Personal Reflection Report

- China Business Trip -

Preface I had never been in mainland China before the China business trip. What I knew about it came from my second-hand experiences such as books, news and conversations with Chinese classmates. They are good sources for information, but I wanted to see and feel how it is with my own senses because I hope to work in mainland China after the graduation. Through the trip, I got to have some understandings about China and China business, though 8 days were not enough to apprehend all aspects of them. My understandings, however, might be confusing to other people because I concluded that China is difficult to define as one word. Like Yin Yang(), it sometimes appears to have two opposite aspects at the same time. It is a socialist country while it has harshly competitive market. Some of its technologies are as much advanced as many developed countries while some part of the society is still remaining same as developing countries. It has also high level of diversity thanks to its large population and territory. Generally, I would make an argument about what makes me think like this and in the end I would add my opinion about cultural conflicts. Socialist Market Economy One of the words explaining Chinese economic system is Socialist Market Economy. When I first hear this word in a China finance class in the last semester, I felt as if it is a kind of contradiction though I knew China was doing well in terms of Market Economy. In my understanding, socialism economy is controlled by the government and capitalism economy is controlled by open markets. For me, China is basically socialist country, though there is no perfect market economy in the world. I was wondering how much China is socialist and how much China is market friendly. On the way to the Hotel from Beijing International Airport on the first day of the business trip, I thought I had found out a clue to grasp what Socialist Market Economy in China means. I saw Volkswagen, Benz, Toyota, Hyundai, Honda and especially Audi running on roads with Chinese local brands cars. To my surprise, the foreign automobile brands seemed to account for a lot of portion in cars

on roads. South Korea, although it has defined itself as a market economy county, has not given a much opportunities to foreign brands in its automobile industry. Local companies were supported by South Korean government in the beginning of the business and have been protected de facto more than companies in other industry by it. Considering that South Korean market is relatively very small and a lot of foreign brands cars are produced in China by a kind of joint-venture companies, I have found Chinese automobile market more open and free competitive than that of South Korea. On the other hand, I have heard that most of big steel companies are state owned and their reform is made by the Government. During the visit to Shou Gang (Capital Steel), I made a question to the speaker whether its move to Tangshan in Hebei province has to do with a national plan to develop north eastern China and he replied it does. The company seemed apparently controlled by the Government. However, it is not the case that there is no competition in the market. I have strongly felt that Shou Gang is also trying to improve their productivity and technology to provide customers with high quality products so that it can survive in the harsh Chinese steel industry1. A market is important in market economy because it causes competition, and therefore offers efficiency to a society. Market economists believe that planned economy would damage function of markets and consequently harm overall efficiency of the society. On the contrary to their beliefs, in China, competition in markets seems to be vivid even though economy is planned by the Government. Personally, I think the Chinese government is doing well because many Asian countries have achieved their economic success being led by governments, and state-owned companies contributed a lot to a nations fast growth. However, more important things in this report are business aspects and in that viewpoint, I have felt doing the business in China in is not so easy in contrast with the belief that China is the land of new
1

According to a chinaknowledge.com, there are ten major players in the steel industry and they account only for slightly more than 50% of the production. In South Korea, POSCO, the biggest player in the industry takes up 60% of the production.

opportunity seeing a myriad of foreign and car makers. At the same time, I felt that a private company cannot compete with companies controlled by the Government. For example, I have heard that Shou Gang sometimes provides its products at low prices to boost the other industries. Mr. Fu Qiang also said during his presentation that big companies in terms of revenue are almost Government related companies and a private firm should get into the area that they dont exist. In conclusion, I felt extremely competitive free markets and extremely government-leading industries coexist in China. Between a developed country and a developing country Chinas GDP per capita in 2009 is 3,648 US Dollars. 2 Actually, it is relatively less than several developing countries. However, China is one of a few countries that have succeeded in launching a manned space ship and a lunar probe. In business, Google, most brilliant internet company, still keeps its office in China in spite of the censorship issues and Lenovo has acquired IBM PC division, which owns a high technology in manufacturing laptops. During the visit, XinAo ENN shows advanced technologies in Green Energy industry and BNBM also shows its technology is not so far behind its global competitors from developed countries. Seeing these companies, I felt that China had already become a developed country. Nevertheless, I also could find out some aspects in which China needs to make improvements. One day, my roommate was seriously sick and I went to a hospital with him and the professor. It was around four in the morning. Besides the darkness, I was so flustered that I couldnt see whole hospital, but it seemed a big general hospital. In contrast to its size, sanitary status was not so good. Especially, a bathroom was worse than I expected. It was very surprising to me that hospitals sanitary was not enough good to protect patients health. If it is a normal building, I could understand it because I have used extremely dirty toilets many times in South Korea. However, hospitals should be different from other buildings in sanitary because they must do their best to avoid secondary infection inside hospital
2

Korean National Statistics Office

buildings where more germs and viruses are hanging around than normal buildings. I dont think that hospital managers have not set up proper sanitary policies. I believe that it is highly likely that the policies are not obeyed well due to systematic flaws or insensibility of hospital workers. In addition, driving habits of drivers in Beijing is different from those of developed countries. I was almost hit by a car a few times when I was crossing a street at a crosswalk because drivers didnt care about pedestrians though it was a stop light for them and there was no traffic jam. These experiences of mine make me think that many people are not faithful to the basic rules. Admittedly, faith to basic rules saves a lot of cost in doing business. For example, if workers do not abide by security policies of a company, business secrets of the firm could leak to its competitors, therefore management have to spend much money on watching its employees. And if workers do not much care about standards of the product quality for their convenience, low quality products would harm the reputation of the firm some day and it should be a great amount of cost in the future. Diverse markets in one country As everyone knows, China has over 1.3 billion of population. Ive heard that in human history, we have never seen this kind of single big market emerging. European Union has around 900 million but it consists of several countries. The United States, which has been the biggest single market, has around 370 million of population. However, it is the true that China is one homogeneous market? One country is one market. This was my basic idea and I had never thought about it in depth before the lecture about China marketing in Qing Hua University. One part of the lecture was that life style in Chinese cities are not the same, and therefore marketing should different. It is very interesting to me because South Korean cities are usually not considered the different market though there are some differences between them. On top of the professors explanation about it, I think basic factors like extensive territory and big population make distinct marketing strategy worth conducting. As for China,

physical distance between cities is not comparable with that of South Korea, so it could cause clear differences of natural environment and peoples way of thinking. One of my Chinese friends who comes from Chengdu has told me that women in Chengdu have elastic skins because of high humidity in Sichuan province. On the other hand, Beijing is vey arid because of the winds coming from innerMongolia and Siberia. It is highly likely that the needs of women in two cities for cosmetics are different and if I were a marketing manager of a cosmetic company, I would have to conduct different marketing strategy in two cities. Moreover, the population of each city is significantly big and there are living 12 million people in Chengdu and 17.5 million in Beijing.3 If they are small markets, distinct marketing is not efficient. However, I think it is not the case in China and even if it is not efficient right now, I anticipate it would be in the near future as GDP per capita of Chinese cities are rising more. Conclusion It is often said that there is no competition and efficiency under the planned economy. However, the competition in China is as harsh as a capitalist economy even though some industry is under the government control. Ive watched a documentary about Chinese history and I heard from it that Deng Xiaoping said that there is no capitalist economy without planning and no socialist economy with markets. I think Deng Xiaoping made a totally brand new Socialist Market Economy concept based on this idea. Foreigners like me who knows only about western economic system might have trouble understanding it because this concept has never been tried in other countries. However, it has been working very well and I think one wanting to do the business in China must understand it to survive there. As with economic system which has characteristics of Socialist economy and market economy, China has characteristics of developed countries and developing countries simultaneously. I think China would make a fast improvement in a lot of aspects, but businessmen need to consider where China

http://en.wikipedia.org/wiki/List_of_cities_in_the_People's_Republic_of_China_by_population

currently stands in aspects relevant to their business. A great diversity that comes from the history and regional features of each province should be considered as well. In addition to what I have mentioned, Id like to say foreigners like me should be more careful when they say something about China. Usually, media tend to deal with bad news about other countries and they are likely to make a judgment about them in their viewpoint. We are easily affected by the media, and therefore we are likely to have biased information in the viewpoint of Chinese. On top of that, Chinese people seem to be proud of their country, culture and history, wherefore even if unbiased questions in the view of foreigners are asked, sometimes they could look like aggressive questions to Chinese. So, in business situation, I think I need to take much care about this kind of cultural confliction.