MCBC Steps Way Out: Shanghai & Beijing
Mike Violette, Washington Labs &
"Every single issue critical to the US plays out here." - Mark
Lambert, Regional Unit Chief, US Embassy Beijing. Remarks to MD-China
First Official Day: Shanghai Old & New
Rushed about like kindergardeners on the first day of
school, Master Ning shepherds us safely with soft, but stern
words from the JW Marriott hotel to the Shanghai Urban Planning
Bragging rights for the biggest and baddest city model are up
for grabs (we visit the Beijing counterpart in a few days). The
model shows the present and future Shanghai, an expanse that is
presently home to 20 million souls and is expecting more...
The scale model is sexy and super-sized (800 square meters), but
has a practical use, too, as city planners can envision the flow
and arrangement of 21st century urban living for one of the
world's largest cities and with the second highest-building under
development in the Pudong area. Pudong (East of the HuangPu
River) was not-so-long ago farms and fields (1990). My my,
little Pudong has grown.
The Bund, across the river in the Puxi District (West of
HuangPu), is the location of the trading houses when Shanghai
was sliced and diced amongst the various colonial powers during
the dynastic periods. Various "concessions" were let to the
European powers after Chinese effort to expel the foreign bodies
were variously repressed--winner takes all. The vintage Bund is
a lyrical contrast to the Jetsonian Pudong.
Our Shanghai urban tour and education, a mere sip from a
vast ocean, wraps up with a visit to the Xintiandi (New Heaven
Earth) district, which was one of the tonier areas of bustling
1920s Shanghai during the period of time when China was,
briefly, a Republic. The characteristic "Shikumen" housing is as
iconic of Shanghai as the Hutongs are of Beijing.
There are many references to Earth meeting Sky (or heaven)
in China's culture. The term "Middle Kingdom" comes from the
sino-centric notion that China (Zhong Guo--Center Country,
literally) is in middle of everything between Earth and Heaven.
(Literal translations don't really play out the context of the
Chinese language; often a paragraph, or more, is necessary.)
Gives one a necessary perspective on the attitudes of a rising
superpower and is a frame of reference for not only one-on-one
relationships (stones in the bridge) but on more global matters
that people-above-my-pay-grade get to grapple with.
Xintiandi is now reborn as even more tony, with restored
period housing hosting bars, cafes and other diversions.
Here, in one of the restored/preserved Xintiandi homes, our Lori
Dovell checks out the appliances and wonders where the espresso
machine plugs in.
But we're not on a historical tour here and have serious
business to conduct. So we head to lunch, departing for the
first organic Cantonese restaurants in Shanghai, the Ming Tang
Our host is owner Dr. Winston Chan, a long-time MCBC board
member who has operated the Ming Tang for the past two years,
shuffling between Maryland and China, overseeing various
activities on both sides of the Pacific.
Winston is a successful IT entrepreneur with a PhD in
geophysics and welcomes seasoned representatives of
Maryland-based Black and Decker and RTKL.
Towson-based B&D is the well-known tool maker that uses
the strong backs of Chinese labor to realize US-designed tools;
Zhou Qin gives a brief perspective on the workforce.
Baltimore-based RTKL is arguably one the most successful
architects in China; Greg Yager has decades of overseas
experience and provides some perspective for us in the service
We got our businees fill and lunch was delicious.
Next were visits to successful Wall Street English based in
Baltimore, MD. The model for WSE is to use direct, interactive
methods to challenge students to immerse themselves in the
language. The model has been very successful, and the company
has taught over 2 million student the lingua franca of
Here, Secretary McDonogh poses with the Director of Wall Street
English in Shanghai.
One of the hallmarks of any business is longevity and
perseverance, not unique to China business. WSE was skeptically
received by the local business community when it set up
operations. "No one will pay the prices you are asking for
English language classes" went the line. The key, though, is
digging through, going under or over the wall of naysaying. As
our dinner guest Ms. Roberta Lipson of Chindex noted during our
trip: "In China, everything is difficult, but nothing is
And, as we have seen, American Icon "brands" are well-received
and well-respected here.
Two of our crew who are keen on education, Steve Drake and
Ernest Wagner keep their oars in the water and their ears tuned
for opportunities in distance-based learning, taking cues from
the successful Wall Street English.
We spent a few rainy hours at the Expo, visiting the US and
China Pavilions in express fashion. Travel tip: find yourself a
Secretary of State and a couple of VIP passes and save a few
hours of standing around.
"Better City, Better Life" is the theme of what might be the
final grand Expo in our lifetimes. Speculation has it that the
resources necessary to put these big events on are quickly
dwindling. The US pavilion, for example, almost didn't happen as
the US Congress forbids the use of public funds for this kind of
China, for her part, provided several tens of millions of
dollars to various developing nations to come and support the
six-month show. After the event is shut down, most of the
170-odd pavilions will be scraped away and the area used for
redevelopment into condos and a Better City.
The final evening in Shanghai was capped by a banquet at the JW
Marriott hotel. The event, attended by over 150 of our closest
friends, provided an opportunity to highlight the trade
delegation and thank our various sponsors, both in the US and in
Shao Ning presided and gave an overview of the mission's
objectives. This particular mission is different from many
others in that the focus is on creating real connections.
Throughout our visit, the vision of increased cooperation,
echoed by official and the commercial interests, is the only way
Our own Fontaine Bell, who has done much of the heavy lifting
during the preparations and execution of the mission, provided
remarks to the group.
Of course it takes more than one to get things moving, as these
guys know and Ms Yan from Shao Ning's office is our Radar
O'Reilly, with schedule, pen and a sweet smile.
Here, she poses with our old friend Anthony Goh, one of the
co-founders of the Maryland-China Business Council. Anthony
lives in Beijing and dropped by to see us as we welcomed former
Ambassador Zhou (more on that later).
Anthony's business is in developing cooperative projects between
US technology firms and Chinese customers. The trick to a
successful enterprise is to get the agreements worked out,
identify sub-contractors and protect partners' interests.
Anthony recently worked on water purification technology,
assembling the pieces of the cooperation and implementation.
Quitting Shanghai, we headed northwest to Beijing; the phrase
"herding cats" was heard several times. By Xiamen, these cats
will be a cohesive and integrated group. The one cool thing
about travel with internationally-oriented like-minded thinkers
is that the "small stuff" ain't worth sweating.
Off To Beijing
Washington Labs/ACB Open Office in Beijing
Taking a break from the hustle of the delegation, I made my way
up to the area of the Olympic park where we have opened a joint
Washington Labs/American Certification Body office. Jerry Lee, who heads up our Shenzhen team and oversees
all of China, has created an efficient working space to do our
The space is walking distance to the MuDanYuan (Peony
Flower Park) subway station and close to several critical
customers, TMC and ZTE, notably.
Our staff has expanded and the WLL Chinese Entity (Washington
Technology International) will provide review,
endorsement and engineering training for Chinese customer labs.
We will be part of the circular supply chain that connects the
US and China industries and consumers.
We now have three staff dedicated to helping US
manufacturers satisfy regulatory needs to IMPORT to China. After
years of working the other direction, we're going to try to help
balance the trade.
A key feature of our China team is its youth. As an aside,
during a conversation with one of my longest-standing colleagues
and friends, I asked what challenges the "mentors" in China
have. The response: Teach Marxism. Seems the youth have little
interest in the topic; they just want to be successful and build
a better life for themselves. Maybe we can do it together.
We had lunch in a Thai place, greeted with Christmas wishes from
Embassy: Fortress US
We weren't invited into the inner sanctum, but we did have
to work through a myriad of blast doors, cross-checks, video
surveillance and X-ray examination (provided by a Maryland-based
manufacturer). I suppose in the interest of propriety I won't
share the name, but they're at every major airport location. The
new Embassy in China, relocated from the center of the city, is
the largest in the world. Your correspondent visited the old
embassy some years ago and the first comment is that there is
little in the way of "charm" in the new digs, unless you're a
concrete aficiando. The old location was a block away from the
biggest open-air knock off markets in Beijing, selling US Brands
dirt-cheap in the US' shadow, one of those odd China paradoxes.
We were greeted by officials from the State Department and
our beloved Commercial Service and given a sit-down,
free-ranging "Insider's View of China 2010." A summary of their
remarks are provided (all recording devices, cameras, iPods,
electronic doo-dads, & gadgets, etc... were surrendered, so the following is
eyes and ears and ink only).
First, what's bugging post-Mao China? Well, from a US-Centric
point of view, there are four key areas of concentrated focus:
1) Global recovery (read: jobs), 2) Nuclear non-proliferation,
3) Regional security (read: Iran and the North Korean funhouse)
and 4) the environment. As background to those pressing issues
is the "oscillating" relationship between the two largest
economies, impossible to summarize in a few thousand, or more,
words. The key thrust of the US' effort is to have a
conversation to address these issues but to advance to a broader
strategic dialogue to include the four key areas above and
tackle our shared problems.
And then there is the issue of human rights. And Taiwan
("visceral" is the word that was used); the concern is that, if
there is a misstep (whoops! there's goes an errant missile) can
we take steps to correct it? The positive side of the Taiwan
issue is that the present leadership is more realistic, framing
the context of the relationship in a more economic framework.
And, direct flights between Taiwan and the mainland are finally
allowed and, with a special pass, Chinese nationals can take a
holiday in Taipei! My Taiwanese colleagues see the eventual
merging of the two systems... maybe in a generation, but it
certainly makes cultural sense. And maybe the pie is big enough
to go around.
At any rate, the global stakes are REALLY huge and the US'
mission is to bring China along as more of a partner. But
sometimes it is like getting the bride's attention at a wedding,
there is so much going on across the seemingly limitless matrix
of social, political and economic challenges. The point that was
driven home was that many of the world's problems can be
addressed (not solved, mind you) by China and the US working
together. The times call for "expanding the universe" of
It is an "exciting" time and Hu Jintao is coming over to visit
Michelle and Barak in 2011, which will be only the third state
visit in the Obama's administration. Hopefully, the reception
will be without the bizarre faux pas that occurred during his
visit under Bush II. Regardless, I asked one China-hand how
Obama was viewed by China and the interesting answer was that
the Bush family had deeper connections because of Father Bush's
ambassadorship. At any rate, the dialogue will be ongoing and
the good news, from an energy security POV in the Persian Gulf
and Middle East is that China used to foster "destabilizing
forces." Now, the stability of the region is in their own
strategic interest. You can't drop broken glass in the sandbox
your kids want to play in.
One Bowl, One Baby
The one child policy is shifting the demographics and the
population is aging. By some estimates, there are 20% more men
than women in this society. That may be true, but the old adage
about statistics stands and at least on a micro-basis I know
several young pursuable ladies who are unsuccessfully trolling
for a guy. In Holland, you have your pick of tulips, so maybe
they are more discriminating. I think this guy is in pretty good
shape, micro-statistically anyway.
At any rate, there are some loopholes in the policy, for
example, you can have a second child (if you avoid a
state-mandated abortion) if you pay a fine of about $30,000
(steep!). Or, if you divorce and remarry and don't take custody
of your one kid, you can have a baby with your new paramour.
There's a 5 year rule that says if both parents are from
one-child families, they can have two children (with a 5 year
spacing), and if you're a dirt-poor farmer and can't pay the
fine, you say "what the heck, I'll have more kids anyway. Fine
me all you want, just don't take my water buffalo."
The interest in the US, though, is perennial. Over 100,000
Chinese want a US visa each year and the system for vetting the
applicants is strained. The scrutiny of the hopeful travelers
is, in some opinions (including mine) excess. "There were few
Chinese flying planes into buildings..." Many of them potential
investors in a struggling US economy as there is a lot of
liquidity in the system and certain restrictions (on the Chinese
side as well) need to be lifted to allow FDI to flow into the
As for doing business in China, some of the potential
areas of interest were summarized by the Embassy Staff:
Legal: Difficult to break into
Accounting: A little easier
IT: Good prospects for outsourcing
Healthcare IT: A BIG
push to modernize
Construction: State run: forget it, however
sourcing provides great opportunities.
Our brief encounter could have spanned several days, however, it
was time, again, to go to lunch.
CCPIT and Mr. Wan
We are greeted by Mr. Wan Jifei, chairman of CCPIT, the
organization that first got me started in China in 1999. Mr.
Wan's father (Wan Li) was the governor of Anhui province 30
years ago when the sister state program was started.
In honor of Mr. Wan's dedication to Maryland, SoS McDonogh
gave a plaque to the senior Mr. Li, continuing the friendship
throughout two full generations.
Energy China? Dinner with Shi Dinghuan
Professor Shi is one of 1000 science
and policy advisors reporting to the inner power circle in
China. He is Counsellor the State Council and Former
Secretary-General of the Ministry of Science and Technology. He
is, clearly, as one of our group pointed out, a subject matter
expert. Fueled by a spicy Sichuan dinner at the New South
Restaurant ("where chili peppers reign") we were treated to an
expansive and cogent conversation about Energy China. Here is a
summary of his remarks as recorded by the author; the actual
transcript was mistakenly dropped into the sizzling "Mapu Tofu".
Professor Shi began with an assessment and ended with an
outlook. The near-term reality is that China 30B MT of coal is
burned yearly and coal is a long-term factor in her energy.
Petro and nat gas 10%. Nuke is 3%, but growing with cooperation
with Westinghouse. Oil field capacity is decreasing, the oil is
mixed with water, which reduces the quality and yield from the
existing fields, so it is very costly. The objective is to
reduce the dependency on oil and increase the use of alternative
and low-carbon forms of energy. The wind power capacity is
second to Germany, although in one of our discussions with the
embassy folks it was stated that wind generators are deployed,
but not connected to the grid.
Apparently, the incentives were structured to install the wind
turbines, but not necessarily to make them contribute to the
grid. Part of the problem lies in the challenges faced by the
State Grid Corporation, a State-Owned-Enterprise (read: big-a**
monopoly) with characteristic government blase about expanding
the electrical grid to outlying regions where the pinwheels
To gather more oil, according to Mr. Shi, deep ocean
offshore fields are being explored at depths of 3000 m.
Diversity is being sought, but coal will be critical in the near
future; a great deal of emphasis was placed on cooperation with
the US to develop "clean-coal" technology.
The 2020 goal is low-carbon supplies to be 15% of demand,
nuclear being one of them and hydro-electric being another key
source with a doubling of hydro capacity by 2020. However, the
advisors recognize that environmental issues have created
The past 30 years has seen an expansion of demand and many
issues confront delivery of energy to the expanding urban
population as well as the distributed rural population that are
not connected to the grid. Local waste is being burned (solid
waste) in individual generators for providing low-level power
and light for household use.
The thing about China rhetoric is that it is positive and
forward-looking and the dialogue is ideological and sometimes
sweeping. Clearly, global reliance on energy is shaping foreign
policy. Sometimes, though, it is difficult to sort out the
rhetoric from the reality, but the obvious challenges exist in
the countryside and through the mind- and rear-numbing trek
through Beijing's late afternoon traffic.
The goal of the wind power directive are to provide 30GW of
capacity, about the same amount as 20 or so dual-reactor nuclear
plants. China has about 12 nuclear plants in operation with
another 24 under construction, according to the World Nuclear
Association (so-called 3rd generation plants--with assistance
from Westinghouse in the US). The State Energy Bureau has set a
target of 5% nuclear-based energy by 2020 (http://www.world-nuclear.org/info/inf63.html)
or 86 GW with another 18 GW under construction. By comparison,
the US has about 100 reactors in operation, dating from the
1970s, with about 100GW capacity (author's guesstimate).
Breakfast with Zhou
"What matters is how we approach problems."
Our final official activity in Beijing was breakfast with
former Ambassador Zhou Wenzhong, a friend of MCBC and a friend
We had the good fortune to spend an hour exchanging our
views on business and cooperation with China in general and
Maryland in particular.
Zhou carefully but directly engaged on many of the issues
that we discussed with the US Embassy, namely trade, currency,
mutual interests and cooperations.
He said that China is already engaging on several key
areas, namely non-proliferation, anti-terrorism, climate change
and environmental protection.
He held forth on numerous currency issues, and directly
faced the challenge that our trade deficit is a result of
undervalued currency. It would be an oversimplification to point
to that as a leading issue, says Zhou, noting that the US
exports have grown an average 20% per year over the past five
years. He notes, too, that China has an ongoing trade deficit
with Japan and several ASEAN countries and that protectionist
legislation now being considered in the Tea-tainted politics of
Washington would be a move in the wrong direction.
More was said, but I gotta pack and get on the bus.
On to Hefei and Xiamen.
Mike Violette, on the road with the SoS