Happy Thanksgiving! (not so much in China)

Up at 5 this morning after a solid 8 hours (yeah!), quick visit to the gym then breakfast and off to South Station for the high-speed train to Tianjin. After missing photos of kids on the way home from school on the backs of bicycles, mopeds, etc yesterday, I missed them this morning on the way to school the same way. Here’s the best one I got:

On the way to school

The station is new, huge, and beautiful. With 58 RMB and 30 minutes you can ride about the distance from Philadelphia to New York in perfect comfort at 200 mph. Very cool.

Train station

But to get to the Tianjin Economic Development Area (TEDA), you have to ride another hour in a taxi (100 RMB). It seems like you’re in the middle of no where then suddenly another city pops up.

Tianjin is growing at 16% a year for a decade. In 20 years China’s cities will have added 350 million people (that’s 2 New York Cities a year!) and it shows in Tianjin.

Cranes are EVERYWHERE in Tianjin

Tianjin is the third of three areas targeted for development in China’s 10-year plans. One of the many strengths of the authoritarian system is that resources can be concentrated to achieve impact. Deng Xiaopig initiated this approach, and it works. It’’s possible partly because there is s bone deep difference between American and Chinese culture that supports it: the Chinese see themselves primarily a a part of a whole, whereas Americans see ourselves first as individuals. The Chinese view of the concentration of resources in Tianjin is to be proud of what China is achieving – they are genuinely happy to wait for their city’s turn because they view themselves first as Chinese, second as a member of their family/work etc and third as an individual. This difference is in evidence everywhere every day – the Chinese even put their family name first and given name second. In America we see ourselves as individuals first and our democracy ensures that resources are spread widely, if not evenly. Often, the result is that the investment is too small to have an impact.

We arrived at the TEDA International Cardiovascular Hospital and were greeted by Yin Cheng, an administrator, who gave us an exhaustive tour. It was fascinating to see every aspect of a hospital – the outpatient operations, the radiology and labs, the pharmacy, etc… We even got to see the operating rooms, including one in use!

In scrubs (over coats) to tour the operating rooms

The system is very different. Patients pay for service (although no one is denied serviced in a life-threatening situation). But the costs are extraordinarily low. A consultation, which lasts 20 minutes on average, costs 20 RMB or about $3. An MRI 1500 RMB or $200. One striking difference is the view of privacy – we were allowed to see and take photos of everything, including computer screens with people’s test results etc.

This hospital is extremely modern and well-equipped. Its approach is unique, and based on Dr. Liu’s ideas. He follows two principles: humanity and capitalism. The first leads to programs like free surgery for over 500 orphans a year. The latter to astounding medical suites.

The main room of a suite that takes up half a floor!

The suite's exercise and piano room

A mid-level room with a terace

Importantly, regardless of the room a patient is willing to pay for, the quality of medical service is the same. Dr. Liu , who is a cardiac surgeon, President of the hospital and an Eisenhower Fellow, is sincere in his vision and has solid management strategies to drive it towards success. For example, he outsourced everything that is not a medical service. Doctors anode nurses work in teams. Bonuses are based on performance: quantity, quality, difficulty, cost, and satisfaction, each of which has specific measures. Note that revenue is specifically not in the equation.

Our visit to the hospital ended with a banquet and a very enjoyable conversation.

Claire and Yin Cheng at lunch

Plus, naturally, a photo op. Not just with my little point and shoot this time, but with a real photographer.

With Claire and Liu Xiacheng

From the hospital we took a short cab ride to the Sino-Singapore Tianjin Eco-City. The project is literally unbelievable. Out of waste land a city of 350,000 is being created.

Model of the project

It was planned to take 10-15 years, but they think it will be completed sooner, and it looks like it. There are cranes everywhere, dozens of them. It’s impossible to get a photo to capture even 10% of the feeling of it. While Tianjin grows at 16% a year, the Binai New Area grew 23% in 2009.

The lowlight of my visit was getting locked in a stall in the bathroom. I made a ruckus until someone came, who of course spoke no English, but it was clear that she was getting someone and she also told Claire

We were extraordinarily lucky to get a taxi quickly in the middle of nowhere and rode 45 minutes to Tanggu station. After an hour wait in the freezing station, we rode the high speed train an hour back to Beijing. I ate room service and was asleep by 10.

Supposedly, I was quoted on the radio about the Eisenhower Women’s Leadership Conference and the transcript is posted, but I can’t get to it. I don’t know if that’s because it’s not there or because it’s blocked here. Click at your own risk.

Unfortunately I went back to my jetlag schedule and woke at 3a. At least I had time to work out (which I regretted later!) and watch some Mad Men before a conference call. Then it was off to the Great Wall of China.

I had a private car, which is pretty standard, for 700 RMB (or $100). It took about 1:45 to get there, an hour of which was fighting through the Beijing traffic. At about Ring Road 5 (there area a series of highways around Beijing, numbered 1-6) everything changed and became non-city. I went to Mitianyu, which is supposed to be less touristy. Still, the approach is lined with stalls selling souvenirs with aggressive merchants. I was very surprised to come upon a camel in the midst of the vendors.

It cost 110 RMB to get into the area and ride the cable car up and down.

At the top, you can go right a short way to another cable car or left up the mountain to a view of a lake in the distance. I went left, and eventually climbed up to the writing on the mountain.

It’s a long steep climb.

But the views are amazing.

One of the things I like about other countries is that they’re overly concerned with safety, for example this ledge with no rail. It’s on you if you fall.

At the top I was rewarded with this vista, with the lake in the background. And also with tired legs.

Down was a lot easier than up, and by then I’d made friends with a mother and daughter visiting from San Jose, so the descent went quickly. Back in the car I was back at the hotel by 2p.

Back in Beijing

After some work, I took a Taxi to see the CEO at Gridsum, a company not unlike my own. We had a terrific sharing of ideas and perspectives and identified four potential ways to work together.

I was very happy at that point not to have a dinner and was in bed at 10:30.

After 8 hours of sleep, I enjoyed breakfast at the hotel, then met Claire for an amazingly long taxi ride to Baidu.  The traffic is horrible – much worse than in August and much much worse I’m told than a couple of years ago. On one stretch of the ride the driver said that what now takes 45 minutes used to take 10. Bill Bishop told me the drive to pick up his daughters has gone from 20 to 45 minutes in a year. The pollution was horrible too. I can’t imagine that it can continue like this much longer.

Once we got to Baidu, I had two excellent meetings. The first was with Zhang Tao, who was in charge of the Baidu paid search API and now runs their certification program. We had a free-ranging conversation about search and the Internet in China. China’s paid search market is 4-5 years behind the U.S., tough Baidu’s trying to accelerate the pace. Weibo (Sina.com’s service launched a year ago that is essentially threaded Twitter) is, as Bill Bishop mentioned, the most exciting thing happening. A tidbit for search geeks: average position reported by Baidu is incorrect. And for analytics/PPC geeks: because IP addresses are so limited in China, you can’t get location from thiem like you can in the U.S. (a problem IPv6 will solve.)

Next up was Kaiser Kuo, a charismatic Chinese-American turned Chinese long-haired heavy metal musican/Baidu spokesperson. He had some very different perspectives on Baidu, Google, and their respective relations with the government than I had heard from others. He was tremendously entertaining and gave us the full tour, even letting me take photos (recall I got in trouble for that last time. Which makes me realize that I’ve gotten in trouble for taking photos in China three times, which is probably reflective of a very different ethic.)

Baidu Campus

Kaiser and Claire in front of the oddest ladies lounge ever

Search facts: 30% of searches on Baidu today are for apps! Baidu’s goal is to provide solutions, not just answers, which they call “Box computing”. It’s like like typing 2+2= in the Google search box and getting the answer 4, or Google’s innovations in product results, but more so. In Baidu if you search for a flash game, for example, you can play it right in the results.

Kaiser’s parting thought was that to understand the impact of the Internet in China you have to hold two contradictory truths at the same time:

1) censorship is real and increasing

2) the Internet is the unstoppable center of culture today in China

The government is very carefully monitoring, controlling, and freeing the Internet. They understand its power fully but don’t know what to do about it. (I can’t recall who told me, but only 3% of Internet users in China hop the great Fire Wall, it’s not a major factor in this story.)

After our Baidu tour, we were off to the famous Tsinghua University for lunch, a brief coffee with Mark Ma, and a salon with students interested in entrepreneurship.

Headed into Tsinghua University

Lunch proved more challenging than expected as the electricity was out in the cafeteria building, but we did manage to get something in the main student area rather than the dining room.

Typical street on campus

After lunch we hung out at a coffee shop (with wifi!) until Mark came by. We talked briefly and took off for our talk. It was in another, large coffee bar. There were about 20 students, including a very able MC Seven Cheng. We each made brief comments, I gave a presentation about raising capital, and we took questions for an hour or more. The students seemed eager and very earnest but extraordinarily young – much younger and with very little sophistication compared with the students I speak with at Wharton. There was one woman, however, Min Lei, who has a company with a mobile content system. I’d bet on her to succeed.

On the panel

Tsinghua students

Next was dinner with fellow Tang Zhongha and his colleagues Elton Li and Wendy Li. We were picked up by Elton’s car and whisked to a mercifully close restaurant at the Royal King Hotel, which he used to manage. The restaurant features Peking duck from Yawang, supposedly the best in Beijing. The food and the conversation were both interesting. This was the first time a chicken foot showed up in my soup. The duck was served wrapped in a pancake with some vegetable sticks and was very good. Elton, Tang, and Wendy recently bought an elearning company that they’re retooling and we ended up talking about, among many topics, politics.

At the end of the evening Elton drove me back to the hotel, for which I was very grateful since it was 11:00p!

I spent the last few days of my time in Philadelphia in my closing seminar, which happened to also overlap with the Eisenhower Fellowship’s Women’s Leadership Conference. On Thursday the USA Fellows joined the 19 International Fellows for a day of leadership seminars. The International Fellows are an extraordinary group – I wish I had more time with them. I did get to have lunch with Jane Shaw, Chair of Intel. She was awesome, and hearing her story made me realize some key points about how to be great. I’ll write more about that in my Fellowship summary post after this is all done.

Lunch with Jane Shaw

Friday was the conference, and I had breakfast the with a small group and Christie Todd Whitman, preparing for a panel. The conference was good, although I had to hop out continually for conference calls, and I was one of only three people with laptops open! Mostly I enjoyed meeting people, including Lisa Nutter, the Mayor’s wife (or re-meeting I guess – we met once in the early 90s) and Director etc Aaron Posner.

Getting to China

I flew Saturday non-stop from Newark at noon to Beijing arriving Sunday at 2p. I slept on the plane for about five hours, which set me up well for the adjustment. I breezed through the World’s Best Airport (said Conde Nast Traveler in 2009) Beijing Capital International.

The Humongous Terminal 3

I couldn’t find my driver so I took a taxi to my hotel, the Hilton Wangfuging. I stayed here last visit too, it’s a nice hotel in a great location and Eisenhower gets a good rate.

It’s chilly here, but no more than Philly or NY. Everyone talks about it though.

Beijing Startup Weekend

After settling in and managing to stay awake I headed over to a Startup Weekend run by my friend Andy Mok. 30 people pitched ideas on Friday, the top 8 took the weekend to develop their idea and presented. I was falling asleep so I didn’t stay through the judging process, but there was a mix of really smart stuff (sms-based virtual currency for distributing aid), lots of so-so ideas, and some copycats. They’re very popular here. One of these was a guy from Microsoft who wants to clone Ari Jacoby’s Solve Media. I was most intrigued by the idea of creating a virtual currency using SMS to distribute aid in disaster relief from Joey Renert (I am going to meet with him Friday). Presentations and the conversations were in a mix of English and Chinese, and the entrepreneurs could have been in NYC or SF. Only one team didn’t use a Mac or iPad to present. Everything moves fast in China, and I think that Apple is going to take this place by storm (see the iPhone 4 line in the preceding post).

Andy Mok, Beijing Startup Weekend

I managed to stay up until 10p – supposedly that’s the first step to zone switching successfully, woke at 3 but stayed in bed until 5, then got up and worked out, supposedly another step to switching successfully.

Breakfast

Breakfast in Chinese hotels is an extraordinary thing. I started to take pictures of all of it but was told that it’s not allowed – they’re afraid you’re going to go into business and copy the buffet set up! Never mind that every hotel has one. Anyway, here’s what I got before getting in trouble:

10% of the breakfast buffet

That’s the dim sum station. There are also stations, as big, for:

• Chinese noodles
• Japanese breakfast
• Baked goods
• Cheese and cured meats
• Cereal, dried fruit, nuts, peanut butter, honey etc
• Pickles and other random things I don’t understand
• Eggs - omelets, scrambled, fried, poached,…
• Every western side imaginable: pork sausage, chicken sausage, ham, bacon, hash browns, home fries, grilled tomatoes, sauteed mushrooms,…
• Fruit
• Smoothies (5 blenders with different ingredients for each)
• Refrigerated yogurts, muesli, juices, etc…)

No exaggeration! It really is amazing, and everything is extraordinarily high quality. I was sitting there after finishing, I thought, reading the NY Times on my iPad, and a waiter brought around fresh = hot croissants. Amazing.

Meetings

Well-fed, I went down to meet Jack Perkowski. Jack is an investment banker-turned-entrepreneur-turned investment banker. in the 90s he built an auto parts business in China called ASIMCO. Now he’s building JFP Holdings. Jack’s main point/lesson is that to be successful in China, foreign companies need to truly localize, and most don’t. Truly localizing means that Chinese managers need to have the authority to make the decisions. ASIMCO was a collection of majority-held joint ventures with Chinese parts manufacturers. The initial plan was to hire western industry veterans, which failed miserably. Plan B was to hire experienced Chinese managers, which also failed miserably (mainly because they came from state-owned enterprises). Plan C was accidental, but turned out to be the winner: hire “new China managers” – managers who were Chinese but had worked in true capitalist companies. Jack believes that Chinese managers look at costs differently – their gut reads 100 yuan like $100 (it’s worth about $15), and they operate that way. Wu Hai called foreign managers “wasteful” and I think this is behind that. Jack’s story is told in Mr. China and Managing the Dragon.

After meeting with my able coordinator from CEAIE, Claire Zhang to go through my schedule for the week, I headed off to have lunch with the head of Morgan Lewis & Bockius’s Beijing office. Unfortunately, he was called away on an urgent client matter, so I met with the marketing person instead. We had a delightful Szechuan lunch. The biggest law firms in China are local – they’re the only ones allowed to go to court. There are a few foreign firms that came here early and have good sized practices. Others, like Morgan Lewis, that came later are very small – only 2 attorneys in this case, in a firm of over a thousand.

In the afternoon I had coffee with Bill Bishop, who co-founded CBS MarketWatch and has been in China since 2005. He is an angel investor (although not in China) and man-about-the-startup-scene. He confirmed and amplified my conclusions about how difficult it is to do business in China as a foreigner. Even though relationships and Government connections are less important for Internet businesses, only a couple of foreigners have succeeded. (Bill’s girlfriend has recently opened the first cupcake shop in Beijing – another copycat!)

I have a board and I’m on two boards right now, and I’ve served on many more in the past decade. This was a tough week in a few ways, and it leaves me thinking about how to handle diversity as a Director. Specifically, how should you react when the going get tough?

I think that there are two key things to do:

1) Be supportive. CEOs are motivated people who are used to succeeding and have a huge incentive to do so. When things are bad, they know they’re bad. Pointing out that they’re bad, asking for definition of exactly how bad they are, itemizing the terrible downstream ramifications, or reminding the CEO how prescient you when you said this was going to happen are not helpful. The CEO is under tremendous pressure –  in addition to fixing the problem, they have to appear unflappable and in control for their staff, investors, customers, prospects, and everyone else they deal with. Your goal should be to reduce that burden, not add to it. You can talk about how to do things better later.

2) Help. The CEO has to solve the problem, and if you have anything to contribute, it’s time to offer it. (If you don’t have anything to offer, you might want to consider replacing yourself on the board with someone who does.) Have a forward-looking problem-solving conversation. Recommend an approach. Pull out your rolodex. Or your checkbook.  At a minimum offer an “oh, that sucks.”

Or, fire the CEO.

Most directors do little to enable great CEO performance. It’s not about hand-holding – those problem-solving conversations can be hard-hitting – but it is about understanding. The way the Directors reacted to a key challenge facing one of the companies I’m involved in was very revealing. The most successful, and most experienced, directors reached out to the CEO quickly, and in exactly the manner I suggest. Because it works.

My buddy Bryan Eisenberg (Professional Speaker, Best Selling Author, Online Marketing Authority) posted about Facebook credits and quoted me (scary).

The iPhone4 is out in China, and this time it’s on fire. As Fortune writes, the crippled iPhone 3 (no wifi) sold only a few thousand units, while there are pre-orders for 200,000 this time and huge lines.

iPhone4 Line in China

Almost every tech startup I see in the U.S. uses Macs, but in China I only saw one (plus some iPads). When I asked about this, most people answered that Apple products are much better, but that PCs are so much cheaper. They said it with envy. My bet is that, given the pace of change in China, I’m going to see a lot of Macs when I go back in November. Despite crazy prices, the Chinese will pay up for foreign brands. Today’s lines are an amazing leading indicator in what will be the second biggest market for Apple.

I’ll be off to China again in a couple of months, and hope to take the train to Tianjin. Thomas Friedman is there now for the World Economic Forum, and his Op Ed in the NYT yesterday captured, almost exactly, my feelings about the comparison of the two countries’ current economic, cultural, and political states.

Wall Street Journal covers Kai-Fu Lee’s Innovation Works’ launch of Tapas and Wonderpod.