A cohort of students from our Executive MBA program is currently in Hong Kong and met with representatives from Shuanghui, the holding company that recently purchased Smithfield Foods. Janet Au, Deputy Managing Director of Shuanghui, gave a detailed presentation on the motivations behind the Smithfield acquisition from the Shuanghui perspective. She believes this deal has opened the door to many subsequent cross-border deals.
“America has great assets,” said Ms. Au. “Our success has shown the way for other Chinese and international firms to work with and possibly acquire more American firms,”
This is the logic behind the Mason School of Business developing a relationship with Fudan University for our Executive MBA program. American executives should not be surprised at this activity — they should be prepared for it.
The following is an account by EMBA student Mark Edgren, of his experiences in Hong Kong with his group:
Crowded, dense, constantly moving — almost organic — Hong Kong’s energy seems tangible and electric. At the same time, the glaring differences between the “ultra-wealthy” and the much larger number who seem to struggle to survive in a very expensive part of the world are obvious to the outside observer. One wonders how much discontent might be brewing under the veneer and gloss. Likely this is even worse in mainland China where the newly-wealthy are appropriating the “bling” to prove their status.
This kind of income inequality and the consumption culture it fosters are likely to be increasingly unacceptable to a population who can't aspire to that level of success within the current system. Whatever the barrier — corruption, nepotistic/family relationships, or lack of appropriate regulatory frameworks — it seems a valid question to me whether the Chinese economic onslaught is really benefiting the Chinese people collectively … or just the top tier.
The implication for U.S. firms seeking a $1.2B market for our products is that the Chinese market is not about GDP or a strong Yuan or even cash savings in China. I think it is when the majority of the population can afford to purchase imported goods (i.e., the rising Chinese middle class).
The people we've encountered so far on the trip exhibit a tenacity and aggressiveness in seeking economic opportunity that speak to a deep-seated desire to succeed — or at least to have their kids succeed. There is no shortage of hard work. There doesn't seem to be a shortage of human capital or desire to do well. Maybe the solution is getting the “system” out of the way to unleash the vigor of the Chinese.