Archives September 2006

The Talent Behind ‘China Inc.’

By Thomas Hout and John Wong

From The Wall Street Journal Online

A stereotype is forming around China’s acquisitions in the U.S. — buy fast rather than build slow. Lenovo’s buyout of IBM’s PC unit, TCL’s buyout of France’s Thomson and with it RCA, and now Haier’s bid for Maytag all suggest that China is in a hurry to go global and will freely spend low-cost money to acquire our brands and distribution access, plus secure an outlet for their low-cost products made in China.

The problem with this view is that China’s most successful acquisitions to date in the U.S. have little to do with China’s low-cost money and workers or buying our brands. They are instead all about Chinese management skill and U.S. workers. These no-name Chinese acquisitions are turn-arounds founded on hard-nosed Chinese business practices, and they import less product from China than most U.S. manufacturers do.

Haier in fact doesn’t fit the mold either. It has spent 10 years building its own brand in the U.S. and now has its name on 10% of new U.S. refrigerator sales. Large units, too expensive to ship from China, are made in the U.S. Haier succeeded by partnering with a young, market-savvy U.S. entrepreneur, Michael Jemal, who created down-market, niche refrigerator products that the big U.S. brands ignored and won its own distribution access by customizing products for the big box retailers. Haier’s bid for Maytag is a turn-around play premised on Haier’s proven management practices. Otherwise, sophisticated co-investors like Blackstone and Bain Capital would not be aboard.

Chinese companies that are successfully building slow in the U.S. include Wanxiang and China International Marine Container (CIMC). Wanxiang Group, China’s leading auto-parts maker, tried to export auto parts from China to the U.S. but found itself under-priced by Polish and Romanian imports. So it adopted a private equity role in building a U.S. business: it joint ventures or acquires stakes in struggling U.S. manufacturers, then restructures their management and operations based on what Wanxiang learned in China. The Group now has equity positions in over 30 auto-parts companies world-wide, and its U.S. sales of nearly $400 million are more profitable than its business back home.

CIMC may be the world’s least visible globally dominant company, making 40% of all shipping containers. In the 1990s it consolidated South China’s big container business — much like GM rolled-up U.S. autos in the 1930s — by buying up smaller local producers with non-voting stock, then rationalized production among these subsidiaries. Only then did CIMC acquire a U.S. truck-trailer maker from a bankrupt parent and turn it around, using Chinese-made container components and factory floor technology.

Chinese management is an under-rated asset in American discussions of China’s global strategy. Almost all large successful companies in China are turn-arounds of formerly politically managed state-owned enterprises. The managers who took them over during the 1980s and 1990s reforms had to learn what any turn-around specialist does — flatten layers, fire the pretenders, prune losing businesses, and hammer operating costs down. The CEOs of Haier, Wanxiang, and CIMC all started and spent their careers on the factory floor. China’s low-cost mentality is just as much about cheap management as about cheap labor.

So it makes sense that China’s first and surest global companies will be in mid-tech or modest brand businesses built on ground-level operating skills, opportunism, and local partnerships — not high-profile consumer brands or high tech. These proven Chinese strengths also play perfectly to deep changes going on in the U.S. economy — revitalization of distressed small manufacturers through new partnerships, private equity’s growing role, and even lower income consumers’ trading-down to lower-priced household durables.

Not all Chinese companies, however, think they have the time to build slow. Lenovo and TCL are in fast-moving businesses where strong global competitors are breathing down their neck in China — especially, Dell, Samsung, Nokia and Motorola. Computers, flat-screen televisions, cell phones, and mobile consumer electronics devices of all kinds may be made in China but controlled by multinationals there who are pulling away from Chinese competitors.

This issue of pace is a problem for China. Product and marketing innovation is rooted in close contact with customers and close collaboration with adjacent, complementary technologies. Chinese state-owned companies have typically been separated from end customers by government-controlled distribution intermediaries. The result is China doesn’t have what Silicon Valley and other innovation clusters have — diffusion of knowledge horizontally and movement of technologists between firms.

Too much can be expected of China’s high-profile companies now. The early rounds of Chinese globalizing favor less glamorous, hard-nosed Chinese companies who have a lot to offer to industrial America right now.

Expat Life: A One-Way Ticket To a New Life in China

By Alan Paul

From The Wall Street Journal Online

Please don’t call me a trailing spouse. It’s a horrible term — sexist and demeaning when applied to a woman and downright emasculating when slapped on a man. But lingo is lingo and facts are facts. And the fact is, in expat land, I am a trailing spouse. I became one the moment I put my career on ice, packed up the house and three kids in suburban New Jersey and moved to Beijing in support of my wife and her new job.

This isn’t all new to me. I haven’t set foot in an office for nearly 10 years, working from home as a magazine writer and editor. As our three children’s primary caregiver I am used to being the only adult male in a room, having chaperoned field trips, assisted in kindergarten classes and shown up for countless midday assemblies. Still, the dividing line is much sharper here. After all, we have uprooted our family and moved to the other side of the world for someone’s job. And it’s not mine.

While my wife, Rebecca, has long had the job that parents like to brag about, as a rising editor at The Wall Street Journal, I’m the one who has managed to live out the widespread male fantasy of getting paid for a state of perpetual adolescence. As a senior writer for Guitar World and the basketball magazine Slam, I was paid to write the kinds of things that most men call procrastination: Who are the five greatest power forwards of all time? Name rock guitar’s 10 greatest riffs. Why isn’t Lynyrd Skynyrd in the Rock and Roll Hall of Fame? When it was time to leave home and go to work, my destinations were press-row seats at NBA games or New York rock shows. It’s not a life I could easily abandon.

Yet when Rebecca casually mentioned to a friend last December that the Journal’s China Bureau Chief job was posted, I urged her to go for it. She was shocked. I had, after all, nipped in the bud talk of moving to Chicago, Washington, D.C., and San Francisco, hesitant to give up my gigs and support system to head off into the great unknown. “But this is different,” I explained. “It’s China!”

Six months later, worn out and frazzled from preparing to pull up stakes, I found myself asking my doctor for a sleeping-pill prescription to help me get some rest. A simple thought ran through my head: “Me and my big mouth.”

For months, I had wondered what it would feel like to board a plane with a one-way ticket to Beijing. When the moment came last August it felt like a huge exhale. A tremendous sense of relief washed over me, knowing that our 15 suitcases were secure in the cargo bin, life as I knew it was fading in the rearview mirror and adventures were looming ahead. Whatever difficulties the transition posed had to be a piece of cake compared to the painstaking, numbing process of erasing our existence in Maplewood, N.J., and emptying the house we had lived in for seven years.

Moving to China with three kids — Jacob, 7, Eli, 5 and Anna, 2 — seemed so wild and ambitious back in Maplewood. Then we arrived here — to the Western style “villa” my wife’s company owns in a tree-lined, European style gated housing compound called Beijing Riviera — and felt anything but exotic. Standing on the playground watching my kids run around, I was surrounded by dozens of moms from around the world. One of the first questions people ask upon meeting one another is, “Where was your last posting?” We were not only fresh off the boat, but fresh on the scene in a larger sense. Our most exotic traits were the reversal of gender rules and our straight-out-of-the-burbs background.

I met an 8-year-old girl whose mother was Indian and father Dutch but who had never lived anywhere but Beijing. Eli became good friends with a 5-year-old British girl with a perfect English accent who was born and raised in Hong Kong. At a school assembly, the principal asked how many kids spoke four languages and about 20% raised their hands.

Fellow expats were not the only ones not quite sure what to make of me. The company driver had to get used to not only having a lady boss, but figuring out how to deal with a male tai tai (lady of the house). Like most people in his position, Mr. D is a bit of a heavy. He is also indisputably loyal, officious and efficient. He has driven us around town to perform the many bureaucratic errands required to live here — processing visas, getting press credentials, applying for driver’s licenses. He also provides invaluable assistance in many of these tasks.

On one such errand, Mr. D’s view of me was stood on its head. I am credentialed and sanctioned as the Beijing Bureau Chief for Slam magazine. We waited in line at the massive, bustling government office where visas are issued for Chinese and foreigners alike. When it was my turn, the policeman processing my paperwork looked up from his stamping to say, “I very like Slam.”

Next came a fairly intense, in-depth basketball discussion. He wanted to know who I thought was the best Chinese basketball player, “after Yao Ming.” Mr. D watched and listened in amazement, then turned to the officer and asked him something in Chinese. The two had an animated chat, and Mr. D looked at me and smiled and laughed. Afterward, something seemed to change in the way he regarded me.

While my wife went off to work, burying herself in a demanding new position, the kids were adapting to life halfway around the world with remarkable ease, nonchalantly starting at a British-run school complete with uniforms. Frankly, they inspired me to keep moving forward and never look back, as I walked to Starbucks everyday, laptop bag slung across my shoulder, grateful for the free wireless service as I waited for my DSL hookup to be activated. It didn’t take long to sell a story on bike riding through crowded, downtown Beijing and start interviewing the stars of the Chinese national basketball team, in search of the next Yao. You know — getting paid for the kind of stuff most people call procrastination.

Executives in China Need Autonomy and Access to Boss

By Carol Hymowitz

From The Wall Street Journal Online

SHANGHAI — On a recent evening stroll, James Rice, a vice president at Tyson Foods and the head of its China operations, wandered into a narrow alley, drawn by the pungent scent of spices coming from a food vendor’s stall. The vendor was selling skewers of barbecued lamb coated with cumin, a popular evening snack here.

That detour gave Mr. Rice the idea for a new food product: cumin-flavored chicken strips. “I found just what I was looking for — an exotic flavor that is authentically Chinese,” he says. Within a few weeks, his research-and-development manager had created a new recipe, and members of his marketing staff had begun testing it with consumers. When they got a 90% approval rating, they knew they had a hit. Mr. Rice began selling the new product in just two months.

That quick launch was the result of strong teamwork by his staff. It also reflects the freedom Mr. Rice has been given by superiors at Tyson’s headquarters in Springdale, Ark., to build the company’s business in China as he thinks best. “When I see a way to modify or create a new product I think we can make money on, I don’t have to go through layers of management or wait months to get a decision,” he says.

Some of the executives who oversee operations for multinational companies in China have this kind of autonomy. Others must seek approval from bosses located elsewhere for even small decisions, such as making a change in packaging or pricing. Many spend considerable time weighing when to act independently and when to take marching orders from corporate headquarters.

It is the yin-yang management challenge for overseas executives everywhere. But the stakes are higher in China, the world’s fastest growing economy, where every multinational company wants to do business. “If you don’t have flexibility to respond quickly to new markets or situations — to make a pricing or flavor change — it’s very hard to compete against Chinese companies, which do react quickly and also have the advantage of much lower fixed costs,” Mr. Rice says.

It also can be an operational nightmare when corporate bosses insist on centralized systems. An executive at an industrial-products concern spent months last year arguing with his bosses in the U.S. about an information-technology system they wanted to use globally that wasn’t compatible with Chinese characters. They purchased the system, and he had to buy a separate IT system that his employees could actually use.

A manager at a consumer-products company wanted to reduce the package size of a product in order to lower the cost and attract more lower-income Chinese customers. He sent the request to his boss, the vice president of Asia operations, who sent it to the vice president of international, who in turn sent it to senior executives in the U.S. The request was approved, but by then five months had passed and a competitor already had launched a similar product in a small package.

Country managers who focus on what their superiors back home want may not pay close enough attention to local preferences and practices. That can be a fatal error, says Desmond Wong, Americas Coordinating Partner-China at Ernst & Young Americas. “Anyone who manages Chinese employees has to understand that they expect an extra month’s pay at Chinese New Year, and if they don’t get it, they’ll try to find work elsewhere,” he says.

Local hires also want assurance that their boss has the ear and respect of his or her boss. “So it’s important to persuade top executives to visit China at least once a year,” Mr. Wong says. “And if you tell employees before the visit that you want them to look good to the bosses, they’ll go extra miles for you.”

The most successful executives in China have autonomy, as well as access to corporate chiefs when they need it. Jack Q. Gao, vice president and regional director of Autodesk’s operations in China, believes that “to grow in this market, which is so dynamic and unique, I need to be directly supported by top executives who can present one strategy to the government.” China’s government, he notes, not only sets economic policy but is the largest customer of Autodesk and many other multinational companies.

Since he took his current job two years ago, Mr. Gao, who oversees about 1,600 employees, has opened research-and-development centers in China to create software products tailored for Chinese customers. He also is partnering with local businesses to create new applications for AutoCAD, Autodesk’s software design tool. “It’s a new business model,” he says, and it may help to offset software piracy.

Mr. Gao meets several times each year with Autodesk Chief Executive Carol Bartz, along with the company’s chief operating officer, head of global sales and vice president of the Asia-Pacific region. The group, which is known as the China Initiative Steering Committee, is also available to confer about “anything unique or experimental I may want to try,” he says, ” and gives me a direct channel [to the top] for decision making.” Unlike some of his counterparts at other multinational companies, he adds, “I don’t have to spend all my time educating corporate executives about China.”

Executives Trained Abroad Are Sought After in China

By Andrew Browne

From The Wall Street Journal Online

When Dominic Leung moved to China this year as chairman of the country’s second-largest life insurer, the Hong Kong executive startled his senior managers with a blunt message: Skip the formalities.

On his first outing to a branch office, the staff formed a welcoming line that snaked from the elevator lobby down a long corridor to the reception counter — the kind of over-the-top gesture that strokes the egos of many Chinese corporate VIPs. But Mr. Leung was embarrassed, and annoyed. “I said to the general manager: ‘You never do that again,’ ” he recalls. ” ‘I don’t need that.’ ”

Mr. Leung, who worked previously for American International Group and the United Kingdom’s Prudential PLC, says he is now trying to persuade managers at Ping An Life Insurance not to greet him personally at the airport. “To me it’s wasting time — they should be working in the office,” he says.

Mr. Leung, a 56-year-old insurance-industry veteran, is part of a new wave of “overseas Chinese” being recruited to fill top slots in Chinese companies. These executives — from Hong Kong, Taiwan, Singapore and other locales where Chinese have settled — have long been wooed by multinationals to run their China operations. Now, some of the brightest are jumping to Chinese companies instead.

In some ways, the trend points to the relative fortunes of Chinese companies in China’s vast domestic economy, where local businesses have proved to be at least the equal of multinationals in the battle for market share. Increasingly, Chinese companies are seen as a springboard for the ambitions of overseas Chinese with U.S. and European graduate degrees in business. Some who have made the leap say they were prompted by a glass ceiling at multinationals for ethnic Chinese employees.

Once the new recruits get over initial culture shock, they report few regrets. Middle-ranking managers who once reported up a chain of command to New York or Frankfurt suddenly find themselves controlling companies that are emerging as national leaders in the world’s fastest-growing major economy.

In a multinational company, “headquarters calls all the shots. But if you work for a Chinese company, you call the shots,” says Zheng Xue-cheng, a corporate search executive with Egon Zehnder International, which recruits high-level talent for Ping An and other Chinese companies.

Corporate perks may be meager in Chinese firms, but pay is competitive and stock options can be generous — in rare cases, sensational. After quitting his job running Microsoft China, Tang Jun, a naturalized U.S. citizen, joined Chinese online gaming company Shanda Interactive Entertainment and picked up 2.6 million stock options now valued at more than $90 million. (The company was listed on the Nasdaq Stock Market this year.)

Tan Wee-Seng, an ethnic Chinese from Malaysia, gave up housing, education and car allowances when he left a senior business role at Reuters news service last year to join Li-Ning Sports, a sportswear company run by a former Chinese Olympic gymnast. “But the options are better,” says Mr. Tan, Li-Ning’s chief financial officer who steered the company through a Hong Kong listing this year.

Another lure: the chance to “help and transform this country,” says Mr. Tan. Ping An’s Mr. Leung says moving to the company gives him a feeling of belonging in China. Working for a multinational “I was an outsider, maybe even a foreigner,” he says. “Now I’m one of them.”

Chinese companies are more open-minded about international recruitment than their counterparts elsewhere in Asia. In part, the openness is driven by necessity: Chinese companies planning to raise capital overseas often lack financial managers with the skills to navigate complex international regulatory and compliance issues.

In some industries, like banking and insurance, Chinese companies face an onslaught of foreign competition as domestic markets open, and they need managers who can implement smart sales and marketing strategies and internal restructuring.

China Construction Bank, one of the country’s Big Four lenders, planning to issue shares next year, has invited a leading Japanese banker to sit on its board of directors — a first for the bank. The Bank of China, also in line to list, is searching overseas to fill positions up to the level of vice president.

Ping An Group, parent of Ping An Life Insurance, has gone further than perhaps any major Chinese company in opening its staff ranks: Half of its top 50 managers come from outside the Chinese mainland, says Sun Jian Yi, the group’s deputy chief executive officer. As a start-up in 1988, Ping An was up against an established state monopoly, the People’s Insurance Co. of China. To compete, it had to look as different from PICC as possible. “We said we wanted to follow the international market,” says Mr. Sun. “We needed overseas money, overseas systems, overseas talent.”

Goldman Sachs Group and Morgan Stanley came in as early private-equity investors. The Shenzhen-based company, which listed just across the border in Hong Kong this year, hired the McKinsey & Co. consultant who drew up the company’s long-term strategy, Louis Cheung.

Mr. Cheung, a 40-year-old Cambridge-educated Hong Kong native, joined Ping An after turning down offers from an international investment bank and a dot-com. Mr. Cheung, 36 when he joined Ping An, says he wanted a company offering super-charged growth, and “China is the only country where you can get that kind of growth.” Now Ping An’s chief operating officer, he shuttles between Shenzhen and Hong Kong, where his wife, a Singaporean investment banker, lives.

For Ping An and other Chinese companies, overseas Chinese are an easier fit than other outsiders. For a start, they can speed-read office memos in Chinese handwriting. But the high-paid recruits can also spark resentments. Ping An runs a two-track pay system. “At first people asked: ‘Why are you paying so much?’ ” says Mr. Sun, who happily admits he earns less than some of the overseas Chinese who work under him. “We had to educate our work force.”

And imported management methods don’t always go down well. Staff at Ping An headquarters are fuming over a new electronic card system at the main door. Employees who leave the building for longer than 30 minutes must explain their absence to a supervisor. “Not even a mosquito can get out of this place without permission,” grumbles a junior manager.

Alan Ku, Ping An’s Taiwan human-resources manager formerly with Unilever, says the system is now being reviewed.

China-Based Employees Demand More Perks, Better Salaries

By Kathy Chen and Peter Wonacott

From The Wall Street Journal Online

China’s office workers may not know who Dilbert is, but many are feeling the pain of the popular cartoon character who works long hours for a soulless corporation.

And they are starting to fight back.

PricewaterhouseCoopers’ Beijing office recently has seen a rash of resignations in its auditing division, and, in July, a group of senior auditors approached the firm’s partners to complain about what they described as paltry pay and long hours.

“People felt that they were doing a very good job, but their salary increases weren’t ideal,” says one auditor who quit the firm this summer after working there several years, partly because of the long hours. To top it off, he says, even though senior auditors often worked until 1 a.m. or 2 a.m. each night and on weekends, they weren’t eligible for overtime pay (though they could take time off).

PricewaterhouseCoopers quietly settled the dispute by agreeing to pay all of their auditors overtime and to issue annual bonuses early. “We hadn’t done the best job communicating with staff, which happens when we’re so busy,” says Dave McCann, the firm’s partner in charge of human resources in China. “Now we’re starting more communications.”

Problems are brewing in the cubicles at multinationals in China. As business booms, foreign companies are pressuring local employees to be more productive, even as budgets — and salaries — remain tight. The trend coincides with some fundamental changes in China’s white-collar work force: No longer satisfied with just a job at a brand-name foreign firm, many Chinese professionals aspire to more leisure time and other accoutrements of a middle-class lifestyle. They also are showing greater awareness of their legal rights under labor laws.

The result is that labor friction, once confined to factories and unprofitable state enterprises, is seeping into the offices of multinationals in China. “At first, Chinese employees [at these companies] felt the salaries were higher, so they put up with the conditions. But gradually, they have become more and more dissatisfied and want to see improvements,” says Zou Zhen, a division chief at the state-backed All-China Federation of Trade Unions.

Adds Frank Gallo, head of the Beijing office of human-resources consulting firm Watson Wyatt Worldwide, “Companies need to be more conscious of people’s needs.”

A multinational job in China is still much cushier than working for a state-run company. While workers may be under more pressure to perform, monthly salaries are equivalent to $400 for receptionists and $3,500 for engineers, for example. Wages at state-run enterprises usually range from $50 a month to $200, although some are starting to pay more-competitive salaries.

Foreign firms also offer more opportunities to go abroad and to learn modern skills. Meanwhile, many of the former perks offered by state-run employers — job security, shorter hours — are fast disappearing as they, too, come under competitive pressures.

The number of labor disputes is rising, too. Last year, Chinese arbitration authorities heard some 226,000 cases involving more than 800,000 employees, up 23% and 31%, respectively, from 2002. Mary Gallagher, an assistant professor of political science at the University of Michigan, says that while foreign companies prefer to settle disputes internally, they also are seeing a rise in the number of cases.

But some workers are taking their multinational employers to court. Last fall, more than a dozen former managers at MSD China, a joint venture between Merck & Co. and a Chinese pharmaceuticals company, filed suit against the company alleging that they were fired over wrongful charges of misconduct. The firings took place around the time Merck was conducting global layoffs, and the Chinese employees believe the company fired them to avoid paying severance packages.

Alice Chin, MSD’s head of external affairs, says the company terminated certain employees because “they violated the company’s policies and procedures.” She says several cases have been settled through arbitration, while others are pending in China’s arbitration and court systems.

In April two Chinese workers sued Shanghai ADT Facilities Management Co. after they were fired for allegedly breaking company rules. A General Motors Corp. joint venture had hired workers from Shanghai ADT for low-skilled tasks, such as cleaning services. These employees worked at the GM site, but weren’t given health benefits or a work contract, and paychecks were delayed, says Qiu Jie, a director of the Labor Law Aid Center at the East China University of Politics and Law in Shanghai, which advised the employees. The arbitration panel ordered Shanghai ADT to pay them back wages and erase the rule-breaking allegation.

Shanghai ADT, a joint venture between Knight Facilities Management Inc. of Saginaw, Michigan, and two Shanghai companies, including GM’s passenger-car partner, Shanghai Automotive Industry Corp., declined to comment. Shanghai GM said it wasn’t aware of the dispute. Shanghai GM said any such situation would mean it would “take immediate action to demand the supplier provide all the necessary information and labor contracts…to address the issue.”

Some Chinese professionals also are getting riled over the often-huge differences in pay between local and expatriate staff. Under China’s old centrally planned economy, workers were paid roughly the same. These days, pay scales are uneven, and working elbow-to-elbow with highly paid expats stokes resentment, says S. Prakash Sethi, a professor at the City University of New York’s Baruch College who advises multinationals on codes of conduct. He says similar workplace frictions are playing out in other countries where skilled local professionals are in demand, such as India.

In this environment, some trade-union officials see an opening to expand their membership among white-collar workers in foreign companies, one-third of which are unionized. China’s unions fall under the umbrella of the All-China Federation of Trade Unions, which traditionally has been closer to management than workers.

Some multinationals are trying to adjust their policies pre-emptively to meet the changing needs of their workers — and of their own fast-growing operations in China. Merck, which has a female-heavy work force, says it has introduced flextime for working mothers and opportunities for managers to work in the U.S.

PricewaterhouseCoopers, whose annual revenue is growing more than 30%, is revving up hiring and becoming more selective about which projects it takes on. “With our China practice becoming more mature,” says Johnny Chen, partner in charge of the firm’s Beijing office, “we need to focus more on retaining the qualified accountants we have recruited and trained.”

— Kersten Zhang contributed to this article.

Deep Inside China, Expats Struggle to Cope

By James T. Areddy

From The Wall Street Journal Online

CHONGQING, China — As one of Ford Motor Co.’s managers in China, 30-year-old John Larsen is exposing his family to a culture they couldn’t imagine back home in a Michigan suburb.

But when his wife and kids — ages 2, 4 and 6 — moved here last September, they preferred to stay inside a 19th-floor Hilton hotel suite, where the family lived for nine months. The rarity of fair-complexioned, American children on the sidewalks of the gritty industrial city of Chongqing makes the Larsen family a crowd-stopping spectacle.

“It’s not very fun and my kids hate it,” says their mother, Laurel, 31. Over a bowl of her homemade vegetarian chili in the five-star Hilton, the Cincinnati-born woman added, “When we go home and close the door, we feel like we are back in America.”

As corporate ambitions bore deeper into China, foreign companies are sending families to less-developed cities like Chongqing. Such places offer huge, untapped markets for companies. They also provide accelerated career opportunities to young executives eager to punch their ticket on the way to upper management. But the postings can feel like a detour into isolation and culture shock for some families.

Chongqing is a city of 32 million people, but Westerners are still rare here. The city is nearly 900 miles west of Shanghai, and about a decade behind it in terms of economic prosperity. So-called bang-bang men hang out on the streets, hungry to earn a few cents lugging stones, machinery or even garbage on their bamboo poles. Residents walk on sidewalks covered in cooking oil and spittle. Even the weather isn’t a selling point: Fog trapped in by the surrounding mountains creates generally soupy skies, made worse by pollution.

American companies are drawn to cities like Chongqing because they are cheap; the average annual wage here is $1,500, about half of what it is in Shanghai. Merchandisers see markets for all kinds of products. In Chongqing, for example, car ownership is just 1.3 per 100 people, a fifth of the rate in Beijing.

A tall, confident man with wispy brown hair, Mr. Larsen sees many benefits to the move. He likes his job, developing marketing strategy for Ford. He’s glad his children are seeing a different way of life. The private school that the older two kids attend provides an excellent education, he and his wife agree.

Still, the adjustment has been more challenging than they expected. “We thought we would be eating a lot of Chinese food and the kids would be learning Chinese quickly because they’d be immersed,” says Mr. Larsen. So far, that hasn’t happened.

A marble lobby dominated by a waterfall and piano bar makes the Hilton the swankiest address in this part of China. English is the first language and a concierge takes care of smoothing over any rough spots. A blue-lettered “WELCOME” mat marked the entrance to the Larsen’s three-bedroom suite, converted from six guest rooms. It cost $4,300 a month, paid mostly by Ford. When the family needed to step outside, their driver, Jojo, waited in a black Ford Mondeo sedan, provided by the company.

Ford picks up most of the rent for its expatriate employees and encourages them to live in hotels because the conveniences help workers “remain focused on running the business,” says Ron Tyack, a senior Ford executive in China.

Expat perks are being scaled back in cities such as Beijing, Shanghai, Guangzhou and especially Hong Kong, parts of China where rapid development has made it easier for foreigners to adjust. But perks remain a must to lure Americans and their families to cities like Chongqing.

Shanghai and Beijing each have a dozen international schools, many with hundreds of students. Chongqing has one international school, in a converted house, with 40 pupils ages 2 to 17. Ten hospitals in Beijing offer foreign-grade medical care. Chongqing has a single Western-style clinic, located in the Hilton, that rotates a different doctor through every few months. Even breathing is easier in Shanghai. Chongqing has 88 fewer days of good-quality air than Shanghai during the average year, according to Chinese government statistics.

Perhaps most shocking: The Starbucks chain, which boasts nearly 100 coffee shops between Beijing and Shanghai, doesn’t have one in Chongqing.

In recent years, “the demographics of the expats have changed,” says Joseph Verga, a 45-year-old financial controller for Ford, who lives in Chongqing. When he moved here two years ago, “there wasn’t a baby” among his U.S. co-workers, he says.

Shortly after Mr. Verga and his 42-year-old wife Marybeth were dispatched to China, they trekked through Tibet. She filled their apartment with paintings from Vietnam and a clay warrior statue from Xian in western China. But after Ms. Verga became pregnant, she decided she didn’t want to go to a Chinese hospital. So this spring, two months before her due date, she flew home to Detroit to give birth to her son in a U.S. hospital. “There’s not one thing that’s the same,” about Chongqing and the U.S., she says.

Before Ford started making cars here in 2003, the city — familiar overseas as “Chungking” — hadn’t seen so much foreign attention since serving as an allied supply post in World War II. Decaying hillside mansions are a reminder that Chongqing was a capital for the Nationalist government before the civil war that brought communists to power in 1949. Today Chongqing is the main jumping-off point for tourist cruises on the Yangtze River toward the famed Three Gorges Dam.

The government is eager to boost interest in places like Chongqing, which gets just 5% of the $8 billion of foreign direct investment that Shanghai takes in annually.

The first time either of the Larsens saw China was when Ford flew them to Chongqing last summer for a visit after his job offer. The couple, who have been married eight years, realized they would be in for a big change. But there was never really much debate whether he would take the job. Ms. Larsen jokes that she knew that in accepting his marriage proposal she was also agreeing to someday follow him to China.

Her husband caught the China bug after being assigned by the Mormon Church to do missionary work in Taiwan at age 19. While there, he learned to speak and read Chinese. Today he speaks Mandarin Chinese well enough to conduct business meetings. Before moving to China, Ms. Larsen’s international experience consisted of living in London for 18 months and a vacation to Cancún, Mexico.

Like many foreigners in town, Ms. Larsen says she won’t touch Chongqing’s signature cuisine: “huoguo,” or hot pot — a fondue-like dish so loaded with fiery chilies that its aroma seems permanently suspended in Chongqing’s air, along with diesel fumes. Supermarkets feature chicken feet jutting out of crushed ice and slabs of pork dangling from sharp hooks.

Neatly dressed in slacks, a black argyle V-neck and bright white blouse, Ms. Larsen shows off her solution to the food challenge: A closet full of cans, stacked to the ceiling, with labels like Green Giant, Crisco and Hormel — items lugged to Chongqing in suitcases or mailed from overseas. Her birthday present in February was a silver, side-by-side U.S.-sized refrigerator-freezer.

Food is a bargain in Chongqing. Ms. Larsen spends only $50 to $100 a week on groceries, compared with $200 to $300 in Michigan. With the help of her small network of expat wives, she has found one store that has Oreo cookies and another that stocks Fruit Loops cereal and canned refried beans. The children see little in the markets that resembles the food they remember back home. Ms. Larsen says they don’t give her much sass when she tells them: “here’s what you’re eating.”

Recently, the Larsens faced an important new food complication. Four-year-old James was diagnosed with celiac disease during the family’s summer visit back to the U.S. The boy now needs a diet free of gluten, which is found in wheat. In the U.S., Ms. Larsen prepared two cartons of special wheat-free foods to take back to Chongqing.

Entertainment in Chongqing is hard to find, the Larsens say. At a drive-through “safari park,” the children looked through car windows and watched tigers devour live chickens tossed from a ranger’s jeep. Enthusiasm about visiting pandas was marred, Ms. Larsen says, by seeing the zoo’s grubby bathrooms. The Larsens attended a Chinese opera, featuring two actors with painted faces, one in a horse costume. Tickets cost only $2, but the family, unimpressed, left at intermission.

One pastime Ms. Larsen has designed for 2-year-old Eliza is spotting dogs near the Hilton hotel. A look down an alley found no animals one Tuesday. After an hour, the little girl had glimpsed two mutts. “He’s going to his house,” Eliza said as a scruffy brown dog jostled along a sidewalk crowded with scaffolding equipment.

Chinese men and women made way for the tot to amble down on the sidewalk. Nearly everyone reacted to the rare sight of a foreign child, pointing, giggling, staring and sometimes touching her. “Eliza’s kind of like the monkey on show,” her mother said.

Ms. Larsen and her daughter took a route back to the Hilton over a pedestrian bridge, where merchants sell sunglasses, combs and belts. One woman’s habit is to thrust a mirror into the little girl’s hand each time they pass, Ms. Larsen says. She says she feels obligated to buy it, even though she is tiring of the routine. At first, the woman asked only one yuan for a mirror, Ms. Larsen says, but now she charges eight yuan, about 99 cents, for each one.

As Ms. Larsen settled up, a middle-aged man bent down for a closer look at Eliza, while a bang-bang man leaned on his bamboo stick and watched. An elderly passerby gave Eliza’s cheek a quick pinch. Everyone tried to be friendly, but Eliza, unsmiling, said nothing. She kept her head down, eyes fixed on the new mirror.

Foreigners are such a rarity in Chongqing that even Ms. Larsen gawks at times: “There’s a Westerner we don’t know,” she says, on one drive through town. Only about 25 of Ford’s 2,500 employees in Chongqing are foreigners. The Larsens say they know literally every expat family living here.

Ms. Larsen says she hasn’t learned enough Chinese in her two hours of weekly lessons to make even basic points to the family baby sitter. She often calls her husband on the cellphone to seek translation help. Looking over the skyscrapers outside the hotel window, she says, “Real life is happening out there, and I’m not connected.” Even so, she adds, “What would I do out there?”

Her offer to volunteer at an orphanage was turned down, she says. Her major diversion is teaching two Pilates-style exercise classes each week for expat women, plus dance classes for little girls. Instead of paying her, a few dollars are collected per class for a local school for the blind.

A centerpiece of expat social life is a Wednesday “ladies’ lunch,” where funds are raised for the blind school and news is swapped about which store has taco shells or sour cream. The women make visits to the fabric market, using calculators to bargain, then use gestures to show a tailor what they want made.

While she hasn’t made friends with locals, Ms. Larsen says she values her new expat friends. They are people who simply wouldn’t be in her orbit back home, she says, including a woman from Cuba and a woman closer to her mother’s age.

From the Hilton, every morning a white van picked up the older two children, Emma and James, for the 20-minute drive to the place in China they enjoy most: school. Ms. Larsen prizes the 7-to-1 student-teacher ratio at the Yew Chung International School, which Ford covers at an annual cost of $13,000 per child.

National flags wrap along the ceiling of Yew Chung School. Children from a dozen countries sit shoulder-to-shoulder at little desks. Emma’s class groups 5-, 6- and 7-year-olds. She studies Chinese each day and practices with her father at night. She is reading English above her U.S. grade level.

“I think I’m going to be a snob when I go home and walk into the public school,” Ms. Larsen says. “They go a lot faster [here].”

With two years still to go on their assignment, the Larsens recently decided to move out of the Hilton and into a five-bedroom house in a new gated community designed for expatriates. Ford pays almost all of the rent. The couple say they want their kids to have a more “American” experience, in particular a yard to play in and the responsibility to clean it up. There’s also a local pool and a playground in the area.

Mr. Larsen has recently needed to spend part of each week at Ford’s new plant in Nanjing, several hours away by plane, near China’s east coast. Ms. Larsen says his absences sharpen the isolation she feels in the new house, away from the helpful, English-speaking Hilton staff. But she says she accepts that her husband’s new assignment is a sign of his value to Ford.

The Larsens credit life in Chongqing with deepening their family ties. “We have to be friends with each other,” Mr. Larsen says. They have taken trips to Thailand and South Korea, and made plans to visit Bali and Hong Kong’s new Disneyland. Ms. Larsen says she is also trying to get out of urban Chongqing more on weekends, going to places such as parks around the mountainous region.

But they are always aware how far they are from home. Mr. and Ms. Larsen returned from dinner one evening to a find a poem from their 6-year-old daughter Emma, complete with a child’s misspellings, taped to their bed-stand. It read:

Amarica is my place!
I love Amarica.
It was fun.
It was so fun.
I miss it.
I miss my frieds.
I love Amarica.
Amarica was my place and it still is my place.

Developing a Jobs Market In a Fast-Changing China

As chief executive of China’s third-biggest online recruitment company, Liu Hao makes a living off the demand for talented people eager to prosper in the nation’s dynamic economy.

Zhaopin.com Ltd. has 18 offices across the country and more than 1,000 employees. At any given time it typically posts 200,000 to 300,000 jobs, ranging from drivers to salespeople to senior executives. Mr. Liu says that is 10 times the number of offerings in 2002, when he took over Zhaopin, in which he was a major investor.

Both the company, whose name means “recruitment” in Chinese, and the industry are still small. Market-research firm iResearch estimates that China’s online job-recruitment market was worth about 800 million yuan, or about $100 million, last year, and puts Zhaopin’s 2005 revenue at 70 million yuan and its market share by registered users that year at 9.8%. Mr. Liu puts its market share by revenue at 20% to 25%.

But the industry is growing fast. And Zhaopin, which started up in 1994 and now counts such regular clients as the China units of Microsoft, Unilever, Alcatel, BMW and Hitachi, is growing with it. The online recruitment market was up 46% from 2004, iResearch reckons, and Mr. Liu says earnings, which he won’t disclose, are, like his job postings, 10 times what they were in 2002. In April of last year, Monster.com, a major U.S. online recruitment company, spent $50 million to buy 40% of ChinaHR.com, one of Zhaopin’s two larger rivals. (The other is 51job.com.)

Mr. Liu, 37 years old, takes pride in having propelled the company to its current position. His co-investors include the venture-capital arms of computer maker Lenovo Group and Taiwan’s Acer Group. He says Zhaopin could go public, perhaps next year.

But Mr. Liu also takes pride in his own metamorphosis, from Beijing University physics major to Yale University law-school graduate and attorney at New York-based multinational law firm Davis Polk & Wardwell to California venture capitalist to entrepreneur, believing that in the end it’s better to commit to one vision than to make a run at many projects.

Mr. Liu spoke from Beijing with Juying Qin in Hong Kong about that principle and about connecting China’s leaders and workers with jobs in a fast-changing economy.

WSJ: How does Zhaopin.com mediate between prospective employer and job hunter?

Mr. Liu: We usually sign contracts with our clients or the employers. We check the veracity of the company as well as the job positions they want to post. Job hunters can put their own information into our database .

WSJ: Have you ever found your jobs online?

Mr. Liu: Well, no.

WSJ: What was your first job and what was the most important lesson you learned from it?

Mr. Liu: Practicing tax law. I was extremely impressed. The law firm is like a university or a learning machine, passing along knowledge to junior associate lawyers like me. Law students still tend to be less practical, especially Yale law students.

WSJ: Why did you turn from physics student to lawyer to venture capitalist and then to corporate executive?

Mr. Liu: Being a physicist was my childhood dream. But after a few years, I had a lot more discoveries about myself. I call this process rediscovery.

I went to law school not because I wanted to be a professional lawyer but because in law school, students could be exposed a lot more extensively to society. From a venture capitalist to the manager of this company was quite a natural choice for me. I was managing the company at the time as an investor, the company was not doing well, and I thought it was kind of an obligation for me to go in.

Most of my friends were against my choice, in part because they thought the risk was so high. Being a venture capitalist or being a lawyer is really kind of a cushy job. Lawyers do not really take that much risk. You do give advice to your clients, and you do have to make judgment calls, but those judgment calls do not eventually affect you.

To be a lawyer, you need to restrain your passion and be unemotional. To be a manager, you have to have some passion. If you don’t have it, you can’t do it.

Fundamentally I felt like were all kind of passive. In my life, I have always wanted to point to something that I really built.

WSJ: You didn’t go to business school and had no real managing experience before. What made you so confident you could turn this company around?

Mr. Liu: I actually asked myself the same question when I took this position. But I think personality is the most important thing that leads to success. I was always able to manage the transitions well, from physicist to lawyer and then to venture capitalist, so I should be able to manage another transition well.

WSJ: In your industry, are there big differences between China and the rest of the world?

Mr. Liu: The American job market is more like a seller’s market, while China, with a larger labor base, is more like a buyer’s market. But the job market in China is nascent. Fundamentally, its problems reflect the problems stemming from the educational system.

Many fresh college graduates don’t have the skills to cope with real work. They don’t have enough career training. So it can be quite hard for them to find their niches in the first couple of years after graduation.

There are two main problems. First, some people, especially fresh college graduates, make fake résumés by exaggerating their experiences. Second, people change jobs very frequently.

WSJ: Can you describe China’s leadership potential?

Mr. Liu: The quality of managers in China has been improving quite obviously in recent years, but there are still far fewer experienced managers than the market demands. Back in 2000 to 2002, people without much management experience could easily get around by carrying some master-of-business-administration degree from some big-name university like Harvard, although some were really not very capable.

WSJ: What is the most important piece of technology you use?

Mr. Liu: Basically I talk on the cellphone 24 hours a day. Sometimes people call me at 3 a.m., and they don’t even ask whether I was asleep. If I didn’t have a cellphone with me, I would start to worry about what I am missing. This really has become part of my body.

China needs more overseas experience, says Yao

BEIJING (Reuters) – Houston Rockets center Yao Ming believes more of his Chinese team mates need to gain experience abroad for the national team to be competitive at the 2008 Beijing Olympics, state media reported on Tuesday.

China finished a disappointing 11th at the world championships in Japan after being knocked out 95-64 by eventual runners-up Greece last week.

Yao, who averaged a tournament-high 25.3 points and virtually carried China into the second round, told state TV that several of his team mates should join more competitive leagues overseas.

“As the 2008 Olympics are drawing near, we should send abroad the likes of Yi Jianlian and Wang Shipeng as soon as possible in a bid to raise our level in the short term,” the 7ft 5in NBA All-Star center said.

“Even if our basketballers fail to play as regulars, we still could benefit at least from their training. I played as a substitute 10 minutes per game initially, too. It depends on your will and work.”

Yao lamented his team mates’ lack of strength and courage after China crashed out of the worlds, and remarked in media reports last week that Chinese basketball was too inward-looking.

But he conceded it was “impossible” for domestic clubs hungry for national success to send key players to foreign leagues, Xinhua news agency reported.

China’s basketball officials, concerned that foreign careers might interrupt national duty, have also been reluctant to allow young talent to seek their fortunes in overseas leagues.

Yi Jianlian, touted as China’s next Yao Ming and courted by several NBA clubs, declined to enter this year’s NBA draft after China Basketball Association (CBA) Director Li Yuanwei voiced concerns about young Chinese players warming benches in the NBA.

Menk Bateer and Wang Zhizhi, the other two towers in China’s NBA “Great Wall,” were characterized by regular transfers and little game time.

His NBA aspirations clashed with China duties, leading to his sacking after failing to join the national team during the Asian Games in 2002. Wang returned to China earlier this year.

Wang and the rest of Yao’s team mates will return to domestic league clubs for the kickoff of the CBA 2006/2007 season in October, before being called up for November’s Asian Games.

Yao has been exempted from the Asian Games, Xinhua reported.

Large numbers of low quality talent hurt China

Source: CRI
09-14-2006 16:05

China needs to take action against the large number of poorly qualified and low quality professionals with university or college certification, Chinese Talents Society Vice President Wang Tongxun said.

China Youth Daily reports Wang Tongxun issued his warning at a forum on human resources development held recently in Beijing.

Record numbers of Chinese citizens have received higher education in recent years. Over 66.5 million people have college degrees or above and around 17% of high school graduates enrol at university. There were 2.8 million graduates in 2005, nearly 9 times the number of graduates in 1985.

But Wang Tongxun said that as universities and colleges grow from institutions that cater to an elite group of students to institutions that education the masses, several problems have been created.

Degrees and titles are easy to obtain in China. Some universities or colleges issue diplomas recklessly, even providing them to people who have not attended the university courses. The lack of a sound qualification system allows poorly skilled Chinese professionals to receive titles more easily than their foreign counterparts.

Wang Tongxun also said the academic research at Chinese universities and research institutes is often carried out in a poorly planned and impatient manner. The resulting papers are rarely cited by foreign researchers and rank below 120 in the world in terms of citations. As a result, most of the research has no value and can’t be put into practice.

To compound the problem, the tendency for employers to value people according to their degrees rather than their talent and work experience has led to a culture of degree-hunting where people neglect to improve their talents in a measurable way.

Finally, Wang Tongxun said the phenomenon has led to a brain drain. Around 930,000 Chinese have traveled overseas to study since 1986, but only 230,000 have returned

Editor:Sun Luying