Walter Hutchens’ Blog

This summer I helped orchestrate a five-week summer program in China for US law students. The program was organized by the law school of the University of Minnesota.

It was a lot of fun helping 34 law students, three US law professors, two Chinese language instructors and an assortment of other guests experience China, many for the first time. They learned a lot and I think had a great overall experience.

The group took classes four days a week. On Thursdays and on some weekends we organized field trips. These excursions afforded the participants some outstanding experiences.

We visited the Great Hall of the People where they heard from senior staff members of the National People’s Congress Standing Committee.

We went to the Supreme People’s Court and met with four sitting judges.

By happenstance, retired U.S. Supreme Court Justice Sandra Day O’Connor was in Beijing this summer, and participants in the summer program had front-row seats to hear her speak. Dean Stephen Hsu of the School of American and Comparative Law at the China University of Political Science and Law made that possible. CUPL partners with the University of Minnesota Law School for programs in China. Coincidentally, Dean Hsu and I worked together at the same law firm earlier in our careers, and it was nice to interact with him again.

The students also got to hear from leading local and expatriate lawyers. A panel of distinguished Minnesota alumni spoke to them the first week, and the last week they heard from an expert panel on Chinese legal reforms.

In addition to their formal classes and law-related field trps, we organized a number of cultural excursions. The group hiked the Great Wall and watched an acrobatics show. Most of them also participated in an optional field trip to Shanghai. They also got to visit the offices of the Beijing city planning bureau where they heard about the venues under construction for next summer’s Olympics.

There are a number of other China-based summer program for US law students, but surely Minnesota’s is one of the best. I was delighted to be involved in it and value the many new friends I made.

Last week I led a class in Shanghai for Smith School MBA students.

The course was titled Doing Business in China. Its main focus was China’s financial sector, including China’s banking, insurance and and securities markets. We also explored general themes of doing business in China and looked specifically at foreign direct investment (FDI) in China’s manufacturing sector.

We met with a number of insightful people, including those listed below. (The list is arranged by topic, not quite chronologically.)

General Themes of Doing Business in China

Patrick Cranley, managing director of Asia Media, a communications company in China.

James Golsen, a representative of the U.S. Foreign Commercial Service.

Alick Sun, China manager for Schering-Plough, an agricultural biotech company (and Maryland MBA).

Prof. Zhou Dunren, a former Fudan University faculty member who now works for the Pudong Institute for the U.S. Economy.

Xiang Wang, an attorney with Jones Day who specializes in IP law.

Banking

Julia Wu, a deputy general manager for Deutsche Bank in China.

(Stephen Green of Standard Chartered also discussed banking).

Insurance

Dean Cowan, a senior manager and insurance specialist with BearingPoint who has been stationed in Shanghai for over a year.

Terrence Cummings, an actuary with the American International Assurance (AIA).

Michael Yu, a vice president of AIU in China.

Both Mr. Cummings and Mr. Yu spoke to us at the headquarters of American International Group (AIG) in their old building on the Bund.

Securities Markets

Situ Danian, a senior research fellow at the Shanghai Stock Exchange.

Li Gang, a Shanghai-based managing director of China International Corporation (CICC), the leading investment bank in China.

Stephen Green, senior economist with Standard Chartered in Shanghai and author of China’s Stockmarket.

Foreign Direct Investment & Manufacturing

Qiu Xiangrong, a deputy director of investment promotion in the Pudong New Area department of commerce. Ye Fan also joined the discussion and helped with translation.

Officials from the Suzhou Industrial Park.

Zou Qin, a vice president of Black & Decker, in charge of their Suzhou Industrial Park factory which we were able to tour.

Natalie Annmitoraj, a vice president for quality with Shanghai General Motors (no photo). The SGM factory tour was interesting, and we were grateful for the chance to see first hand what may still be the largest FDI project in China. SGM’s speaker gave us a brief presentation about the JV, including statistics about its booming sales (from 20,000 to 500,000 cars in 6 years). However, her expertise was mainly in operations, and I think for this group of MBA students it might have been even better to hear from someone who worked with finance, management, law or some other “corporate” department. The speaker was unable or unwilling to answer many of the students questions.

These meetings were all held during a single tightly-packed week.

Prior to arriving in Shanghai, the class met for nine hours in the U.S. These pre-departure meetings, spread over three Sunday afternoons, were designed to give the students initial context for what they would experience in Shanghai. I lectured about Chinese language, culture and history. It was radically truncated, but it did at least give them some highlights. I didn’t have to persuade them of the relevance of history; between our first and second meetings, anti-Japan protests erupted across China, making the relevance vividly clear.

In the final U.S. meeting students made group presentations. I had divided them into teams and assigned each team to one of the main topics we planned to explore in Shanghai (general themes and issues, banking, insurance, securities markets and FDI/manufacturing). Each group gave the entire class a preliminary briefing on its respective topic. This allowed a subset of the students to become conversant with a particular area and enabled the entire class to gain at least one exposure to some of the vocabulary they would be hearing in China (NPLs, SOEs, SAFE, CSRC, CBRC, CIRC, etc.).

Besides providing an initial briefing, each group was asked to post material to a course blog while we were in Shanghai. The idea was that they would cover our activities in China related to their topic, providing a journalistic account of what we did in Shanghai along with some analysis and links to other resources relevant to each group’s respective topic.

I think the pre-departure group presentations were helpful, and I think the idea of a course blog is generally a good one. But there is substantial room for improvement in the execution of the course blog assignment. I’ll write about that separately.

Overall, I think the course was extremely successful. Many of the students were, predictably, captivated by Shanghai. They could feel the momentum, and they saw the physical transformation the city has already undergone. Like many visitors, they became convinced that what is happening in China is profoundly important for the future. The could feel it, which is something classroom-based education doesn’t always inspire. However, I was pleased that, along with being seduced, they also heard about some of the real difficulties of doing business in China and some of the enormous challenges the PRC faces.

I assigned the book Mr. China to the entire class. It is not a theoretically rich work, but its stories about how some Western business people lost enormous sums in China and were sometimes defrauded by their Chinese partners is sobering.

Once there, the students heard a lot about infirmities in China’s banking system and stock markets. They also got a sense of some of the regulatory hurdles that many foreign investors face. Thus I think they got a relatively well-balanced exposure to the enormous opportunities and challenges confronting those who do business in China.

Many of these students will probably return to China on business. Even if they do not, what happens in China is likely to affect their lives and careers. These students will be equipped with some very helpful background for grappling with that aspect of their future.

One delight of this trip for me was that I didn’t have to fret about logistics. The Maryland China Center, a quasi-state agency of Maryland based in Shanghai, provided great support, as they have for each of the last three years when we’ve offered a Smith School of Business course in China. Above I am pictured with MCC staff members Karen Sun and Jim Curtis, our minders for the week. When I took a group of undergraduate students to Hong Kong in January, I didn’t have such help and personally made dinner reservations, booked buses and counted noses at each stop to be sure we didn’t leave anyone behind. All that was exhausting. The MCC relieved me of all that, so I was able to concentrate on structuring the course and other purely academic dimensions of the trip. Moreover, they helped not only with “logistics” but also with the substantive content. Having worked in China before, I had contacts in the sectors I wanted the class to focus on, but the MCC arranged meetings with many high-level people whom I didn’t know. They made the course much better than it would have otherwise been, and I am very thankful for their hard work and valuable help.

This January I taught a class on doing business in China. The course was mainly conducted in Hong Kong, with a day trip across the border to Shenzhen. The students were 28 undergraduates of the University of Maryland. All were business majors; nearly all were honors students.

In Hong Kong they heard presentations from U.S. government staff based in Hong Kong, including speakers from the U.S. Foreign Commercial Service and the Department of Agriculture (who talked about biological trade issues, including bird flu, “mad cow” disease, and SARS).

They also went to the Hong Kong Securities and Futures Commission. The SFC’s Laurence Li gave them a presentation there.

The next day they heard a speaker from Hong Kong’s Independent Commission Against Corruption.

In Shenzhen they visited the Shenzhen Stock Exchange. A SZSE staff member gave them a presentation, enabling them to compare the HK and mainland markets.

The students were required before they left the U.S. to read two books, produce an oral and written book report and take a brief examination based on preliminary readings and lecturers I gave. While in Hong Kong they were required to keep a daily journal. Once we returned to the U.S. they had to write a research paper on a topic related to doing business in greater China. Thus in terms of workload it wasn’t an “easy” class, but their formal schedule in Hong Kong was purposefully kept light, leaving them ample time to explore.

From reading their journals I know they made good use of that freedom. They made excursions to Lantau and Macao, went to museums and discovered how vibrant and interesting the various districts of the HK SAR can be. Many of them also made modest contributions to the HK economy. They shopped a lot, and some visited the Jockey Club in Happy Valley.

Elanna Tam, US Foreign Commercial Service

Laurence Li, Hong Kong Securities and Futures Commission

ICAC

USDA

Gordon Cleveland, USDA.

Shenzhen Stock Exchange.
Posted from my Sony U

Teaching the course was very rewarding (perhaps “orchestrating” is a better word, since I did only a minor part of the lecturing). For me this experience completed a meaningful circle. Fifteen years ago I made my own first trip to Asia as an undergraduate on a study-abroad class. We went to Hong Kong and then into the PRC. We happened to arrive on the mainland just days before tanks rolled into Tiananmen Square on June 4, 1989.

We were in Anhui Province, far from Beijing, in the small city of Wuhu. That’s the home of Anhui Normal University, an institution with which my Alabama college expected to develop an exchange program.

Even in Wuhu there were protests. The day after tanks cleared the Square in Beijing, An Shi Da students marched onto the streets outside their campus. They wore white to express mourning. They carried wreaths they’d made from tissue paper. They wanted to inspire a general strike. Many had friends in Beijing whose fates they didn’t know. They’d been boycotting classes throughout the spring.

Watching the violence on CNN, our parents were of course distraught. It was unclear what would happen next. There were rumors of splits within the army, talk of possible civil war. In any case, blood was already on the square in Beijing. Nobody’s parents would be assuaged just because violence hadn’t yet erupted in Wuhu. We had to cut the visit short. But foreigners were stampeding out of China. You couldn’t easily book a flight home. We traveled from Wuhu to Anhui’s capital Hefei, then on to Nanjing. From there we got a flight back to Hong Kong. After a night there, we flew back to the U.S.

Reporters met our plane in Birmingham; we were big local news–locals trapped “behind the lines” as history unfolded. I had no comment. I had nothing coherent to say; I felt conflicted and overwhelmed, unable to process what I’d experienced. I’ve spent much of the last 15 years studying China, trying to sort it out.

China is now vastly different than it was in 1989. At least in some ways. Transformation hasn’t come to all areas.

This January, leading my own class trip to China, I awoke to find the headline, “Zhao Ziyang is finally free” on the front page of the South China Morning Post.

Later that day I met two young mainlanders in Hong Kong. Both were recent graduates of PRC colleges. I mentioned Zhao Ziyang’s death to them. They’d not yet heard about it. Worse, they didn’t know who he was. The memory of Zhao, the former head of the Chinese Communist Party, had been effectively erased from their world. That gave me chills, recalling some of what I felt in the PRC 15 and a half years before.