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IXP – China

“There are several paths to success.” That is my key learning from the China IXP this January that proved to be an amazing learning opportunity and an extremely dazzling experience. I was hooked on the charm of the orient.

I went on the China IXP because I was attracted by their economic success and the enigma of being able to achieve it in a political and cultural setting so different from the Western model we’re so used to revering. I went seeking a learning opportunity from one of the world’s most successful emerging economies that might be relevant to where I’m from. I was happily surprised by what I found.

Through a series of company visits and talks with business executives and leaders, I started to see and understand the real China.

Doing Business in China: Business & Politics
Perhaps my biggest learning is how business and politics are intertwined so closely in China. The Communist Party of China (CPC) may be exercising excessive limits on personal freedoms by Western standards. But its legitimacy is rather derived from the economic prosperity it successfully strives to achieve for the people. Entrepreneurship is highly encouraged on its different levels, ranging from letting loose the bazaar seller trying to promote the fake Armani shirts to supporting those establishing international schools or strategic industries, or promoting foreign investments worth billions. The main question is whether the business objectives and outcomes are aligned with the CPC vision for the country. Does it bring benefits to the people without posing a threat to the party’s ideals? Bureaucracy comes to an end once there is top-level support for your business.

This is why there was a consensus that the value added from having a CPC member in your business is indispensable. They’re essential to understanding where the policy is heading and act as your ambassador in the party. Personal connections are worth a lot. There’s a renewed focus on Chinese ties when hiring at top levels. A degree from Tsinghua or Peking universities, China’s elite schools, is highly esteemed even when complementing Ivy League degrees.

But isn’t government regulation what is now being asked for here in the world’s pinnacle of capitalism? Isn’t the network a big reason many of us opt for Ivy League schools? Perhaps the driving ideals are different and the comparison is more like that of apples to oranges. But my point is that the above is not as intimidating as it looks like from the outside.

A particularly interesting visit was that to Google China. They were explaining how they managed to make peace with the government. If you avoid the taboos, you’re safe to go. A couple of days later we got the clash news through emails from our friends back home. I guess the ideals of a company that is founded to empower people through free exchange of information were too much of a contrast to the status quo.

An insightful talk at JWT, the global marketing communications agency, shed some light on the main drivers of the Chinese consumer, the impact of Confucianism, and the inherent need for protection and status projection. They were stressing how the Chinese people are becoming more modern and internationally connected but not Western.

We also got the chance to visit some Chinese flagship companies. The display galleries of Lenovo boasted their new laptop prototypes that contrast with the old-looking ThinkPad models they inherited from IBM. Executives at SMIC, the semiconductors fab, were explaining the extent of government support needed in such a critical industry, especially given that the main competition is in Taiwan. Finally, some of the quotes hanging on the walls of the Wanxiang Auto Parts factory stating “Factory prosperity, our glory; Factory decline, our disgrace.” capture the essence of the Chinese drive for success.

Cities, Culture & Beyond
An understanding of China could never be complete without touring its cities. Beijing is definitely the cultural and historical center. Historical landmarks we visited like Tiananmen Square, the Forbidden City, the Great Wall, the Hutongs and the Summer Palace contrast heavily with the fabulous modern architecture rising over its skyline that continued to awe us. A unique scene, however, was to be found in the Temple of Heaven. Through the early hours of the morning, elders and youngsters gather in its surrounding park exercising, ballroom dancing, playing different games or simply singing!

Shanghai was a truly cosmopolitan city. A mix of Chinese & European architecture shapes the older buildings, and again some of the world’s most fabulous modern high-rise towers adorn the skyline. But it is the extreme modernity of its people and extravagance on display in many forms that set it apart. The Shanghai Acrobatics show was an excellent representation of the city’s modern twist.

Hangzhou, the smaller city by the beautiful lake, was the tour’s relaxing spot. Simply picturesque!

I’m surprised to say that the culinary experience was just exquisite. My fear of trying the bizarre got me to carry some canned tuna to save the day. I was so mistaken! We were graced at every meal with a broad range of delicacies that were truly delicious, to say the least, and were accompanied by authentic Chinese hospitality. The abundance of fancy restaurants only makes it more difficult to choose from them.

And make no mistake. There was no compromise on the nightlife either. China had some of the world’s most amazing clubs that rocked till the early hours of the morning. The spectrum varies from the energizing Karaoke experience to the Chicago band playing amidst the gilded opulence of this luxury club designed by Philippe Starck.

I have come back in awe and admiration. Culture aside, what is it that the masses really need and want if a choice is to be made: is it political freedom or economic prosperity? The marriage of business and politics, that long debated topic; is it necessarily a curse? Is a successful authoritarian regime sustainable with the withers of time and change of leaders? Those were just a few thoughts I came back reflecting upon.

Author’s Biography
Charle Alfy is an Egyptian who believes in the individual’s influential role in society. Learning from the world’s aggregate pool of knowledge drove him to HBS and on to the China IXP.

February 16, 2010
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