International MBA Program
Internship Web Journal
Laura Edgerton
IMBA Class of 2008
The Maryland Center, Shanghai, China
laura_edgerton@moore.sc.edu
Journal Entry #3 - June 1, 2007:
March and April
were by far the best months of my internship. Every day we were meeting with different high-powered
executives in some of China’s most successful companies, getting treated to fancy lunches,
exchanging gifts, and most importantly, building “guanxi.”
For anyone who hasn’t studied the business culture of China, guanxi is the Chinese word that can be most closely translated as relationships, though it goes far beyond that in China. Here it is traded almost as currency, with business cards as the physical manifestation of the currency. You don’t go anywhere without your business cards, and the process of exchanging them is very formalized. You must present your card with both hands, bowing slightly, and in the same manner accept your new acquaintance’s card. It is very important to make every appearance of studying the card closely before placing it somewhere safe as if it were a $100 bill. People here keep whole bookshelves of business cards, neatly catalogued in albums for future reference. Once you have met someone and exchanged cards, it is a good idea to send a follow-up email expressing your delight at making their acquaintance; then if you need anything from them in the future, you have established the groundwork to contact them again and leverage your new guanxi to ask for favors.
When we set about arranging the meetings for the bank rep, I first learned the importance of guanxi, and what the lack of it can mean. If we called a company with which we had no previous contact, it was very difficult to get them to agree to a meeting. Making it even more challenging was the fact that the bank rep was not a very high-ranking executive in the bank. He was basically a salesman in charge of mid-sized markets. When requesting a meeting in China, it is very important to properly align the rank of the two people meeting, i.e. a banking officer would not normally request a meeting with the CFO of a company. But that’s exactly the kind of person our client wanted to meet with, so we had to pull out all the stops and use all the guanxi at our disposal to finagle the kind of meetings that the bank rep would find worthwhile.
In the end, the list of companies we visited with included the largest steel-maker and biggest manufacturer in China, three of China’s four biggest shipping companies, China’s top oil producer, and two of the top four automotive companies in China. We got to tour the island factory of ZPMC, the world’s biggest crane manufacturers, and see how they welded steel structures underwater. We crossed one of the world’s longest bridges to tour Yangshan Deepwater Port, the largest port in Mainland China. We visited the Shanghai Stock Exchange, which I was shocked to find is just a huge room full of computers. Of the barely 20 people actually on the floor, I counted several with their heads down on their desks taking naps! Apparently all the computers are linked to brokers who work from their own offices, and only major events like February’s crash will induce them all to come down to the floor. Not exactly the NY Stock Exchange, but a great example of some of the differences between the two countries!
Over the course of these meetings I made some incredible contacts and got to witness first-hand how business deals get started in China. Each company had a different piece of advice for how the bank should set up business in China, and what kind of services would be useful to them. The shipping companies focused on vessel financing and container leasing, while the trade companies wanted to discuss the bank’s international trade financing products. We met with a leasing agency who may be persuaded to sell the bank a bundle of its leases for an upfront payment in return for assumption of the residual risk as well as the stream of cash flows. A few companies were interested in investing in the US and may consider using the bank’s government connections and extensive experience in the Maryland market to help smooth the way for their investment.
Several themes emerged from all these meetings and served to provide a set of guidelines for the bank’s future possible expansion into China. All the companies we met with indicated that they would be much more likely to do business with the bank if it opened a representative office in China. An RO is the first step for many companies venturing into China and acts as a liaison between the home company and the customers in China. Although it’s limited to only non-profit-making functions, it is still an important first step to give a face to your company as it begins to establish a presence in China.
Other companies warned us of the importance of not duplicating what is already being offered by local vendors, but rather to find a way to add value. They stressed the importance of government relationships, making companies such as the Maryland Center ever more important in assisting US companies to gain a foothold in the market. We were also told it was very important to properly define the company’s scope in China rather than attempt to be all things to all people.
The meetings provided a wealth of information for both me and the bank rep to digest. I prepared a report for him on the regulatory environment in China and the different ways other foreign financial institutions have been successful in entering the China market. As the country begins to live up to the promises it made prior to accession into the WTO of opening its financial markets to foreign competition, this is certainly an exciting time of both amazing opportunity and undeniable risk. I feel like I’m in the right country at the right time, and hope to be able to leverage these experiences into a career path that will put me right in the middle of the fray.
Journal Entry #2 - May 7, 2007:
During my first month at the Maryland
Center, I encountered some of the frustrations that inevitably abound when living and working in a
foreign country. After 9 months in Beijing, I thought I had mastered the culture shock of living in
China. The street-spitting, the toilet-squatting, the toddlers with slits in the back of their
pants relieving themselves in the streets, none of this bothered me. But working in a Chinese
office environment stretched my flexibility and adaptability to whole new lengths…
The position I was hired to fill was brand new in the office, and as such was "continuously evolving." I quickly learned that my first and primary responsibility would be to take ownership of the M&T Bank project, as it had up until now been resting on the shoulders of the only other foreigner working the office, an American who specialized in marketing. Having been with the company for four years already, he was being pulled in many different directions and was happy to hand off the bank project to my partner and me.
Our first step was to identify potential customers and arrange meetings for the bank representative. He had indicated to us that his bank had two major interests in the Chinese market – international trade finance and commercial banking. Our primary targets included China’s major shipping companies, logistics companies, terminal operators, companies importing US goods, and any Chinese company who might be interested in investing in the US, particularly in Maryland.
I quickly got to work researching the market and compiling a list of potential customers. My partner was a Chinese graduate student named Sharpe who specialized in China’s banking sector. Though I’d been studying Chinese for over a year and a half, I was not yet at the level where I could comfortably converse on the telephone or interpret during the meetings, so I was grateful to have a Chinese partner working with me.
Unfortunately for the progress of our project, right smack in the middle of February when we should have been feverishly working away, we all got a week off for the Chinese New Year.
It's a strange Chinese quirk that all working people are granted the same vacation time each year – one week for the New Year, one week in May, and one week in October. This was originally intended to encourage travel and tourism, but in a country where 1.3 billion people are all induced to travel in the same time period, the result is mass chaos. The Chinese New Year is the one holiday where everyone returns to their hometown to celebrate with their families, much like our Christmas holiday. However, there were not enough trains to accommodate the mass exodus from Shanghai, and to make matters worse, there were no laws to keep scalpers from buying up all the tickets and then reselling them for three times the price. The result was that people would go to the train stations and wait for hours in long lines, only to be told that there were no tickets or that they would have to leave several days earlier if they wanted to make it home at all.
So little by little in the week leading up
to the New Year, office attendance dropped off. Although all 30 of us were technically required to
work the Saturday before the New Year, I was one of only 4 people who showed up that day. My
partner, Sharpe, had disappeared the previous Tuesday after telling me he was off to the train
station to try to purchase a ticket home for that weekend. I never saw him again.
China's New Year's Eve was unlike anything
I've ever experienced. Seven-year-olds and septuagenarians alike were overcome by a mass pyromania
that threatened to light the whole city on fire. Dodging fireworks with the smell of singed hair
and gunpowder in our nostrils, we threaded our way through the streets of Shanghai as if caught in
the crossfire of a war zone. It was insanity, and I loved every minute of it!
After enjoying my week off, I headed back
to the office the following Sunday (in order to get seven whole days in a row off, the government
mandates working the Saturday before and the Sunday after the break…that’s communist China for
you). We only had one week until the bank rep arrived, and not a single meeting had been scheduled.
I didn't even have the meeting request letter translated into Chinese, which Sharpe was supposed to
have done before the break. Each day Sharpe didn't arrive, I became more concerned that the project
was going to be in serious jeopardy. Although I expressed my concern daily to my superiors, it was
not until that Tuesday that help arrived.
My boss asked me to interview and hire two
assistants to work on the project with me. The first I hired was an undergrad business student who
would be responsible for contacting the target companies and scheduling the meetings. The other was
another MBA grad student like me, studying finance at Fudan University. She was trained as an
interpreter and would attend the meetings with the bank rep and myself.
With less than a week to go, we threw ourselves into the project. The bank rep would spend 45 days in Asia, but of that time only three and a half weeks would be available for meetings in Shanghai and one week in Beijing. With 50 meetings to arrange over that time period, we had no time to lose.
Journal Entry #1 - April 7, 2007:
As a Chinese Track student, the timeline for my internship is a little different, so I'm submitting this as my first journal entry even though I started my internship in late January. I will try to think back to what my impressions were during my first few weeks living and working in Shanghai.
I'll begin with a little background about myself. I'm one of the IMBA students who did not come from a business background. In college I studied journalism and Spanish and was fortunate enough to spend a semester in Spain my sophomore year. Thus began my love affair with living abroad and speaking foreign languages. After graduation I spent a year in Guatemala working as the sub-director and English teacher of a small secondary school. It was an amazing experience, after which time I was definitely able to cross teaching off my list of possible future careers!
I first became interested in the IMBA program at USC when my boyfriend (now my husband) decided to move to Columbia to attend law school. The chance to learn business skills from a top-ranked university while picking up a third language seemed too good of an opportunity to pass up. I chose Chinese because the challenge of it thrilled me, and because with the way the Chinese economy was taking off, it seemed there would be plenty of opportunities.
After spending all last year in Beijing studying Mandarin, I moved to Shanghai with my husband in January to begin my job search. My husband Daniel is a JD/IMBA student who spent last year working as an intern for China’s biggest domestic law firm, King and Wood. We were both interested in doing our spring internships in the realm of finance and had heard that Shanghai had more opportunities than Beijing, so we packed up our stuff and made the move. We had loved living in Beijing but were excited about the prospect of exploring a new city, and even more excited to leave the 20-degree winter weather of Beijing!
We found a great one-bedroom apartment in a lively part of town called the Jing'an Temple area. It’s within 10 minutes walk from a subway station, just two stops away from the main downtown area west of the Huangpu River, called People's Square. The first couple of weeks in Shanghai, when we weren’t busy sending our resumes out and applying for jobs online, we walked around the city to familiarize ourselves with the maze of neighborhoods and shopping districts. Shanghai is a rather compact city, so if you have the time you can easily walk from place to place, so we spent our time happily people-watching in Shanghai’s many parks and finding out-of-the-way restaurants to sample China’s excellent cuisine.
My second week in Shanghai I was invited to interview with a company called the Maryland Center. Sponsored by the Maryland Department of Business and Economic Development, the Maryland Center promotes trade between China and the US state of Maryland. They were looking for an in-house Investment Consultant to advise Maryland financial companies on strategies for entering the China market. My particular project would be to assist Baltimore-based M&T Bank in exploring the possibility of opening a branch in China. A representative of the bank would be arriving in early March for a 45-day exploratory trip to China, and I would be responsible for researching the market, identifying potential partners, arranging and attending meetings with key companies and government officials, and consulting on the best way for the bank to establish a presence in China.
This sounded like an ideal way for me to gain experience and insight into the China market for financial services, so I readily accepted the position. I started on January 29, leaving a little over one month to prepare for the arrival of the bank representative. Needless to say, I had a busy month ahead of me…