China trip, Day Eight—April 13: About half way through the trip on this beautiful, sunny Thursday. The sky was still a bit clear from yesterday, but it that slowly became history as the day passed by. We started the day at the Renmin University (the People’s University), which has a new and pretty campus in a quiet and quite nice neighbourhood. Picture of one of their, I guess main buildings, below:

The entire morning was a seminar with a couple of presentations on human resource management in China by some of their MBA students, which was followed by a discussion with a number of MBA students. It was interesting to see their perspective on things, and—especially—debating culture. We had to “warm them up” in order to really get the debate going, and, still, at that point you could not be entirely sure that what we heard was their opinion or that of someone else (say, Chinese Government?). In any case, all of the students were friendly, warm of heart and sociable.

In the afternoon, we had paid a visit to the Beijing Biotech and New Medical Development Center. It was, mostly, a sales pitch: Why place your pharma R&D in Beijing? and like-minded questions were answered. But useful stats and historical developments came about as well.

In the evening, and one of the many high-lights of the trip, was a visit to a theatre showing the story about Kung Fu; expected, but fascinating choreography, music full of fantasy, and a visual experience of calibre. I could go there again. Picture, below:

China Trip, Day Seven—April 12: On the programme for today was a visit to the Danish embassy and hereafter the Danish industrial company F.L. Schmidth. During the night there had been hurricane winds, which completely cleared the usually dusty air and smog-filled sky, which was wonderful. You really feel the clean air, when you took a breath, and you could see the sun for the first time, because the smog had been blown away. On a day like this, Beijing started looking attractive and got the nice spring-feel over it. Everyone had their sun glasses out. Our embassy was situated in an Embassy neighbourhood, so it was a rather calm place, with almost no traffic and people, but a lot of fences and guards. The nice weather, though, made these rather cold surroundings seem nice. Below, a picture of the entrance to the Danish Embassy.

After our morning visit, we split up for lunch. A couple of friends and I headed for PizzaHut to get some real proteins, something we had been missing ever since we got here. What stroke us about the restaurant, which is a normal McDonalds-like fast food restaurant in Western countries, was that it was a really upscale, nice restaurant here: Marble floor, starlight ceilings, luxury couches to sit in and so on. And—not to forget—the toilets were the nicest we had seen so far here in China, and they were up to par to any Western luxury restaurant.

Our afternoon visit was with F.L. Schmidth, a Danish industrial that makes concrete factories and related things. Their head office is located in a good looking apartment/business cluster called East Lake, which is in a very nice part of Beijing. East Lake Villas was actually established many, many years ago by another Danish company, EAC. Below a picture of the entrance to East Lake.

China Trip, Day Six—April 11: This was yet another packed day, but it proved to be very interesting. As the previous day, we headed up to Tianjin outside Beijing to visit Danish industrial giant Danfoss’s main China facilities. Frequent readers of my blog will remember that Danfoss was the case company of the CBS Case Competition 2006, which gives it a special place in my heart. And it was amazing to travel thousands of kilometres across the globe to see that the buildings Danfoss has in Beijing, look just like the ones in Denmark. On the other hand, and equally inspiring, was how the structure of the organisation had been adapted to Chinese norms. It is big as well as little things, such as how the canteen is and how employees are appreciated, that meet the eye.

The visit at Danfoss was only for the morning—we drove back to Beijing for the afternoon to visit PricewaterhouseCoopers and learn about the insides and outsides of the legal environment for doing business in China as well as the comprehensive tax system. In addition to all that wisdom :-), one major takeaway from that visit was the view of the city from their offices (below).

I tried to keep up with daily posting during my trip to China a week ago, but I only managed to do so the first four days. Now, I continue—we are at day five. The title to this post comes from the hilariously funny speech that Will Ferrell held at the graduation ceremony for the Harvard Class of 2003. Let’s hit it:

Day Five—April 10: The programme for today was a daylong visit to Novozymes’s production facilities in the Tianjin Economic Development Area (TEDA) 2-3 hours drive outside of Beijing. Actually, the length of the drive varies greatly with traffic—and traffic grows at enormous speeds. In fact, some Danish expatriates we spoke to said that they could feel traffic volume increase week by week.

As usual, our chartered bus for the week was waiting for us outside the hotel to take us to the Novozymes facility. After a one hour drive, we entered a remote parking lot (a huge one) with hundreds of taxis and buses. Clearly, this was a maintenance centre of some sort and not Novozymes’s facilities. What had actually happened was that the driver was dissatisfied with his boss about some kind of pay issue, and he had decided to take us “hostage” until he had it his way. We did not know whether we had actually driven one hour in the wrong direction or how long we were going to stay here at this taxi/bus place. In Will Ferrell slang—We are now in Russia! But this happens in Communist China as well. After three quarters of an hour, we were on our way again, and I fell asleep for the rest of the ride.

After a long drive we arrived in TEDA, which is a huge development area. Many multi-nationals are placed here, and you can see countless production facilities. The area is designed as a grid like an American city, and it is expanding all the time. You sense pollution the minute you get there, which is actually not that different from the feeling you have in Beijing. Novozymes is one of the cleanest production sites there, and they receive constant awards for the sustainable production.
At Novozymes we met their finance manager and one of their production managers, who also gave us a tour of the plant. Most of all, it resembles a brewery, and it also smells like it—at least in the fermentation section of the plant. Unfortunately, we were not allowed to photograph inside the facility, so you’ll have to do with one from the outside.

The day ended in an ever-so-infinite car line on our way into Beijing—we had started getting used to it.

Day Four—April 9: Today was Sunday and Grand Sightseeing Day for us, inasmuch as our programme is packed on weekdays. We started early in the morning with our guide, who introduced himself with some cool, crazy Chinese name “…but just call me Phil or Phillip.” We called him Phil (photograph below).

The programme for the day was packed. We started at Tiananmen Square—Google it if you want to, I’m not too keen on writing too much about it behind heavily monitored Chinese internet firewalls. After Tiananmen Square we walked through the Gate of Heavenly Peace (they know how to name things here) into the Forbidden City, which is a huge complex of buildings, and where the emperor used to live hundreds of years ago. On the back of the envelope, the Forbidden City covers just below one square kilometre—it’s huge! Below is a photograph of the Gate of Heavenly Peace with a painting of Mao hanging over it.

Besides the striking architecture, the size of the palace, the breeze of history—what I really find fascinating is the fact that there is a Starbucks store inside the Forbidden City. Of course I had to take a picture, which is below. My friend Ditlev is posing next to our hidden (forbidden) treasure.

(…we did so much more on this day… we saw more of the gigantic Forbidden City, we saw the enormous Summer Palace, and we went to one of the hustler markets to see how those work. I don’t have time to write about all that now, so: …to be continued :-).)

Day Three—April 8: Eating breakfast on this—another grey (grey because of smog, not because the sun isn’t shining)—day, I was amazed by the fact that the Chinese seem to eat the same kind of food for breakfast, lunch, and dinner: Rice with eggs, chicken, dumplings with mixed meat, water melons, etc. Then, so am I on this trip :-).
This was the day where we were going to visit the Chinese headquarters of Novozymes, the company around which the cases evolves. Below, a photograph of their building.

Novozymes’s Finance Director for Asia gave us a more detailed presentation on their activities in Asia, as well as surprising and knowledgeable insights during Q&A. Novozymes produces enzymes and micro-organisms (if I get the time, I’ll write more on the company later) and relies heavily on patent protection of these products in order to stay profitable. To my surprise, in China, intellectual property rights issues are of no concern to Novozymes—their products and the processes to make these are simply too complicated to become victim of the normal Chinese culture of copying things ruthlessly.

We were also introduced to NNE (my unofficial explanation to this abbreviation is Novo Nordisk Engineering), which—like Novozymes—also originates from the Danish pharmaceutical company Novo Nordisk. NNE is an engineering consultancy and has managed the construction projects of both Novozymes’s headquarters and their production site in TEDA (an economic development zone a couple of hours north of Beijing by car). In the case we’re solving, the issue is an expansion of Novozymes’s production capacity, which is why the viewpoint of NNE is extremely relevant. Below is a picture of Novozymes’s Asian Finance Director, Mads, and NNE’s General Manager for China, Christian.

After having spent the day at Novozymes, including an hour or two of case solving, we headed back to the hotel. I headed out to Beijing’s pedestrian street with a bunch of people to have a look—it is actually a pretty normal pedestrian street with McDonald’s, Nike, Häagen-Dazs, adidas, and what else you could imagine. Evidently, there are also stores carrying Chinese-made products, for instance, a store carrying all kinds of “cutlery”, i.e., chop sticks (photograph below).

This was also the day where I bought an incredibly expensive ice cream from Häagen-Dazs (RMB 60, just below EUR 10, which is about the same as three good evening meals would cost you here) and some of my friends ate beetles, so we covered a lot of ground.

Day Two—April 7: We landed this morning and drove to the hotel from the airport. What strike you right away is the amount of traffic, the lack of visibility through the air, and the extremely dirty streets and buildings. There’s simply dust all over the place—your lips and throat dries out pretty quickly upon arrival—and stays that way (thus far, at least). Below, a picture from our bus ride from the airport to the hotel.

After arriving at the hotel, we gathered to get an introduction to the trip by the organizers, tips and tricks by Miao (a Chinese national resident in Denmark, who follows us on our trip), and—finally—the case, which we are going to work on the next 10 days, was also handed out. Below, a picture from our introductory meeting.

At the end of the day, we had a welcome dinner of traditional Chinese cuisine. Among the more exotic things were sea cucumber and pig’s brain, but there were also chicken, noodles, beef and much more. Below, a close-up of one of the dishes from the evening.

Day One—April 6: Kick off for my China trip, a day I’d been looking forward to for a long time. Although it is a kind of a business trip, I also view it as a semi-vacation—the first in months. I met with the remainder of the team in Copenhagen Airport, where obligatory hot dogs and window shopping was on the programme. Below is a picture of (from left) Jakob (who is on my China team), Louise, Morten (whom I studied at New York University with), and Peter (whom I was in LA with).

We transferred flights in Frankfurt to a jumbo-jet looking forward to an eight-hour flight. We landed on April 7 (local time) in Beijing. Below is a picture of the group in Beijing Airport completely wasted by the flight.

In nine days—on April 6—I’m going to China to study challenges and opportunities for Danish companies that are doing business in, well, China. In total, about 30 students have been selected to go on this trip, where we—in teams—will work on solving a business challenge facing a large Danish company’s Chinese operations. I haven’t met my team yet, but I am sure it will be fun, challenging, and fascinating to work with them.

I have been selected as the official photographer for the trip (our photos will be distributed to media/press)—and given my keen interest in photography, I am, of course, very happy about that.

What I really wanted to post to my blog is the preliminary programme which came out a couple of days ago, so here goes:

• April 6: Copenhagen – Frankfurt – Beijing.
• April 7: Arrival in the morning, introduction to everything in the afternoon.
• April 8: Day-long visit to Novozymes’s headquarters in China.
• April 9: Sightseeing: Tiananmen Square, the Forbidden City, the Summer Palace.
• April 10: Day-long visit to Novozymes’s production facilities.
• April 11: Danfoss’s production facilities in the morning and PricewaterhouseCoopers in the afternoon.
• April 12: The Danish Embassy in the morning and F.L. Smidth in the afternoon.
• April 13: Renmin University of China in the morning and the Beijing Biotechnology and New Medical Developing Center in the afternoon.
• April 14: Bestseller in the morning and IFU (Danish International Investment Funds) in the afternoon.
• April 15-16: Free time—or—time to work on the case.
• April 17: Case discussions and presentations at Novozymes’s headquarters.
• April 18: Sightseeing: The Great Wall.
• April 19: Beijing – Frankfurt – Copenhagen.

I will post in more detail on each event as we move along in the programme, but I am not sure how often I will get internet access and how much time I will get for blog-posting.

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Interesting article in the Guardian (China’s powerhouse vision for 2050):

By 2050 China will have eradicated poverty, established itself as a world power in science and lifted the average lifespan of its billion-plus citizens to 80 years, according to two blueprints for the future published yesterday.

Even by the standards of a country that has a passion for long-term economic plans, the targets - which foresee the relocation of 500 million peasants to cities, huge investment in biotechnology and the addition of hundreds of millions more cars to the streets - are ambitious, but give an indication of how the nation would like to see itself in the middle of the century.

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I previously commented on Google’s China launch. Since then, Google has put a post up (Google in China) on their web site in response to all the negative press and blogging they have been subject to since the China launch:

Google users in China today struggle with a service that, to be blunt, isn’t very good. Google.com appears to be down around 10% of the time. Even when users can reach it, the website is slow, and sometimes produces results that when clicked on, stall out the user’s browser. Our Google News service is never available; Google Images is accessible only half the time. At Google we work hard to create a great experience for our users, and the level of service we’ve been able to provide in China is not something we’re proud of.

This problem could only be resolved by creating a local presence, and this week we did so, by launching Google.cn, our website for the People’s Republic of China. In order to do so, we have agreed to remove certain sensitive information from our search results. We know that many people are upset about this decision, and frankly, we understand their point of view. This wasn’t an easy choice, but in the end, we believe the course of action we’ve chosen will prove to be the right one.

Launching a Google domain that restricts information in any way isn’t a step we took lightly. For several years, we’ve debated whether entering the Chinese market at this point in history could be consistent with our mission and values. Our executives have spent a lot of time in recent months talking with many people, ranging from those who applaud the Chinese government for its embrace of a market economy and its lifting of 400 million people out of poverty to those who disagree with many of the Chinese government’s policies, but who wish the best for China and its people. We ultimately reached our decision by asking ourselves which course would most effectively further Google’s mission to organize the world’s information and make it universally useful and accessible. Or, put simply: how can we provide the greatest access to information to the greatest number of people?

Filtering our search results clearly compromises our mission. Failing to offer Google search at all to a fifth of the world’s population, however, does so far more severely. Whether our critics agree with our decision or not, due to the severe quality problems faced by users trying to access Google.com from within China, this is precisely the choice we believe we faced. By launching Google.cn and making a major ongoing investment in people and infrastructure within China, we intend to change that.

I thought the decision made sense before I read this (read my post: Google Launches in China), and I still do.
Prominent Google observers still don’t see the positive in the decision. (John Battelle: The Real Irony Here).

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Google has launched the localised Chinese version of their web site, Google China, albeit not fully equipped with all features found at Google.com. Google has for a long time postponed going into China, because of the censorship restrictions imposed by the Chinese government, which Google has found incompatible with their values. Although Google.com is also censored when accessed from China, this censorship is exercised by the government and not Google themselves. Now, however, Google has followed in the footsteps of competitors Yahoo! and MSN, and launched a localised Chinese version with voluntary censorship.

Critics believe this decision conflicts with Google’s Do No Evil mantra. From a business perspective, however, the decision makes perfect sense: (1) Competitors are already in the Chinese market and more importantly (2) via the Chinese version Google now gets an inside, controlled approach to the censorship as opposed to the external censorship applied to Google.com. The latter will enable a better understanding for search and internet patterns of Chinese web users, but, in the long term, also offers the possibility of increasing bargaining power towards the Chinese government with regard to censorship.

Examples of censored searches include queries for the Tiananmen Square massacre and the—in China forbidden—Falun Gong movement.

Read more: Here Comes Google China, Google Joins Chinese Censor, and Google Makes Right China Decision.

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From Autoblog:

With more than 5.9M vehicles sold in China last year, the country has become the second-largest automobile market in the world, moving ahead of Japan (which saw 5.8M new vehicles sold in 2005). China’s sales represented 8.7% of the world market, or about double its share back in 2001.

Not surprisingly, 5.76M of those vehicles were domestically produced, as China’s market remains very difficult to crack for importers.

The market in China remains highly fragmented, with the largest producer - First Auto Works - grabbing less than 17% of the market.

One of my friends told me: “I don’t know much about China, but if you multiply anything by one billion, it’s fine with me.” This is true, but you cannot always multiply things by one billion in the case of China, whose domestic market remains very difficult to get into. Lack of regulation in some cases, over-regulation in others, and lack of a developed domestic demand (China’s growth is mainly export-driven, not driven by consumption) are real challenges, which need to be faced if one wants to even get a chance of getting close to the one billion multiplication. Given the export-driven growth, it is nice to see that consumption grows, in this case with cars. Still, domestic cars take the majority of car sales in 2005. Let’s see what 2006 brings.

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Together with 29 top graduate students, I am going to China (Google: 660m hits) in April to try to gain a deeper understanding for their culture, doing business in and with China, and to solve a specific, concrete problem of a Danish company present in China. We will also visit the facilities of a number of Danish corporations as well as we will be visiting Chinese firms.
Before going there, I will spend a lot of time on catching up, which is why I will be starting a blog post series on China containing whatever I tumble across: History, Economy, Business, Architecture, and other musings as I see fit. I will, of course, also update you more detailed on the contents of my trip, as they unveil.

Welcome to the China Exposé.

(Photograph is from the Great Wall of China.)