March 12, 2012- Beijing- Lenovo, US Embassy and Quanjude Rd. Duck Restaurant

March 12, 2012
Trip to Lenovo

Got a very nice tour of Lenovo in Beijing. Lenovo is the world's second largest PC manufacturer and the single largest producer in Asia. Lenovo was incorporated in Hong Kong in 1988 with its previous name, Legend. Lenovo purchased IBM's PC business in 2005. Lenovo is mostly owned by the Chinese governement. I could not get a straight answer as to what percentage is publicly traded, but I do know that shares trade on the Hong Kong stock exchange. It was explained to us in the tour that Lenovo is focusing on bringing new products to Asia that satisfy the Asian consumer. They believe that this is where their largest potential market is. They test new products on the Asian market first. We got a short tour of the assembly plant, but workers were off, so not much to see really. Did get to see the warehouse which was 100% automated. Pulleys pluck components from the shelves. Lenovo does not pay for any of the parts until they are pulled from the shelf for production. Very efficient. Dr. Crandall would have loved to have seen it!

Headed back to US Embassy, got to see modern Beijing. Many new skyscrapers and apartment buildings. This town is being rebuilt. Real estate bubble for sure as Chinese are investing all their savings into apartments hoping to flip them.

Modern building construction everywhere in Beijing



On the way, we got some stratistics form Wendy.
Literacy rate in China now- 93%
Life expectancy now- 74
Before 1949, life expectancy- 36
Farmers now- 55% or population
Before 1949, farmers- 85% of population
Chinese characters- 9 basic strokes, Mao simplified Chinese characters, young people not learning all the Chinese characters because of computers
unemployment rate now- 3.7% but this does not include farmers who consider themselves self-employed and are not counted
Medical insurance was only available to city workers, last year was offered to farmers

1 million trees are planted each year in Beijing to keep dust storms down and protect city from desert outside city.

Lunch at Hua Jia yi Yuan- Hot Pot- Restaurant. Was very good. Typical to most meals, but Hot Pot centered at the middle of the table was a little different. Hot Pot cooking with pork, peppers, vegetables, etc. Lotus root included in hot pot which was very good. Like a potato but unique shape.

After passing through security, we got inside the US Embassy in Beijing where we heard a lecture from Landon Loomis- Commercial Officer at the US Embassy in Beijing.

US Embassy in Beijing

Loomis works with small and mid-size US companies that are trying to get established in China. For a small fee, they can help with their connections and knowledge of the Chinese system for much less cost than consultants.

Loomis' presentation was very interesting. He and his wife are both diplomats currently in Beijing. He will be moved to Mexico City in the next year. He gave us a nice overview of Chinese business and relations with the US.
US trade with China- $503 billion in 2011
US exports to China up 13%- 2010- 2011
China is US second largest trading partner after NAFTA
Chinese FDI into US- over $4 billion in 2010
77% of US debt owned by Americans
Only 1% of total US debt owned by Chinese
170 cities in China with populations over 1 million
Middle class now 23%- in 2020 will be 48%
Chinese reaction to 2008 Financial crisis- Total stimulus- $586 billion- $1.45 trillion from banks
Goals of stimulus- to stimulate economy, fund infrastructure
Problems with the stimulus- non-productive assets, debt horizon not matching, $250 billion unrecoverable

US- China Relations:
Xi Jinping- Vice Chariman- will be next president
Hu Jintao- current president

China's Challenges:
healthcare- no quality
inequality
affordable housing
food prices
demography
inflation
pollution
corruption

Per capita disposable inccome:
urban- $3,454 / year
rural- $1,105 / year

70% of electicity produced by coal
50% of water resources are severely polluted

12th Five Year plan:
Focus on Quality Growth
moving up value chain
Addressing Inequality
Enabling Consumption

Economic Restructuring:
7 strategic Industries- Technology 3%- 8%
Services- 47% of GDP
urbanization 51.5%

Innovation:
R&D funding to 12.5%
2.2% of GDP

Livelihood:
Healthcare
Housing
Population Control

Obstacles to US companies in China:
rising labor costs
protectionism
unclear regulatory environment

Website- www.buyusa.gov/china

Back on bus to Quanjude Rd Roast Duck Restaurant

Lex and Icy at Quanjude Road Duck Restaurant

The Quanjude Road Duck Restaurant is Beijing's most famous roast duck restaurant. We had several courses including scorpion appetizers. Scorpions were very good- deep fried. Duck was delicious. Skin was crispy and duck was not greasy. Duck is carved into 12 * 9 pieces, since both are lucky numbers. Typically served with hoisin sauce on a pancake with scallions. Best part of dinner was that students from BISU joined us and we got to see Icy again. She is so sweet. Lex has attempted to email her several times since we got back. She has not responded, so we are afraid our emails are being censored. We really wanted to keep in touch with her.

End of our last day in Beijing.