China Global Immersion 2019 - Tencent, Li & Fung, Ping An Visit & More

A place where Silicon Valley meets New York, London meets New Delhi, the gateway to China -The Greater Bay Area. I had a chance visit and study in Hong Kong & Shenzhen, China with UCLA and Chineses University of Hong Kong with 40 other students late last year and I haven't stopped thinking about the experience till date. I wanted to capture and share my learnings and experiences in country visit with this article.

My seven big takeaways and reasons why Hong Kong for US businesses considering expanding in Asia -

1. Gateway to china - Driving distance way from China's showcase digital commercial city Shenzhen. Millions of travels cross the border from China to get to Hong Kong just for shopping and then go back to mainland. It is a great test bed to see how a Asian consumer will react to your product.
2. Hub for all premier brands. You become global as soon as you have studio in Hong Kong international airport. People world over travel / immigrate and make the diverse nucleus of HK. A good business in Hong Kong will get the right mix of talent, financing, legal and government support to scale. This city is as cosmopolitan as it gets.
3. Blend of East & West -Cosmopolitan Culture, Language and Food - Not knowing Chinese can be a barrier especially in early stages of launching a company in Asia. Hong Kong is unique. Being a British colony for long, British English is widely used. The food is tastiest ever. Its surreal and just a burst of flavors. The weather is awesome. Disney is also there bringing it closer to home. 

4. With one belt one road initiative, China will take control of the silk route through shipping route, rails and roads. This will lead to an emergence of a bigger upper middle class in Asia. Any businesses serving Asian consumers are bound to grow.

5.Potential for High Growth - High dense population with a significant upper middle class. World domination is not possible for you without China !

6.Asian Consumer Bias for Western Products - Perception of US or Europe made products especially cosmetics, consumers products are higher quality and well tested.

7.Setting up Business in Hong Kong- It is very easy to setup a company here in under a day. China setting up to get a company in place take a 6 months to jump regulatory hoops. China is still the place to be in for e-commerce and it's sheer market size. Integration to mainland is also in interest of HK businesses. Its called the greater bay area.

Read on for more details on the visit immersion further.

Company Visits: Our top company visits included Tencent, Li &Fung, Ping An, Lee Gardens, MTR, Hong Kong Science and Technology Park Corporation

Tencent - The Chinese multinational conglomerate is headquarters in Shenzhen. Its subsidiaries specializes in various Internet-related services and products, entertainment, artificial intelligence and technology both in China and globally. We were amazed at the display of innovative product displays in their showcase some live and some in preview. They had one of the best executive suite building ever with indoor rock climbing walls, library, football stadiums, pool tables. We were welcomed in the lobby by a bot who followed visitors and offered water bottles and then went to the next guest at Tencent.

With the showcase tech we witnessed, it would not be a leap to say Tencent can do what Google, Facebook, Paypal, Whatsup, Apple wallet, Youtube can do just all put together and better!

Li and Fung - Li & Fung is a Hong Kong based supply chain company primarily for US and EU brands, department stores, hypermarkets, specialty stores, catalogue-led companies, and e-commerce sites. At Li and Fung, their senior leader shared a futuristic supply chain mgmt vision. It was fascinating to see how one company brought an entire ecosystem of products, processes and solutions as enablers of a very complex ecosystem from manufacturing to distribution together.

We saw a full virtual simulation of a fashion show right from the body of the model, clothes, makeup and movements. Such a time-saver! You could try different shades of lipstick virtually and print the one you liked there and then into the real world.

They are a conduit for US and European brand to launch in Hong Kong and then expand to china and support foreign brands get to the Chinese domestic consumer. The best part of the visit was their animation on creating a full fledged runway show in a virtual world were styles for the model clothes, makeup, shoes, everything was designed as blueprint to the real show. There key three theme were innovation, digital and speed. 

The Idea Lab (HKSTP) - Backed by Hong Kong Science and Technology Park Corporation, The idea lab is an incubator for early stage companies which providers local entrepreneurs with space, training, financing and networking to build their companies. They are focused on five technology clusters including Biomedical technology, Material and Precision Engineering, ICT(Internet Communication technology), Green Technology and Electronics. The five clusters build on three technology platforms - Health Ageing, Robotics and Smart Cities. 75% of the companies which go through HKSTP are in business which speaks to rigor of their selection process and support.Two big examples of HKSTP success include LALA Move with same day delivery in Southeast asia which got 160 M in Series C funding and Fano Labs - an AI/ML startup who is first to be backed by Horizon Ventures. Sonikure - ultrasound delivery and Lumos - safetly for bicyclist are also HKSTP noteworthy companies. They also shared one their annual awesome pitch competition called the Elevate.

"In Elevate Pitch Competition, you are literally in an elevator and you get 60 seconds to make your pitch to a worthy investor going up 100 floors. Your opportunity to disrupt!"

Ping An Finance Center- Ping An is 29th in 2018 on Fortune 500 is a top global insurance provider. We visited Ping An which is the world's fourth largest skyscraper after Burj Khalifa, Shanghi tower, Makkah Royal Clock Tower. The company impressed us with a solid 3D video production in which they shared a very futuristic vision for Shenzhen skyline. Ming Zhang, Chief Economist at Ping An shared a macro economic view of China and Ping An role. The House Prices in Chinese Tier One Cities is much expensive compared to other cosmopolitan cities around the world with Shenzhen on the top. He shared coping strategies for business in China -focus on market-oriented reforms and opening up of markets, not be over anxious on economic slowdowns, avoid big stimulus packages, extending working life, promoting immigration, containing finanicial system risk and building regulations with high transparency and efficiency. Ming Shared four steps per decade on how Ping An become small to big.

1. First Decade- Building institutional Platform & Exploring path for modern insurance
2. Second Decade - Focus on insurance development & exploring integrated financial
3. Third Decade - Strengthening integrated financial and exploring Fintech
4. Fourth Decade - Deepening Finance + Technology and Exploring Finance + ecosystems

Today Ping An spans across Insurance, Banking, Investments, Fintech and Health tech businesses.

60% of the top 100 Senior Management are from Overseas at Ping An. All from top international enterprises with an average 20 years of work experience.

Ping An invested more than 50 Billion RMB in the past decade on R&D on innovative tech in fintech, healthcare and AI. They have more than 23K technicians, 500+ Big Data Scientists, 4000+ global patents. They have increased internal competitiveness with tech like AI, Blockchain, Cloud tech, Big data and security and have exported socialized services like Finanicial Services ecosystem, Healthcare ecosystem, auto services ecosystem, Real estate services ecosystem and Smart City Ecosystem.

Lee Garden One - Rising above the streets of Causeway Bay on Hong Kong Island, Lee Garden One is at the center of a seven tower complex constructed over the span of 35 years. The tower floors are arranged as a triangle featuring two broad sides facing towards the nearby waterfront of Victoria Harbour and maximizing the expansive views of Kowloon. During our visit, we got to know about the history of the Hysan family (founders), green building elements and cutting construction tech including green curtain wall, green roof, Urban window, Hybrid cooling, Setback & Core Orientation, Sky garden, free cooling. The walk on the buildings roof top garden was constant reminder of importance of land on the island and in middle of scarcity we have innovation to make a mile go longer!

HK Mass Transit Railway - MTR is a major public trnsport network serving Hong Kong. It consists of heavy rail, light rail, and feeder bus service serving Hong Kong Island, Kowloon, and the New Territories. The system was super duper convenient with the octopus pass to get on and off. As soon as you arrive you are hooked on this and are a pro by end of day one! The company visit was a trip to their workshop where the magic happens and the new cabins, rails are assembled, tested and made. Their emphasis on quality, timely service and safety is part of their DNA and key consideration in making any decision, training, launches etc.

Chinese University of Hong Kong - CUHK delivers some awesome lectures bringing together top economists, industry leaders and professors. We learnt about the rapid evolution of markets in China over recent decades. 25 years ago companies came to china for cost minimization and world factory/labor market. Now China has transitioned from a world producer to the world's market everyone wants to get a piece. Shenzhen min monthly wage is $500. Bangladesh's monthly wage is $63 for a factory worker. Professor Kalok Chan gave the welcome note - "Made in China". He showed the amazing pace of Shanghai's changing skyline from agriculture to ultra urban in matter of few decades.

HK Market Opening- 200 years ago, HK was just a bunch of fishing villages. It was very far from China's vision for trade. Brits wanted to come to China and start trade. After long the only product they came up with was opium. 1800 were opium wars which lead to opening ports to trade conquered by Brits. This gave wave to entrepreneurship endeavors. Macao cannot handle international trade. HK has deep waters. Brit took HK. Portuguese took Macao. All toys were made in Hong Kong in 1970. 1980s, HK turned into a financial center.Early days absence of politics was an early advantage.

China shifts from World's producer to World's market.

Some proof point include where US has the highest no of Swiss watches by count, Hong Kong has the highest purchases of Swiss watches by value!

Opportunities in China for Western Businesses

"You can make billions of dollars in China. It is a very approachable goal especially Shenzhen!"

Made is China is a national sentiment and the government is propelling the agenda and become a self sustainable society by 2025. Nevertheless, there are areas to make a difference and add to the conversation in China. One of the opportunities we discussed was there is an inherent distrust of the Chinese consumers on pharma and baby care products made in country. This specific category of products, foreign companies could take advantage of even in the light of Made in china government push. For example Novartis invested $1 Billion in Shanghai Zhangjiang Hi tech park to develop a R&D unit to make products for the Chinese market.

HK and China - Today - One country two systems. HK keeps its free market, civil service, foreign policy, feds never been tried anywhere in the world. Freest economy on the world to communist party. HK still maintaining its own system. Fear is that China will take over and its inevitable. On the other side, for China maintaining HK sovereignty, economy and running it as is is great for GDP. Why do you want to destroy something like HK a functioning rule of law? Other than Singapore which other Asian nation is running like this beautiful place.

Key to HK being relevant in a modern workplace is to hold on it unique set of values and not be just another Chinese city because it is not one at the core of it.

As an optimist from the heart, I predict China -HK will still remain separate system but I do acknowledge, there is no guarantee.

How not be successful in China?

West is a very trust full society. A piece of paper west means a lot. Contracts hold value. People trust the system to work and protect individual and business rights if something goes wrong. In china, you have to spend a lot of time building trust.

Embedding in Chinese culture and build trust is key to having a functioning contract.

Get in business with a person who you met at a trade fair and take his word of it. Build the relationship. Very tempting to jump in. You have to work with investigators to find out who runs the business who are key partners. Unbelievable amount of profiling for background is the norm for a potential Chinese business partner. This lack of transparency has lead to booming investigator markets.

Rule of Law in China- China has law. Enforcement is an issue. Interpretations of law are different by jurisdiction and states. You can't criticize the president and the government. Private enterprises can be criticized.

Big question for China remains is can one be China be virtuous player in a dirty market?

 Cultural Immersion -

The Ten Thousand Buddhas Monastery - It is a mid-20th century Buddhist temple located in Sha Tin, Hong Kong. It was a fun trek over the hill with a steep climbing stairs all the way up. Its covered with Buddha statues on both sides of the stairs with some fun poses.

Happy Valley Racehorse Course - CUHK got us in an exclusive racing event in Hong Kong Sha tin racecourse with fantastic views of the race. We also went to the tracks and got a close up view. Horse racing was introduced in 1841 in Hong Kong and was only for the elite. Today this is pretty much mainstream in HK with seasonal races and mania around events.

Symphony Light show - On one of the nights, we happen to see the Hong Kong city laser show which lit up the city's skyline and happens to be the world's largest permanent light show. We enjoyed the city skyline with awesome authentic cuisines.

Victoria Peak - We to the Victoria peak where saw breathtaking views to Hong Kong. Its the highest peak in Hong Kong and a shopping mall attached to it. Its one of the biggest tourist attractions.

The Window of the World is a theme park located in Shenzhen. It has about 130 reproductions of some of the most famous tourist attractions in the world squeezed into 48 hectares . The Eiffel Tower dominates the skyline, the sight of the Pyramids and the Taj Mahal all in proximity to each other are all part of the appeal of this theme park. They looked so authentic!

I have come back in awe of life in HK and Shenzhen. This wouldn't have been possible without UCLA, Chinese University of Hong Kong, Companies who hosted us, Shangri-la, Shenzhen, Hyatt Hong Kong and my fellow fantastic classmates who made the trip such an unforgettable experience.

With- Beverly, Rakesh, Kristina, Niraj, Jay, Jaydev,Vikash,Savitur, Dr. Andrew de, Person, Sean, Gemini, Dhanalakshmi, Ashutosh, Orian, Edward, Chris, Rebecca Wong, Mark, Banty, Martin, Jessica Kwa, Leon, Geoffrey, Helena, Sarah, Patrick, Philipe,Tony #whyanderson #journeytothetop #leadership #asia #cuhk