China Global Context Business Trip
Note: This recollection of a trip to China was written for UO admin as a requirement for certification of global context credits.
In 2018 I was CFO of a RAIN Eugene startup called Rithwir, a consumer electronics company. The company was founded by John Boosinger a University of Oregon Professor who leads the TSA department. The product was a complex electronics board that would make video games immersive by letting users use their bodies to physically run around on the board. Since John was an employee and developed the product during his hours at the University it was considered a University invention.
A few months before my trip to China, I had to negotiate with Innovation Partnership Services an agreement that let us form an outside company that holds the intellectual property that the University of Oregon retained a 5% equity stake. I then pitched to local venture capitalists and angel investors and raised $50,000 for the prototype. Our plan was to build the prototype that summer in Shenzhen, China known as the Silicon Valley of electronics because 2/3 of all electronics are manufactured there. My mission was to go there understand the culture, business environment, and electronics factories in order to lay the groundwork for us to send employees over the summer to build the prototype there. This was not an internship where I had to pay the University or some company to have the pleasure of performing free work. I was a co-founder of a financed startup and I had to understand the Chinese business environment.
This was my sophomore year at the University of Oregon and I planned to go over our December break. I planned to fly directly to Shenzhen and figure out everything else as I go. My main task was to understand the electronics markets and how it is best to build products over there, without getting your product stolen by industrial spies. From there, I wanted to understand the culture and make some friends. I had only one contact over there Jan Smejkal who ran a startup incubator in the city.
On the first layover, I met a professor from MIT who was consulting with the Chinese government on how to copy and reverse engineer American drugs properly. He remarked at how they often would skip steps and instead make a dangerous concoction. Then I met an American who had just raised $100,000 on GoFundMe to make a unique phone case that can be mounted on everything, including a Skydiving helmet. His name was Ty and he was the first one to start to tell me about his experience finding a manufacturer. He was in China to pick up his product and his plan was to bring the first 10,000 cases back home with him on the plane. I got the WeChat of all the people I met because WeChat is how everyone talked, paid for food and booked tickets.
Then on the flight to Shenzhen, I met a nice girl who was from Shenzhen but went to school at the University of Southern California for Industrial Design. She told me about her experience growing up there and how the city has transformed from a sleepy fishing village 50 years ago into a megacity of 12 million-plus. It was the fastest growing city in human history, she said. She also talked about how her parents wanted her to leave the city and get educated abroad because like many people there, they do not see a great future there. When we landed, I could not find my hotel shuttle and so her dad, who was picking her up, offered to drop me off. The dad who was a cop drove a Mercedes Benz. He talked about how millions of Chinese went south to this city to find opportunities and how he started off as just a waiter at a restaurant.
This first week, after networking with local entrepreneurs and startup incubators I found and went on multiple tours of factories in the local area. They all mentioned their ability to make anything and copy anything. In one factory, I saw weird robots with TVs next to thousands of assembly made security cameras. The tours actually made me a little sick because everything was so industrial. Thousands of people making the same goods doing super boring repetitive work. The grand scale of everything was amazing, however, it was also stomach-turning for a guy that likes nature and solitude. The thousands of copy and paste homogenous apartment buildings, some built-in one month, that fit the millions of residents all felt too cramped.
What bothered me the most was the surveillance and the omnipresence of the government in every move you make. Whether that is the giant surveillance cameras on every half-block of the sidewalk, audibly clicking, recognizing your face and then storing your location on a government server. Or the blocked internet that prevented me from accessing any information whatsoever unless I used a VPN which helped me get around the firewall, a crime that almost everyone does.
On the bottom right photo above, I also attended a few language cultural nights where Chinese citizens wanted to try out their English on me. There is almost no point in learning Chinese as any businessman and most in the city knew basic English. These cultural nights were interesting as we talked and debated subjects such as Donald Trump’s tariffs on Chinese goods and the fact that he generally was taking on Xi. I remarked that I loved the Chinese, but as an American, the things Xi was doing with his power was becoming concerning. It was interesting the difference between the generations with a younger Chinese man I talked to had the NYT, Wall Street Journal, Bloomberg, CNN and Time apps on his phone and he was a voracious reader of everything. To the older Chinese man who was mad that their country’s stock market had fallen 60% in the last two years as the trade war was heating up.
Shenzhen is famous for its electronics markets. I spent the next few days checking out the enormous compound that houses thousands of vendors. One building is literally 10 blocks long and 5 blocks wide. That is one of 7 buildings. Vendors have displays of every electronic component you can ever imagine and you can point to one and say, I’d like 1.2 million of those!
Obviously, these markets are overwhelming to most Westerners. So, many foreigners trying to build something will go to one of the many startup incubators or build facilities where there are English speaking counterparts that will help you find what you need or help you navigate your way around the markets while giving you a space to build your product. These places were great for me to meet other Westerners building products and hear their first hand experience. I met a team that was building a robot that is supposed to replace farmworkers because the robots could pluck everything from apples to strawberries.
After a week, the city became overwhelming for me so I headed to Hong Kong. Finally, a place that respects basic rights. A place you can watch Youtube and not feel like the police are monitoring you or might take you away in the night. I went on many tours seeing the whole city on a hop on hop off bus. I then went to the mountains to hike and get out of the industrial scene.
After spending a few days here, I went back to Shenzhen. From there I decided to just head to the Northern region of China so that I could experience the beautiful mountains of Guilin, China. There were no flights, but I found a bullet train. Heading over to the massive terminal I boarded the train with still no plan or hotel. Traveling at over 350 miles per hour we got there in about 7 hours. We quickly went from the heart of the massive industrial city to the countryside, to then another massive city covered in soot and dark clouds of pollution to then back to the beautiful countryside.
I just ran out of data on my phone so I could not look up any hotels. The train stop was also a rural one with no nearby stores. Looking lost and cold, a nice woman came up to me. Using her translation app she said she could take me to a local 5-star hotel that was only $40. Her husband drove me in their BMW to the hotel. It is still a mystery to me why all these people I met with seemingly low paying jobs had expensive cars. The man joked with me to see if I wanted to eat some dog. While I thought it was a joke, I later found out it was common for restaurants in this region to serve dog. I usually would point to a random item on the menu at restaurants. I knew, however, that I did not want to take chances. For the next few days, I stuck to McDonalds and KFC. Nevertheless, I got to the hotel and booked a boat tour for the next day.
Gulin was a beautiful area with amazing rock faces and a river that meandered among them. It was a sort of cultural rite of passage for Chinese people to visit as the mountains were immortalized all over the currency. Posing with the $20 bill was common for most of the people on our boat. I sat next to a Russian woman who gave tours to Chinese tourists who visited Moscow. She was shocked that I had not planned my trip there and how I had even made my way around. She, on the other hand, had planned every moment of her day months in advance. She told me stories about how she hated many of these tours because the guides only talked about the myths and the spirits, not the history and geology of an area. Most of the tour was filled with stories of how the rocks would allow dragons to fly around and hide in the mountains. It was an interesting point for later on we went through caves that had no mention of how the rocks actually formed and instead was the rocks were bathed in pink and other colorful lights. Random stories about how the spirits formed the rocks told the whole way throughout the caves.
That night, I felt like I had seen everything that the region had to offer so I headed to the airport to see where I could go next. I saw a cheap flight to Beijing and was on my way. When I got there, I was being cheap and didn’t want to get a hotel since it was already 2 am. So I fell asleep on some chairs by baggage claim. When I awoke, I booked a hotel and decided to take a cab. Unfortunately, my phone died and I had not written down the address. I told him to just take me to Tiananmen Square.
It was 5 am yet there was a massive amount of people going somewhere. Another protest? I had thought. I followed the crowd through a massive security checkpoint. All of a sudden everyone was running. They ended up lining up with no one allowed to pass an invisible line. Cops were everywhere and one spotted me in the crowd. “Passport!” one Chinese officer yelled at me. I handed it over. “Where is your China visa!!” he barked. It had gotten sticky and he missed it as he flipped through. I showed him and he moved on.
It had turned out to be a flag-raising ceremony. Over the next few days, I did multiple tours of the Great Wall, the sacred palace and the historical museum. I had met a few Indian students who were studying in Hong Kong and spent the next few days exploring the city with them as well and meeting their friends who lived in the city.
Overall, it was an interesting time to visit China. The factories were breathless but politically it was frightening to watch as the country was being transformed by Xi’s power grab and the increasing surveillance on citizens across the country. Also, the trade war was just starting to inflict significant economic damage to China. Businesswise, Shenzhen is still the number one place to build electronics. However, as one American who owned a few factories told me, “In the last few years, all of my American friends have left. They have all been driven out by the government. They harass you until you just turn your factory over.” While China’s economic transformation has been an amazing story to see and hear about, it is a dangerous and tricky place to do business. It is especially dangerous if you are an American with intellectual property that you might want to protect.