first stop: beijing, china
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First Stop: Beijing, China. Presented by Meredith Mao & Josh Rosen April 27, 2005. Tonight’s Agenda. Beijing Company and Embassy Visits Lenovo Group Limited American Embassy in China Facts & Figures History Today’s Beijing Map of Beijing Culture Focal Points Regional Cuisine Beverage - PowerPoint PPT PresentationTRANSCRIPT
First Stop: Beijing, China
Presented by Meredith Mao & Josh RosenApril 27, 2005
Page 2
Tonight’s Agenda
• Beijing Company and Embassy Visits
– Lenovo Group Limited
– American Embassy in China
• Facts & Figures
• History
• Today’s Beijing
• Map of Beijing
• Culture
• Focal Points
• Regional Cuisine
• Beverage
• Language
Page 3
Who is Lenovo Group Limited?
• Largest PC maker in China (3rd largest in world)
• Primary Products and Services include:
– Servers, handheld computers, imaging equipment, mobile phone
handsets, manufacturing and IT integration support services
– December 2004: Agreed to purchase IBM’s PC operations for
approximately US $1.75 billion
“Leveraging on the excellent environment created under China's reform and open door policy, together with the encouragement and support of government leaders and people from various sectors of the community, Lenovo Group has been able to develop rapidly. Today, many people in China and the Asia-Pacific Region agree that Lenovo is the typical model of an high-tech enterprise of the Chinese people, which is becoming more matured and getting stronger everyday.”
- Liu Chuanzhi, Lenovo Chairman
Page 4
What are Lenovo’s products?
• Principle businesses classified into 3 groups:
– Corporate IT Products: Commercial desktop PCs, Notebook
Computers, Servers, Peripherals (Laser printer, scanner, etc.)
– Consumer IT Products: Desktop PCs, Notebook Computers, Mobile
Handsets, Inkjet Printers
– Other Services: Manufacturing and IT integration support
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5,000
10,000
15,000
20,000
25,000
Mil
lio
ns
of
HK
D
2002 2003 2004
Total Revenue (Millions of HKD)
Total Corporate IT Consumer IT Handheld IT Other Services
Fiscal Year Ending2002 2003 2004
Revenue (Millions of HKD) 20,853 20,233 23,176 Revenue (Millions of USD) 2,673 2,594 2,971 Net Income (Millions of USD) 134 130 135 Conversion factor: 7.8 HKD = 1 USD
Page 5
How geographically concentrated is Lenovo?
• In 2004, nearly 99% of Lenovo sales were generated in China
• Based in Beijing with majority shareholder (~60%) Legend Group
Holdings controlled by the Chinese government
– PC assembly lines in Beijing, Shanghai and Huiyang (Guangdong
province) with a total annual production capacity of about 5 million
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Mil
lio
ns
of
HK
D
2002 2003
Revenue by Geography
China Europe Asia-Pacific North America
Page 6
How did Lenovo grow to become so large?
1984: Established and began the distribution of computers such as IBM
and AST, as well as HP printers and peripherals
1989: Began the design and manufacture of motherboards and provided
systems integration services for large corporate and government
clients in the PRC
1990: First company to introduce the home computer in the PRC
1994: Listed on The Stock Exchange of Hong Kong
1998: The one millionth computer left the production line, Best selling
brand in the PRC
2004: Agreed to purchase IBM PC operations for approximately US
$1.75 billion. Transaction expected to be completed during Q2
2005. Pre-acquisition employment exceeds 11,400.
Page 7
What’s ahead for Lenovo? (Discussion topics for visit)
Strengths– Dominance in Chinese market
– Strong Branding
– Superior Distribution and Manufacturing Operations
Weaknesses– High concentration in low-margin business
– Late entry into handset business (market share <2%)
Opportunities– Increased capability in Notebook PCs
– Will benefit from strengthening Chinese dollar relative to US dollar
– Low Cost PC market and alliance with AMD
Threats– Lack of technology capabilities in handset marketing
– Integration risks with IBM
– Anticipated PC price wars and declining handset prices
Page 8
Tips & Tricks …
Key Takeaways:
• Carry Toilet Paper With You
• Consider Bribery Where Necessary
Created in February 2000, The Bathroom Diaries rates 6000+ public bathrooms in more than 100 countries, providing a wealth of information to both travelers and urban dwellers. The largest enterprise of its kind in the world, The Bathroom Diaries was founded and is operated by Mary Ann Racin, an entrepreneur whose professional background is in education and international finance. http://www.thebathroomdiaries.com/china/beijing.html
Page 9
What is the American Embassy in China?
• Located in Beijing and contains 4 supporting Consulates
• Serve American business and travel interests in China and as an
education resource for Chinese looking to learn about American
economy, politics, and business practices
• Divided into many, many Departments
Clark T. Randt, Jr., American Ambassador to China US Consular Districts and Embassy Location
Page 10
So, what do all of these departments do?
• US Citizen Services
– Consular services (passports and birth registrations), Information and
assistance in a number of other areas (tax and voting information,
marriage, adoption, etc.)
• Visa Section
– Application procedures and requirements for qualifying for visas
• Information Resource Center
– Provides reference and research services on U.S. policy, legislation,
and social issues to Chinese seeking information about the United
States
– Subject emphasis is on rule of law, economics and trade, regional
security, the environment, and U.S. society and values
Page 11
So, what do all of these departments do?
• Press, Culture & Education (Public Affairs)
– Manages the United States government's official information,
educational and cultural exchange activities in China
– Handles all public affairs matters and media relations concerning the
Embassy, the United States government and its policies toward China
– Coordinates and supports U.S. cultural and educational activities in
China
• Environment, Science, Technology & Health
– Works to improve understanding and cooperation between the Chinese
and U.S. governments on environment, science, technology and health
issues, while managing cooperation between the two countries under
the Sino-U.S. Science and Technology Agreement
Page 12
So, what do all of these departments do?
• Political Section
– Reports on topics from human rights to political changes in the US
leadership
– Supports the many high-level visitors that come to Beijing each year
• Economic Section
– Providing reporting on bilateral trade issues such as market access and
intellectual property rights, macroeconomic policy, sector specific
government policies, and other topics such as labor issues
• Foreign Commercial Service
– Assists U.S. companies with U.S. exports to China, emphasizing help for
U.S. small to medium-sized enterprises (SMEs)
• Foreign Agricultural Service
– Promoting the sale of US agricultural products in northern and eastern China
Page 13
Recent Developments (Discussion topics for visit)
April 14 2005 – Issue warning of possible anti-Japanese demonstrations
throughout China: April 16th & 17th, May 1st – 4th
April 11 2005 – Visit by Assistant Secretary of Commerce for Market
Access and Compliance of the United States, William Lash
– “Issues related to the protection of U.S. investments and intellectual
property rights”
March 2, 2005 – Visit by Assistant Secretary of State for Consular Affairs,
Maura Harty
– “Underscore the efforts that US has made in the post-September 11th
world to ensure that America continues to be and is once again seen to be
the open and welcome society”
Feb 4, 2005 – Speech on the development of China's Service Sector by
Craig Allen, Senior Commercial Officer
Page 14
Beijing Facts & Figures
• Beijing means “Northern Capital”
• Capital of China (except for 1928-49 during Nationalist period)
• Also referred to as “Peking”
Population 13.9 million
GDP US$43 million (2003)
Time Zone 13 hours ahead of Durham, NC
Exchange Rate 1 Chinese Yuan = 0.1208 US Dollar
1 US Dollar = 8.2765 Chinese Yuan
Language Mandarin (local dialect is Beijinghua)
Weather May average high 68.1°F (20.1°C)
Page 15
History: A snapshot of Beijing’s past
─ 500,000 BC: Peking Man inhabits Beijing region (fossils unearthed b/w in early 1900s)
─ 1045 BC: Earliest Chinese record of settlements in Beijing area
─ AD 938: Beijing (Nanjing, “Southern Capital”) is auxiliary capital of the Liao dynasty; enclosed by fortified walls
─ 1153: Beijing (Zhongdu, “Central Capital”) is capital of Jin dynasty; city walls expanded
─ 1215: Army (led by Genghis Khan) sacks Beijing (Zhongdu), marking beginning of Mongol era; Yuan emperor transforms city (exemplifying urban planning) & renames it Dadu, “Great Capital”; Beijing is the capital of the entire country
─ 1368: Zui Yuangzhang seizes Beijing (Dadu), founds Ming dynasty; capital moved elsewhere and Dadu renamed Beiping; third Ming emperor moved capital back to Beiping, which was destroyed, reconstructed, renamed Beijing, “Northern Capital”; basic grid of city designed, city wall reshaped
─ 1644: Beijing falls to Manchu during a peasant uprising & Qing dynasty is founded; Taiping Rebellion (1850-68); Second Opium War (1860); Empress Dowager Cixi bequeaths power to 2-year-old Puyi
─ Turbulence (e.g. invasions by nomadic tribes) in areas surrounding Beijing*
* Numerous dynasties existed during this time, as well as periods when the site surrounding Beijing was invaded by or controlled nomads
Page 16
History: A snapshot of Beijing’s past (cont’d)
─ 1911: Revolution brings Nationalist Party to power, Sun Yat-sen declared president of Republic of China; capital moved to Nanjing in 1928 and Beijing renamed Beiping; communists and National Party form alliance, embark on Northern Expedition (led by Chiang Kai-shek) to reunify China and take power from warlords (1926); Chiang slaughters communist allies in Shanghai (1927)
─ 1937: Japanese occupy Beijing (Beiping), but defeated in 1945 by communists
“Mo
der
n E
ra” ─ 1945: Communists, led by Mao Zedong, defeat Nationalist Party, found People’s
Republic of China; Beijing is capital again; historical destruction (1950s); Cultural Revolution launched (1966-76)
─ 1980s & 1990s: Restoration efforts begin and new construction takes off
─ 1989: Tiananmen Square demonstrations
─ 1997: Jiang Zemin takes power; privatization of many industries beings
─ 2001: Beijing chosen to host 2008 Olympic Games
Page 17
Today’s Beijing: Undergoing transformation
• Tremendous growth and expansion
– Examples: Increased tourism, increased experimentation in the arts,
exploding fashion industry
• Development underway to prepare for the 2008 Summer Olympics
– US$181.4 billion towards Olympic-related development
– Considerable investment in transport infrastructure (roads, subway)
– Environmental measures for cleaner air & greener spaces
• However, there are downsides …
– Historical buildings torn down for new development (over 100,000
residents relocated); yet urban renewal projects unable to meet needs of
growing population, resulting in cramped living within the city and
movement to satellite towns
Page 18
Where in Beijing?
Hotel
ForbiddenCity
AirportGreat Wall
US Embassy
Source: www.beijingtrip.com/beijingmap.html
Page 19
Culture: Today’s cultural renaissance in the arts
• Government has made an effort to preserve “damaged
treasures” & revive works of traditional artists
– Revival of Peking opera (jingxi)
– Resurgence of calligraphy and Chinese-style painting
– Growing market for antiques
• Innovation, creative expression transforming culture
– Portrayal of “realities of modern day China” e.g. rapid
modernization
– Experimentation with contemporary forms (e.g. American-
style pop art)
– Beijing considered as China’s “rock music mecca”
Page 20
Focal points: Top sights to see
Tiananmen Square• World’s largest public
square • Site of Gate of Heavenly
Peace, formerly largest of 4 gates of Imperial City Wall; Mao proclaimed People’s Republic from this gate
• Pass through Tiananmen on way to Forbidden City
Hutong (alleyways)• Formed by lines of
courtyard homes (siheyuan)
• Originally prominent residences (dating as far back as Yuan dynasty), but conditions worsened during period of Republic of China
• Many hutongs have been destroyed to make space for new development
• Nearly all run east-west to ensure that main gate of siheyuan faces south
Great Wall• Construction of “original”
wall began over 2000 yrs. ago when country was unified; took 10 years to link the separate walls built by independent kingdoms
• Subsequent dynasties continued to strengthen and expand the wall
• Extends for 3,000 miles; many parts have crumbled, but some sections restored
Forbidden City• Imperial palace of Ming and
Qing dynasties (24 emperors over 500 years)
• World’s largest palace complex (more than 9,999 buildings)
• Outer Court for ceremonial and administrative activities; Inner Court for royal family
Page 21
Focal points: Top sights to see (cont’d)
Summer Palace• Destination for royalty to
escape summer heat in Forbidden City
• Features palace temples, gardens, pavillions, lakes, corridors
Beihai Park• Park with lakeside temple
architecture• Opportunities to relax (rent
a rowboat, watch calligraphers or tai chi practitioners, stop for a drink or snack)
Jingshan Park• Highest point in Beijing City• Recommended for good
views, especially at night• Made of earth removed to
create palace moat• In the early morning on
weekends, can see groups of elderly Chinese gather to sing
Temple of Heaven Park• Exemplifies Ming architecture
(built 1420 AD)• Symbolism integrated into
layout and architecture (e.g. ancient belief that “heaven is round, earth is square”)
• Considered sacred ground where emperor performed major ceremonial rites; today, still an important meeting place
Page 22
Regional Cuisine: Food for thought
• Characteristics of Beijing cuisine (“northern cuisine”)
– Preference for warm, filling dishes
– Wheat-based noodles, buns & dumplings preferred over rice
– Vegetables limited: mostly cabbage, turnips, yams, potatoes
– A lot of freshwater fish & chicken
– Cooking styles: Steaming, baking, “explode frying”, Mongolian BBQ,
Mongolian hot pot
• Most famous dish: Peking duck
• Popular snacks: tripe, filled sausages, fried liver, lamb kebabs,
special breads, “rolling donkey”
• Desserts: Caramelized fruit, “Eight Treasure Rice”, steamed buns
filled with sweet bean paste
Page 23
Beverage: Another round, please!
• Most popular: Tea
• Second most popular: Beer (best selling labels shown below)
– Yanjing Beer and Beijing Beer are locally brewed, as is Wuxing beer
Green tea Black tea Wulong (semi-fermented) tea
Tsingtao Beijing BeerYanjing Beer
“watery and unremarkable”
but extraordinarily cheap”
Page 24
Language: Repeat after Dorothy …Hello ni hao
Goodbye zaijian
Please qing
Thank you xiexie
You’re welcome bukeqi
Yes shide
No (don’t have) mei you
No (not so) bushi
My name is … wo xing …
Do you speak English? ni hui shuo yingyu ma?
I understand wo tingdedong
I don’t understand wo tingbudong
Could you please ...? ni neng buneng ?
I’d like a/an … wo xiang yao …
I’d like to buy a/an … wo xiang mai …
How much is it? Duoshao qian
I want to go to … wo yao qu ...
Where is the …? … zai nali?
I’m lost wo milule
Toilet (restroom) cesuo
Restaurant fanguan
Hotel jiudian
Can I buy you a drink? Wo kebukeyi mai yi bei jiu gei ni?
Do you want to dance with me? Ni keyi he wo tiao wu ma?
Thanks Dorothy!!
Page 25
Page 26
Sources
• www.beijingtrip.com
• www.frommers.com
• www.travelchinaguide.com
• www.x-rates.com
• www.buyusa.gov/china/en/
• www.hoovers.com
• www.ibm.com
• www.lenovogrp.com
• www.usembassy-china.org.cn/
• DataMonitor Report – Lenovo Group Limited, December 2004.
• Hoovers Database - Lenovo Group Limited
• Lenovo Group Limited Annual Reports, 2002 – 2004
• OneSource Database – Lenovo Group Limited
Page 27
Suggested Questions to Ask During GATE Visit to:The American Embassy of China (Beijing, China)
1. What are some pressing issues that the Embassy currently faces?
2. How much coordination exists between the multiple departments within the Embassy? Are they structured more as
independent or interdependent entities?
3. Talk with us about the members of the Beijing community that rely on the Embassy to learn about economic,
political, social, cultural, etc. practices in the US. What types of officials/citizens are most commonly
represented?
4. How do you foresee the Embassy changing over the next 5 years as China become more and more of an economic
powerhouse?
5. Overall the American Embassy in China website contains a significant collection of online political, economic,
cultural, and financial resources as well as detailed contact information for those that wish to seek additional
information. However, while many of the resources are superb, the website is difficult to navigate. Has there
been any initiative to improve the design/structure of the site?
6. Talk to us about some of the major changes in the Embassy since Bush was elected (Randt was named
ambassador) US President in 2000.
7. Tell us about how the Embassy would help a US based company interested in outsourcing manufacturing
operations to China assess the potential human rights concerns that foreigner investors may have.
8. We learned that on April 21, 2005, Deborah Seligsohn, Counselor for Environment, Science, Technology and
Health, spoke at the Embassy for Earth Day 2005. Can you tell us about how the US EPA and Chinese State
EPA are working together to reduce air pollution and improve water protection?
Page 28
Suggested Questions to Ask During GATE Visit to:Lenovo Group Limited (Beijing, China)
1. How do you plan to position your Legend brand that has been incredibly successful in China as well as within the
Asia-Pacific region as compared to the IBM/Thinkpad brand?
2. Have you considered adding/moving any of your manufacturing locations to areas outside of China? Are lower cost
areas for production available and feasible?
3. Talk about the cost advantages that you have over US-based competition (e.g. Dell and HP) due to the fact that (a)
your operating plants are owned by Lenovo and contained within China and (b) your close connection with the
Chinese government.
4. Given that worldwide PC prices and most component prices (inputs) are declining rapidly, how will you continue to
maintain revenue and profitability growth?
5. Tell us about the opportunity that Lenovo faces in the handset business.
6. When you choose to pursue a strategic alliance with a company such as Microsoft or Intel, what are the key
considerations?
7. Describe some of the challenges faced within integrating the Lenovo culture with the IBM culture and how you plan
to address these.
8. Customer service operations is one of Lenovo’s greatest strengths and differentiators in the Chinese market. Will
you strive to achieve a similar level of service in the US in other areas of where IBM products have highly
penetrated the market?
9. We’re read that the integrated (Lenovo/IBM) PC Division will be headquartered in NYC, NY. What changes does
that mean for this Beijing location?
10. What do you foresee will be some of the key technological developments affecting the PC industry in the next 5
years?