This is the second part of a guest post by Onutase Dehenre, a member of the Texas MBA at Dallas-Fort Worth class of 2013, who recently took part in a global trip to China as part of the Texas MBA Program.
My favorite visit of the trip was first on the agenda: a visit to Anadarko Oil, an upstream independent. While I have an industry bias, what wowed many of us about this company briefing was their rather blunt assessment on capital investments in China. In short, one must always be aware that the government reigns supreme when you have a joint partnership (or any sort of business in China, for that matter). They have goals and visions that will likely run contrary to the capitalist concept of maximizing value. In these cases, our usual models for NPV and terminal growth fall short…an American company may only be running the show and making great profits for a couple of years before control is shifted over to the host-country partners. Fascinating stuff, as are the very loose contracts that set up the business arrangements. Interestingly, I started to cross reference the issues we were discussing with our curriculum to date: Accounting (via their P&L), Finance (via their WACC and country risk applications), Stats/Risk Management (via their oil exploration process), and the ethics portion of this class. Just to be able to fully understand the topics within a synthesized and real-world environment was just proof that I made the right educational choice.
Here’s another fun fact we learned from the Anadarko oil team: Drinking games are a form of corporate bonding between teams. We were told that when there are company dinners, each team (one from the owning company and one from the local company) will submit a roster of folks that are currently planning to attend. Based off the list, rosters are then re-evaluated and players switched so that each team increases their chance of winning by out-drinking the other. Craziness, but apparently that goes a VERY long way towards relationship building in the Chinese culture. Who knew…
Pollution – yes…it exists, in spades in Beijing. We got some of our best shots of it from Anadarko’s headquarters. It’s clearly a conundrum…the massive energy output fuels their economy (and some would argue that of consuming nations), but at what cost? Part of the Global Studies course involved setting up a hypothetical business opportunity in China, and my team chose personal pollution mitigation. It’s clearly a HUGE opportunity, and I’m glad I only had to spend a couple of days over there.
Ok…on to Marketing! We got another outstanding presentation on how to market to the Chinese consumer from Madison-Ave darlings Ogilvy and Mather. Having just completed our Marketing final, the concepts and tactics were thoroughly linked to what we’d just learned. Very educational stuff on the how the Chinese consumer thinks, and as one would expect, it can be at odds with the Western world. Here’s another fun fact: the average consumer puts roughly half of their income into savings! Clearly, advertising to that consumer requires different messaging than what we’re used to.
One of our teachers, Dr. Chen, plays the zheng, a traditional Chinese instrument, in one of BOCO’s relaxation rooms.
On Thursday, we got to visit our first private Chinese company: Bright Oceans Inter-Telecom, otherwise known as BOCO. This is a conglomerate of different businesses, with a technology underpinning. They’re into software, road-building, telecommunications, and a lot of other things. We got a tour of their headquarters, as well as a very informative video on what it is their company does, and plans to do. Ironically, they reminded many of us of Microsoft as we toured their area, with rooms for working, coding, meditating, stargazing, etc.
In the afternoon, we got a visit from the CEO of Coldwell Banker Real Estate, China. As one can imagine, there’s great demand for real-estate, with all of the growth taking place. Although some of this demand is local, lots of the real-estate needs are by foreign companies looking to set up shop in the Chinese market place, and having CBRE experts on the ground facilitates that. This was another key piece of the “how” to enter a Chinese marketplace, and once one combines the foreignness of the need with the complexity, a huge need for Real Estate services can be seen. Again, another great high-level presentation of on how to take advantage of the exciting growth in China.
Was woken up at the unholy hour of 5:30am by the tailor. I guess I shouldn’t complain. But it’s early. Why was a tailor waking me up, you ask? Well, to get customer-tailored suits made, of course. OCR is right around the corner, and although I might not have that perfect GPA, I can at least be Dapper Dan, at a very inexpensive price.
Finally! Visited the Great Wall. “Unreal” is about the only world that comes to mind. You hear all those legends about being able to see it from space and all, but it’s just massive up close. After trying to imagine the manpower and resources that must have gone into building this thing, the only thing I could think of was that it has to be the mother of all CAPEX projects. Try setting up that DCF model. After that, we got lunch at a Jade restaurant, and got to see the Ming Tombs before having one last dinner together, and then preparing for the journeys home.
However, there’s one last tale to be shared, both embarrassing and of a pedagogical nature. Apparently some of our Houston brethren arrived a little early, and decided to check out the night life. Some fellow party-goers asked them to go drink with them, and sure enough, a good time was had by all, with drinks flowing freely. However, the bill came due, and here the story gets fuzzy, but the amount due was either 2500 Yuan, or $2500 dollars, payable in full by our brethren, an unconscionable amount no matter what was due. The story spread like wildfire, with sheepish grins abound, but the lesson: if someone asks you to go drinking with them, be very mindful, as you’re easy prey. Culture shock at its finest.
With that, wheels up. Can’t wait to get back!