What happened? Why return?

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Our “family vehicle” while in China – the local city bus.

Well, it’s been a while since I’ve written (that’s putting it mildly!).  Here’s why:

To recap: my wife, Gienah, and I went to Yunnan Province, China in August of 2014 to spend 2 years studying Mandarin language and Chinese culture full-time.  That part of the plan went well and our 2 years ended in late June 2016.

The next part of the plan was to buy, start or join a small business in China’s Yunnan Province with plans of being there for the next 10-15 years (or more).  Ideally, that business would have a strong clean transportation element.  That’s where we encountered some headwinds (putting it mildly, again!).

I’ve been trying to decide how to explain the challenges to people who are not familiar with the economic, regulatory and market conditions in Yunnan Province, China.

The shortest version is:  Our plans failed.

There, I said it.

Was it a lack of vision?  A lack of confidence?  Lack of determination?  Lack of faith?  Lack of skill?  Lack of effort?  I’ve asked these questions over and over and there is probably some truth to each of these shortcomings and more.  There is also truth to the fact that, in life, things don’t always turn out according to plan.

There is a longer version of the story, but I’m not sure many folks have the time for that.  There is a really short version, but it lacks the nuance and contextual grasp of conditions on-the-ground, in-the-street.  So, one option is to just pass, not even try to explain.  In a way, that’s the option I chose during the first 6 months after returning to the States (which was probably a good approach to allow some time for reflection and perspective).  But, that ultimately seemed pretty lame to me, so just in case anyone is interested in our experience, read on!

First, the cost structure of doing business in Yunnan has been increasing dramatically over the past 5 years.  For example, many local (Chinese) business owners in Dali regularly close their doors because their rent has unexpectedly increased by 2x…or more.  Labor rates have also seen upward pressure and as a result, for a number of industries, exporting products from China has become less and less competitive vs. Thailand, Vietnam, Indonesia, Malaysia and India.

Second, the local (micro) competitive environment among small businesses is extreme.  It is not uncommon to see a number of competitors (sometimes as many as 6 or more) open new businesses on the same street after a new business has achieved visible signs of success.  In some cases, these competitors are virtually next door and on the same side of the street!  Of course, if you’re the last person to open a store and struggle to differentiate your value proposition, the first thing you do is lower your price which often destroys the market for everyone, including the first mover.  These dynamics are common in the small (to medium) business space, but less common where the first mover has a clear technological advantage (as was the case in my previous work experience in China with clean transportation).  The bad news was that as a small (very small!) business investor, we were unlikely to enjoy even a fraction of the technological advantage I had previously experienced in the corporate world.

Third, the local regulatory environment and “business customs” were more difficult than anticipated, even for Chinese nationals.  I simply could not “get my head around” attempting to operate a small business as a Westerner with limited language skills and knowledge of local customs.  A quick example might help explain:  One of my local (Chinese) friends obtained the management contract for 3 boutique hotels around the local lake.  This lake is a major tourist destination for Chinese and international travelers (think Chinese version of Lake Tahoe).  Less than one year later, he was preparing to sell/exit these contracts and relocate to Chiang Mai, Thailand.  Why?  According to him, the local authorities and sub-suppliers were impossible to do business with.  That was a daunting thing to hear, since he had over 28 years of tourism experience in Yunnan Province and as a native, he knew the local language and culture far better than I ever would.  And, he had relationships (关系 – guan xi)…something that is worth more than gold in the Chinese business context.  There are many more stories like this one, but to be fair, I must also say that we know several Westerners who have been doing business in Yunnan Province successfully for 5, 10 and even 20 years.  In some cases, they have recently closed their doors, or are struggling to figure out a sustainable strategy for keeping their doors open.  Others appear to be doing just fine.  I have a tremendous respect for these savvy entrepreneurs.  You know who you are…keep it up!  This experience has also produced in me a tremendous respect for those who immigrate to the US and start new businesses from scratch, often with very limited financial resources, limited local language skills and little knowledge of the local culture or regulatory requirements.

Fourth, it was really difficult to separate “fashion” from true “policy priorities” when it came to clean energy and clean transportation in our area.  Just before we arrived in Yunnan, the local government had taken on a visionary initiative to install wind/solar powered lighting around the lake – almost 100 miles of continuous solar- and wind-powered street lights.  After less than a year or two, it was not uncommon to see 50%, 70% or even 90% of the small wind turbines on top of these light poles no longer functioning.  And, I never could figure out where the batteries were located for storing the solar or wind energy to power the lights after dark (or when the wind was not blowing).  Yet, the lights continued to operate.  Were they simply connected to the grid and the wind/solar elements were just window-dressing?  Or, was each solar panel and wind generator tied to the grid to provide distributed power generation?  (Not likely).

Perhaps I could (should) have been part of the solution to help local officials turn these aging and non-functioning assets into much more productive elements of a clean-energy system.  On the other hand, the fact that they were visibly dysfunctional yet not receiving any maintenance or repair attention may have been a strong indicator that these devices were installed to achieve a goal that was not purely related to clean energy.  In addition to this example, I was daily reminded of the razor thin margins that local transportation companies faced and the direct impact these economics had on the level of technology in their fleet.  Our primary “family vehicle” (the local city bus) was so old and poorly maintained that it was hard to imagine clean technologies would be introduced in the near-term.  Like many things in China: so many questions…not so many answers.

 

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Yes, these are actual photos of the bus we often caught into town.

Finally, after 2 years of language study, my wife and I did pass the HSK Level 3 language fluency exam (thank you Li Laoshi, Zhou Laoshi and Ellen!).  Passing the HSK 3 was a real win for me since I struggled with the language much more than my wife.  Nevertheless, for me personally, HSK 3 hardly felt like sufficient language fluency for me to be competent doing business with financial investments in a responsible way.

That’s the short(er) version.  Somehow it sounds a little better to me than the shortest version!

In the spirit of full disclosure, I should also say there were opportunities to do general management work in the major cities, including the possibility of work as a “New Energy” executive with some of the domestic vehicle OEMs.  But, the one part of our vision that never changed was a strong desire to live in Yunnan Province.  After 2 years on-the-ground in China, that part of the vision was only reinforced.  Our desire to live in one of China’s major cities and forge a completely new life with new friends, new communities, new utilities, new water supply companies, new markets, new transportation systems, etc. paled in comparison to our desire to be in Yunnan.  Furthermore, we did not go to China with the support network many expats experience, and if we were to stay, we would have wanted to remain in the local community where we had built close friendships and felt connected to the local community and culture.

All that to say that after 2 years in Dali, Yunnan Province, we returned to the States.  It broke our hearts to leave many special friends in Yunnan, and we continue to miss them and so many things about the local community and culture.  After spending several months in Colorado studying to take the HSK 3 exam, we migrated south to Texas where we are now much closer to family on both sides.  For those of you who have lived outside the US, you will appreciate the reality that “returning” culture-shock can be just as difficult as the “going” culture-shock.  We are living witnesses to that reality.  We are also living witnesses to the beauty and unique cultural elements that make the US, Colorado and Texas great places to live and visit!

Despite the disappointment of not seeing our plans come to fruition as we had envisioned, we are so thankful to God for our time in China.  It was truly one of the most enriching experiences of our lives.  Now, we’re excited to see what He has planned for us next.

If you’re interested, please watch for an upcoming post entitled:  “What’s Next?”

Copyright © Kevin Beaty, YUNEV and “Feet on the Ground…”, 2017.  All rights reserved.

Top 10 Things I will Miss

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Sunset in Dali Old Town our last night

As you may have noticed from my previous blog posting, we will be returning to the U.S. following our 2 year language and culture studies in China.  In fact, our departure date is today!

While it would be foolish to believe I can anticipate exactly how reverse culture-shock will impact me, there are several things I “think” will be true.  Here’s my best estimate for a Top 10 List of what I think I will miss and what I will enjoy about returning to the US after 2 years in SW China.

Obviously, I will miss the many special friends and relationships we have developed over the past 2 years.  This will be the hardest part of transitioning back to the US, and I am omitting this most important category to keep this article light and enjoyable (at least for me!).

I THINK I will miss:

  1. Noodle shops (especially “拉面/lamian” which means “hand-pulled” or hand-made noodles)
  2. LOTS of daily human interaction (the relaxed, outdoor lifestyle here includes interacting with people on the street, on the bus, in the vegetable market, shops, restaurants, etc…)
  3. Being able to practice Chinese (everywhere!)
  4. Weekly traditional Chinese massage (< $10/hr)
  5. Riding motorcycle in the crazy local traffic!
  6. Shopping/buying from local shop owners/vendors (not the self-check-out at “big box” stores)
  7. Creative, artsy culture of Dali
  8. Natural beauty of Dali (Cang Shan mountains, vibrant flowers/colors throughout the year, beautiful skyscapes with dramatic light from the clouds as they roll over the mountains near sunset…and of course, Lake Erhai!)
  9. Farmers working in their small village gardens/fields
  10. Time…for spending with friends and building relationships
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My favorite “egg lady” – How can buying eggs be so much fun?!

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My last bowl of hand-made noodles…couldn’t resist!

I THINK I will enjoy:

 

  1. No longer living behind the Great Firewall (see upcoming article for why this is #1 on the list!)
  2. Being closer to family
  3. Butterfingers
  4. Ability to communicate with majority of society!
  5. Steak (think Ribeye!)
  6. Riding motorcycle in more predictable traffic patterns
  7. Tacos, Chips, Salsa
  8. Central heating (or effective winter heat of any kind!)
  9. US “standard” height countertops, tables, chairs…even vehicles!
  10. Fewer fish bones and bone shards in meat!

I’m sure there will be plenty of surprises during the coming months (and even years) as we experience life in our previous culture, but one that is no longer our only culture.  So, I hope to share some of those surprises in this blog with those who might be interested.

Copyright © Kevin Beaty, YUNEV and “Feet on the Ground…”, 2016.  All rights reserved.

High Maintenance Horticulture

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Ficus trees along local boulevard (Dali Xiaguan)

Have you “wrapped” your Ficus today?  Ficus trees are very popular here.  Not just as indoor plants, but also as outdoor trees along boulevards and in parks.  It’s interesting for me to see the effort and attention to detail that goes into caring for these trees.  As these photos illustrate, these trees are wrapped in an elaborate and carefully applied organic fabric at the beginning of the “winter” season here.  Many other trees receive carefully applied white “paint”.  These treatments are necessary for these beautiful trees to survive the relatively cold, dry winters.

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Closeup pic showing the elaborate and detailed wrapping on Ficus tree trunk

The fascinating thing to me is the significant level of resources (labor, materials, and genuine care/effort) that go into this maintenance activity while a number of nearby building exteriors (paint, windows) go largely unkept and unwashed.  In the US, it would be more common to see plants/trees left to fend for themselves through the winter months (or lower maintenance plants chosen in the first place), while the buildings/windows were kept much cleaner than here.  There is a difference in these behaviors that must be deeply embedded in the local cultures.  No explanation just yet, so this is simply an observation report for now!

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Wrapped Ficus trunks and smaller “painted” tree trunks.

If you have thoughts on what might explain these contrasting cultural behaviors, please drop me a note at kevin@yunev.co or leave a comment (above left).  And please note that there is a priority call being made here, since the trees do receive significant attention, while many buildings and windows do not.  Therefore, I do not accept the simplistic “labor in China is cheap” explanation that is often given to explain such differences.  If it were that simple, the windows would also be clean and the buildings freshly painted!

Copyright © Kevin Beaty, YUNEV and “Feet on the Ground…”, 2015.  All rights reserved.

By the Numbers:

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Boutique Starbucks in downtown Bangkok (my personal favorite during recent holiday trip)

How far is it to your nearest Starbucks?  What do you typically pay for your favorite drink at Starbucks?

Here’s a breakdown on my Starbucks stats:

The Journey:

  • 15 minutes – Walk from apartment to bus
  • 15 minutes – Wait for bus
  • 30-40 minutes – Bus ride to train station
  • 60 minutes – Wait for train
  • 5 hours – Train ride from Dali (Xiaguan) to Kunming
    • There is an 8-9 hour “night train” option, but we’ll ignore that choice for now!
  • 15 minutes – Wait for Taxi
  • 15-30 minutes – Taxi to my nearest Starbucks

So, total time to Starbucks: 7.5 hours!

But, to avoid an overnight hotel bill, I should probably return home, so that puts the round trip at 15 hours…minimum!

The Cost:

  • 1.8 RMB (or CYN) – Bus to Train Station
  • 198 RMB – “Soft Sleeper” Train from Dali to Kunming
  • 26 RMB – Taxi from Train Station to Starbucks

Since I still need to return home after visiting Starbucks, total cost: 452 RMB ($74 USD).

Including a Tall Americano, my cost is just over $75 USD for a single cup of coffee.

Does that sound a bit different than your normal experience?  Welcome to life in remote SW China.

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My nearest Starbucks – Kunming, Yunnan Province

Now that you know why it could easily be 5 months before my next Starbucks Americano, I hope you will enjoy your next trip to Starbucks just a little bit more!

Copyright © Kevin Beaty, YUNEV and “Feet on the Ground…”, 2015.  All rights reserved.

 

Seeing Red

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Did you celebrate the Chinese (Lunar) New Year last week?  Well, you can be sure all 1.4B people here in China did.  In fact, this holiday (aka “Spring Festival”) is China’s biggest and most important holiday of the year and dominates the local culture for at least 1 entire month…something like Christmas and New Year’s holidays on steroids!

Spring Festival represents the world’s largest migration, with more than 3 Billion passenger trips occurring over a period of about 1 month.  These are not quick trips across town for a big dinner with the relatives.  These trips are all about “pack-your-bags” and get ready for a long bus, train, plane, and/or car ride.  Imagine a number of passengers greater than the entire US population traveling at roughly the same time!

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Kunming Railway Station – Spring Festival 2015

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Local Walmart – selling Chinese New Year decorations

The preparation for celebrations is also pervasive, including plenty of shopping options ranging from big box stores (i.e., Walmart), to small dedicated sidewalk shops that open just for selling seasonal decorations.  We missed the actual festivities on February 19, since we were on our own holiday in Thailand, but just being in China during the ramp-up to the holiday was a real eye-opener into the major role this holiday plays in local culture (and the economy).

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Local street vendor – selling Spring Festival decorations

I’ll save the fireworks part of this story for another time…!

Related PBS article with some great pics:

PBS Chinese New Year Article

http://www.pbs.org/newshour/rundown/photos-billions-move-china-celebrates-year-sheep/ 

Copyright © Kevin Beaty, YUNEV and “Feet on the Ground…”, 2015.  All rights reserved.

Somewhere in China…

Dali Zhang's Garden

Dali Zhang’s Garden

Do you ever feel like the rules keep changing faster than you can keep up?!  For me, it’s a matter of first learning the rules in China, then keeping up with the pace of change!

As you may have noticed, things have been pretty quiet on this blog lately.  Two primary factors:  1.) My main focus has been on Job #1: Language Learning, and 2.) I was trying to decide how to handle writing about China’s diverse and constantly changing landscape.

It seems that immediately after posting legitimate and accurate articles, I am confronted with a paradox:  a real life observation that seems to contradict what I have just written about.  A recent example was the apparent lack of pecans in this region (see Updated Pecan blog).  Another example included the open man-holes I reported on previously (Rule #1: Watch your Step).  Since then, I have actually seen good examples of local safety practices (cones, safety tape, etc.) being implemented while man-holes are open and exposed.  So, should I just stop writing in order to avoid the possibility of spreading misinformation?!

I’ve concluded that these paradoxes serve as an important reminder that:

“Everything you’ve heard about China is probably true somewhere in China.”

For me, it means suspending absolute conclusions and judgments about China based on one person’s report or account – regardless of their credentials and whether their report is favorable or unfavorable.

From a business perspective, it’s also a sober reminder that selling to a broad (generic) market in China is very risky.  If you don’t know exactly who your customer is, what they value most, how much they are willing/capable of paying, and where to connect your product/service with those specific customers (marketing/distribution/logistics), the outcomes will likely be very disappointing.  Yes, this is standard business practice (e.g., market segmentation, channel management, etc.), but it seems to me the penalty for violating these rules in China is likely much greater than in other markets around the globe.  The good news is that even the smallest (niche) market segment in China can represent a very large absolute customer base, due to the sheer scale of China.  The challenge becomes finding a way to understand and connect with those specific customers.  If you can do that, serving “niche” markets in China may actually be a more attractive strategy than chasing larger marketshare in other parts of the world, especially if you also have a robust mechanism for identifying paradoxical behavior and tracking changes among those customers.

Would love to hear your thoughts on this relevant and challenging topic!

Copyright © Kevin Beaty, YUNEV and “Feet on the Ground…”, 2015.  All rights reserved.

Does Sun ever Set on “Chinese” Empire?!

Sunset over Cangshan Mountains in Dali Prefecture

Sunset over Cangshan Mountains in Dali Prefecture

China’s historical investments in energy and natural resources around the globe are fairly well known…and perhaps even well understood.  But, their more recent investments abroad in technology, brands and talent are almost surely less understood by Westerners – including some in the business world.  Be careful:  developing strategies for China’s future by extrapolating its past is not a promising recipe for success.

Perspective (and data) from recent Economist article:

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Click above article (link) for the full Economist article.

Copyright © Kevin Beaty, YUNEV and “Feet on the Ground…”, 2014-2015.  All rights reserved.