The World is Flat

Thomas Friedman’s The World is Flat: A Brief History of the Twenty-First Century poignantly illustrates a changed (and still changing) global economic environment that the public seemingly has not yet fully realized. It is not only an appropriate read for the students within our class, but would probably serve as a good wake-up call for the rest of our country’s citizens. We are not secure at the top of the mountain and there’s no reason to believe that we won’t get passed by.

The flattening of the world that Friedman writes about refers to the removal of obstructions that have kept many of the world’s people segregated, suppressed, and uninformed. The “flattening,” fueled primarily by the technological and telecommunications boom of the last 25 years, has made it possible for countries that were lagging far behind in the economic race to pick up so much momentum that they can now run with the leaders of the pack. The long and short of the flattening concept is that nobody and no place can be counted out as either a competitor or an opportunity.

The book follows a linear path, making its claim early on, and then exploring it as the book continues. After providing evidence of the flattening through the analysis of ten forces that flattened the world, Friedman goes a little more in depth on the politics that played into the flattening. The book wraps up with discussion about who will and will-not be affected by the flattening and a bit of advice on how to avoid being passed by.

The 10 “flatteners” are a mix of major political events and corporate actions. Each flattener is analyzed in terms of how it removed some level of barrier towards globalization. Beginning in 1989 with the fall of the Berlin Wall, each flattener brings the reader closer to present day and closer to a flat world. Friedman discusses corporate cultures, outsourcing and in-sourcing, new software models, and the steroids which help fuel the fire.

Friedman presents his “triple convergence” in the following section. It combines new people (previously closed societies), new methods, and new technologies as three factors that have led to the flattening the world.

The convergence is followed by analysis of America’s role in the new flattened world. He describes the groups of people who have nothing to fear: the untouchables; however, through illustrating the groups that are safe, he underscores the groups which are not.

The book is rounded out by some guidelines for companies and individuals who wish to survive and succeed in the new world. He urges the reader to embrace the flat world and the new technologies, methods, and people that are guiding it.

On the whole I certainly enjoyed the book and would recommend it, but Friedman’s writings do requite a little bit of commitment from the reader. I read Longitudes and Attitudes, another book by Friedman, about two years ago and this book swiftly conjured up memories of his style. Without question, he has done his homework and knows his material; his arguments are well developed and supported by plenty of evidence. He is able to draw from history, politics, pop culture and business to paint a global picture that would otherwise be hard to see. However, he can become somewhat redundant.

I shudder to think about the number of times the term “flat” was used in the book. Many arguments seem to go on too long and there are chapters that had me aching for the end. Additionally, though I his arguments were all well supported, I don’t know if I can ascribe quite as much significance to some of his “flatteners” as he did. I wasn’t paying a lot of attention to the economic impacts of Netscape’s IPO while in high school; so perhaps I am not in a position to argue his reasoning without doing my own homework, but sometimes it seemed that he made events out to be overly important.

Be that as it may, there is a lot to be taken away from this book. It helps filter some of the noise out of the complexities of globalization and will provide you with appreciation for where we are, where we are headed, and what needs to happen for us to get there.

Flooding in China

Not sure if anyone's been watching the news lately... but China's been hit with some SERIOUS flooding recently. Apparently it's a cycle that hits every year. They specifically mention Fujian province as the hardest hit (just up the coast from where we'll be in Shenzhen)... they also mention Guangdong province (where Shenzhen is located). Their frequent battles with natural disasters have helped them improve their emergency response and an interviewee knocks the U.S. response to Katrina. In you're interested in viewing the CNN video, here's the link:

http://www.cnn.com/video/partners/clickability/index.html?url=/video/world/2006/06/11/grant.china.floods.cnn

The Companies and Places we will visit

ShenZhen Newly EverRise Electronics Co., Ltd.
Newley EverRise appears to be a manufacturer of power-related products. I recognize some of the components from within computers that I have worked on, though I could not tell you what their function is. The facility appears clean and modern, but beyond that there is not much that I can interpret. I am interested to see the size of the facility and learn why they have located in Shenzhen and what advantages they derive from being there.

BBK Cell Phone Factory
It appears that BBK produces more than just cell phones. On the website there are images of home theater components as well. Everything appears to be quite sophisticated and the webpage layout is similarly advanced. The phones I saw represent the top of the line products in the U.S. In visiting the cell phone manufacturing facility, I will be interested to see the level of precision needed to produce these devices, and the way in which these devices are handled as they move through the production line. I would like to learn a bit about the process they go through to sell their phones to service providers, and where they see the industry headed.

Yantian Seaport & Logistics Center
The Yantian Seaport should provide a startling contrast to seaports in the U.S. My family has been involved with the shipping industry for two generations and has told me that the ports outside of the U.S. really put ours to shame. The volume of material being shipped out of China has me expecting a more modern port, with more advanced handling of containers. I would like to get an idea for the layout of the port, and learn what steps they have taken and plan to take to increase efficiencies, reduce conveyance, and improve throughput. Are any Lean Manufacturing principles in place? Could they be utilized?

PWC
PWC is well known as one of the largest accounting firms in the nation. There presence in China is not unexpected, as they must surely see many of their clients positioning themselves there or operating there already. I would like to learn a bit about the differences in handling accounting in China, how the government structure affects their business, and what some of the difficulties they have faced have been. What Chinese firms do they compete with and how do they compare?

CBRE
CBRE is certainly expanding their operations in China. They have quite a few offices already and from what we learned in our pre-departure session with Bill Chillingworth, they will continue to expand. Since Shanghai has a large financial district, I would be interested to know if they are conducting only real estate business there, or if they also use it as a hub for strategic planning. I would like to learn a little more about how they analyze Chinese markets as compared to those in the U.S., and if they are able to utilize any of the same models from other countries in China. My suspicion is that they have had to adapt much of what they do in order to be successful here.

Shanghai Urban Planning Exhibition Hall
The Urban Planning Hall should provide us with fantastic background for our trips to CBRE. The City and Regional Planning course I took in conjunction with the Bank of America Low Income Housing Challenge earlier this year really opened my eyes to urban planning and its importance to economic growth and prosperity. The rate at which China is expanding only underscores this importance. At the hall, I hope to learn how China tackles this issue and how their methods differ from those used in the U.S.

HSBC
HSBC, like most companies we have learned about, is expanding its business in China. A recent press release posted on its website denotes that they recently opened another sub-branch in Shanghai. Clearly HSBC sees great opportunity in China, but I am curious to know if they are more apt to focus on business customers since the Chinese people do not readily incur the massive levels of debt that we take on in the U.S. If they are more business-customer-oriented, I would like to know what they consider their strengths, and why they think I should choose them if I were to take my business into China.

RR Donnelley
RR Donnelley provides printing solutions for businesses around the globe. Their services range in size and scope and incorporate batch jobs and long term contracts. They have probably moved into China because of the potential for cost savings and sales growth. As China continues to expand, RR Donnelley sees a huge market for their products and having a foothold in China will help they expand at the rate of China’s economy. I am interested to know how relaxed environmental policies in China affect their business and what steps they take to decide how to handle environmental concerns. I would also like to know if their competition in the region forces their hand on some of these issues.

Microsoft Global Technical Service Center
The MS GTSC provides first tier support for all of Microsoft’s software, products, and platforms. I assume they were attracted to Shanghai by the number of highly educated workers available, new infrastructure, proximity to manufacturing, and potential for regional expansion. Having a major division located here will help Microsoft’s name in the region which is important given the major intellectual property battles that will almost certainly have to be fought moving forward. I am interested to learn about how Microsoft passes issues through their chain and back up to higher level groups located at different global offices, and how the different divisions interact with each other.

Carrefour
Carrefour is the second largest retailer in the world trailing only Wal-Mart. Headquartered in France they now have stores all over the globe. They appear to have been the first company to merge a supermarket with a department store. I expect that they are hoping to expand throughout China and become the go-to location for low prices and large selection. I will be interested to who they see as competition and what inherent advantages their business model gives them in the Chinese market. I also imagine they may be in China to introduce products manufactured in China to the rest of their global stores.

Shanghai Museum
The Shanghai Museum features over 120,000 pieces of ancient Chinese art. The scope of the collection is appropriate given the scope of Chinese history. The new museum built was built during the 1990’s in the center of the city. This clearly makes it accessible to residents and visitors, but at the heart of the city it is also a powerful reminder to all who visit about the breadth of Chinese history and power. I am interested to learn more about Chinese history while visiting the museum and to learn what exhibits travel and to where.

Suzhou Industrial Park
Though it was difficult to garner any insight about the park from the website, the images do tell me a little more about what to expect. The area looks quite a bit larger than I would have expected. It also appears to be modern and comfortable. I am interested to learn what other types of industries are located in the park and what features attracted the owners to this location when they moved their.

U.S. Commercial Attaché
The U.S. Commercial Attaché provides information and assistance to help businesses succeed within China. They have programs to help companies with establishing themselves in China, promoting their business, protecting their business, shipping out of and into China, etc. They also conduct seminars and facilitate networking. I hope to learn about the changes that they have seen take place, and where they see U.S./Chinese business dealings heading. How much has China opened up to the world and is that trend continuing?

CBRE
Having already heard a little bit about CBRE from our predeparture session, I am very excited to visit their offices in Beijing. Clearly there is enormous potential in the planning and development of many major cities in China. CBRE has wisely positioned their self into the Chinese marketplace to garner understanding of how the Chinese real estate market varies from our own, and to be able to act swiftly and surely to maintain a competitive advantage. The upcoming Olympics are certainly going to illicit more investment in a short period of time than would otherwise be seen and will hopefully provide a glimpse into how other cities will be developed. I would like to know what level of vacancy CBRE sees in China and how they adapt their methods and models to draw comparisons to the US market, if at all.

Sun Microsystems
Though I was unable to read the information on the site, there were two terms in English which jumped out at me. One was ‘java,’ Sun’s development platform which is often used for web-based applications. The other was ‘Solaris 10,’ Sun’s latest operating system. The company is probably in China for a various reasons. Certainly there is plenty of intellectual capital to be utilized in China, and at a lower cost than in the U.S. They also may be looking to gain a foothold in the Chinese marketplace with their operating system. Much of Eastern Asia is already using Linux and other alternative operating systems, so Sun probably sees an opportunity to take market share away from Microsoft and other competitors. I would like to know if Sun believes that Microsoft can be toppled from their perch atop the OS marketplace. And since Sun also develops workstations that their operating system runs on, I would like to know how much of an advantage they feel that gives them.

Peking University
Peking University is a large university with a strong focus on research and diversity. They have a giant number of programs available which include sciences, management, education, and humanities. They are aiming to be among the best universities in the world, though they do not say what they are doing to get there. The photos provided of the campus help paint the picture as a much larger school than Cal Poly or CSU Monterey Bay. I expect it will feel a bit more like UC Davis in size. I will be interested to see how Peking University views itself in comparison to other schools within the county. I would like to know how competitive the schools are with each other and how that manifests itself.

Tsinghua University
Tsinghua University appears to be a top notch school located on beautiful grounds in (near) Beijing. The school’s presence on the web is well organized and professional – and that’s just the English site. They tout ‘great statesmen’ that came from the university and discuss the strong support they receive from the nation. It leads me to wonder how much influence the government maintains over higher education in China. Obviously students have been at the heart of some social unrest in China and I would be interested to know if that is a trend that is increasing or decreasing. Also interesting was the news page that initially shows up for the English site. It features achievements in math and medicine which, in my mind, underscores the Chinese focus on science and the U.S. shortfalls we have seen of late.

Panjianyuan Antique Collection Market
The Antique Collection Market was started as a flea market almost 15 years ago. It has now grown into a giant marketplace where businessmen from all over China maintain stalls selling arts & crafts, second-hand goods, and historical items/replicas representing a wide array of Chinese ethnic groups. The market is comprised of more than 3000 stalls covering nearly 5 acres of land. I am looking forward to seeing items representing different aspects of Chinese culture, and learning a little about the many ethnic backgrounds found within China.