Walter Hutchens’ Blog

Today I was in Shanghai to give a talk at Fudan University. The University of Maryland’s journalism school is running a program with Fudan’s journalism school. The program introduces journalism students to covering the financial sector.

I think the idea for the program is great because 1) most journalists don’t get much training in business but need it and 2) financial journalism is comparatively (and I stress comparatively) open in China, so it’s easier for US and PRC institutions to find common ground (I don’t think we’ll be running any joint programs soon on covering indigenous independence movements, political dissent or un-sanctioned religious movements, but economic journalism is another thing entirely).

I didn’t have any prior relationship with Maryland’s fine journalism school, but as a Maryland business school faculty member resident in China, there was an obvious overlap between what they are doing (and where they are doing it) and my background. So I was happy to fly down and help in a modest way with the program.

My lecture focused on the role of law in the financial sector, particularly stock markets and entrepreneurialism.

I tried to help the students understand how stock markets work (at a very basic level) and how mainland Chinese stock markets are different from foreign stock markets.

The upcoming ICBC IPO provided a good jumping-off point.

I got them to list pros of investing in ICBC. They had no trouble doing that. (Massive size, implicit government backing, growth in the Chinese economy). Then I asked them to list potential risks of buying ICBC shares. It was harder to get them to see the downsides, but with prodding they came up with a few. (NPLs, opacity of information about borrowers, increasing competition including from foreign banks due to WTO accession).

Once we had a decent list of pros and cons that an investor should consider, I talked about the basic problem of information asymmetry in business. I explained how people try to lessen information asymmetry through due diligence, contractual provisions and (for listed companies) complying with disclosure duties.

To help them see how law enables (not just burdens) business, I also walked them through a US startup, from eureka moment to IPO. I talked about how law holds the whole process together, from formation of a v.c. fund to making its portfolio investments to operating the business to an eventual exit (through bankruptcy, IPO or M&A).

At the very least I think they picked up a lot of new English vocabulary words. Being able to offer the Chinese equivalents of unfamiliar terms seemed to help a lot.

The students were bright and attentive. Several of them participated actively in the discussion, which pleased me greatly. A few were well informed about macro issues in China’s financial reform process, but for most of them it seemed to be a new area. I was delighted when one participant, after I’d been rattling on about ICBC for a few minutes, piped up and asked, “What’s an IPO?” That helped me pitch the discussion at the right level (I hope).

As usual, I met a few students whose mastery of English left me slack-jawed. Really stunning, particularly for people who have never been out of China.

Fudan’s school of journalism has a nice set of new buildings (with more under construction). They have classrooms with tiered seating, full-on AV capabilities and Internet connections (though none apparently was available in the room I was in).

I stayed at the Fudan Crowne Plaza, a new hotel directly across the street from campus. It’s fabulous—certainly the best hotel adjoining (or inside) a PRC college campus that I’ve ever seen.

All in all, a very pleasant visit, and I hope one that provided some benefit to the students.

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