Shanghai Business Visits Day 2

Tuesday was another full day of business visits in Shanghai. The more time I spend in this city, the more I like it. It is a beautiful, clean city, that is very modern and continuing to grow.

Our first visit this morning was 3M China where we heard from Wayne Xue, Director of Corporate Strategy and Communications. I was very surprised to learn at how diversified that 3M is overall as a company. I was aware of their consumer products division as well as their healthcare division but didn't realize how deep their portfolio was. It is also impressive how much the China division contributes to 3M's overall revenue and is one of 3M's most successful foreign subsidiaries. Based on what we heard I think 3M China is doing a lot right, they are investing in R&D, planning to increase the R&D headcount from 450 to 750 by 2015, they also have very low turnover of employees, so they are obviously a good place to work. The market average in China is 1/3. 3M China also targets up to 70% of supply regionally. I also think their strategy is sound, expecting that the industrial sector will be a major contributor to their short-term growth and that healthcare and the consumer business will be contributors to their long-term growth.

Similar to the Vietnamese, the Chinese business people that we have met with so far all seem very proud of their accomplishments and their businesses. I do think that the Chinese people are a little less warm than the Vietnamese people but everyone we have met with so far have been friendly and very professional.

We had another great lunch today. We were at another mall and found a place that we could get a salad. I was never so happy to have a salad in my entire life.

After lunch it was a stop at the US Consulate located in the office complex of the same mall. Quite different than our visit to the US Consulate in Vietnam, this was much more laid back from a procedural standpoint. We met with Tom Cooney from Public Affairs, Evan Felsing in Economics, and Ki Tin (sp?) in Commerce. One of the most striking things that we heard on this visit to me, was the many Chinas that exist in the country. Shanghai is not really a real reflection of the economy of China, it is one of the showcase cities in China. Tier 2 and 3 cities are markedly different. We will get the chance to see a Tier 2 city tomorrow when we head to Hangzhou.

The team also spoke a bit about US businesses operating in China. With IP issues still looming China may not be the best place where a company's competitive edge is their intellectual property. There are also 2 large issues for companies now, labor costs are increasing and finding good Chinese managers can be difficult. Starting to do business in China is not something that can be done via phone, it requires a presence to get started. The largest opportunity they see is in the services sector, with 80-90% of companies being successful. The message I heard is that there is still opportunity in China but it is not necessarily easy to start up in China. I think this is where Vietnam may begin to have an edge over China, their labor costs are still lower and they have a very young workforce.

The other topic that I found interesting was about education. China is the #1 source country for international students in the US. Although the higher education system in China is good, it is very prestigious to receive an American education. China is clearly benefiting from their students returning home with a quality education. Some of the folks that we have met with already were in fact educated in the US. Overall it was a very interesting and informative visit, it would have been nice to start our business visits off with this visit like we did in Vietnam. I think it would have set the stage well for our other business visits.

Our final visit of the day was the Langham Hotel in the Xintiandi area of the city. The Langham is a luxury hotel in the heart of the nicest areas of the city. We received a full tour of the hotel and it is quite impressive. They are catering to the business professional and providing luxuries to the business traveler. It was also interesting to find out that the area is owned by one investor and his brother. Having been there earlier in the week in the evening it is clearly a successful operation that they are planning to grow even further. The hotel treated us to a very luxurious buffet dinner which was a nice break from all of the traditional Chinese food we have been eating.



The future of Xintiandi



This is just the desserts!



We have another full day tomorrow, taking the bullet train to Hangzhou. It's hard to believe our trip is almost coming to an end. So far it has been an enlightening trip where we have met a wealth of interesting people. I expect to be continuing to learn from this experience for a long time to come.