Today’s ride to the Armstrong acoustic tiles plant gave us some time to look at Shanghai’s bustling city streets.  Without a doubt it has the most Western feel of any city we’ve been to, but I can’t explain exactly why.  All I can say is that with the exception of having many more mopeds and bicyclists, the traffic reminds one of Manhattan, and the numerous and unique skyscrapers reaching towards the heavens reinforce the effect. 

Shanghai may not have hosted the Olympics, but at the moment it is the location of a world famous event.  This is the 2010 World Expo, which was launched just under a month ago and will continue to be in operation for six months.  Shanghai exhibits the telltale signs of a recent clean-up effort just as Beijing did, and its hard to miss dozens of street vendors selling stuffed animals and keychains of Haibo, this Expo’s mascot, who looks a lot like a blue Gumby.  Posters and advertisements around the city state the event’s theme phrase: “Better city, better life.”

After an hour or two on the bus, we reached the Armstrong facility.  Armstrong is a company that originated in the United States but has since expanded across the globe.  It is one of three other businesses that have followed the same business plan that we will be visiting over the next few days.  The Armstrong plant we visited manufactures the ceiling tiles one sees in schools and business buildings, which it ships all over Asia.   After a brief introduction about the company and its entrance into the Chinese market less than two decades ago, we took a walking tour of the assembly line itself, where we followed the formation of the tiles from being raw ingredients (some of which are recycled), to liquid forms being poured into molds and baked, to finished products being inspected and packaged.  Almost the entire process was automated, but workers were hard at work monitoring the mixture of ingredients, ensuring the quality of the tiles produced, and maneuvering loads of hundreds of kilograms on forklifts with the grace of a ballerina. 

We’ve been told that, for relatively uneducated workers, American companies are the best employers.  Salaries and benefits don’t extend anywhere near what laborers in the United States receive, but they are favorable relative to other Chinese companies.

From Huntsman we drove to General Electric’s Shanghai facility.  This is much more of a research institution than Huntsman was, and encompasses quite a few areas of GE’s broad spectrum of industry participation.  The woman we spoke with worked in their transportation department, and told us about a big project in which they are engaged with the Chinese government building trains and railways in the high elevations of Tibet.  GE also does a large amount of work in the energy business, especially in the manufacturing of turbines for wind energy generators. 

GE Shanghai

It’s clear that in order to succeed, American companies need to approach all aspects of their businesses from a Chinese prospective.  For instance, China rarely permits businesses to enter the country if they do not participate in corporate partnership.  This means that Huntsman and GE could not enter their ventures alone–even though it is possible to later progress to a stage of independence.  In GE’s case, this poses a significant risk.  They may have to partner and share with competing companies in order to have their product sell.  When that partnership ends, the technology they shared with competitors could be used against them. 

In addition, it’s important that these companies have to be dedicated to producing a product that is by China, for China.  The Chinese government has a tremendous amount of power to make or break a company, and would not allow one to exist that funneled its profits and innovations abroad.  In order to survive, the companies need to orient themselves 100% to benefiting China–and there is a lot of money to be made in doing just that.

I found it fascinating to learn that there are actually very strict regulations, both by the United States and Chinese governments, which limit how much researchers in either country may share with foreigners, even when they are part of the same international corporation. Imagine working on an international team and knowing the answer to an engineering problem with which you are faced, but being unable to offer it because your government sees the information as something that could endanger national security if leaked. 

By the time we returned to our hotel from GE and dinner, it was night in Shanghai.  Xinli took us on a quick walk to the the “Bund” area of Shanghai, which is one of the oldest parts of the city.  Many of the buildings here have the heavy Greek columns that we associate with Western financial institutions–and that’s just what they were constructed for, decades ago.  The beautiful buildings now mostly house Chinese banks and other offices, but remind older Chinese populations of a time when Asians were discriminated against by European colonists.  On one end of the Bund flows the Huangpu River, across which one can see the great skyscrapers of Shanghai’s business district, named Pudong.  Looking from the old Western constructions to the modern hi-rises, one glimpses over a hundred years of architectural and cultural transformation. 

The Bund and the view across the Huangpu

Tomorrow we have the whole day to spend at the World Expo, which should be an exhausting but great time.

Location: Shanghai, China