Sunday, August 22, 2010

Post China blog - a little foggy

First I must say, the whole experience seems like it is/ was a dream (I actually had a dream during the flight that I was recently in China, LOL). Good thing I took some notes in a journal when I had the time as my memories are a little vague. There was so much to take in and process (good thing pictures were taken and shared online). When I returned home, China left me in a bit of a fog mentally. This was not too much different than the “fog” we encountered during all but the last two days of the trip. I was excited on Friday @ noon when I had a shadow. I even took a picture, as it was my first shadow (from the sun) in China.

This trip has been an exciting experience. I met truly captivating people, from the first presenter Mr. Baker (Mahon Investments) to the last Mr. Perkowski (JFP Holdings), and many in between. One of the most interesting facts is that B&Q (Home Depot type chain store) is the market leader, but captures only 2% of the market share! This gave some insight on how local things are in China. The stall markets are very important in this segment. This emphasized one of the themes I have seen recurring. To do business successfully in China, one needs to think global, and act local. This applies when hiring local managers, to having/ finding the right guanxi (social connection and business networks).

China’s market is HUGE. We learned this from JFP holdings using the automobile industry as an example. A large pyramid represents personal transportation, where only the top third would be automobiles, and the remainder being bicycles, scooters, etc.

The real automobile market is thus much larger due to substitution effects, and the fact that China is a developing nation, where people will be trading up to buy automobiles. Many Chinese in the cities buy something just for the look/ image of having a specific brand. Buying a car, just to own one for instance, and not necessarily having a need for one is somewhat common. As, a result, there is a large discrepancy in the quality (price) of vehicles. This also applies to all other manufactured products.

One car may typically only last 2-3 years but for a cheaper price meets many lower income users purpose of owning a car. Owning a car is very important, as they do not own their homes or apartments, but have to lease from the government. There are little to no real property rights in a communist nation, and a car is something that gives them expression of freedom, and ownership in my view. One cheap low quality car may last a family many years as a result not being driven often and thus suites their needs of “owning a car.”

I personally liked the Kung-Fu show, and was a little disappointed at the trip to the Great Wall. It was good, but I had very high expectations as it is THE GREAT WALL. Part of the let down was that it was foggy, and limited any great captivating views or picture opportunities. It was neat being at spot where there were padlocks on a chain up and down the wall. I think it was shown on one of the reality shows… here is the best picture/ view from my photos.

I feel China is interesting, complicated, and boy, do they matter. Orlando touched on the haves and have nots. If the have nots move up the pyramid, China will more than matter (that is a lot of people with a lot of potential).

Thank you to all.
-Chris Steinke

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