China Apprentice

“If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of everyone, and the receiver cannot dispossess himself of it.” - Thomas Jefferson

Photo by Fatty Tuna

China is often admired for its vibrant variety of cuisine, a long and enchanting history, delicate ceramic, silk, and other cultural arts, not to mention, a vibrant street market of cheap copied DVDs, pirated software, and fake designer clothing. The dichotomy of rich cultural heritage based in Confucian and Daoist doctrine paired with an almost flagrant neglect for characteristically “western” values for intellectual property rights (IPR) can surprise the unassuming visitor. The fakes, the poor product quality, and an apparent disregard for IPR make foreign governments and businesses unsure of China’s innovation potential. Understanding the past, present, and future of China IPR is key to successful business in China.

Foreign media consistently overwhelms the international community with impressive statistics of China’s growth. That growth is enthusiastically fueled by continual investment from the world’s multinational corporations in the new “socialist economy with Chinese characteristics.” Depending on the source, China’s GDP growth hovers at just a fraction under 10% year-on-year – a record for a country’s development by almost any standard. The so-called “gradualist-reform” inspired by Deng Xiaoping’s famous Southern Tour in 1992 and subsequent opening of the economy that led to China’s eventual inclusion in the World Trade Organization in 2001 has attracted a frenzy of foreign direct investment and an overall global rush to enter the China market. Annual factory growth, though slowing in recent months, holds steady at around 17% while export growth hovers around 20-30% . It wasn’t long before the world recognized China would become the “factory of the world”. The technical competitive advantages of companies opening facilities in China rolled in on waves of technology and intellectual property transfer. Literally millions of China’s poorest citizens were trained to operate all manner of machinery in order to manufacture anything the world ordered.

The more Gucci pocketbooks and James Bond movies China’s workers manufactured, the more local people realized they might like one or two themselves. After all, a fake Rolex from one of the original Rolex factories really didn’t seem so different from the real thing sold for thousands times the price in downtown London. Fakes and counterfeit products are good export moneymakers too. In fact piracy and counterfeiting has been consistently on the rise since China took the title from Taiwan, Russia, and Southeast Asia. The Geneva Chamber of Commerce claims that 7% of all global trade is counterfeit goods. Estimates put foreign firm’s losses at $20 billion annually with two out of five companies losing more than 20 percent of their local revenue sometimes reaching as much as $150 million annually. And this isn’t just fake CDs and DVDs. Half the motorcycles sold in the China market are imitations of Japanese Yamaha and Honda. 97% of 1300 synthetic medicines produced in China are copies. High-technology items, such as microprocessors, are knocked off as well, modified to accommodate pirated components in video game consoles or computers thereby creating a value-chain based on piracy. There’s often no way to reliably tell if a product is real or not. Of course, most people probably wouldn’t be surprised to know that the “US-based Business Software Alliance claims that 96 percent of China’s software is illegally copied.” A CD of software on the street sells for less than a dollar and legitimate stores are virtually nonexistent. The processes for mitigating the mass IPR problems are weak at best. It can take five to six years in China to successfully remove a bad-faith trademark that violates IPR. Counterfeit products take up valuable Chinese domestic market share and are also aggressively exported overseas creating a real problem for both Chinese and foreign companies trying to leverage corporate intellectual property in China. (more…)

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I’m excited to take part in this year’s Lingnan Sun Yat-sen INDUSTRAT competition. Though the course may be an elective and I’ve already taken the required number of MBA elective courses (actually well over the required three), I was compelled to sign up. I’m interested to see what a “capstone” course for an MBA could be all about. I’m also a little scared to think that this intense four-day simulation could test all the things we’ve learned in this MBA over the past year and a half. A guest professor in from Hong Kong coupled with a famous simulation program developed by the great minds at one of the world’s best business schools, INSEAD, makes me more than a little curious about the 2007 Business Strategy Simulation.

I remember it was a mad rush to register for the class when it came available. A new online registration system at Lingnan like any new online system, didn’t work when it was supposed to let us sign up for the course. With suspense building, when the course finally was released to the Lingnan masses, it was a swift dash to find an open cable port for the student’s laptops and log in to the system. I slipped in the course just two people from the course limit.

And I’m glad I made it. It was enough to pique my interest when I first received the preparatory course materials for this course – 孙子兵法 or The Art of War by Sun Tzu (full text translation). A longtime enthusiast of Chinese philosophical thought, I was delighted to learn this strategy course wouldn’t be all about western ideas but would focus on possible the father of all strategic thought, Sun Tzu.

I’ve advocated before that I think Lingnan should focus more on some of the decidedly Chinese contributions to management theory and practice. The emphasis these days in MBA programs is so much focused on the ideas of a bunch of gray-haired white guys. The world is waking up slowly to the fact that China has a lot more to offer to the greater education community. This course is just one example.

The professor, 赵越 Oliver Yue, got me interested the minute he walked in the room and started to introduce himself. I was particularly inspired by what he claims is a theme in his life stemming from the repetition of a particular Chinese radical in his name, 走 which means to go or walk or otherwise indicate movement. Whether inherited from birth or motivated by the aspirations of his parents, Dr. Yue, makes a point to live his life reflecting a common Chinese proverb, 读万卷书，行万里路 or read 10,000 books, travel 10,000 miles. I don’t know about the books (though a PhD probably gets close), but he’s certainly made his round of travels. He’s been to all seven continents and snapped some fantastic photos along the way. Now, a man who lives by such mantra, enjoys the art of photography AND studies the application of ancient Chinese philosophy to modern business is a man of interest in my book.

In fact, not only do a frequently quote the same Chinese proverb and take gazillions of travel photos, but it was just yesterday that I gave a very similar final presentation in my Strategic Management class on the management interpretation of The Art of War. I was surprised to learn that the Dr. Yue’s lesson preparing us for the first day of simulation drew some very familiar connections in strategy with Sun Tzu.

In many ways I agree that a war’s battlefield can be much like the business environment （孙子管理思想？）. Perhaps Sun Tzu’s most famous line 知彼知已者，百战不殆 epitomizes the importance of having valuable information both about your own company and your competitors (to include customers, users, key actors, suppliers, etc.). To evaluate yourself, your enemy and the environment, Sun Tzu tells us凡此五者，将莫不闻，知之者胜，不知者不胜.

There is no general who has not heard of these five factors. Yet it is he who masters them that wins and he who does not that loses. When assessing the outcome of a war, compare the two sides in terms of these factors and appraise the situation accordingly.

The five factors he refers to are now often quoted in business strategy texts. 故经之以五事，校之以计而索其情：一曰道 – The Way, 二曰天 – Heaven, 三曰地 – Earth, 四曰将 – Command, and 五曰法 – Doctrine.

Modern theorists (relatively modern that is compared to 300 BC) have developed strategy frameworks that conveniently match some of The Art of War’s basic ideas. 天者，阴阳，寒暑，时制也. Dr. Yue highlights the relationship between Master Sun’s factor of “heaven” and David Baron’s market and non-market environment summarized in the acronym PEST – political, economic, social, technological not to mention the public and the media. Not only do these aspects affect the “business climate” represented by the heaven factor but we can also consider Michael Porter’s 5 Forces - Suppliers, Buyers, New entrants, Substitute Products, and Competition.

Modern theory coincides even more with Sun Tzu’s famous work. Henry Mintzberg’s Five P’s, Perspective, Position, Ploy, Pattern, and Plan match almost perfectly with Sun’s 5 factors, respectively. 道者，令民与上同意也。故可以与之死，可以之生，而不畏危. The Way can be compared to modern corporations’ core competencies and social responsibility. 地者，远近，险易，广狭，死生也. The idea of Earth representing distance, terrain, land, and place can be related to the company through internal analysis of resources, labor, capital, transportation, etc. Jay Barney uses such a resourced-based view to evaluate a firm’s financial, physical, human, and organizational capital thereby helping companies capitalize on resources with value, rarity, imitability, and organization. 将者，智，信，仁，勇，严也. Command, on the other hand, is the ability of the company leadership to implement strategy using the five characteristics of a general that also apply to any organization’s leaders:

Wisdom – recognize changing circumstances, active involvement in planning process
Sincerity – towards employees for soliciting their feedback and input
Benevolence – incentive system
Courage – no hesitation to make decisions which capitalize on an opportunity
Strictness – discipline for self and others

法者，曲制，官道，主用也. The last of the five factors, doctrine, is modifying the structure of the organization to facilitate strategy. This must happen at all levels of the organization: corporate, business, and functional. Though Sun likely didn’t have common business-level strategies in mind when he penned his words, concepts of specialization, diversification, integration, outsourcing, and strategic alliance are found in cryptic form throughout the text. Gary Hamel’s idea of Business Concept Innovation (BCI) is but one way to create a unique strategy that creates competitive advantage over competitors.

Sun Tzu tells Generals to evaluate the competition with the five factors by asking a series of questions. These questions can be directly related to key business strategy concepts:

Vision/Core competencies - Which sovereign possesses more moral influence?
Leadership - Which general is more capable?
Market/Resources - Which side has the advantages of heaven and earth?
Organization/Structure - Which army is better disciplined?
Competitive advantage/training - Whose troops are better armed and trained?
Incentives/Vision - Which command is more impartial to meting out rewards and punishments?

Even though we may evaluate our company today based on these questions and factors and then create an ideal strategy, tomorrow the environment could change. 夫兵形象水. 水因地而制流，兵因故变化而取胜. As the water changes its course in accordance with the contours of the terrain, so a warrior changes his tactics in accordance with the enemy’s changing situation. A business must have similar flexibility to realize strategy is fluid and ever-changing.

It’s amazing a text from over 2000 years ago still holds such significance in world affairs. The interpretations and applications of this little book are very practical for any business, small, medium, or large. I look forward to analyzing this simulation more and finding inspiration in this ancient wisdom.

Where to start a business in China - PRD or YRD

In most foreigner’s eyes, the subject of this article is hardly even a consideration. For most westerners not familiar with China, there are only two cities in which to do business – Shanghai and Beijing. In fact, outside of these two internationally well-known metropolises, few would be pressed to name other big cities in China. But rising real estate prices and a quest for even cheaper Chinese labor, has led some western investors looking elsewhere in the vast Middle Kingdom to start business. Shanghai has long been known as the financial center of China with a blossoming skyline of modern skyscrapers with bars and restaurants to rival New York City. But what most foreigners may not realize is that Shanghai has not always been known as a business capital.

Geographically and often quite politically isolated from the northern powerhouses, Guangzhou was actually the first city in China reputed for business. Without going into too much history (admittedly I’m no expert), Guangzhou was one of the first cities in China to open to the outside world in the 1600s where it was designated one of the only trading cities where foreigners could come onshore and conduct business. The silk, porcelain, and opium trade led to the war with the British that eventually conceded the territory of Hong Kong to the imperialists. This official foreign port only gave the business-minded Cantonese an excellent means to continue doing what they do best – making money.

Today, the people of Guangdong province have a reputation in China identifying them as the most skilled business people. The people of Chaozhou, a city north of Guangzhou are actually referred to in an ancient proverb as the “Jews of China” (in a good sense - meaning throughout China they are most skilled at business). While Shanghai has succeeded in recent years in attracting big foreign investment, Guangzhou has always been a place of entrepreneurs and opportunity.

Professor Jiang Lin 林江 at the Lingnan IMBA program at Sun Yat-sen University in Guangzhou recently gave a seminar detailing the differences in culture between Guangzhou and Shanghai that give Guangzhou it’s edge in entrepreneurial business. Prof Lin has done vast research on Chinese politics and the interaction with business. He currently teaches a course titled “Critical Issues” at Lingnan where he explores these interactions. Prof Lin was the official translator for Yuan Geng, one of the key figures credited with giving rise to Shenzhen SEZ – the first special economic zone in China that contributed to the recent economic boom. Prof Lin regularly consults leading foreign companies in Guangzhou such as Honda and Toyota on their business strategy in China. He was also the consultant to the key Dongguan investor in China Digital TV, a corporation that after listing on the NASDAQ exchange increased by over a factor of ten in value. His experience and expertise well qualifies him to compare the advantages and disadvantages of incorporating a business in Guangzhou or Shanghai.

Below are some of the main characteristics of Guangzhou’s business culture. First and foremost, Guangzhou is a city that support and encourages entrepreneurs and small businesses. Foreign companies or just those with a good idea may like to consider Guangzhou as a possible location.

- Local Guangzhou people have learned from Hong Kong how to do business – this is a classic case of the chicken or the egg – did the Cantonese learn from Hong Kong or were the Cantonese always just so good - the most efficient port in the world has given Guangdong a wealth of international business experience – while Hong Kong has morphed into more of a regional financial center, Guangzhou remains the mitochondria power supply behind the Pearl River Delta. Guangdong has the highest GDP of any province in China and was the first to surpass the 10,000 USD mark a couple years ago.

- Guangzhou has long-established relationships between business professionals and government officials – separated from Beijing, Guangdong government is intertwined with local business. Being so far from the national government, Guangzhou officials rarely have much opportunity for promotion beyond the provincial level. And they like it that way. Entrepreneurial ventures throughout the city guarantee the government officials have a great opportunity to make money themselves – far supplementing their modest government salaries.

- Shanghai government emphasizes support of state-owned businesses – most of the financial services in the city go toward these largely inefficient enterprises. While Louis Vuiton and Rolex may be common storefronts in Shanghai, the city harbors few local Chinese brands that are now gaining international recognition.

- The PRD contains the most Small and Medium Enterprises (SME) of any other province and financial institutions are used to lending to these entrepreneurial outfits.

- Guangdong people are well-traveled – the majority of Chinatowns around the world speak Cantonese. Why? Because Cantonese people have a reputation for chasing opportunities and going where money can be made. Many of those people return – many do not – this creates a network of Chinese all over the world that contributes to the business success back home.

- Guangzhou is a city of immigrants – like any land of opportunity, Guangzhou attracts people from all over – most of which are from neighboring provinces. People travel to Guangzhou from within China to seek opportunities in the big city. This creates a culture of diversity, tolerance, openness, and pragmatism. No one speaks perfect Mandarin and rarely do visitors encounter a snobby elitism sometimes characteristic of Beijing natives.

- Basic infrastructure is some of the best in China – perhaps due to the proximity to Hong Kong, Guangzhou boasts the fastest subway line in the world, some of the world’s tallest buildings, and a modern, efficient transportation network.

- A mild climate keeps Guangzhou natives and outsiders coming back (the summer heat also keeps people away!)

On the other hand, there are three main points about Shanghai culture that give it advantages over Guangzhou.

- Traditionally known for its “haipai wenhua”

- Shanghai blends the best of northern and southern business culture – while Guangzhou may specialize in entrepreneurship, Shanghai takes the best of Beijing’s talent for long-range planning and patience and balances this with a southern drive for quick returns and high profits. Guangdong tends to attract 3-year-or-less investments less inclined to make long-term high-tech investments.

- Strong central government connections – In China, guanxi can be everything - Shanghai officials and businesses maintain many high-level relationships with Beijing authorities – this allows for easier granting of national certifications and business permissions. Over 4000 central government officials hail from Shandong province and therefore have roots in Shanghai.

- Though Guangzhou attracts much immigrant labor, Shanghai is a national source of talent. Guangzhou’s entrepreneur culture puts less emphasis on education and more on practical skills and vocational studies. Guangzhou youth are born to parents who made their success through hard work and clever business savvy. Shanghai students excel in engineering and sciences.

A quick and dirty look at the vertical integration of an industry leader

In 1979, 20 young entrepreneurs with only 20,000 RMB in capital established the ”Youth Garment Factory” and created the origin of Youngor. 25 years later, Youngor grew into a leading company in the Chinese garment industry eventually becoming a listed company, Youngor Group Co., Ltd., with approximately 40 other subsidiaries. Today Youngor Group has developed an operational standard based on fabric and garment production with real estate and foreign trade as supplements.

As Li Rucheng, President of Youngor Group, confidently states, Youngor aims to “popularize the brand-the bigger the market , the longer the industry chain.” He emphasizes that the chain of Youngor “should be as long as it can be.” But professionals within the same industry don’t entirely agree with what Youngor claims is the secret to the garment industry in China. They claim that the vertical investment makes the chain too long, creating a whole string of risks that the head company will struggle to manage. However, Youngor persists in its own way and continues to expand its manufacturing scale. It currently faces several challenges in realizing efficiency of its vertically integrated company structure. Proper leveraging of these advantages will make the difference between failure and success for the Youngor Dragon.

I. Advantages of Youngor’s vertical integration
- Investment in high-tech solutions through high-tech fabric manufacturing base – textile industrial city – large investments in pattern design
- In-house cloth production eliminates added costs of purchasing and transporting supplier’s cloth – also eliminates delays in delivery
- Set up a software company to create an IT solution for increasing the transparency among different parts of the industry chain
- Strategic similarities among all links of the industry chain – should be able to realize efficiencies by owning all parts of the product cycle
- Owns the largest garment manufacturing base in Asia – biggest garment producer in China
- National network of sales centers with a common face to the customer - stable and multi-leveled sales network with over 2000 business sites – “whoever is closest to the market gains the initiative
- Textile production chain segment is an advanced operation – cooperates with world’s leading textile companies, recruits talented people, uses advanced industry equipment – investment of 100 million USD

II. Main issues facing Youngor
- How to turn the company into a sales-oriented enterprise from production-oriented
- Increasing efficiency throughout the extended industry chain
- Concept to product cycle currently too long – 70 days – products are missing the high season – currently producing five for every one piece needed
- Keeping pace with the season’s changing fashions and demand
- Surplus inventory – discount liquidations at 100 million RMB/year
- Cost of increasing number of B2C specialty shops – corporate vision
- Increasing transparency - companies are no longer glass houses - they are “glass plates under a microscope”
- Record growth figures make investors nervous Youngor is a “typical blue chip” stock

III. Possible Solutions
- Increase transparency using IT – the company should realize efficiencies in design-to-distribution cycle – follow example of American Apparel and Zara

- Compress product cycles to the point where customers expect the latest fashion from Youngor – give customers a reason to make fast purchasing decisions and return to the store frequently
- Hire a team of market specialists with international expertise – these experts closely monitor the market trends and forecast where Youngor fashion should go – need to strive to be a market leader who has a pulse on the latest fashion and is first to make it available to the everyday consumer
- At the beginning of each product cycle and at intervals periodically throughout the cycle, key members from each critical point in the industry chain meet (either virtually or in-person) to discuss the product development and make minor adjustments where necessary to meet the market demand/production restraints – develop an informal intranetwork that helps facilitate this communication
- Fine-tune the distribution network by only shipping small orders every two weeks to the sales outlets – each outlet submits order once every two weeks

- Use e-commerce to sell customized products directly to customer

- Develop website that gives customers multiple size and style options
- Allow customer to make clothing custom design decisions with in-store kiosks

- Increase sales channels through direct marketing

- Establish reliable IT communication network among branches and with headquarters
- Follow model of new high-performance sportswear company, NAU

- Create a unique shopping experience at the stores – create a Youngor “experience” modeled after Starbucks

- Design standardized store layouts, storefronts, displays, color schemes
- At the beginning of each season, produce in small numbers and only send new designs to key stores where customer reaction can be gauged and production adjusted based on demand

- Use franchising to share some of the risk of opening many sales outlets with franchise owners

- Make investments in brand development through creative marketing

- Sponsor high-level events where Youngor clothing is worn by all the participants
- Make clothing for actor/actress to wear at award ceremony/promotion activity
- Expand the brand internationally by developing flagship stores in major global cities

- Capitalize on advantages of owning the entire production process – offer customization options and flexibility to meet customer demand – start to realize efficiencies by making custom changes to product lines

- Improve SCM – purchase professional ERP software package (SAP, Oracle, etc.) or hire individuals with experience in successful SCM software companies

- Expand the investment in cloth to selling to and trading with companies – creates a competitive environment where the first stage of the industry chain creates another profit opportunity

- Create stronger performance incentives by developing a “shared service organization” where corporate services such as IT, training, etc. must compete with external suppliers of the same services to serve internal operating divisions

- Focus on the “visible hand” of the corporation – coordination through active planning – create a “virtual corporation” that monitors and controls all segments of the industry chain

Below are samples of some of our Chinese marketing services. We also take freelance photography orders. Feel free to contact us for more info at admin@screamingsushi.com.

这是翻译服务的一个例子。我们可以帮您翻译中文用标准的英文。Below is an example of our Chinese-English translation service.

各位同学：
中国国家教育部的一个高级检查团将在12月3－7日来暨南大学华文学院检查，这次检查对暨南大学和华文学院都非常重要，主要是检查我们的教学情况和学生情况。因为我们是中国的大学，所以在这个时间里很多事情必须按照中国大学的要求去做，从11月26日到12月7日，请各位同学每天在学校一定要遵守下边的规定：
1、 每天按时上课，不能迟到；
2、 每天8：00—17：30不能穿拖鞋进教室和办公楼、教学楼；
3、 不能在教学楼和办公楼内吸烟，课间尽量不要吸烟；
4、 不能将早餐带入教室，不能在课堂上吃东西、打手机、发信息；
5、 在校园内任何地方遇到老师应该主动向老师问好，上电梯时如果遇到老师，主动让老师先上；
6、 住在学校宿舍的同学要遵守宿舍管理规定，不夜归，不影响别的同学休息。
一个好的学习环境对我们每个同学都有好处，但是一个好的学习环境要我们每个同学一起创造和维护。让我们一起努力，不只是为了这次检查，为了以后舒适的每一天学校生活，遵守以上规定，共同建设一个优美的华文学院！

对外汉语系
2007年11月

Important notice for all students:

From December 3rd – 7th, a high-level inspection team from the China Education Bureau will be visiting Jinan University, Language and Culture Campus. This inspection is very important for Jinan University and the Language and Culture Campus. The team will be inspecting both the teachers and the students at our university. All Chinese universities are required to be accordance with specific national requirements. From November 27th until December 7th, we ask that each student abide by the following guidelines:

1. Be on-time everyday for class
2. Everyday from 8:00-17:30, do not wear sandals or other inappropriate footwear in the classroom or administration building.
3. Do not smoke anywhere inside the classroom or administration building. Smoking is also expressly forbidden inside the classrooms.
4. Do not eat in the classroom. Do not use cellphones to call or send text messages while in the classroom.
5. When you approach a teacher on campus, please offer a friendly greeting. When waiting for the elevator please allow teachers and staff to enter the elevator first.
6. Those students who reside in the dormitories please abide by the dormitory management rules. Do not be out after dark and do not interrupt your fellow students’ rest.

A good study environment benefits every student. However a good study environment needs the support of each individual student to be effective. We all need to try our best during this inspection to create a comfortable university atmosphere. We need each student’s support to make sure we are all upholding the rules. Together we can help make our Language and Culture Campus a wonderful place to study and live.

Chinese as a Foreign Language Teaching Department
November 2007

An analysis of the space tourism industry using Porter’s Five-Forces Model
A relatively new industry called Space Tourism is proving that motivated private investors paired with creative and talented engineers may now be able to accomplish what only governments were previously capable of. In 1961, supported by massive government funding, research, testing and operations, the USSR successfully launched the first human, 27 year-old Yuri Gagarin, into space on the Vostok-1 spacecraft. The world watched as this previously earth-bound human ventured into a truly heavenly place where no man had gone before. This journey caught the adventurous spirit of billions back on the planet. Now almost 50 years later, people are yearning for their own space experience. Private corporations are making this possible through what they hope will eventually be a profitable industry in Space Tourism.

Stephen Hawking, the famous physicist known for his work in space-time theory, has warned that,

Life on Earth is at the ever-increasing risk of being wiped out by a disaster such as sudden global warming, nuclear war, a genetically engineered virus or other dangers … I think the human race has no future if it doesn’t go into space.

Several entrepreneurs with seemingly bottomless pockets and unwavering determination seem to have heeded Dr. Hawking’s cautioning, and are now working with fervor to make a bit of money off what promises to be an eventual mass migration into the cosmos.

Wealthy multi-billionaires are financing what is now turning out to be a new commercial space race. First governments were in on the act. In 2001, the Russian Federal Space Agency sent the first private citizen space tourist, Dennis Tito, up for a ride in the Soyuz craft with a stop at the International Space Station all for the modest price of $20 million. Then in 2004, backed by Microsoft’s co-founder, Paul Allen, and led by aerospace guru, Burt Rutan, Scaled Composites launched and landed the first private privately-funded manned space flight subsequently winning the $10 million Ansari X Prize.

That was just the beginning. Since the inaugural Scaled Composites SpaceShipOne flight, the company has been acquired by Northrop Grumman and is now in cooperation with eccentric British millionaire Richard Branson and his company Virgin Galactic. Virgin has reportedly attracted up to 200 clients who are each paying $200,000 for a short weightless ride in SpaceShipTwo, Mr. Rutan’s new 6-seat spacecraft. The Washington Post reports that “Virgin Group expects to invest a total of $240 million by 2013” in the company’s bet on space tourism.

Space tourism market still suborbital

Allen, Branson, and Rutan are by far the most visible in the still very “virgin” space tourism industry. There are a handful of other wealthy entrepreneurs that are all vying for their piece of the potential market. Among them, Amazon.com founder, Jeff Bezos, with Blue Origin, Jim Benson’s Space Company, as well as other companies like Space Adventures, Space Island Group, and Bigelow Aerospace. Traditional government-funded efforts still haven’t folded their cards yet either. Boeing and Lockheed recently signed a monopolistic “United Launch Alliance” to supposedly cut costs in the rocket booster industry. NASA created Commercial Orbital Transportation Services (COTS) agreements with several companies to spur private sector R&D. The Russian Federal Space Agency is still sending tourists into space like the first privately-funded Iranian-born Ms. Anousheh Ansari. Also, the European aerospace agency, EADS Astrium, “unveiled plans this summer to develop its own four-seat space plane, with tickets to sell for around $150,000.”

What investors and potential market entrants are now predicting is a rapid market “explosion” in space tourism. Although skeptics say these companies “will merely provide rich people with a good view of the atmosphere that their carbon-hungry trip has just helped to destroy - the ultimate 4×4 experience”, others are betting on a larger, more mainstream tourism market.

In the years 1908 to 1912 the world went from a grand total of just ten airplane pilots to hundreds of airplane types and thousands of pilots in 39 countries. It is hoped that the X-Prize [is providing] a similar jumpstart to the space travel industry.

The difference is that instead of leaving the development of this new industry to slow, risk-averse government organizations, risk-taking private investors are providing the much-needed venture capital and corporate vision. The cumulative investment of $1 trillion that has been made by governments in space technology development has yet to earn a commercial return. NASA currently spends $100 million or more per space launch and many of those don’t even carry humans. Perhaps the forward-looking business strategic environment that focuses on cutting costs and turning profits is what could bring a sense of purpose to the often criticized over-budget NASA.

What’s different today is we have more millionaires and billionaires than ever before, and we have the analytical tools, computational tools, where a single individual can finance it, and a team of 20 can design and build a spaceship that used to take a major first-world nation to support.

Taikotourists

The market worldwide is certainly growing. As people see the prices come down from the millions to the hundreds of thousands to the tens of thousands, the demand will continue to outpace the supply. According to research by Patrick Collins presented at the 1997 IEEE Aerospace conference, “some 80% of young people up to the age of 40 would like to [travel to space], and even some 30% of people in their 60s and 70s say they would like to … a majority of those in favor say they would pay 3 months’ salary; about 1/4 say that they would pay 6 months’ salary, and some 10% say that they would pay 1 year’s salary or more.” Those statistics reflect a welcome climate for potential investors. The European Tourism Research Center says that “perhaps most exciting speculations about future travel involve the idea of space travel becoming commercially available to the public.” Futron, a market research firm, predicts that “as many as 14,000 space tourists will be heading into space each year by 2021, generating annual revenue of more than $700 million” says the International Herald Tribune. Demand is expected to grow to more than 1 million passengers/year if the cost can be reduced to around $20,000 per person.

And if there’s a significant market, we can be assured that the world’s most populous nation will be interested in the business. Merrill Lynch reports there are over 300,000 millionaires in China. In fact, Hong Kong businessman, Jiang Feng is reported to be paying $100,000 to take a suborbital flight. Just recently, an undisclosed entrepreneur in Zhejiang province became the first mainland Chinese to sign up for a seat onboard Mr. Branson’s ship. Chinese technology and companies may also even be players in the space tourism market before long. According to Wired News magazine, “Space Adventures will consider the Chinese Shenzhou vehicle once it has proven its reliability.” Realizing the potential for domestic interest in space flight, NASA administrator, Michael Griffin, predicts “China will be back on the Moon before [the U.S.]” (more…)

This entry was a work in progress that finally got finished. I left out the part about Eastern Europe. I’ll get back to that in a later post.

Finally back in Guangzhou after a couple long flights and a night on the floor in the Dubai airport surrounded by the buzz of sheiks and Africans all apparently buying gold necklaces. Apologies to anyone who may have been keeping track of our travels. I seem to have lapsed in writing for a couple weeks. My only excuse is an intense last portion of our journey punctuated by many long train rides, very hot weather, and an overdue bout with food poisoning. This post should make up for a long span of missed ones.

In case you haven’t noticed, I try to get myself in quiet inspirational settings when I write these posts. Could I ask for better in China. Well, probably yes. How do you get away from all the people, you ask? I’m currently relaxing close to the registration building on Sun Yat-sen University campus as I wait to sit down with the professors and convince them to let me take classes. Southern China takes a siesta (小觉 or literally “small sleep”) after lunch till about 2:30. This always allows me some extra time. Classmates ask me why I don’t sleep insisting that it’s good for my health. I tell them it’s because I don’t stay up till 3:00 am like them doing homework or playing video games. That’s how it works – no nap = regular sleep schedule. But Chinese still believe that the nap is a necessary part of the day so schools and businesses duly respect that.

And that’s just fine by me. The worst of the Guangzhou summer is passed and now the days are comfortably bearable. I found a spot next to a tastefully preserved brick building from Sun Yat-sen University’s better architectural days back when it was all Lingnan property. The building ironically stands next to an open pit of rubble where buildings like it were recently toppled to clear way for more dormitories or classrooms. It’s a starkly beautiful scene to wait out the 午觉.

In fact that leads me into the first topic of this post - an Eastern Europe/China comparison. Damn! Screw the aforementioned beauty of this place – the mosquitoes are still going strong in Southern China – I’m moving to the library! Pick this up later…

Never made it to the library. I managed to get a copy of the class schedule and in fact it has been some time now since registration. I spent a good week sitting in on various levels of Chinese class trying to find the best fit for my abilities/interests/goals. Students and teachers kept asking me which class I was supposed to be in and I kept saying I hadn’t decided yet. I told them all I was just “sitting in” to try out their class. There didn’t appear to be any other students doing this. At Jinan it was standard drill for the first couple weeks of class. Inevitably in this way, the better teachers all attracted the most students. It’s the free market approach to Chinese course selection. It’s a fun way to take tastes from the buffet selection of courses available. Anyway, I finally decided on a study approach that has been a part of my strategy throughout the first two years of learning this crazy language. I opted for challenge.

Sounds trite but let me explain. My entire experience studying Chinese in China has been characterized by discomfort. And ironically, I mean this in a good way. From day 1, I didn’t speak any Chinese. My wife and I landed in this amazing country not even knowing how to introduce ourselves or tell a cab where we wanted to go. With that foundation, I enrolled in the “Speedy Chinese Course”. I’ve pontificated before about my experience in that class. It was essentially all overseas Chinese students who had grown up with Chinese in their home but had never taken the time to formally learn it in an academic environment. This was a challenge for the greenhorn beginner. I was always behind. I always had to work really hard to keep up with my classmates. It was the brute force approach to Chinese study. And it worked.

After 4 months at Jinan University I jumped from Speedy Beginner class to Intermediate class (most students need an entire year before that move). I was in a hurry to learn and had grown accustomed to the discomfort that comes from being behind and needing to catch up. It’s this sort of challenge I think that works really well when learning a foreign language. If you’re the smartest one in the class and the teacher loves you because you know all the answers, it’s time to change classes. I’ve never been that guy.

So as I try to juggle MBA courses and Chinese classes this semester (only two more to go in the MBA program), I have again chosen challenge and I just hope I can hang on again. That’s ok, I like hanging. But I noticed, whether it was my study approach or the level of instruction at Jinan, I find the overall product delivered at Jinan is better than that at Sun Yat-sen. Feel free to argue with me on this but I think the biggest difference in the caliber of students that the two schools produce is the effect of one little teaching method called the 听写. Jinan has ‘em, ZSU doesn’t. These little vocabulary spelling bees are the key to learning Chinese characters and actually remembering them for years to come. I’ve written about them before and how much I hated it. But they worked.

I’m taking a mishmash of courses from the 高级班 and 本科 levels. These are the two highest levels in the Chinese department. One is simply called “High Level Class” and the other is the 4-year undergraduate course for those that major in Chinese. Both are probably above my everyday street conversation level but I find I can follow what goes on in class and, more importantly, I’m very interested in the subject matter. Finally, I’m using Chinese to actually learn something! It seems like it takes so long to get to a level in Chinese where you can read a newspaper about today’s news (not a watered-down textbook version), watch a TV show from last night (not a dialogue crafted for foreign students), write a professional letter (that doesn’t sound like a 5-year-old), or read a scholarly paper about Chinese history, culture, or current events. The courses I’ve chosen focus on all of these. Finally I feel like I’m not just learning Chinese but actually using the Chinese language as a means to learn other things. Finally.

Schedule conflicts aside, highlights this semester should be Chinese Culture, Business Writing, Business Conversation, Chinese History, Intensive Newspaper Reading, Ancient Chinese, Chinese Poetry, and Television Watching (if only college kids in the US had a class like th