Moving to China: Where Should You Set up Shop?

Travelling the Silicon RoadSo you’ve decided you need to have a presence on the ground in China. Or you’ve decided it’s time to move some manufacturing to China, or expand the sales offices you have there.

Then the question becomes where do you go in China to set up shop?

It’s a big question, and not one with the clear-cut answers it had just a few short years ago. At first glance, it might seem obvious: if you’re talking about electronics manufacturing, then Shenzhen, China’s richest city, is the place to go. If you’re talking about something farther up the food chain, say semiconductor manufacturing, then Shanghai is the place to be, right?

Well, if you’ve been following along as Electronic News has ventured down the Silicon Road this autumn, you know it is not quite that simple. There is some truth to those statements, to be sure. But the industry landscape in China – and foreign companies options – are considerably more complex, to be sure.

But lets look at that conventional wisdom first. Shanghai and Shenzhen are obvious places for a reason. Shanghai is a huge port city with plenty of natural resources, namely water, and an established infrastructure – this is why there are fabs here in the first place, including many that belong to the fourth largest chip foundry, Semiconductor Manufacturing International Corp. (SMIC). You’ll find the Chinese offices of many a U.S. and European chipmaker here in the gleaming new skyscrapers that dot the skyline.

Look at Applied Materials Inc., the world’s largest process tool vendor, and an old hand when it comes to operating in Asia – it’s literally around the corner from its biggest Chinese customer, SMIC, and its headquarters in Shanghai.

At the other end of the supply chain spectrum is Shenzhen, which has blossomed over the past two decades into China’s electronics manufacturing center. It was made a special economic zone for a number of reasons, but those reasons are similar to why Shanghai has exploded — and why Shenzhen is exploding.

For one thing, Shenzhen is a port city. Located in southern China on the eastern edge of the Pearl River delta, just across the border from Hong Kong, it is home to much, if not most, of China’s electronics manufacturing, and has the infrastructure to support that. In fact, it is probably the only place in the world to have a wholesale electronic components shopping mall located in an office tower downtown. That’s right, the SEC Electronics Marketplace: seven floors of components and finished electronic goods available wholesale.

Both cities have abundant human resources, not to mention prevalent universities, particularly Shanghai. In fact, Shanghai is so popular right now — particularly with Chinese engineer-entrepreneurs returning from abroad to take advantage of the advantageous business climate – that there are some 120 fabless companies in various stages of development in Shanghai, according to one chip startup I visited.

Plus, both cities have much to recommend them in the eyes of Western expats. Both cities are relatively clean and pollution free, and are very cosmopolitan; one could easily get by in Shanghai without having to learn Mandarin, or ever having to eat Chinese food, for that matter (why anyone would actually want to do that, however, I wouldn’t know – but I met Westerners in Shanghai who happily pointed this out).

Shenzhen, meanwhile, while much smaller and definitely more “Chinese” than Shanghai, is rapidly approaching that same level of international sophistication, and is so new and clean, it has been labeled China’s garden city. Indeed, the whole city seems at first glance to be sparkling and new, and compared to China’s older cities, green space is much more abundant.

But these very things that make Shenzhen and Shanghai such obvious choices may also serve to make them not-so-obvious choices. Shanghai, for example, is very expensive by Chinese standards – many people I spoke with, both Chinese engineers who had worked in Silicon Valley, as well as Western expats, pointed out that housing costs are approaching San Francisco/San Jose levels – and all of the attendant issues are starting to crop up in Shanghai, too.

“It’s not a problem for us yet,” said Kevin Sun, a marketing manager for Applied Materials China, referring to the high cost of living in Shanghai. “But of course they feel this pressure,” he said of Applied’s local Chinese employees.

It’s Not Just Location, Location, Location: Beijing vs. Shanghai

Another thing to bear in mind is that to do anything in China, you have to have established quan xi with the government – you have to establish and maintain the right relationships. For all of its cultural opening up, for all of its warm embrace of the free market, China is still a party where the Communist Party holds near absolute power.

And while Shanghai and Shenzhen may have a wealth of technological human resources, when it comes to finding brainpower in China, there is no better place than Beijing – which happens to be the seat of political power in China as well.

Now, for people not familiar with China – and perhaps more so for those who are only familiar with Shanghai – it’s important to understand that Beijing is the cultural heart of China, not just the political center. Geographically, Beijing never had much to recommend it, but in China’s distant past, as its dynastic rulers began to consolidate power across this vast country, Beijing became a strategic location, the crossroads of a growing realm. That is essentially why it became the seat of power for China’s emperors, which in turn attracted China’s intellectual and cultural elite, historically.

By and large, this is still the case today. Not only is it the seat of government, it is home to most of China’s premier universities – the Peking University, Tsinghua University, and the China Academy of Science, to name just a few — not to mention most of its millionaires, old and new, and its popular entertainment stars. It is also home to many of its brightest painters, musicians and writers.

And if there is a hot-button issue for the Chinese today – well, there are many, actually, but the rivalry between Beijing and Shanghai is one of them. Of course, the people that live in China’s other burgeoning high-tech cities have their own views on the matter, but most Chinese people in the tech industry in either Beijing or Shanghai, have a strong opinion with regard to the rivalry.

And the people that argue on behalf of Beijing make strong arguments. Beijing may not be a bustling port city, and may not have the infrastructure for manufacturing that Shanghai has, which the city’s proponents readily acknowledge.

If you’re just after cheap manufacturing, then by all means, go to Shanghai, says Liang Sheng, the section chief of the Department of Information Industry of the Beijing Municipal Government. “But if you want to expand your profits, you have to come to Beijing.”

And if you are looking to develop intellectual property (IP) tailored for the booming Chinese market, Beijing is the place to be. “Here we have our own IP,” he said, observing – as many Chinese officials did — that there was a reason SMIC built its first 300mm wafer fab in Beijing.

Liang likens Beijing to Silicon Valley; it is where a big chunk of China’s domestic chip IP is created. China’s only EDA company, CEC Huada, calls Beijing home, and of the 400 design houses in China, 85 are in Beijing. If that ratio isn’t good enough for you, consider this: out of the 16 design houses that achieve more than $100 million in annual revenue, more than half have their headquarters in Beijing.

Of course, there is no official distinction between Shanghai and Beijing when it comes Chinese efforts to lure the semiconductor industry there. Rather, it’s the result of a natural evolution: “it’s just what it is,” remarked Xu Xiao Tian, secretary general of the China Semiconductor Industry Association. “These two cities have their advantages and disadvantages.”

There’s More to China than Beijing and Shanghai

Some of those disadvantages in Beijing, aside from a comparable lack of natural resources, are considerable pollution and horrendous traffic. That is not to say that they aren’t problems in Shanghai, but in Beijing, they are particularly acute. While Beijing has a venerable, effective public transit system, there are still so many people in the city that its traffic jams rival the worst of those anywhere on the globe; it will be interesting to see how Beijing addresses this problem when it hosts the 2008 Olympics.

And it isn’t the only place to find superior human resources in China; consequently, nor is Shanghai the only place to find infrastructure and physical resources for manufacturing. As Xu observed, quite rightly, many companies both domestic and foreign, are looking at other cities around China – Chengdu, Xian, Shenyang, just to name a few. There are resources to be had elsewhere, often without the costs associated with Beijing or Shanghai.

One thing is common to virtually every significantly large municipality in China today: the local governments are playing to their strengths, and doing what they can to lure foreign investment. Wherever you go, whomever you talk to in local governments – as well as the local companies looking for foreign business partners – the phrase “win/win” comes up time and again; incentives are falling out of the metaphorical trees.

And each these other municipalities offers unique cultural environments as well, as followers of the Silicon Road blog know well, be it the food of Sichuan Province, or the warm subtropical climate of southeastern coastal China.

“I want all these cities to be successful with their semiconductor industries,” Xu remarked. “We’re paying attention to all of them.”

Electronic News Travels to ChinaIndeed, if one were involved in optoelectronics, Xiamen would deserve consideration. If software is your company’s forte, then Shenyang may be the place to set up Chinese headquarters. There are many places, places that we couldn’t squeeze into my Silicon Road itinerary, that are burgeoning high-tech and/or industrial centers in their own rights, or soon will be – Xian, Wuhan, Tianjin, Beihai and Guanzhou, just to name a few.

Wherever you decide to set up shop in China, I can say one thing is abundantly clear after spending a month investigating China’s tech industry: now is definitely the time to be there.

Editor’s Note: As explained at length elsewhere on this site, this is a news story written by me that originally appeared on the now-defunct Electronic News’ website, which is long gone. It’s former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge). You can still see a copy of this story at EDN.

Where in China, Indeed

Travelling the Silicon RoadWhere should you set up shop in China? What about where I would set up shop in China? Well, being a telecommuting journalist, I can, within reason, live wherever I want.

Theoretically, if I have high-speed Internet access and a phone, the world is my oyster, or some such metaphor.

Many of the friends I made while in China would often ask me where I would live if I moved to China, or, out of all the places I visited, which one I liked best. Well, realistically, to cover the semiconductor industry, I’d probably have to call Shanghai or Beijing home, or at least home base. But if I could live anywhere in China — as to my favorite place so far, that is difficult to say.

It’s like trying to decide my favorite place in the United States; I can’t narrow it down to just one.

I loved living in the Bay Area of Northern California, but I gave it up for the wilds of West Virginia, to be closer to family, and because I love West Virginia, too (hard for you Left Coasties to understand, I know, but it’s true). Portland, Ore., Austin, Texas and Santa Fe, NM, are on my short list of places I’d love to live in the United States, as is Athens, Ohio (went to college there).

Now that I think about it, you could tack on Flagstaff, Ariz. to that list as well (I actually did live a half-hour away from Flagstaff, once upon a time). I also loved the two years I spent living in Cleveland, believe it or not; it’s one of the best large American cities, in my humble opinion.

And anyplace near water automatically has something to recommend it, as far as I’m concerned.

As for China, it’s an equally difficult task to decide where I would live, if I were given carte blanche. If I could only take the culture of Beijing and the food of Chengdu — oh, the food of Chengdu — and put it in downtown Xiamen, without making it any bigger — that would be ideal. But I must admit, I enjoyed every place I visited in China, and could be happy in any of those places on the original Silicon Road itinerary.

Plus I’m sure there are many more places I will discover when I return.

Electronic News Travels to ChinaJust as I will discover similar places the next time I go to Europe, or visit the places I haven’t been to yet: the rest of Australasia, and the Middle East & or poking around my home continent, for that matter (New York city; Portland, Maine; Athens and Savannah, Ga. and Key West, Fla. all have yet to be explored by yours truly). Then there is South and Central America, and Africa — I’d love to visit it before more of its ecology is destroyed.

You know, having the travel bug is a mixed blessing. Part of the joy of traveling is returning home to the familiar: sleeping in the same bed every night, and seeing friends and family. Yet I haven’t been home two weeks, and already I’m somewhat restless, thinking about where to go next, memories of language barriers, intestinal distress, jet lag and pit toilets not withstanding.

Jeff

Editor’s Note: As explained at length elsewhere on this site, this is a blog entry of mine that originally appeared on the now-defunct Electronic News’ website, which is long gone. While its former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge), as far as I know, this blog content isn’t hosted anywhere else on the Internet, hence my reproduction here.

Original Comments

at 11/23/2005 12:47:40 PM, Scott O from Ohio said:

I have been following your stories for the past several weeks and think your writing is fantastic. I am a Manufacturing Engineer and I have traveled between Ohio and Shanghai several times this year. I am returning to Shanghai again for two weeks after Thanksgiving. I can really relate to your stories and your point of view… Keep up the good work! I am looking forward to your next article!

Editor’s Note (slight return): D’oh! Once again, when I downloaded the Silicon Road microsite, Adobe Acrobat managed to grab only one of 10 original comments that were attached to this blog entry – it grabbed more than a thousand other pages (most of them empty; I guess it’s an inexact science), but not that one. Damn.

Thank You and Good Night

Travelling the Silicon Road

HONG KONG — Boy oh boy, what a place to end a month-long Chinese sojourn. I arrived here this afternoon; the sun is setting on my last night in China.

But then Hong Kong isn’t really China, in the same sense that San Francisco isn’t really the United States. It’s in the United States, but it isn’t an American city. Just like no country can really claim its bustling port cities as their own, it’s clear even after just a few hours that Hong Kong is a unique place. Hong Kong isn’t Chinese, it’s Hong Kong.

There is every flavor of human being here; a true international city if there ever was one. And it’s a shame I will only be spending about 24 hours here. Of course, one could get into a lot of trouble in a place like this in only 24 hours, and normally I would be more than willing.

But it is a rather bemused and bittersweet feeling I have at the moment. Like I said previously, I feel like the task of unraveling this fascinating, wonderful land has only just begun. It’s true that I’ve had enough business travel to last me awhile, and after wandering the streets of Hong Kong for a few hours, I can’t help but long for the solitude and wide open space that will greet me when I return home later next week.

And Lord so help me, I think I would consider murder in cold blood if I thought it would get me a decent burrito a few hours sooner.

Nevertheless, all things considered, if I had the opportunity and the world were a different place, I’d stay. For how long, I don’t know. As long as I want to, I suppose. If Reed Business were to offer me a correspondent position in China, and they said I could live where I want to, I’d take it in heart beat. If they said I had to live in Beijing or Shanghai, I’d have to think about it for awhile — not very long, likely — and the answer would probably be yes.

I’m not saying I want to spend the rest of my life here — there is that whole free speech thing, I have issues with — but then I can’t say that about anywhere, really. Not even Ireland, which is the only other foreign place to tug at my heart strings like China has. But for a time. …

Anyway, I was a day late arriving in Hong Kong, where I was scheduled to spend the weekend before returning back to the States, with only a day to spare on my visa. Why did I skip an extra day in Hong Kong to remain an extra day in Shenzhen?

Well, Dear Gentle Readers, you don’t get to hear that part of the story. Suffice it to say, my soul longs to return to Gulang Yu or Beijing, and I have no doubt left my stomach in Chengdu, probably for all-time (although I haven’t been to Italy or Thailand — yet). But just when I thought I was going to escape a month in China relatively unscathed, it turns out that I’ll be leaving a little piece of my heart in Shenzhen. A tiny piece, but a piece nonetheless.

And for those of you that know Shenzhen, get your minds out of the gutter, it’s not what you think; I’m not talking about any of Shenzhen’s legendary working girls. No, Ali … she is anything but that.

I even thought about staying tonight in Shenzhen and getting up early and going straight to the Hong Kong airport. But I figured that, even though I have no interviews or appointments in Hong Kong, it was still part of my job to come here and experience it. And it’s a good thing I did, because it took hours to travel the 30 some kilometers from downtown Shenzhen to downtown Hong Kong.

This brings us all the way back around full circle to the subject at hand, finding out the truth of China.

But that will have to wait until next week. After all, it is Saturday night, and I am in Hong Kong. I’m not that bemused.

Electronic News Travels to ChinaWhat, you thought this was it? Oh no, the voyage down the Silicon Road will continue long after I’ve returned to the States. There are more stories to write about China, and more blog topics, like the long list of people I want to thank.

Why for heaven’s sake, we haven’t even gotten yet to what I know many Westerners want to know about: public restrooms and pit toilets. How could you think we were done?

Stay tuned.

Jeff

Editor’s Note: As explained at length elsewhere on this site, this is a blog entry of mine that originally appeared on the now-defunct Electronic News’ website, which is long gone. While its former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge), as far as I know, this blog content isn’t hosted anywhere else on the Internet, hence my reproduction here.

Original Comments

at 11/7/2005 7:36:42 AM, PeteF said:

I’ve enjoyed this series very much. As a student of Chinese history I envy your opportunity to visit there. And I must compliment you; you were not an ugly american. You are a real traveler. I’m going to be looking forward to more of your work. The writing is quick, entertaining and insightful. You done good boy!

at 11/7/2005 12:37:29 PM, Wayne V said:

Jeff, just a short note to tell you how much I have enjoyed your reports from China. Definitely first hand and first rate! Have a safe trip home and I look forward to hearing more about your trip! Wayne V

at 11/7/2005 2:09:45 PM, Jim from Rhinebeck said:

I’ve read bits and pieces of your blog; have enjoyed, and agree with, your perspectives. I’ve been to Shanghai on and off, for 10 years, to attend Semicon China trade shows. It’s amzing to see Shanghai’s transformation in that time, when the Pearl tower was the only really tall structure in the city scape. Now, Shanghai boasts a skyscraper a day and a 430 km/hr ride on the mag-lev.

Jeff, if only you could have seen the bicycle traffic in 1995! So much of that traffic has moved to the subway. This past March was my first endeaver to see other cities in China; Beijing, Xian, Shanghai, and Hong Kong. Seemingly endless examples of cultural, social, and political juxtaposition. My Beijing business associate (friend/guide/translator) survived the Cultural Revolution, and is now quite proud to own his own home and car.

China, for all its complexities and contradictions, is modernizing at an unfathomable rate. It’s a 21st century version of the California gold-rush. Enough of the profound. Time and Newsweek covered the profundities in detail. Simply put, China is a great place to visit. An when you’re done, you’ll be wishing Chinese foot massage parlors in the US.

at 11/7/2005 2:13:04 PM, Phil Harris said:

Having recently returned from a 2 week stay in Beijing, I found the people friendly, warm, and very helpful. My coworkers were enthusiastic and recognized that I brought information on well established western procedures. It was also an opportunity for me to learn that business in China has some similarities and differences. I hope to make this trip again shortly and look forward to it except for the plane ride. That leaves a lot to be desired. Thanks for your perspective. Phil

at 11/7/2005 2:14:43 PM, C.C.Poon said:

All the tour articles make very interesting reading. Worth many times over the money spent (by whoever)on the trip. I look forward to reading the other articles yet to come. Many thanks for writing them, Jeff.

at 11/11/2005 8:49:12 AM, Pete Flynn said:

Jeff, I want to let you know that this series has been great. I’ve enjoyed every post and even most of the comments by other readers. Even the dopey ones.Since I work for a company that sells lots of “stuff” to the Chinese electronics industry, their success means I keep working. I see the global integration of China ultimately resulting in more freedom for the Chinese people and a reduction in tensions. I will look forward to more of your articles.

The Old Journalist and the Sea

Travelling the Silicon RoadXIAMEN, China — One thing always happens to me on every extensive trip — and sometimes the quick ones — to places I haven’t been before: I find some spot to which I’m instantly ready to move.

On this month-long trip, that moment, the first one, anyway, came in Xiamen.

Now if there is one thing I’ve learned about traveling and moving relatively frequently, being a somewhat restless soul, it’s that falling in love with people and places share the same pitfalls — and I’ve been known to fall at the drop of a hat. Just because you fall in love with a person/place initially, the relationship may not have what it takes to keep you happy in the long term. Just because you had fun on vacation, or the place you arrive at/person you meet is unexpectedly charming and beautiful, doesn’t mean you will like living there/with them.

Sedona, Ariz., taught me that, in more ways that one. But that’s another two or three stories for some other time.

Xiamen, in its own way, is just as Chinese as the other cities I’ve been to so far: Beijing, Shenyang and Shanghai. It has an important place in Chinese history, plays a current role in its nascent technology industry, has a thriving university culture, and was a key part of its Western colonial era. Like seemingly every other urban area in China, there is a ridiculous amount of construction, and traffic scares the living bejesus out of me.

And yet Xiamen is something different. It’s China, yes, but it certainly doesn’t fit the stereotype.

I could say that about the other three cities I’ve been too in China, of course. But Xiamen really is not what Westerners frequently associate with China, at least not the ones I know, and as such, is a pleasant surprise. This coastal island city that sits across from Taiwan, amidst other surrounding islands, at first glance reminds one of either Southern California or South Florida, or perhaps the Gulf Coast of the United States.

There are the palm trees and the sand, the balmy near-tropical climate (welcome after Shenyang’s chilly autumn days), and clean air (welcome after Beijing’s and Shanghai’s dreadful smog). And then there are the fishing boats and seaside shops — not only can you pick your own lobster here, but your own crab, fish, shrimp and sea life that I couldn’t begin to identify. Then there are all manner of places designed to separate cash from tourists, from upscale, trendy clothiers to vendors of cheap flashy trinkets, and all of them seemingly inundated with trendy, well-dressed hipster kids.

And my interpreter and I agree; Xiamen girls seem to be the prettiest of our travels so far in China. All afternoon I kept singing that annoying Beach Boys tune in my head, only I would change the words to “Wish they all could be Xiamen, China girls … ”

The Great American Novel Awaits on Gulangyu Islet

But really I think Xiamen is more akin to the south of France, perhaps, or somewhere else on the Mediterranean, given the European architecture scattered throughout the city, particularly the closer one gets to the water.

In fact, there is a neighboring island, Gulangyu Islet, that seems more akin to some South Pacific volcanic island, or perhaps the Caribbean, rather than coastal mainland China; it’s narrow, windy streets (cars are apparently not allowed and certainly not needed) and historical architecture reflect the many European powers that made attempts to colonize this port city in the past — some successful, some not.

And in temperament, Xiamen definitely seems to be more laid back; the pace of life is slower here. Rush hour traffic is nothing like Shanghai or Beijing, but then it’s a small Chinese city, if indeed it can be said there is such a thing, with only 1.24 million people here.

Particularly on Gulangyu Islet, life is lived at a leisurely, island pace.

Even though the sea to the south is clogged with cargo and tanker traffic — there is an oil refinery on a nearby island — on Gulangyu, musicians play traditional instruments in public squares, their instrument cases open for the yuan of appreciative passersby. Since there are no automobiles here, everything from garbage to construction supplies to the day’s catch is hauled in big wheelbarrows around the island. Tourists stroll the narrow boulevards, and the shop keepers hawk their wares, and the three island policemen tool around in electric carts.

Everywhere you look is colonial-era architecture, some of it well maintained, others crumbling with age. These buildings are interspersed with new ones that sometimes mesh well with the old neighborhoods around them, such as the Xiamen University college dedicated to the arts, and some new apartment buildings that hopelessly clash with their older and more dignified neighbors.

Stairs climb through thickets of bamboo and around ancient trees, winding through hillside neighborhoods that must surely once have housed colonial administrators. From some vantage points on the island you can see the skyscrapers of Xiamen, about half a kilometer from Gulangyu. And yet when you are on this little islet they might as well be miles and years away — you can just smell the history here, mingled with the odors of cooking seafood, sea breezes and the fragrance of tropical fauna.

It is here that I could see setting down for awhile, enjoying a slow-paced, island lifestyle. The crumbling old European buildings call to a hopeless romantic like myself; it would be easy on Gulangyu to pick up where Hemingway left off, typing away in some dusty old room, while ocean sea breezes flutter the curtains at the open window, where the cries of the island’s elementary school children can be heard, mingled with the occasional foghorn.

Electronic News Travels to ChinaPerhaps someday my travels will bring me back to Gulangyu; perhaps I will take a job as a correspondent in China, and I’ll be able to settle here for awhile, until I grow restless once more.

But in the meantime, alas, I’m ensconced on the sixth floor of the generic, hygienic Crowne Plaza hotel, and tomorrow I will not be contemplating the themes of man vs. man or man and nature for a forthcoming novel, but meeting with members of China’s optoelectronics industry.

What the hell, I never really liked Hemingway anyway.

Editor’s Note: As explained at length elsewhere on this site, this is a blog entry of mine that originally appeared on the now-defunct Electronic News’ website, which is long gone. While its former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge), as far as I know, this blog content isn’t hosted anywhere else on the Internet, hence my reproduction here.

Original Comments

at 10/25/2005 7:18:07 AM, Paul said:

Something for you to contemplate as you admire the old houses on Gulangyu; Until the Cultural Revolution most of those beautiful old builds were single family homes. Sadly, during the revolution they were carved up into 3 meter square family apartments. In this case the beauty truly is only skin deep, as the insides of these building now are mostly a mess.

at 10/25/2005 1:25:23 PM, Bob said: And just when I was looking for the idyllic place to settle down. Perhaps I’ll have to go and see but one day the missiles flying over-head to and fro Taiwan might upset this tranquil picture you paint.

at 10/25/2005 10:45:23 PM, Jeff Chappell said:

Despite the public political bluster and military bravado, I honestly think the Chinese are much too practical to get into an armed conflict with Taiwan; the island is quickly becoming an economic ally, and Chinese government officials look at its rapid development as a model for China. In fact, the recently retired leader of the Kuomintang government in Taiwan was just here in China on a state visit — he was touring the Forbidden City in Shenyang at the same time we were, a week before last.

at 10/25/2005 10:51:10 PM, Jeff Chappell said:

As for what happened to the houses on Gulangyu during the Cultural Revolution, yes, it is indeed a shame. But then it is an important aspect of history, if not a happy one. And it’s no justification, but “progress” is often the fate of many old and beautiful buildings everywhere, not just China; such is life. But then the real attraction for me to this islet is its geography, climate and its people and their culture — and the seafood — not the buildings.

at 10/26/2005 11:21:17 AM, Goose Hosage said: Jeff, road warriors such as yourself need to get more sleep. When you find yourself rambling with multiple paragraphs regarding a topic, which in fact should have been covered in a few sentences, readers really begin to wonder. “Wildly Inarticulate Ponderinngs of The Jet Lagged” perhaps would have been a better title.

at 10/27/2005 4:24:40 AM, Jeff Chappell said: LOL, Goose, dude … it’s a blog, not my entry for this year’s Pulitzer. Get over it. And I’ve said it before, and I’ll say it again: folks, what’s with the dis’n me, as the kids say, and not putting your real name to it? C’mon … if I’m not afraid to put my raw and un-copyedited emotional ponderings out there for all the world to see, at least have the decency to use your real name. I do, after all. And it’s not like I’m going to hunt you down or anything. I’ll just laugh and say at least I can spell “pondering.” Of course, if your name really is Goose Hosage, I look pretty stupid right about now. 😉

at 10/29/2005 11:57:28 PM, fred in seattle said:

everyone is a critic…too bad most dont have anything positive to say. Jeff, Thank you for your insight into a city I love. Maybe others with narrow views will stay at home and watch the latest reality show with their microwave dinners as we travel the world…zaijian

at 10/30/2005 11:02:20 PM, Jon said: Hi. I’m an American who has been living in Xiamen for three years and am now married with a 2 year old. This is a great place to live! And my wife and I are going to set up tours and give relocation help to people who want to come here. My life has progressed in every aspect in the 3 years here on this comfortable island in China than the last 30 years in the States. Welcome to Xiamen! jon@jonruby.com

TI China Engineers Straddle Two Different Cultures (part 1)

Travelling the Silicon RoadSHANGHAI – Editor’s Note: At the behest of Texas Instruments Corp.’s Jeff Smith, deputy director of Asia Semiconductor Communications, as well as worldwide manager for analog media/analyst relations, four TI China engineers sat down with Electronic News Senior Editor Jeff Chappell to talk for an afternoon, but not about TI or its latest products. Rather, they discussed the experience of being an engineer and working for a U.S.-based, global company doing business in China.

The four engineers — three of them Chinese — are a microcosm of what you find in a large foreign tech company doing business here. One, Tan Hui, has only been out of graduate school six years, and has worked for TI in China since graduation. He is currently a member of the technical staff and an application manager in the industrial and home appliance semiconductor group here.

Another, Michael Wang, grew up in a city not far from Shanghai, and is currently a system engineering manager in the portable power management semiconductor group here. While he has worked for TI for several years, he came back to China a year ago after spending two years at TI headquarters in Dallas.

Eric Braddom is director of DLP products for TI’s Asia semiconductor group. A U.S native, he has spent the last two years in Beijing with TI; prior to that he was with the company and also stationed in Dallas.

The fourth member of the group was Yu Zhen Yu, a senior member of the tech staff and director of the industrial and home appliance group and China application and development center in TI’s semiconductor group here in Shanghai. He came back to China two and a half years ago after living some 14 years in the United States; prior that he was based in Houston, Texas.

During the afternoon, the four provided insights that can only come from living and working in China, and in some cases only having been a native who has lived abroad and come back. The following are excerpts from the conversation.

Chappell: First off, tell me what is it like working for a large American chip company here in Shanghai?

Tan: I have no experience working with a domestic company, but one big difference I’ve noticed, since I started with the company in technical support … I think working for a large international company enhances our ability with teamwork. If you want to be successful, you have to have technical expertise, but it’s not the only thing. You need a team, a system to support you. TI has done a good job along these lines. I’ve talked with friends I went to school with who work for domestic companies, and they say it’s not like that. Domestic engineers concentrate on their own work. It’s a big difference.

Braddom: It’s definitely a challenge working with and managing Chinese employees also. They have many strengths and are very strong technically, but cooperation is often a weakness. In the U.S. we’re taught early, we’re forced to do things as a team. That is a management challenge. Chinese students just haven’t had that [teamwork] experience.

Wang: China produces more engineering graduates than the United States or Germany, but the pool accessible to a large international company like TI is relatively very small. They are often not qualified because of one, language, and two, teamwork. Language is a big thing, I think. Just look at the way I work in TI — we have almost daily contact with the mother team back in the United States, and knowing English is essential.

Chappell: What’s the converse? What’s it like for the large American company to come here?

Braddom: One thing about the Chinese workforce, is it produces a real good chance to have diversity. China is a very diverse country, and it’s really nice to have engineers that can converse with customers in their own local dialects. Furthermore, in China I get a lot of strong resumes from women. I’d say about half of our staff are women; in the U.S. it would be a much lower number. There are many opportunities to achieve diversity in China, from a management perspective. I’m not sure it’s valued by everyone, but it’s a good opportunity for us.

Yu: One big problem, however, for Western companies doing business here is motivation of local, native employees. There is often a historical and cultural gap between them and management, who tend to be expatriates, or from Hong Kong and Taiwan. Often employees come to work here or at other large international companies to get exposure, but after a couple of years they get fed up and leave. They don’t have the same feeling the U.S. and European employees have with regard to how they feel about the company.

Braddom: I’ve found that some Chinese employees though do respond to Western style management — it’s an opportunity to achieve that closeness on the staff.

Yu: I think the problem is that companies fall into the same cycle; there are so many managers that are not local — they miss the opportunity to groom local employees for management and leadership positions.

Braddom: Teamwork is not taught in schools here, but there is a strong focus on family and relationships. Even on my team, some of the employees use the [familiar Chinese titles] of older sister or younger brother. Then there is the concept of face. It’s kind of like a bank account. I’ve seen it both demonstrated and used in business here, and it can be quite effective. It really does exist and it’s important to understand. Companies here are just now learning the concepts behind intellectual property laws and merger laws. They recognize that it is important if China is going to do business globally. But it’s more important to have the relationships in place when dealing with Chinese people in business, not just the signed legal documents. You have to know the concept of guan xi.

Yu: That’s very true. After 14 years in the U.S., it is something I had to adjust to again. In the U.S., if you dealt with a colleague and had met each other’s business needs, you were done. But here in China, it’s much more than that. Sometimes, even though you both realize that it’s not a personal relationship, you have to make it feel like a personal relationship.

Braddom: It’s really nothing more different than realizing that people have personal and professional objectives, and can use your help to achieve them. It’s not just going out do dinner together or having drinks together, it’s actually helping one another.

Wang: In my mind, though, I would like to emphasize that compared to other Asian countries, China and the U.S. are not all that dissimilar. Taiwan and China are much more open to Western culture.

Yu: That’s very true. We’re much more open to Western ways of doing business and Western ways of thinking.

Tan: You have to remember, when an Eastern businessman looks at a business deal or opportunity, he sees that there are always reasons for and against it. That’s why the relationship beyond the deal is so important.

Electronic News Travels to ChinaYu: People do emphasize relationships a lot. Let’s say you are trying to gain 10 different customers, in the end, it’s the ones that really benefit from what you have to offer that become successful. And that’s when, in turn, the relationship becomes stronger. But fundamentally, you do have to bring value to the table. It’s not just guan xi.

Wang: I think this idea that relationships are so important originates from dealing with the government. I don’t always see it at my level.

Braddom: For my part, I’ve have seen it used it myself.

Return to Traveling the Silicon Road tomorrow for the second part of this article.

Editor’s Note: As explained at length elsewhere on this site, this is a news story written by me that originally appeared on the now-defunct Electronic News’ website, which is long gone. It’s former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge). You can still see a copy of this story at EDN.