a part of this project, one that could revolutionize China’s energy sources.

Control Risks

This organization is an independent, global risk consulting firm. It specializes in political, integrity, and security risk. They assist organizations by working to help them analyze and manage risks and opportunities associated with operating in hostile environments or complex societies. Control Risks provides what they call “practical on the ground protection and support”. They can also deal with sensitive political issues, a service that I can imagine a foreign firm would find highly valuable. Their integrity risk services include protection against: corrupt practices brought on by necessary dealings with public officials, corporate wrongdoing on the part of competitors or partners, and fraud by employees. From the information I gleaned from Managing the Dragon, I can imagine how valuable of a resource Control Risks must be to honorable organizations trying to operate in China. Albemarle

Albemarle is a company that I was fortunate to know something about before further research due to the presence of its headquarters in the Baton Rouge area. It is described as a specialty chemicals company that employs a little under 7,000 employees in 100 countries around the world. I greatly look forward to interacting with the Chinese branch of an organization that is so “close to home” for LSU. The chemicals it produces are used in consumer electronics, plastics, both normal and alternative transportation vehicles, pharmaceuticals,

12

agriculture, and more! Its operations in China include 10 different Chinese cities, two of which include Beijing and Shanghai. I feel that my excitement about the opportunity to meet with these individuals is heightened by not only by my desire to learn from them but also because the LSU MBA Program and I as an individual can further strengthen that relationship even after returning home to Baton Rouge. Some recent company news, from right here in Baton Rouge, involves the streamlining of its flame retardant product offerings to further develop key product grades. With such an innovative company “right down the street” from LSU, I look forward to learning about their operations in China and perhaps understanding key differences between how they operate in China and how they operate at home.

ZPark

This may in fact be one of my favorite visits of the trip. ZPark is a professional science park that focuses on “new-generation IT”. The last decade has brought nearly 300 software and research and development companies to ZPark. A metric taken at the end of 2013 indicated that the companies at ZPark owned over 16,000 intellectual property rights, including both patents and copyrights. Companies that can be found at ZPark include IBM, Geomodeling, Oracle, and Lenova. The offerings available at ZPark include Industrial Service, Technical Service, and Business Service. Some more specific technical service offerings available at ZPark are R&D, Cloud Computing, E-Commerce, System Integration, and more. The opportunity to visit ZPark and potentially get to interact with some of these organizations is an invaluable experience for me, being someone hoping to enter the IT field. I look forward to seeing how some of these companies operate in China firsthand. IBM

IBM or the International Business Machines Corporation is an American technology and consulting organization that serves 170 countries across the globe. The organization sits on the cusp of innovation and opportunity continuously and works on projects that are “ahead of their time”. The IBM “Green Horizon” project was launched to help China toward achieving their energy and environmental goals. The areas of focus for the Chinese include: air quality management, forecasting and energy optimization, and renewable energy. IBM’s China Research Laboratory will capitalize on the organization’s 12 global research labs to spark innovation in regards to achieving the goals set for those three key areas. With air quality becoming a worsening problem in China’s most populated areas and the need for excess energy only increasing with time, IBM’s efforts and partnership with the Chinese government and other organizations will revolutionize how China uses energy for decades to come. The opportunity to meet a representative who is such an important part of this initiative may in fact be the most impactful meeting we make in China to understand the current state of energy and what to expect for years to come. China Energy Net China Energy Net is an IT and internet based provider that focuses on organizations in the energy industry. It was started in 2000 and was China’s first energy website. The organization’s goal is to provide business development and marketing opportunities to its energy clients. It operates the China Energy Research Net (CENRC) which is composed of a large committee of

13

consultants who specialize in energy. The committee represents the best the organization has to offer in regards to energy project development, investment finance, and market consultation. I feel that having the opportunity to learn more about this organization will allow me a look into a foreign consulting firm that specializes in one industry. This is the type of organization I have a specific interest in, especially for IT consulting opportunities.

14

Works Cited

"About." Albemarle. Albemarle Corporation, n.d. Web. 13 Mar. 2015.

"About the US-China Business Council." US China Business Council. US China Business Council,

n.d. Web. 12 Mar. 2015.

"About Us." China Energy Net. Beijing Falcon Pioneer Technology Co.I.td., n.d. Web. 21 Mar.

2015.

"China AP1000® Nuclear Power Plants." CB&I. CB&I, n.d. Web. 10 Mar. 2015.

"Company Introduction." Shanghai Aerospace Energy Co., Ltd. Shanghai Aerospace Energy Co.,

Ltd., n.d. Web. 12 Mar. 2015.

"How We Help Our Clients." Control Risks. Control Risks Group Holdings Ltd, n.d. Web. 15 Mar.

2015.

"IBM Research Launches Project “Green Horizon” to Help China Deliver on Ambitious Energy and

Environmental Goals." IBM. IBM, 7 July 2014. Web. 14 Mar. 2015.

"Introduction." ZPark. Zhongguancun Software Park, n.d. Web. 17 Mar. 2015.

Perkowski, Jack. Managing the Dragon: How I'm Building a Billion-dollar Business in China. New

York: Crown Business, 2008. Print.