In 2014, Beijing’s CRRC Corporation (the largest rolling stock manufacturer in the world), began what has amounted to nearly $ 3 billion of contracts to re-build American transit systems. Headquartered in Beijing with over 180,000 employees, the company has steadily gained ground in the U.S.
Recently CRRC has struck deals in Boston, Chicago and Los Angeles, with plans to invest in major production and assembly facilities. In Boston, plans call for a $ 60 million final assembly facility and test track at a former Westinghouse site Springfield, Massachusetts. In Chicago, it’s a $ 100 million manufacturing facility on the Southeast side. Lastly, in Los Angeles there will be a facility to manufacture major components, including propulsion and air conditioning.
The numbers are obviously astonishing, but the message that local authorities have given so far is that the company had the highest-rated technical offer and lowest price while offering the most robust local employment program and highest U.S. component content.
The first of the deals was with Massachusetts Bay Transportation Authority for Boston’s subway system. The $ 567 million project will build 58 cars by 2021. The design process has taken three years for the Orange Line and Red Line cars. The design will provide 15 more passengers per car, wider and electrically-operated doors, four accessible ADA-compliant areas per car, LED lighting, modern HVAC, automated passenger information, data recorders, and live CCTV capabilities.
In March 2017, CRRC signed a deal with the Chicago Transit Authority to produce up to 846 new rail cars. The $ 1.3 billion contract will revive rail car manufacturing in Chicago after a 50-year hiatus. The manufacturing facility on the Southeast side will be about 381,000 square-feet employing about 170 workers. According to a statement from Mayor Rahm Emanuel’s office, CRRC will spend $ 7.2 million to train the local workforce. In a news release the Mayor said, “This new facility represents a major investment in Chicago that will bring economic development to the Southeast Side, while creating good-paying jobs for hundreds of workers.”
The most recent agreement, in late March 2017 was confirmed for the Los Angeles Metro by Los Angeles County Metropolitan Transportation Authority (LACTMA). It came right before Chinese President Xi Jinping and U.S. President Donald Trump met in Florida to discuss trade and investment between the two nations. The LA deal encompasses building 64 subway cars that will be worth as much as 7 million. The cars have already met Washington’s “Buy America” provisions requiring 60% of components to be made in the U.S. The first car is expected to be delivered in 2020 and completion of the project is expected by Fall 2021.
In totality, the world’s largest supplier of rail transit equipment is looking to improve technology innovation, upgrading capacity, and manufacturing platforms in the U.S. In an interview, Li Yongle (Vice President of CRRC Qingdao Sifang) said, “CRRC will support other project plans in the U.S., including projects for metro cars and high-speed trains.” CRRC will be helpful in developing local U.S. economies as well as the interconnectedness of various business hubs nationwide.
I was meeting with a company recently. They called me because they were considering making some changes to their management team. They were frustrated with the behavior of leader in their company in China, a Chinese executive. Their concern? He (let’s call him Wang) was not on the plant floor enough. He wasn’t communicating regularly with them about day-to-day details at the plant. They wanted him to design and lead some production improvement projects and he wasn’t following through.
I suggested that before they consider replacing him, which is both costly and time consuming, that it would be good to take a look at their procedures. I could work with them to assess day-to-day business transactions and how they had structured the communication of business needs. This would give us the short term benefit of identifying Wang’s strengths and weaknesses, we could better identify what capabilities we would be looking for in a replacement, and at the same time we could identify areas where we could improve their procedures.
But really…I was thinking during the discussion that the underlying reason for their dissatisfaction with the manager was cultural. The above complaint is one I hear often, and its common struggle for US owned companies in China. Not because of the capability of the manager, but because of our different expectations of what a manager does. Let’s take a look at one difference between how U.S. and Chinese value management communication.
To do this I am going to look at the behavior three ways; what we say our goal is, what that really means, and then how we feel about it. So let’s look at management communication in China and the U.S. through that lens.
- What we say we do: Americans believe that our management style is open, that we empower our teams to engage and contribute to the organization by giving them overall goals and encouraging them to create a solution.
- What it really means: Your boss is going to give you a goal, maybe a loose outline, and expect you to figure it out. You know that phrase, right? To figure it out involves you coming back to them with questions regularly through the process. They (un)intentionally give you incomplete information (because it would be insulting to give you all the details) and expect you to come back and ask for more information. In an American work environment, you should ask your supervisor regularly for feedback as you progress. If you don’t, then they worry that you aren’t making any progress and you may go astray. And you had better ask more questions, because they didn’t give you everything you needed up front in the first place.
- How it feels: If you are American, depending on your personality, this can either be liberating or irritating. Yes, you have more flexibility and input, you can be creative and you have a lot of freedom in how you perform your job. Equally, it can be frustrating to only have the outline of the project change as you proceed, watch the goals change as you gather more information, and stop and start while you wait for feedback.
- What we say we do: Chinese believe that their management style is clear and efficient, that they give their employees clear instruction and direction and the employee can be successful with less risk to them and the organization.
- What it really means: Your boss is going to give you very specific goals, and information and details on how to meet that goal. You are expected to stay within the framework of your role and not venture outside of the parameters. If your task involves coworkers you will go to them early and often to gather information. You should not ask your supervisor questions, if you do that means they failed (they didn’t give you clear direction) and you failed (you didn’t understand it).
- How it feels: If you are Chinese, depending on your personality, this can be either liberating or irritating. Yes, you know exactly what to do to succeed, your boss will give you clear direction and you are responsible for your part of the project, not for things that you can’t control. However, it can be frustrating if you want to be creative in your job and/or expand your skills outside of your current role.
CONFLICT: Obviously, the conflict is when you have a boss from one cultural expectations and the employee from the other.
- Chinese in the US managing Americans: An old friend of mine was asked to move from China to the U.S. for a six month assignment as interim Director of Supply Chain. She is Chinese, had 20 years’ experience, mostly with U.S. companies and had worked for this particular company for five years. After she was in the U.S. for a month or so I called her. When I asked her how things were going, she said “Americans drive me crazy. They can’t just get things done without coming back all the time with questions. My teams in China would have just taken care of it. It’s such a waste of time.”
- U.S. factory in China: I was working with a client in China, the GM of a large 400 person high tech factory in southern China. As we were meeting on a project, his Chinese Plant Manager came in. Their discussion was about a new product that would be coming to the plant, and what lines they would use to manufacture it. The U.S. manager threw out ideas (and then grabbed them back and threw out more). He said “what about lines 4 and 8” and as the Chinese manager was thinking through 4 and 8, with just a few minutes going by…the American said “no…what about 5 and 9” Over 5 minutes the American changed their mind a few times (he was, after all brainstorming). I could see the Chinese manager getting more and more frustrated.
- U.S. Manager talking about a Chinese employee: The U.S. manager said to me that the Chinese employee was hiding something, that they weren’t being transparent about the problems at the factory. Why? The Chinese employee only mentions a problem to management after they have identified and started working on the solution.
- Chinese intern on a project: I hear this from Chinese students here in the U.S. who are interning at U.S. companies. As a matter of fact I just had this conversation with one of my interns. The students are given a broad outline of a project, and then the boss is gone. They don’t give them much information on how to complete the project, its not something they have done before, they don’t have the data needed, etc. The Chinese intern isn’t comfortable asking the boss for more information, so the project stalls and both sides are not happy.
- The Chinese manager would need to understand this is how U.S. workers have been socialized in the workplace. If you aren’t coming back to give your boss updates, you aren’t doing anything. I wouldn’t try to change their behavior – “when in Rome” as they say.
- This is similar to the above, but if the U.S. manager really needs his staff’s input to make a decision – he needs to frame it that way. If the U.S. manager had framed the discussion better in the first place, their Chinese manager could have worked within that structure. Rather than saying “we are going to decide where to put this product” if he had said “we are going to think about 5 or 6 different options for this product, and then we will narrow it down to the best two options. Then I want you to take the next few days to analyze those two and give me the pros and cons of both.” No problem – the goal was outlined, and the Chinese manager could work on that (clearly stated) goal.
- In this situation the answer is procedures. Having a procedure that forces problems to be written down on a form and management notified. How you implement that depends on the function of that particular position / department. But any client that works with me knows that I am stickler for procedures. They eliminate a lot of cultural misunderstandings.
- With my intern, I framed the situation for him – told him I expected him to give me an outline of the project, and then I would comment on it, and give it back to him. And that we would repeat this pattern back and forth a few times. I told him I know he wouldn’t be comfortable working this way. But, this is how Americans are, and to work in the U.S. he needed to get more comfortable with it. The first draft he gave me – 90% complete. Lol.
SUMMARY: Overall, U.S. management behavior expects information to be communicated up. We expect employees to “bring us problems” and “keep us updated.” In China the expectation is that information will be communicated down so that managers “prepare employees to succeed” and employees are focused on implementation of those tasks.
There is not a right and wrong. Or if there is – you should adapt to the environment you are in. Not force your U.S. communication value system onto Chinese employees in China. And Chinese managers/employees in the U.S. need to adapt to the expectations here.
FYI – this is a small part of a training program I have for companies (one for U.S. teams, one for Chinese teams) that started when Disney asked me to work with them more than 10 years ago. There are patterns in behavior like everything else, and as much as the projects we work on involved regulatory procedures and accounting processes and quality systems – those are influenced by cultural norms. There are many reasons why we have the behavior norms that we do, but to learn that you need to take the class!
This client had the class, but its hard to change your own expectations! I wanted to use the exercise of reviewing their communication and procedures to remind them of those lessons, and help them create a better system to keep everyone on track.
OVERALL – It’s important to be competent both in the transactional side of business, and the cultural / behavioral. Developing that skill set in your team is critical. Learning from advisors who have both technical and cultural experience is also.
To read more check out the link below:
U.S. and Chinese Management Expectations
In our ‘1st Quarter 2017 Newsletter’, we had our first “Trumpdate” article. At the time, all anybody really knew was that this Presidency was not going to be like any other. The direction that the Administration was going in was still developing. Now the image is getting a little clearer. In the past couple of months, trade talks have increased, especially around the in the subject of China. In early November of 2017, President Trump visited China and began the next phase of discussions with President Xi Jinping.
President Trump’s approach to China during his early stages had been shaped by his deeply felt opinion that unfair trade practices have harmed American workers. After July’s Comprehensive Economic Dialogue; both the U.S. and China expressed their interest in narrowing the trade deficit. Many have predicted that based on the staff that President Trump brought on his most recent trip, the deals will likely center around China buying American energy, farm products, aircraft, and machinery.
On this topic there are two major developing opinions within American business communities:
- First, people are concerned that President Trump’s focus on the deficit could distract from larger problems such as market access and global competition. As we all know, China is the most populated country in the world. Those populations are potential customers for U.S. manufacturers that do a lot of exporting to China. Inaccessible markets would be a problem. China has always been strict with their industry policy, and could use those policies against the United States such as limiting investments or exports.
- Secondly, people have developed the thought that China will see President Trump’s proposal as an opportunity to open different industry sectors to foreign direct investment. This scenario will benefit all parties. The U.S. manufacturers will gain more business with China, and China’s economic growth will be boosted from all the foreign direct investment.
The result is still beyond anybody’s prediction. From his November visit, President Trump was able to sign billion worth of deals. The two countries sealed a total of 19 agreements covering bioscience, aviation, and smart manufacturing. It was also announced that Chinese e-commerce giant JD.com would buy billion of U.S. goods, predominantly beef and pork-based products. The U.S. was able to gain more exports from China and reduce the trade deficit. In return, China has proposed broader economic interaction between the two countries, including:
- Buying more manufactured products and energy from the United States
- Lifting export restrictions on hi-tech products so that more Chinese products can be imported to the U.S. to help reduce the trade deficit
- Having more opportunity to cooperate with the U.S. in research and development fields such as space and aviation
- Implementing the U.S. participating with the “Belt and Road Initiative” as well as the Asian Infrastructure Investment Bank
- Requesting the U.S. to tone down the Section 301 probe into alleged Chinese IP Violation
Stay tuned for our next Trumpdate coming to you at the end of March 2018.
Nearly a year ago, in January 2017, the roll-out of the Columbus Smart City plan was announced. As highlighted in one of our previous newsletters, it is a comprehensive plan proposed in October of 2016 includes new technologies, connected infrastructure, electric vehicles, integrated data platforms, and more. You may be asking “what’s next?”. Developments and plans for Smart City can be found on the Smart Columbus homepage (https://www.columbus.gov/smartcolumbus/). But that is not going to be the most recent project developing in Columbus. Now, it is the Hyperloop!
The Mid-Ohio Regional Planning Commission has proposed a plan to build a high-speed transportation system between Chicago-Columbus-Pittsburgh. It was announced in September of 2017 that the Midwest route is one of ten international finalists chosen, and one of four in the U.S.
Elon Musk, the founder of Tesla, invented the Hyperloop. It is a high-speed transportation system incorporating reduced-pressure tubes in which pressurized capsules ride on an air cushion driven by linear induction motor and air compressors. This new transportation technology will be a game changer for many industries.
The first industry is the aviation industry. If the Hyperloop is established, a 7-hour flight would take half the time. The airline companies that will be affected are those whose revenue comes from the domestic market. Next is the freight industry. Giant companies like Amazon will be very interested in high-speed freight services. Amazon fulfillment centers will be strategically placed along the Hyperloop routes. Lastly, the job market. The new Hyperloop transportation system will remake Columbus. Thea Walsh, Director of Transportation Systems and Funding for the Mid-Ohio Regional Planning Commission stated that, “For people who don’t have access to the big cities like even Columbus may have a way to get in here to access the job market.” The job market will be more competitive because the location barrier will be lower. For example, if you have a job in Columbus, you could live in your hometown of Chicago. Can you think of any places where that is currently the case?
There are many socio-economic factors that would benefit from the Hyperloop relating to the Columbus Smart City. Just look at some of the impacts the Bullet Train had on regional economies in China. Studies by the World Bank found that over the span of 10 years, 15 cities benefited in 209,609.5 million yuan in GDP. The transportation industry alone gained nearly 2,000 million yuan during the time.
To read more check out the link below:
When your product development or manufacturing company needs design, engineering or business services not currently employed, the most typical solution is to outsource the work to a consulting or design firm. There is now a new, cost-effective, novel program at Ohio State’s Center for Design and Manufacturing Excellence (CDME) which utilizes students to bring about high-value manufacturing projects as part of their curriculum. These young minds are eager to learn and willing to expend time and effort to bring about successful projects. When properly mentored and guided by CDME’s experienced staff, they are capable of doing incredible things.
While there is often a trepidation with using students, CDME embraces their passion and creativity to delivery on high-value projects successfully. Our engineering director, Nate Ames, has often been heard stating that one of the biggest values of students is that they are “unencumbered by experience”. While experience is a great trait in our senior engineering staff, students who do not have decades of industry experience are able to look at product design and innovation problems with a fresh perspective.
CDME is proud to have recently launched the Experiential Entrepreneurship Education (E3). This program is the first of its kind in the nation to combine state-of-the-art educational programs in product design, manufacturing, commercialization, and business modeling with advanced on-site prototyping capabilities and real-time, industry-sponsored research and development projects. We are proud to offer another option to innovate for the small to medium-sized manufacturing market. You are encouraged to bring your innovative ideas and engineering challenges to the program and allow these bright students the opportunity to develop your product into a commercial, competitive deliverable. The students gain experience, advance in the E3 program and are gainfully employed. You gain a customized and marketable product.
The E3 program is made possible by a generous donation from an alumnus of Ohio State’s College of Engineering. Those who complete the E3 program will be much more prepared than their peers upon graduation and will start value-added employment from day one. For more information on this program, click here.
By Eric Wagner Program Manager, Manufacturing Extension Partnership at The Ohio State University
We have been publishing a quarterly newsletter for nearly two years to an exclusive list of email subscribers. With nearly 400 subscribers, we thought it was time to go public. We are proud to announce that ‘Issue #7: Industry 4.0’ will be hosted for the first time ever on our website. Industry 4.0 will feature a newly designed layout geared to be direct and user friendly. Check out past editions: http://www.889globalsolutions.com/889-global-solutions-newsletter/
Here at 889, we envision this newsletter to be a source of information for all companies that are involved in manufacturing and procurement. We will be covering trending topics and developing industry news. We will have provided content from peers and partners within the industry that we identify as thought leaders. If you or somebody you know would like to get involved in the next quarterly edition, please contact our team at email@example.com.
Please note that 889 Global Solutions has the discretion to exclude content that does not align with the topic or the 889 mission.
We look to publish the newest edition Wednesday, December 20th during your lunch break. Hope you enjoy!
The Chinese New Year of 2018 starts on February 15th, and lasts until February 21st. While this is a major event that is still largely unknown outside of Asia, importers are sometimes painfully… aware of this season. They certainly have good reasons. The Chinese New Year shuts down every single production facility in the entire country, for varying time frames. In the worst case, and rather likely, scenario – the Chinese New Year can result in severe delays.
Although the official dates of the Chinese National holidays are helpful to understand, it is equally important to know the range of dates around the holiday that are impacted. It is difficult to plan supply chains with inconsistent schedules.
The unofficial dates are what allow the factory workers to visit relatives they may not have seen since the previous year’s holiday. The two holidays with the most days off are the Chinese New Year (mid-February) and the Chinese National Holiday (early October). Both are officially celebrated for a full week. Factory workers that are employed in big metropolitan areas tend to follow the official dates more closely since their relatives are closer geographically, or easier to get to. But, many factories close two weeks prior to the holiday and may not open with a full staff until two weeks after the holiday.
It is also helpful to look at it this way: if a factory closes two weeks before Chinese New Year, and workers do not fully return until two weeks after, that factory will not only have no production during that time, but it will also take a few days after the employees return to get things back up to speed. Then if you look deeper in to that factory’s material supplier, they will also be delayed, resulting in another week. Finally, the large amounts of containers that did not make it out before the holiday will take time to be processed. Ultimately, it is wise to forward plan for 4-8 weeks of delays during these times of the year. But why let that be a deterrent from all the positive aspects of working with Chinese manufacturers?
As a company who has been working closely with a lot of Chinese Manufacturers, one of our suggestions is better planning. By having a better understanding about the Chinese holidays and non-working days, U.S. manufacturers should be able to plan their production. Ensure that production starts in late December, at latest. That assumes in average production time is around 30 to 40 days. If it takes more than 40 days, we start counting backwards and look to have a “buffer stock” in our warehouse. Try to have a minimum 2 weeks’ worth of “buffer stock” between the end date of the production, and the date they close. We also attached a Chinese calendar to help.
New Year’s Day 2018: Jan 1st. No makeup days.
Spring Festival/Chinese New Year: Feb 15th to 21st, makeup days on Feb 11th and 24th
Qing Ming Festival: 5 Apr to 7 Apr, makeup day on Apr 8th.
May Labor Day: Apr 29th to May 1st, makeup day on May 28th.
Dragon Boat Festival: Jun 16th – 18th, no makeup day.
Mid-Autumn Festival: Sep 22nd – 24th, makeup days on Sept 29th – 30th.
October National Day: Oct 1st – 7th, no makeup day.
Are you guys excited for an extra hour of sleeping time? Are you following the daylight savings? If you are, is China following it with you? While much of the world will be participating in the bizarre ritual of moving their clocks forward an hour for Daylight Savings Time (DST) this weekend, China won’t be taking part. That’s because China doesn’t observe it.
If you’re from a Western country, you probably know the DST drill. In autumn, the clocks “fall back” an hour, earning you an extra hour of sleep. But in the spring, the clocks “spring forward,” which means you lose a whole 60 minutes of precious shut-eye. The clock switches are supposed to account for the changes in daylight hours between seasons.
If you’ve ever tried to schedule a Skype call with family or friends back home, you’ve probably noticed how this affects the time difference. For example, if you’re making a call to a friend on America’s East Coast from China, you might be 13 hours ahead in November but 12 hours ahead in April.
China is one of the several countries that does not observe DST, and their daily clock remains unchanged throughout the year. In fact, most of Asia doesn’t observe it, with Japan and India being the sole fellow DST followers.
But this wasn’t always the case for China. The Chinese government made the change to DST in April of 1986 to try and conserve energy. A study from Peking University illustrated that this could save up to 2 billion kilowatt hours of energy (O’Donnell 2017). Government officials had hoped that moving “wasted energy” from early morning light (thanks, sleeping factory workers) to the end of the day when more people were active, the demand for electricity would be reduced.
But the period of changing the times twice a year was unpopular. The city of Guangzhou found it difficult to adapt to the system, and eventually ignoring it altogether. When China was supposed to be moving clocks forward an hour on April 15, workers in Guangzhou complained so much that their employers caved.
The workday at restaurants, schools and government offices across Guangzhou was shifted ahead an hour so that workers could get up the same time as they normally did and still claim they were following the time change. But because the time change was not considered official, many people began forgetting to reset their clocks and meeting times constantly had to be doubled checked. The confusion and inconsistency led to the Chinese government ditching DST altogether in 1992.
Perhaps China is onto something. with not observing DST. The system isn’t too popular with the sleep-deprived citizens of the world. But don’t take our word for it — just check out the Change.org petitions calling for the repeal of DST.
Credit: O’Donnell, B. (2017, March 11). Explainer: Why China Doesn’t Have Daylight Savings Time. Retrieved November 2, 2017, from thatsmags: http://www.thatsmags.com/beijing/post/16191/explainer-why-china-doesn-t-follow-daylight-savings-time
As a Minority Business Enterprise for many years now, it has brought unique opportunities and insights in the industry to light at 889 Global Solutions. By adding our Woman-Owned Small Business status recently we are excited to expand this activity. Over the past few days (Sunday, October 22nd – Wednesday, October 25th) our team participated in the 2017 NMSDC Conference.
Ranging in industries from Automotive to Healthcare with many company sizes represented at the conference, there was a lot to learn. The growing use of Supplier Diversity Programs in large businesses has allowed MBE’s to become more interconnected than ever.
Last week, September 18-20, 889 Global Solutions made an appearance at the AmCon show in Cleveland, Ohio, located at the I-X Center. The turnout was a success for both exhibitors and attendees as American Contract Manufacturers met with local and regional businesses to solve supply chain needs.
The 889 team was excited to create visibility by not only exhibiting, but also presenting a seminar for a local forum at the trade show titled “How to Take Advantage of Global Resources”. AmCon Trade Shows are nationally recognized for having domestic manufacturers come represent themselves and the industry. The show provides a platform for manufacturers to showcase their products and services, as well as, learn about the latest trends in different sectors through educational forums.
As a company that has continually grown since its inception in 2001, 889 has knowledge and experience from past and current practices. It was exciting to learn from others in the space and share what we see as the best way to outsource a supply chain in order to take advantage of labor cost-savings, materials, and also avoid situational road-blocks along the way.
As Alex Anderson, 889 Global Solutions Sales Associate and presenter of the forum, explained “It was a good turnout. There was a good amount of stimulating conversations and general questions about when it is appropriate to look for sourcing solutions internationally, how to go about introducing your company to the practice, and pitfalls to avoid. 889 is proud to consider themselves a leader in this practice and was happy to pass along knowledge that could help businesses be more cost-effective and enhance their supply chain operations.”
Make sure and see 889 Global Solutions showcase more of their services offered at the next trade show being attended in Detroit, Michigan on October 22-25, 2017 for the NMSDC Trade Show. There, you will find not only examples of our international sourcing and manufacturing capabilities, but also our MBE and government contracts capabilities as well. Questions? Please feel free to call 614-235-8889 or email at firstname.lastname@example.org.