I found this book in a book store at the airport in Shanghai on my way back to Europe and read it in the plane, from cover to cover. This is probably one of the best books you can read if you plan to do business in China and want to understand what challenges foreigners face. The authors interviewed 20 Western entrepreneurs who have started their own companies in Shanghai. The stories range from relative newcomers who have been there only two years to the ex-Roche MD William Keller who has now been living in China for 17 years and was even invited to speak on behalf of Shanghai in its - successful - bid to host the World Expo in 2010. This wide range of stories is what provides for a great read. It is not so important if the people interviewed are right or wrong; what counts is their reported perceptions, as this is what you will also most likely experience. The people interviewed were in different situations ranging from - in one case - being an expat working for large company, to starting their own companies either right away or after having worked for a Western company first. There are tons of books out there talking about how to do business in China, but I have not seen one that is so practical and useful as this one - and exciting to read as well. In the words of Deng Xiaoping, that Mr. Keller so properly quotes: "learn from the facts".

So far my impressions on this last long business trip for 2008 have been mixed. While you can read and hear quite a lot of bad economic news, such as closure of 50% of manufacturing facilities for toys or clothes in Shenzhen and other areas, Shanghai gives the impression of business as usual. In the telecom industry, the introduction of a third operator, China Telecom, alongside China Mobile and China Unicom, was yet another smart move by the Chinese authorities (in Shanghai they are called Shanghai Mobile, Shanghai Unicom and Shanghai Telecom). It will lead to even more investment, as well as making the operators more quality- and service-oriented, as consumers have more choice now. Still, people I talked to are pessimistic, and expect real problems still to come. One consultant from the Waigaoqiao business district whose job it is to attract direct foreign investment sees clear signs of less activity now, and even less in 2009.

Then again, the Chinese government has cash in hand like no other nation in the world, and has already announced it will be using part of it for an economic stimulus package. Moreover, in Shanghai's financial district, Pudong, China's third major high-rise project was kicked off yesterday, signaling to the world "business goes on...". Along with the Jinmao and World Financial Towers, there will in a few years be an even higher (600+ m) skyscraper. So China continues to think big, even in somewhat troubled times. It is also moving on to produce its own high-tech products; this time you were able to read and see on TV about the first China-produced passenger jet trial flight out of Shanghai, the 33m-long Xiang Feng (Flying Phoenix).

ARJ21 has already received 208 orders and is planned to ship in 18 months. In this industry, too, China is determined to become a tough competitor like ZTE and Huawei became in the telecom industry with combined orders now of 49 bln USD in 2008.

I am reading an interesting book, YES!, 50 secrets from the science of persuasion. While reading it I somehow thought that most of the scientifically proven "secrets" they mention I just came across in China. It was in one of these markets in Beijing where they sell all kinds of low-cost goods. Could it be that these dealers and the many in other countries have figured out without using any science how to best persuade buyers? One would think so as they manage to survive quite well, it seems. So here's the Chinese way of getting people to buy, assuming they are indeed out to buy something and not just walk around. I am sure you remember this if you have been there as well.

• get attention: "come see", "do you want...", "hello sir", "s.e.x.", "best..."...
  
  
• pull them in: have you go into their booth, "come take a look", "which one do you like?"...
  
• get interaction: "here hold it", "pick the one you like", "where are you from?, ah beautiful country...", "for your wife?"...
• get action: "how much, here type it into this calculator", bargaining starts closing in on the desired sales price, if you play this game you will most likely end up in the middle of each one's first-entered sum; a trick you can use: once the pricing game is done, change your mind and start moving out of the booth slowly, this will lead to another BIG discount: the bigger it is, the worse you negotiated before in the first round.
  Still you will inevitably pay much more than locals even after hard negotiating, +50-100% I think is pretty much the best you can achieve, so best is to go with a Chinese or send someone telling exactly what you like. Or if you don't like this all then you simply bring a list along that shows the right Chinese prices. They will hate you for that but it works, just always keep a smile though!
  
  
• after sales: they try to sell you more, "something for yourself too?", "a second one maybe", "here our business card, come back and you get another 10% discount"...

Apple has bought Silicon Valley based P.A. Semi, a processor design firm. At first sight it seems to not make too much sense to buy a processor design company and for P.A. Semi, which is late in its target markets, telecommunications and medical devices, just a great exit deal. Now the blog community speculates why Apple would do that. Common wisdom is that chip making is a pure economy-of-scale innovation race. You need to be able to come up with a new technology first or with the first ones to make some healthy margins, and most importantly be able to win design-in projects. Then when competitors catch up you are already designed in and can even live with diving prices as shipments ramp up. A game that P.A. Semi seems to have lost as they were late with their products and missed many design-in possibilities. That P.A. Semi has not had any design-in wins with the mobile infrastructure players (Ericsson, Nokia Siemens, Alcatel Lucent, ...) I know first-hand.

Now what has attracted Steve Jobs to buy this company?

I think it is all about differentiation. With Apple competitors catching up against the iPhone (Android and others) it is key for Apple to build better and most importantly unique products. Apple seems to expect that P.A. Semi can help them do that in particular with being able to integrate video and data communications functionality in a very low power design. In the end, people buy Apple gadgets not because they are cheaper but because they offer a better designed and a more usable product that also looks better than the rest.

If P.A. Semi again does not deliver then at the least Apple has better negotiation power with the chip suppliers which will pay the price for P.A. Semi easily by itself. Overall a no-risk deal for Apple it seems.

In my nearly 20 years of work experience in high-tech sales and marketing I have only once worked for a very large company, and that not for too long. So I am probably not someone who knows BIG companies (I'm talking here about the ones with 10ks of employees or even more) inside out.
But I have sold to large companies, while working for smaller ones, many times so I have seen a lot of them in action and - often, of course - in inaction!

First of all, I think that once a company reaches a size of about 1,000 employees it should be split into smaller units that are self-sufficient. I doubt that any larger size of organization can be effectively managed by people anymore. It is simply not possible.

So what is it that disturbs me about large corporations and makes them inefficient? To me one of the most important ingredients for the success of a company is that its employees are highly motivated. Best is if they are self-motivated, second best if good managers are capable of motivating them. If high motivation is there, then literally all other things become a second priority as that is the one thing that lets you overcome all challenges.

I have seen many large organizations that showed one or more of the following behaviors:

Politics
Due to the size of the organization, no-one can oversee what is really going on in every detail. So the best "performers" are the ones that can set up their connections behind the scene and play politics the best. It becomes less relevant how people perform than how well they are able to play politics. Needless to say, this harms an organization.

Reporting Overhead
I have seen group managers in large organizations who had - due to the reporting that was necessary to their higher peers - spend nearly half of their time just doing all kinds of paper shuffling day in and day out, filling out an endless number of administration tools all the time so that their actual work was cut by half or even more.

Lack of Responsibility
Once you don't see the overall picture anymore but are busy making sure that whatever you do does not overlap with the responsibilities of another person or group in the organization, so you don't care anymore whether your work results change the bottom line at all. Simply because you cannot see and understand how your work actually contributes to the success of the company. This leads inevitably to a culture where, even if someone either internal or from the outside sees how to make improvements, organizational needs are followed first and served rather than pushing improvements through. Often also because, if one tries to do that, he/she will be called back pretty soon and not to step on other people's responsibilities.

Process Oriented Thinking

Naturally, to make BIG companies work, their suborganization follows well set up processes, and each employee needs to follow them. Management of the company spends their entire time streamlining these processes and monitoring that they are executed. Chaos is seen as something that kills a large organization - but why, actually? I think the fear in BIG company management of possible chaos is that they cannot steer things anymore how they like it.

They prefer to protect that orderly house than letting new ideas come up to the surface constantly and challenge the status quo - and possibly their own position as well. Quite frankly, I think that chaos is good to a certain extent, and can actually let a company move faster, as long as there are possibilities for everyone to bring up ideas and everybody can push - if it makes sense - through the organization.

Lack of Decision Making
I have seen many large organizations needing years to get anything done, even where the advantages in terms of cost savings, efficiency improvements or even helping with winning more business are obvious. An army of people are involved but no-one is taking it to a level where a final decision can be made. Everyone just confirms that it is actually good but then, rather than actually making a decision, simply pushes it to another group, giving them the job of deciding what to do. Endless rounds of meetings that cost a lot of money are wasted on reports that are only read by a few people - and even fewer people act on them. "I looked at it and I think that it is good but now the other group should take a look too and then decide what to do with it" is the common "job done" attitude. In my opinion, it would often be much better not to waste time but push it to some other group right away. Real supporters and champions are rare in large organizations. This is BTW also true for top management that I have seen. There things go in the other direction. Instead of making an obvious decision quickly, things are pushed to expert departments that are not too happy to get work now from top management but, OK, will do something with it as it is coming from the top, so have to tell them something.

The above are just a few of my observations, and led to frustrations when I had to cope with large corporations as possible clients. If you still need to make your living cutting through all this crap, then certain attitudes are needed, but mostly one thing over all: patience and persistence.

There is a nice book out there that I can recommend to all who are in similar situations: Bag the Elephant, along with its successor, Be the Elephant (great book titles, too). Steve Kaplan sees such companies as friendly elephants that need to be treated properly and their needs looked after if you are to be able to win them as clients. So not as negative as I see it, but simply practical. Not trying to change what cannot be changed anyway but adapt appropriately. That's easy to accept for me as long as I don't have to become an elephant myself.

This trip was very rushed as I had a few - but important - business meetings to attend and then take the flight back again. No time for any tourist activities other than yesterday late afternoon's trip to the silk and pearl market looking for cheap clothes. Of course if dozens of Chinese "skilled" sales people try to "convince" you of their wares you end up buying too much. No difference for me. Prices are still very low of course although you can clearly see that things keep getting more expensive. I also had the feeling that shoppers are more quality aware and want not just good prices but also better products. E.g. a Mongolian cashmere shop was one of the biggest in this big market and business was obviously doing very well. Their quality and prices were outstanding which meants I was unable to resist buying a nice pullover. One of my customers got three...

While the China government is under lots of political pressure right now things are going as usual in the country and no signs of it anywhere. The Chinese are used to taking things as they are since they cannot influence them anyway.

In its attempt to catch up with with the West, wireless technologies have been defined as a political subject and the Chinese government has a big interest in establishing its own wireless standard - and with that becoming independent of Western suppliers. So is the theory. China Mobile is reported to have invested in 2007 2.85 billion USD in a TD-SCDMA trial network in 8 cities in China. Even with more than 500 million mobile phone users in China this is still a lot of money since of course ARPU is also still much lower than in other places. Rumors are though that TD-SCDMA will never see a large-scale deployment as it is technologically inferior to 3G and much delayed. To overcome a possible face-loss, rumor has it that China will decide to go for LTE-TDD, a new version of the next generation wireless technology LTE. We will see.

During my current trip this story has been confirmed by local insiders I could talk to. So we might actually never hear any official "TD-SCMA is dead" news, but a silent transition to whatever they decide next or in the interim. That keeps the story alive without anyone losing face either. The Chinese are flexible, as is well known.