• Do not just sign intellectual property protection contracts with suppliers.  Consider the repercussions for workers’ safety when the contracts are over-zealously enforced in a country where workers live on site and have little power to protect themselves.

• Check the conditions under which employees in your supply chain are working.  Shenzhen is a short train ride away from Hong Kong but a different planet in terms of working conditions.  Don’t be a lazy manager in Hong Kong.  Go and meet the people who make your products.

• Ensure that workers who live ‘on-site’ are properly protected.  Migrant workers live in vast warehouse dorms.  They cannot escape ruthless management.  Wolf Totem is rumored to be the favored business manual for managers at Foxconn.  The book is about the fight for territory between Mongolian wolves and herdsmen.  Ensure the wolves cannot bite your workforce.  It takes the sheen off your pristine white ipod if it is smeared with teenage blood.

        

• The BRIC relationship will be tested over potential water-wars.

• Chinese engineering is increasingly sophisticated and can now build in inhospitable mountains.

• In hindsight the Beijing – Lhasa railway was not only for tourists

• Water has spiritual connotations in India.  Let’s hope this doesn’t muddy bilateral relations.

        

I had some great chats at party.  Annie Chan had project  managed the building of the pavilion for Mace; a cool lady who wears a hard hat to work and fought to get on-site running and fresh water for her workers.  Professor Xia Liping of Tongi University who had helped to obtain the seeds for the UK Pavilion.  Victor Hu of Think London who was definitely thinking Shanghai.  All BritCham Executives in Shanghai who are working overtime for next the six months.  Also the wife of Sir Andrew Cahn who seems to have footed the bill.  All are connected to the project.  As Tom was speaking the fireworks kicked off and everyone chilled out.  I was mesmerised.  Felt proud to be nearly Chinese.  Tom signed our Chinese fans and I arranged an interview for the Charitarian.  Watch this space.

        

I spoke to Grace at breakfast from the Philippines who said it was a great opportunity to relocate to Shanghai and learn how to manage a world class event.  The hospitality industry is buzzing.  Last night I spoke to a young Chinese lad who worked at an international club.  He has migrated from rural China to Shanghai – that is like time travel from 1850 to 2050.  He has taught himself English and chatted eloquently to me about the Kenyan names Obama has chosen for his daughters.  A big fan of Obama since his Shanghai visit, he could quote Obama speeches verbatim.  Guests at his club were from around the world.  Now that he has globalised his attitude and mastered English, he wants to seize the opportunity to travel by joining an international hotel chain.  Back at the Shangri-la, I asked Grace how he could apply to work there.  No problem she said, we are recruiting rapidly for global expansion; give me his CV and I will contact HR.  That is Shanghai.  Able, opportunistic and a launchpad for tomorrow’s leaders.

        

Malaysian crab, Indian barjees, British beef and Japanese sushi tempt Texans in ten gallon hats, Irish with eyes wide and British businessmen bamboozled by the sheer variety.  The attention to detail is impeccable.  I wander around and glance in the kitchens.  Pristine surfaces; regularly wiped splashes from the sides of pots; immaculately dressed chefs.

In the back of my mind I recall a meeting in Shandong last week.  The young dynamic head of investment whom we met for dinner informed us that Shangri-la hotels were soon to open in his home town two hours outside Beijing.  Other Chinese devotees of the Malaysian Chinese owned chain had recently informed me that the hotel empire would soon spread its tentacles to Paris and London (by 2012).  Shangri-la is a brand with ambition. The clientele are predominately wealthy Chinese with taste; they prefer Paris to London but will make an exception for the Olympics in 2012. But what about the Brits?  Will the Savoy grill crowd succumb to the subtleties of Shangri-la?  Will they be seduced by the impeccable buffet, the wall-tanks of blue fish and the cascading water walls?  Will they be sensitive to the feng-shui’ed rooms, the bathroom as main room, the breathtaking views and the bookmarks bearing quotations from Lost Horizon on the pillow?  I asked my lawyer friend who is a fan of both the Savoy and Shangri-la; his bet is that the Brits will be converted by the sheer professionalism of the service at Shangri-la.  As I watched the multinational diners dig in, I had to agree.  Western appetite for Chinese style is far from sated.  Our taste buds have only been whetted.  Soon Chinese will be watching their London lawyer taking calls in Shangri-la, W1.

        

Twice the Australian Prime Minister, Kevin Rudd cautioned the Chinese that “the world will be watching” the Rio Tinto trial, apparently insinuating that it should be showcase of transparency in legal process. The hearing was not open to the public. Australian Foreign Minister, Stephen Smith stated: “On any measure this is a tough sentence”. China is Australia’s largest trading partner. Bilateral resource transactions have insulated Australia from the global recession. The Rio Tinto four were detained in Shanghai last July in the midst of heated negotiations on iron ore pricing.

Take Away

• Once cases reach court in China there is usually little redress.  Companies should take preventative measures by training foreign staff about the way of doing business in China.  The rules are different to those at home.  Political influence is critical.  What is considered a trade secret in China, may be transparently available information in your home country.
• Forewarn local employees about what you expect of their business conduct in China. Larger companies have independent ethics officers and telephone hotlines to offer on the spot advice (see www.boeing.com under ‘Ethics’ then ‘Code of Conduct’) on everything from business gratuities to relationships with suppliers.
• Educate employees on the ‘bigger picture’ on pricing pressure (China/India), stock purchases by Chinese companies and bilateral political relations between China and your company’s country of origin. Every foreign company is an Embassy abroad. Every foreign CEO an Ambassador. Staff will be expected to act accordingly.

        

Currently, Google has sacrificed its reputation with patriotic Chinese consumers on the altar of western values; with the minority of free speech sympathisers, it has however generated debate on censorship. Overall I would say that their move is a commercial home goal; Chinese believe Chinese not Sergey Brin or Hillary Clinton. Foreign companies may find it hard to recruit the best talent in China if they offend political sensibilities. Baidu (Chinese search) will mop up the malcontents.

Takeaway

• Foreigners should adapt to differences in China. A modern nation state this century may not be a model of democratic freedom. Freedom of speech is evolving in China with the growth of the online community (337 million internet users) but at a pace dictated by Government. Twitter and Facebook are banned as horizontal social media could unite geographically diverse pockets of discontent. Search engines are on the fringe of acceptability.
• Foreign CEO’s like Sergey Brin should stay at the Chinese dinner table to remain part of the conversation. If you want to get critical in China you first need to get close to the source of power. Licking your wounds in Hong Kong (China-lite) won’t help. Befriending the movers and shakers in Beijing might have more impact.
• People discuss the salient issues in China in the most informal settings so that no-one loses face. If you want to talk about sensitive issues go for a hike on the great wall with your Government counter-part; don’t fire cheap shots in the boardroom that end up in the press.
• Google should establish their commercial success in China, before turning up the volume on political topics. China is at a stage in its development where people care more about getting rich than being righteous. If you happen to be rich and right-on then you will make compassion cool; Hu Jintao visited Bill Gates before Bush.
• Foreign CEO’s have to learn how to do business discretely within Chinese cultural parameters; they must cut the umbilical cord with parochial opinions back home. Sergey Brin is seen as a puppet CEO taking the punches on behalf of human rights advocate, Hillary Clinton.
• China is the new target market for many foreign companies. Hillary/Sergey may be heroes at home, but China is just left searching for an alternative engine. Politics 1. Business 0.

        

Takeaway

• Many graduates will work for your company for free in the current market to gain experience but if you pay them reasonably and offer training they are more likely to be loyal to your brand when there is an upturn in the economy.
• The average starting salary is 3,000 RMB per month in Beijing. The Chinese government does not welcome foreign companies who treat the staff unreasonably so decent working conditions can win you market share in the long term.
• The bilingual labour market is mobile and motivated by salary as well as good working conditions. The bicultural Chinese elite employed by foreign companies are a close friendship network with university ties. Their opinion will underpin the strength of your brand in China and determine your ability to recruit the best.

        

Takeaway

• As a CEO you have to very careful who you deal with in Government especially at a provincial level. Bribes and any other form of corruption e.g. expensive karaoke and family trips to Hong Kong, may come back to bite you. Beijing is really cracking down on corruption in the rank and file and you don’t want to be caught in the crossfire.
• The press in China is increasingly reporting on corruption cases. Many people carry ‘recording devices’ that look like pens. Be wary of photographs and never commit anything to email that could be prejudicial in court. When people ask for a meeting in their hotel room, always ‘phone a friend’ to accompany you.
• It is increasingly difficult to meet Government officials in China as they are wary of the possible ‘taint’ of corruption. Ensure that your company has someone dedicated to this function that is attuned to the current political climate.