A while back, a friend of mine posted an article from the Esquire on his Facebook titled “The War Against Youth” (in America). I got interested and had a few thoughts on the same problem in a Chinese context.
The article argued that “[n]obody ever talks about generational conflicts,” because it’s difficult to bring up. I disagree. Americans are too liberal and too vocal to shy away from bringing up anything that they think is worth arguing for. The fundamental problem of the lack of discussion in inter-generational conflicts is that people of different generations tend to think of each other as in-group members as opposed to out-group members. For instance, I would place my father within my “group” rather than an opposing group when considering things like “class conflicts.” We are much more likely to group together and fight for common interests based on race, ethnicity, nationality, and geographic regions than by age or generations. But inter-generational conflict exists. Because in general, the older you get, the more you make and the less you have to work for it.
The fact that you make more as you get older is pretty intuitive, because you build up experiences and expertise through years of work. But the proportion at which this gap exists should also make sense. Not in the US. “In 1984, American breadwinners who were 65 and over made 10 times as much as those under 35. The year Obama took office, older Americans made almost 47 times as much as the younger generation…” A jump from 10x to 47x in the span of 24 years. How did that happen? Did older people contribute more and more during this time? Or did experience become more and more valuable?
If asked which one is more important for the nation, I think most people would agree that education is of a higher priority than Medicare. But money says otherwise. “The federal government spends $480 billion on Medicare and $68 billion on education… Across the board, the money flows not to helping the young grow up, but helping the old die comfortably.” According to a 2009 Brookings Institution study, “The United States spends 2.4 times as much on the elderly as on children, measured on a per capita basis, with the ratio rising to 7 to 1 if looking just at the federal budget.” This may be caused partly by the fact that 1. it costs more to keep people alive than to put kids through school and 2. the US population is aging as baby-boomers retire.
Now let’s take a look at the lives of the young Chinese graduating from college. For their entire lives, grades have been the only thing that mattered to get to the top. The most successful students of China are the best at memorization and test-taking. Yet what lies ahead after graduation is one of the most complex and political worlds imaginable. Their skill-sets, mastery of test-taking and problem-solving, are of little to no help. But this is only one of many difficulties lying ahead for them. From education to on-the-job training, from the job markets to culture, nothing helps the Chinese youth – except maybe their parents who can and are willing to.
Education – The Chinese education system is widely acknowledged to inhibit students from developing a creative mind and face real world problems. The One-Child Policy only exacerbated the problem by allowing grandparents to treat their only grandson or granddaughter as their “bao bei” (“precious”) and not allowing them to encounter any type of hardship from childhood through adulthood. Many children from affluent families end up finding jobs through family connections, and those from low-income families with no solid connections often take up low-wage entry-level jobs in manufacturing or services. Still, with all the funding poured into education, “[a] McKinsey study found that 44 percent of executives in Chinese companies reported that insufficient talent limited their global ambitions.” To make matter worse, “According to the Chinese Academy of Social Sciences, the average college graduate earns just 300 yuan — roughly $45 — more than average migrant worker [per month],” which explains why so many rural students choose to drop out of school and begin work early rather finishing their zero-value education.
On-the-Job Training – Having experience working in Beijing, Hong Kong, and New York, I can speak to this from my personal experience – on-the-job training in China is pretty bad. How bad it is will really depend on what type of company you work for. But the point is not just a general lack of formal training programs, but also a lack of mentorship and professional developmental networks. How much people are willing to help you really depends on what you have to offer in return. This makes it very difficult for ordinary young professionals to move up because all they have to offer initially is pure physical labor. Without quickly assemble resources and figure out how to utilize everything around you, you may find yourself stuck at the bottom of the food-chain with no end in sight.
Job Market - State-owned enterprises dominate the job market; jobs at state-owned monopolies in fields like oil & gas, telecom, and financial services are among the most coveted careers in China. But they are nothing like corporations and private enterprises. In SOEs it is generally understood that the longer you stay, the more power you have and the more income you generate. But doing the most work doesn’t necessarily make you last the longest; staying out of trouble does. Therefore, there is little that a young person can do in an SOE other than to wait, and the incentives against innovation create some of the world’s largest “dinosaur companies.” Below is how an SOE entry-level employee described her situation online:
“In terms of jobs, my boyfriend and I both work at SOEs, the most stable type possible. In the view of both of our families, we’d be retarded to quit and try something else. In order to get these jobs our families both had to pay people money and find connections, which is why they don’t agree when we told them we wanted to quit. What makes it worse is that my boyfriend and I are in the exact same situation! Honestly speaking, we are both not satisfied with our jobs, there’s no future. The only thing to do is sit there and get by the days – SOEs are basically all the same.”
Today, even lesser-known SOEs require some guanxi to get in, and the better-known ones (usually monopolies) may cost you both guanxi as well as money, as is the case above. A job at CCTV may costs you a few thousand US dollars; a job as a stewardess for Air China may be double that. That is if you already have the necessary qualifications for these positions. This shows that people would rather wait for years for higher-level income than taking any risks in the more competitive non-SOE markets.
Cultural Reality - In my earlier post, I talked about how ”[i]n the West, youth is good. Youth is energy, opportunities, and possibilities. But in China, youth is immaturity. It equates to inexperience, which to most people screams unreliability (i.e. 不靠谱).” But you can’t blame people for believing this. Younger professionals often quit without notifying his/her boss, steal corporate contacts and other confidential information, or just have a lack of commitment in general. This creates a vicious cycle when society doesn’t help young people which forces them to break more rules and make them seem even more unreliable.
The gerontocratic nature of China’s government and SOE systems is largely a matter of political legacy, and a common legacy of most states with a powerful central government. All of China’s presidents took power at age 60+, with some remaining in power until death. In comparison, Obama took office when he was 48, and no one really cares where Bush or Clinton is.
The older generation of Chinese are sitting on anywhere between 10-30 years of savings, and many receive retirement compensations at a rate of RMB1000+/month (equivalent of minimum wage at a small second-tier city in China) and enjoyed a huge boost from the housing boom if they owned any property from 2005-2009. But keep in mind that elderly people are generally married (income x2), have no mortgage (housing often taken care of by the SOEs from the communist era), lower spending habits, and money from their children, with medical care as their highest area of spending. The younger Chinese on the other hand, must pay for mortgage in post-housing-boom China (if they want to get married and move out), spend more on social and leisure activities, take care of the children’s education (a rising cost), and sometimes take care of the elderly parents.
While it’s true that when older generations pass away, they often pass down all their assets to their children (a source of conflicts in many Chinese families between siblings), but with inflation at 5-6% per annum (and far more so at the most metropolitan areas), the middle-aged Chinese are feeling squeezed, and the younger Chinese graduating from college simply see no light at the end of the tunnel. Unlike in the US, where college grads are pretty much on their own, Chinese parents are often willing to take care of their children for as long as they can.
This makes some people’s lives easier, but it creates another huge problem – the inequality of opportunities. A research paper from 2010 found that, in China, “richer parents helped a person’s prospects (a 10% increment in parental income was reflected in a 4.5% income boost for their offspring) and having parents who were employed by the state helped a lot. Parental education, on the other hand, was no help whatsoever. In these provinces, where your parent works matters more than where he went to school” (italics added).
How to End this War
A few bright spots that might materially shift the dynamics in this “War Against Youth” may be the privatization of state monopolies, the growing service industry, and the IT industry. Baidu, for example, employs over 16,000 people and with an average age of 26. There are also countless number of jobs created via various start-ups in e-commerce, social media, and other forms of online innovation.
China’s current leaders may still be under the influences from China’s turbulent past, but a commitment toward a more open society, starting from the top, may usher in a new era of explosive development through deregulation and innovation. At least that is what we hope for.
If the above sound all too serious, here’s some comedy relief. Watch this episode of Family Guy, where Chris and Meg Griffin traded place with Peter and Lois, only to realize that it’s not easy to be kids or parents, and enjoy a good laugh!
I was in Philadelphia two weekends ago, when Occupy Wall Street had just popped up on my laptop screen for a few days. I was attending an info session for GCC-UPenn and was about to head back to New York. I was in a suit and carried a briefcase.
I was buying a bottle of green tea at the bus stop stand when the guy, after ignoring me for a full 30 seconds chatting with his friends, offered me $18 for the bottle. I startled. He laughed and said it was only $2. He then checked me up and down and asked his friends, “How much do you think this guy makes? $300k a year?” He turned toward me. “Ain’t that right? $300,000?” I paused. At this point I think my sympathetic nervous system was fully at work.
In the interest of self-protection, I said, “No I’m still a student looking for a job, that’s why I’m dressed like this.” Not far from the truth. At least not as far as the difference between 300k and however much I might be making if I were actually working right now. Did I look that old? Or did he just have no idea how much men-in-suits typically make?
Blame me for being overly sensitive but, I’ve wore a suit in the US since 10th grade MUN conferences, and this was the first time that I felt a bit threatened because of it.
The Interview Room
A few days later, a friend of mine went into an interview and was asked a question about Occupy Wall Street.
“So what do you think of the protest?”
“I think it’s a big waste of time. These people should spend their time and energy finding a job instead,” the interviewee said.
Lucky for him, the interviewer actually felt the same way. But such response is far too risky at a sensitive time like this. What if you met someone who liked everything in politically correct terms?
And if this article from last week’s the Atlantic didn’t convince you to never mention “money” as one of your motivations during interview, I don’t know what will.
What This Mean to You
Regardless of whether or not Occupy Wall Street ever took place, people in finance are going to be making less in the foreseeable future. Banks are already downsizing their risks as well as number of employees. To borrow from Mergers & Inquisitions‘s recent blog on Occupy Wall Street, “nowadays people go into Wall Street expecting to get rich, whereas in the 1980s they went to Wall Street hoping to get rich.” So if anything, the recent protest should really make those who are still “thinking” about going into finance to really dig deep and examine the core motivations behind their career choices.
And when all else fail to answer your inquiries – take a gap year.
As Aaron said, there is something intriguing about the fact that the NMD is the only division in GCC that has been handed off to a third Director since GCC was first founded. The first sign of “longevity” – even if only relative in comparison to the other divisions or student groups – is a sign of inner stability.
Building GCC was very much like building a company. The management structure has morphed from a strict division of responsibilities, to a more organic entity, back to a very well-defined system of individual divisions. Like an entrepreneurial firm, the structure needed to adapt constantly to the environment – timing, location, people. If this sounds familiar it’s because it is the familiar “天時，地利，人和” trinity, the circumstances that will determine the success or failure of any entity.
Just as instrumental music became popular in Europe when the technology of making musical instruments flourished, GCC grew and prospered drastically as China became the outlier of economic performance, exceeding expectations and creating exceptions. We have tapped into the biggest shift of paradigm in the 21st century in so many different ways it’s impossible to foresee what will be the exact outcome. But in an environment where too many factors are changing and too many uncertainties lay ahead, the best thing to do is to follow your instinct – and the worst thing to do is to stay stationary.
自古亂世出英雄 – if you only live once, which I assume we all do, why not make something special of your life?
The exposure to the outside world through GCC has profoundly altered my interpretation of risk versus uncertainty. We are all risk-averse. But we cannot avoid uncertainty no matter what we do. Risk and uncertainty both exist as pure consequences of time, but risk can be calculated, modeled, and predicted; uncertainty however, is inevitable and must be embraced. The realization of the inevitability of uncertainty is the single most fundamental factor that changed much of my decision making process, and consequently, yielded the following decision:
I am going to take a semester off and spend it in China.
The decision is almost risk-free. But the decision is ridden with uncertainty. I have come to realize that while I am extremely risk-averse, I am not averse to uncertainty.
A few of us attended the “亚布力到纽约” portion of the Chinese Entrepreneur Forum – the platform involving some of the largest business titans of China today and of the world tomorrow.
Upon entering the Morgan Library, the lobby was filled with familiar faces – the New York network of China-fans is probably smaller than we had anticipated.
The Chinese Economy
毛振华, 冯伦, 曹德旺, 任志强, 陈东升 etc., spoke on various topics relating to one of GCC’s core focuses – China’s economy.
冯伦, President of 万通地产, and a well-known author of some very interesting books on business in China, spoke about the “five views” that are in dialogue regarding China’s political future, ranging from liberalism to absolute Maoism. The predominant view, he says, is the middle-of-the-road “new” thought – slow but reasonable reforms in the government, maintaining peace and prosperity of the country as a whole. Undoubtedly, the view is supported by both large businesses as well as the Chinese government, and probably also preferred by us students who wish to pursue future career opportunities in China .
It is more true in China than anywhere else in the world that business success is highly tied to government policies. Feng observed that the most successful firms in China are ironically along the lines of government policy: the ones that are heavily regulated, and the ones that are not regulated at all. For me, this seems to refer to monopolies such as utilities and telecommunications, as well as the unknown districts of gambling, coal mining, and real estate (until last year).
Feng also touched on the fact that Chinese firms are now beginning to care about corporate image, environmental impacts, and social responsibilities. Chines firms are starting to put together additional pages in their annual reports focusing on sustainable dev and corporate responsibility. This should be good news enough for those of us taking classes with Jeffrey Sachs.
Other panelists emphasized that NGOs has yet to witness their Golden Age in China. With more people who are understanding the impacts of global trade, production, and consumption, there will be both more interest and more room for people to join NGOs to create impact in China. Interested in joining an NGO to work in China in the future? Now is probably the time.
Finance in China
陈东升, President and CEO of 泰康人寿, also left me deep impressions about the future of business in China. 泰康人寿 was founded in 1996, but is now the 4th largest insurance companies in China. Recently, the firm took 550 employees to the Great Pyramids of Giza for both entertainment as well as their annual firm-wide summit – yes, I can relate because I was just there about a month ago. Confirming with what the GCC delegation learned during the Winter Delegation, 混业经营 (Mixed Operation: the practice of merging banking, securities, insurance, and other forms of financial services together for synergetic outcomes) is still a big focus of the Chinese financial services world. On the insurance side, though the traditional models of insurance agents that were introduced to China via 友邦 of Taiwan (which originated from Japan), new practices such as selling insurance plans via commercial banks, selling by phone, online, etc., are all on the rise. 泰康 claims to be selling 100 life insurance plans per day.
A Pleasant Surprise
In the sea of passionate China-lovers who were eagerly networking between panels, I bumped into someone who is perhaps more famous than all of the prominent Chinese entrepreneurs in the room combined - 哈佛女孩儿－刘亦婷.
Fantastic isn’t it? If you are Chinese and you are currently in a top American college, you know who she is.
Sitting next to her during the speeches, I easily forgot that this “Harvard girl” whose fame swept across China as someone who has successfully made it into Harvard from Chengdu, China, is almost ten years my elder. Time flew by and her image as a 18-year-old Harvard girl remained in our memory, but the now-experienced finance professional moved onto better things. After a summer internship at Morgan Stanely followed by several years at BCG, Yiting LIu is now on her path to be an entrepreneur and create something on her own.
It’s in our blood – entrepreneurship. The phrase that “every Chinese wants to be an entrepreneur” was never an overstatement.
Mr. Ronnie Chan of Hang Lung Properties Ltd. recently published an article at the Financial Times. The title is rather catchy – “The west’s preaching to the east must stop” – a title filled with patriotism and a hint of annoyance. A talk last Thursday night focused predominantly on the content of this article.
In essence, Mr. Chan argues for five of what he calls “global rebalancing” between East and West:
- a rebalancing of moral authority
- a shift in decision-making power in global economic affairs
- a shift in the centre of economic gravity from the Atlantic to the Pacific
- a movement away from a total dependence on the US dollar as the global trading currency
- a movement to a more balanced and stable world
In his speech delivered to a group of around thirty at the Citi Executive Conference Center, Ronnie surprised me as someone that is not only successful in business, but also extremely bold and intelligent.
His article sounds great to Asian ears – who doesn’t like to hear that your side of the world is triumphing while the old “winner” is now on the “losing” side? On the issue of morality, Mr. Chan wrote, “Now some in America are advocating a G2 with only the US and China. If the focus shifts to the G2 to make decisions, then what happens to democracy? The west has a moral dilemma.”
On the fourth issue, Mr. Chan wrote, “Over time some countries will keep more renminbi, making it more like a reserve currency.” Some how I’m not so hot on this one. Unless “over time” means “over decades.” Still, I don’t believe it – probably because the economists teaching my econ classes at Columbia don’t believe it.
But more on the event.
The reason why I say that Mr. Chan is bold is that he is very pragmatic in my view. Use the EU for example – “People argued for days about restructuring the EU… but I said, the rest of the world doesn’t give a damn.”
I have always thought that perhaps I do not “feel” much for the EU because I do not live there – but I guess I’m wrong. It’s a global phenomenon. People just don’t care. It’s like Canada.
On the topic of Japan, Mr. Chan also stated that in a nation with a decreasing population size (i.e. a decreasing work force), the “economic growth model” becomes an “economic maintenance model” – and a negative growth rate should no longer be seen as a “recession.” But uh… why don’t we just look at per capita growth instead?
This one is also interesting – “The word ‘Chineseness’ and ‘nationalism’ are oxymorons” – the logic within which is too deep for my ESL brain. Perhaps someone else can enlighten me as to what Mr. Chan really meant. But from what I gathered, he is basically saying that the Chinese do not actually understand what “nationalism” means – that it was always triggered by something else. But I wasn’t sure.
Toward the end of the Q&A session, Mr. Chan touched on the Asia Business Conference because a lady in the crowd asked whether or not he was attending as he is one of the founders. Mr. Chan said, “we don’t invite outside people to come and talk as much… we listen and learn from one another.” Indeed a very unconventional idea. Maybe I’ll incorporate part of this for GCC Day.
As prize for winning the Columbia Case Challenge, Team Almost GS was given the opportunity to have lunch with Mr. Becker Chase from Booz & Co.’s New York office. The lunch was great. Sashimi, bento box, shabu shabu – all paid for by the generous Columbia Economics Society (which receives its funding from our student life fee).
“In the world’s fastest-growing economy, the experience of the last ten years will not be the best guide to the next ten years. Business leaders around the world who want to be successful—not just in China, but anywhere—will need a new China strategy.”
Indeed, a lot of this might just seem like an overly not-another-bullish-view-on-China book. But the fact that the Chairman of Booz & Co. Greater China region is thinking in line with GCC should still be taken as an encouragement.
And what do you know? “Indeed, China is now the world’s largest and fastest-growing source of entrepreneurial start-ups.” Spot-on opportunity for GCC members right there. The world’s largest international student network focusing on China – and what business opportunities do our members have, if not in entrepreneurial endeavors? GCC-Vanderbilt is looking at starting a chapter initiative on doing pro bono consulting work in Nashville Tennessee. GCC-Harvard is looking at bringing volunteerism to China.
“Since 1978, China’s economic growth has been phenomenal,” the report goes on, “but also extremely inefficient.”
With regards to the model of business ownership, the chairman writes, “it will evolve toward a nondemocratic but market-driven form of rule that, arguably, has never been seen on the world
stage before.” Included is a fascinating interactive graphic of how these ownership trends are heading toward.
Lastly, Mr. Tse wrote on leadership - ”Many Chinese officials have internalized this aspiration. They have taken on responsibilities beyond their job descriptions, acting as the guiding hand in the creation of a world-leading nation. Their interests extend beyond self-enrichment to the creation of national wealth.” This reminds me of the words of Mr. Li at Ping An Insurance during the GCC Winter Delegation, “The most outstanding human capital of China are going into the political system.”
So all of this sounds wonderful and great. How do I get a piece of it? Becker assured me that every year, Booz tries to hire at least one person from Columbia. How very kind of them. I think I am better off working my ass off at Goldman Sachs this summer.
目前在中国金融业的最大改变在于政策改革。美国分业经营的传统，是为1933年的《格拉斯-斯蒂格尔法案》（Glass-Steagall Act）所严格控制的。此法案“将投资银行业务和商业银行业务严格地划分开，保证商业银行避免证券业的风险，禁止银行包销和经营公司证券，只能购买由美联储批准的债券。”直到1998年才为新立的《格雷姆-里奇-比利雷法案》 (Gramm-Leach-Bliley Act)所废除。混业后的风险依然存在，就如花旗银行在这次金融海啸中几乎倒闭，使得美国市场信心大大受挫。
在美国，创新思想(Innovation)的起源来自与美籍经济学家熊彼得(Joseph Schumpeter)。创新是指把一种新的生产要素和生产条件的“新结合”引入生产体系。它包括五种情况：引入一种新产品，引入一种新的生产方法，开辟一个新的市场，获得原材料或半成品的一种新的供应来源。熊彼特的创新概念包含的范围很广，如涉及到技术性变化的创新及非技术性变化的组织创新。简单来说，就是依靠创业者和新建立的公司体系，把现有的资源重新组合，让市场和社会取得新的效率和值的提升，因为有太多的资源没有被当代科技所合理的运用。所谓的“蓝海战略”，也不过就是这种发展性的创新吧。在美国，越来越多的市场已经逐渐被一代又一代的创业者所占领，而金融危机更让一向没有耐性的金融业转眼它方。脱颖而出新市场是中国，它有太多的资源等待着被开发，等待着被重组，等待着增值。它需要的是人才。未来的战争将不仅仅是军事的战争，资源的战争，科技的战争，经济的战争，金融的战争，更是人才的战争。因为无论是在军事、科技、经济、或金融的背后，是人才基础给予了各个领域的创造与创新。然而在人才基础的背后，是教育区分开来了所谓的“人才”和“非人才”。所以，整体教育制度的落差，是人才战争的起源，也是全球人才进出各个国家的根本原因。中国人才去海外留学以后多数想留下來发展，而美国人才极少想来中国学习研究，过去来中国的美国人多半都是美国的劣质人才，因为在美国呆不下去所以来中国寻找出路。就如两国的税率和汇率达不到平衡导致息差交易一样，教育制度的成功与失败直接影响着国家人才的进入与流失。在这种模式里，中国的人才在流失，美国的人才在增长。这是过去的人才模式。在我认为，中国现有的教育制度是失败的。美国现有的教育制度是成功的。中国教育的失败之处在于它以分数衡量人才的价值与升值潜力。美国教育的成功之处在于它对学生在创造能力方面的引导和教育。而创造能力在国家经济体系中最能体现的部分便是创业－创业的方法，成功率，以及创业之后对于国与人民有没有真正意义上的增值。过去的模式是教育发展经济，但今日的经济似乎有望可发展教育。人才战争走到今日，中国处于的战略位置与往日不同。越来越多的留洋学生，海外华人，甚至是非华裔人士，都盘算着有朝一日来中国发展。 中国在人才市场的占有率日渐提升，相应的，海归派也即将迎来革命性的变化。新一代的海归在未来的几十年里会有怎样的发展，我们拭目以待。