Shanghai Surprises
As your airplane approaches Shanghai you realize that this huge city-province is preparing to reach more than 30 million inhabitants. From the busy, ultra-modern airport you reach the city center in 8 minutes; a 430 km/hour ride on a smooth magnetic levitation train. In the Pudong business district, a bright, modern skyline appears with broad avenues already insufficient to make traffic flow quickly. At Tonji University, a Harvard-trained senior professor, Dr. Peng, tells us that China’s growth has been led primarily through investment in infra-structure and export; with the global economic crisis reducing exports, it now must be redirected towards internal consumption.
As your airplane approaches Shanghai you realize that this huge city-province is preparing to reach more than 30 million inhabitants. From the busy, ultra-modern airport you reach the city center in 8 minutes; a 430 km/hour ride on a smooth magnetic levitation train. In the Pudong business district, a bright, modern skyline appears with broad avenues already insufficient to make traffic flow quickly. At Tonji University, a Harvard-trained senior professor, Dr. Peng, tells us that China’s growth has been led primarily through investment in infra-structure and export; with the global economic crisis reducing exports, it now must be redirected towards internal consumption.
Shanghai is the most westernized of Chinese cities; one finds street signs in English and a wide variety of international stores in ultra modern malls. But go outside the central business district and try to get a haircut in a barber just 6 steps away from a WalMart stores and no-one speaks English! Nor do they understand easily our gestures or mimicry; with language, writing and general outlook on life so distinct, communication is a real problem; you feel as if you are actually on another planet! However, for expatriates, Shanghai offers a good quality of life; the Brazilian executives we met work hard but have a pleasant lifestyle, with good housing, international schools for their children and a strong expatriate community and social life.
Visiting international companies such as Volvo, Voith Hydro and Vale (ex CVRD) you realize that building relationships is a long, time-consuming and unavoidable process; creating “guanxi” , the Chinese version of business networking is essential to developing a sustainable business. The Brazilians we met seem to adapt very well to this environment; but besides experienced Brazilian and European CEO’s we meet promising young Chinese managers. Typically with excellent technical backgrounds and training, they still seem to lack the communication and leadership skills to take over top management positions in international organizations.
A significant surprise is that labor costs are rising, but one finds that once the Chinese workers understand their tasks and are motivated, they work very hard, and are both productive and quality oriented. Another important surprise relates to environmental and safety issues. Strong legislation has been passed, and is being actually enforced by the authorities, at least in relation to major foreign firms. New companies must comply with environmental laws, and labor laws require a 40 day week, paid overtime, and respect to workers rights. Estimates on social charges on salaries vary from 40% to 50%. Competition for qualified labor is intense and unlike Japan, company loyalty is not a significant retention factor; companies must pay competitive wages and have excellent human resource policies to retain qualified workers.
After Shanghai our trip takes us to Guangdong Province, where Chinas economic opening started, to learn more about how Chinese companies are surviving the economic crisis.
Please watch out for the next blog!
James Wright
Visiting international companies such as Volvo, Voith Hydro and Vale (ex CVRD) you realize that building relationships is a long, time-consuming and unavoidable process; creating “guanxi” , the Chinese version of business networking is essential to developing a sustainable business. The Brazilians we met seem to adapt very well to this environment; but besides experienced Brazilian and European CEO’s we meet promising young Chinese managers. Typically with excellent technical backgrounds and training, they still seem to lack the communication and leadership skills to take over top management positions in international organizations.
A significant surprise is that labor costs are rising, but one finds that once the Chinese workers understand their tasks and are motivated, they work very hard, and are both productive and quality oriented. Another important surprise relates to environmental and safety issues. Strong legislation has been passed, and is being actually enforced by the authorities, at least in relation to major foreign firms. New companies must comply with environmental laws, and labor laws require a 40 day week, paid overtime, and respect to workers rights. Estimates on social charges on salaries vary from 40% to 50%. Competition for qualified labor is intense and unlike Japan, company loyalty is not a significant retention factor; companies must pay competitive wages and have excellent human resource policies to retain qualified workers.
After Shanghai our trip takes us to Guangdong Province, where Chinas economic opening started, to learn more about how Chinese companies are surviving the economic crisis.
Please watch out for the next blog!
James Wright
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