Lunching with the China gold-rushers.

A series on the China gold rush.
March 3 2005 12:25 PM

Lunching With Gold-Rushers

These Yale MBA students are preparing to seek their fortune in China. What advice can they give me?

Despite the title of this series, I myself, sadly, am no longer a "young man," so I'm not seriously planning to "go east" for the duration. I wondered if I would consider it if I were still in my 20s. To get a sense of how real young businessmen and businesswomen are thinking about China, I drove up yesterday to Yale's School of Management. There, in a corner of the cacophonous dining hall, I had lunch with 10 MBA students who were days away from leaving on a two-week China study trip.

The students reported that, although China is a hot topic at business schools, it still pales in comparison to Wall Street. India is also a focus (perhaps even more of one, since India is seen to be taking high-skill jobs, while China's just taking the low-skill ones). Two years ago, the students say, the get-rich-quick China dream known as "chasing the dragon" electrified campus, but interest has now mellowed to the sense that the country will be there—and be important—for decades.

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The students are about to embark on Yale's third annual China study trip, which is offered for credit. A glance at the two-week itinerary made me drool: The students will visit with senior managers from two or three companies a day in Hong Kong, Shenzhen, Shanghai, Suzhou, Hangzhou, and Beijing. More than a mere job-hunting tour, which many B-schools apparently offer, Yale's is designed to offer real-time exposure to China business strategy. According to Mike Huang, an organizer of the trip and coordinator of Yale's Greater China Student Interest Group, Western companies doing business in China are receptive to the visits and readily share their thinking. Chinese companies, however, tend to be reticent.

About two-thirds of the 20-odd student travelers intend to work in China. Some will work in consulting or finance—the same broad-based training platforms so popular in the United States—others in industry. One, a former dot-commer, happily admitted to "chasing the dragon," and intends to build human-resources software for China-based companies. Another stressed that he was not seeking a quick score and simply wants to develop "global operating skills" useful for the next 40 years.

According to the students:

  • You can get by without speaking Mandarin, at least in some industries, but fluency boosts your credibility. Otherwise, you're just the stereotypical "dumb-ass white guy." This insight came from a white guy, who was fluent in Mandarin and Cantonese and not a dumb ass. An Asian-American student, meanwhile, said that, given his appearance, everyone expected him to speak pristine Mandarin, and, when he didn't, they assumed he was a dumb ass. From his perspective, therefore, the "dumb-ass white guy" shtick was helpful, at least in emergencies.

  • American consulting firms, some of the major expat employers in China, generally serve multinationals trying to set up shop in the country and multinationals that are already there but failing. Some firms, like McKinsey & Co., also try to consult for local Chinese companies, but the Chinese are still apparently reluctant to buy services, so margins are low. This distaste for services, as opposed to products, was attributed to China's being earlier in the business lifecycle than the United States. (Over the last century, America's economy has transitioned from manufacturing to services.) China is catching up fast, though.

  • From a business perspective, China is still akin to the wild west. The Chinese are "exceptionally entrepreneurial," the students agreed, although there were no convincing explanations as to why. An ancient tradition of supporting family members, a dearth of social support services, and a desire to escape desperate poverty all seemed reasonable theories, but none seemed to pinpoint a unique quality that sets the Chinese apart.

With luck, I'll catch up with the students in Beijing, where I'll sit in on a meeting with a Chinese real-estate company and not understand a word.

The Pursuit of Truth Department (cont.)—in which I revisit issues, errors, and misconceptions introduced in previous Go East columns, with the goal of eventually getting things right. Please continue to send feedback, corrections, and suggestions to chinagoldrush@yahoo.com.