Some Beijing advices

From time to time, friends and acquaintances ask for travel advices in China and I should know a little at least given my 20 years of living and working in China. So, this post has some recommendations but it's not for everyone and I don't pretend that I know it all so take my advices as input, not final decisions. I'm more of a business traveler than a sightseer/adventurer so bear with me.

First, get WeChat and set up your credit card for payments. You can hardly use international credit cards in China. Cash was King but now all WePay or AliPay. Secondly, download DiDi and set it up with international credit card. Easier to use DiDi to input addresses in english and order taxi as no taxi driver speaks english. Buy a data plan before you come to China. use it wisely, you can upload photos to Instagram and Facebook, etc. when you are back home or at hotel using VPN (i recommend Astrill but ExpressVPN also good).

Always, always avoid people on the street selling you tours or bringing you to teahouse or KTV or whatever. You have no idea what you get into and you'll be easily ripped off. If you want support, order from a tour operator, the hotel or just order a your own driver.

Beijing

Well, here I lived for like 13 years before moving back to Sweden 6 years ago. But have been back to Beijing at least 50 times since moving out. My part of Beijing was East Beijing, centred around Worker's Stadium and Sanlitun. And it's fairly pleasant part of the town, used to foreigners and life is easy around that area. Some tourists but more business travellers and 'locals'. Subway should be used if you can, predictable as Beijing traffic can be anything but fast..

Here's a Google Map (need VPN or your international phone to access) with most places listed below.

Must Do

The Great Wall. Any time of the year but it's most amazing in the winter time where you can the wall by yourself. Avoid Badaling unless you're on a tight timeline. Better to go to Mutianyu. If you have time, I recommend a hike from Jinshanling to Simatai see this tripadvisor or this travelchinaguide post. If you're more adventurous and/or have more time, go Yellow Flower section and stay overnight at a local family. See sunset at the wall, dine in and get up in the morning for the sunset. Good experience. See this post. I don't have any numbers for staying with a local family so take a chance .. 

The Forbidden City. Well, it used to have a great starbucks. You need an hour or two. Easiest access is via subway. 

The tunnels under the city is a different experience but I'm not sure they're accessible anymore. I used to go to a place close to Qianmen. Here's a post.

798 Art District is a different experience that showcases Beijing's creative environment.

Hotels

I personally prefer staying in the North-East part - close to Airport and Sanlitun, easy access to Beijing Railway South (Line 10/14) that takes you to Nanjing/Shanghai. My favourite hotel is Westin Chaoyang but I can also recommend Chao (in Sanlitun), Bvlgari (a bit expensive), Holiday Inn Dongzhimen (great location), Red Capital Residence (courtyard style in Dongsi Shitiao area), Nuo by Kempinsk.

Restaurants

well, you gotta have Beijing Duck. It can only be truly experienced in Beijing and everyone has their own favourite place. Da Dong in Dongsi shitiao is a high-end great experience. You should make reservation but most likely you'll still end up queuing. Instead, go to my favourite, Jing Zun at Chun Xiu lu. Still, ask your hotel to call and make a reservation as it's a popular place. Also, order Chao Bing (fried bread) and dry fried beans.

Hot Pot. Beijing has great options for hot pot. One of my favourites are on the 3rd floor on the corner of Chun Xiu Road and Dongzhimen Outer Street (on top of Pizza Hut). No reservations needed. Order hot pot with Bull Frog. amazing. Yang Hot Pot on the 4fl behind Westin Chaoyang is also good, it's in Jiayi business building.

There's an amazing Inner Mongolian Lamb restaurant, Qing Yi Grassland, close to Jinsong Station on the 3rd ring road. Fresh lamb, great Shaojiu. It's on the backside of the office building. Here's the dianping site. It's bit expensive, like €40-50 for 2-3 people but the lamb is just amazing. The map refers to it as Xueyu Caotang.

In Sanlitun, there's plenty of decent restaurant but more westernized. For Chinese food, go hole-in-the-wall with a crowd. If you crave a burger, go to Fatburger at Liangmaqiao Station, 

Cafes

China has really stepped up and is now serving great crafted espressos and various coffees. Starbucks is always a safe haven but try other places. Moca Bros in Sanlitun (Nali Patio), Luckin Coffee (challenging Starbucks) and just any coffeeshop that has a real espresso machine. Cafe Groove (Korean inspired) at Chun Xiu Road. And On the east side, lots of them. On the south and west, less.. 

Just north of Cafe Groove there's a great food court that has fantastic coffee. A good place for Chinese and asian fast food and a bar as well. On the map, it's the now closed Feitang Yuxiang.

Bars & Clubs

Beijing is a bit limited in the nightlife and doesn't have the same development as Shanghai and Hong Kong. Somewhat limited by the proximity to power. but still, there are some great places. Moonshine Whiskey & Craft Cocktails in Nali Patio, 3F (Sanlitun) has an amazing whiskey collection. (On teh map, the closed Apotechary) Go for Kavalan. Tucked away in an office building behind the youth hostel on Chun Xiu Road, there's an another amazing Japanese whiskey bar but hard to find. You have to go in to the alley, find the entrance to the youth hostel. Opposite, there's an office building. The bar is inside on the ground floor. Another great bar is in Rosedale hotel on East 3rd Ring Road. Pricey but high class.

Infrarouge is a new restaurant/bar/nightclub in North Sanlitun that has good potential. Good DJs. Mesh in Opposite House is a classic bar for good dry martini and music. On Gongti West Road there's a bunch of classic Chinese nightclubs that could be an interesting experience. 

Transportation

DiDi is recommended though all address may not be available in English but it really makes your life easier. From airport, you can take airport train (not express at all as its starts from T3 and makes a stop at T2 before heading downtown). You can order a DiDi but if you can't speak chinese it may be a bit difficult to find him. Taxis? Print the address where you going and be prepared to have limited space for luggages. 

In Beijing, get around with DiDi or subway if convenient access. Cheap and predictable.  Avoid buses and bikes (as traffic behaviour is a bit different from what you might expect)

Outside Beijing

If you have time, visit the gigantic Ikea complex in the south of Beijing. It's quite a different experience from East Beijing and the tourist areas. If you have more time, take the high-speed train to Tanggu to explore a small town (only 2 million people).

China 1997 - 2013

I presented at Stockholm University yesterday to grad students who had a day about Chindia and I was to give my perspective on changes in China from my 15 years living and working in China. I added the presentation to slideshare. Key takeaways? China is not always what it seems like and don’t overestimate the power of Guanxi – definitely a double-edge sword and for foreigners, more so. Of course, the whopping growth and changes in behavior, consumption and attitudes.

A Short Tale of the outdated mammoth traveler

Time to harass myself.. 

I have to admit it, I am probably stuck in pre-millennium ways of traveling as been awfully spoiled by SAS the last couple of years. So when I went to London a few days ago, I chose to fly Norwegian of several reasons – the primary reason was timetable and low-cost tickets as I booked very late and SAS was full (or quite expensive).

Surprisingly, Norwegian doesn’t offer online check-in, so I had to leave home 20-25 min earlier than planned to check-in at the airport (same procedure in London) and after that, the horror of queueing for security check. At SAS, always can use the priority lane for both check-in and security. This is how lit locked the other day (oh, and the queue goes behind the pillar on the left). It only took some 10+ minutes but still…

However, once in the plan, free wifi is great – just not that reliable but great when it works. Planes were new and seats ok but at SAS, food/drinks are for free (for me) – not the same at Norwegian.. And I miss that personal touch from the SAS purser. Will not happen at Norwegian, probably no matter how much I travel with them.

Then landing at Gatwick. Maybe I shouldn’t complain, Heathrow isn’t that great after all but slightly more accessible. But Gatwick feels like a dump and empty and in construction and .. somewhat sad. Security check though was smooth and fast as it was no people.

I guess the time long ago already passed for the golden age of business traveling. Now costs and time schedules matter vs business class and convenience. Just for me (and SAS) to accept the harsh reality.

SAS forgive me for going Norwegian. It may happen again, it wasn’t that bad (and at 40-50% lower cost)

War on the Korean Peninsula? My uneducated layman's view

First a disclaimer: I have no education in crisis and war analysis; nor am I expert in security and military strategies. These are my own thoughts and speculations. And I hope I will be proven wrong

I think we will see military actions on the Korean peninsula as the United States want to remove the threat that North Korean possess. The actual ability for Kim Jong-Un to push the button for a nuclear attack will make US to force a smaller or larger military incident in Korea.

I also believe that US may do this as a preemptive attack. There are too many hormone filled military advisors and leaders that just want to see North Korean gone. But there are also another angle to this and one that has been overseen in many of the discussions. A limited war on the peninsula will seriously weaken China and Korea. From a eco-political perspective, US has all to gain that North Korea heads to war with South Korea and has to be attacked from both South Korea, US and .. China. As China can’t really take the risk of a full-blown nuclear war an hours flight from Beijing, they would have to be involved and supportive of military counter-actions.

This would weaken China politically internationally but also affect their economic position. For Apple and other american brands, Samsung and other Korean products will suffer tremendously by a war outbreak.

If the war can be contained to the Korean peninsula with minor outbreaks to Russia, China and Japan, US will stand strong as the clear winner and really gain power in Asia. Therefore, I think that US may try to provoke an attack from North Korea or even may pre-emptive strike first.

But, I hope all military strategists remember the result of both Vietnam war and Iraq.

China and Corruption

Spinning further on doing business in China and the main topic of the day and for the new leadership in China: Corruption. To be fair, they have other pressing issues as well, like pollution, income disparity, grassroots democracy.

However, corruption is tightly integrated into the whole society and not necessarily in the way that we think of it. For example, it's quite common that sales people do not have salary, nor 'real commission', instead they are advised/told to get the commission from the customer and the seller states what he wants. Say, you are selling software. The company expects to get $1,000 and the customer is prepared to pay $1,250-1,300. The salesperson can pocket $100-150 of the deal and $100-150 goes back to the buyers. The sales person avoids paying salary tax, the company reduces their risk and also not paying social security fees and the buying company probably gets a better price (as if all the costs would be in the product sale, the price might even be higher).

As any macro economist would tell you, this model does not really work well for the society overall as its arbitrary who gets the benefits of the 'tax exemption'. And maybe this is one of the reasons why the government now imposes that kids can not deny to take care of their parents when they are older. The system can simply not take care of elderly in China. But even economists in China argues that the tax burden (link is in chinese) might be too heavy for Chinese companies (as a side note, foreign companies really have to fulfill their duties in paying full taxes).

Another example of how this kind of system really destroys value is water wells. A few years ago, there was a minor earthquake in a city outside Beijing and the city's largest problem was availability of fresh water. But instead of drilling new wells, bottled water was brought from all over the country. Why's that? It turned out that a cost of drilling a well is actually not that high. Say $2,000, but the actual cost for the local government ordering wells were rather close to $15,000 as a lot of leaked out. Thus, cheaper to ship bottled water. 

And the level corruption is unfortunately so deeply rooted that it will not be possible in near-term to extinct corruption; though it is now far more dangerous to be corrupt. With the widespread use of Weibo, whistleblowers can much easier cause trouble. And there are many examples only the last couple of months of government officials owning 10-20 apartments worth tens of millions dollars.

But the Chinese Communist Party strives first and foremost for stability - more important than economic development, human rights and democracy. The China Dream mandates a stable China. I'm not going to dive into the subject of democracy, but stability as the number one objective have implications. One is how/if democracy will be deployed but more pressingly, corruption can only be dealt with to a certain level as the Party needs its people to stay intact.

One of my acquaintances was a very high-level ranked executive in the telecommunications industry. His reputation was that he was fair and didn't accept bribes. He seemed to work for the company's best interest. In comparison with others, he was less interested in personal benefits. However, a few years ago, my friend received suspended death penalty for bribes he took more than 15 years ago. He was caught because one of his young mistresses were trying to gain some personal benefits, using my friends name. And the internal affairs started dig and dig and it seems like everyone has something to hide.

Now, he is one of those who weren't really corrupt and still got caught. Normally, this has been a sign that the person is out in the cold, cut off politically. This is also totally clear in the case of Bo Xilai. But as the Party is somewhat rotten internally from corruption and authoritarianism, it will take time to clean up. This article in Caixin sums up the Bo Xilai story well if you want to read more.

For anyone doing business in China, stay out of corruption of course. First, you don't really know how to play the game and secondly, the implications of being caught are too negative for both individuals and the company. As the case with Bo Xilai shows, never trust guangxi, as you can't predict political power changes in China.

As an anecdote, I just want to highlight that isn't only foreigners who gets scammed in China. Chinese gets cheated too.. I came across a Chinese gentlemen who seems pretty solid and with a good experience in the telecommunications and energy industry. Now, he told me a story that was not very nice. He met a Swedish businessman who he started a JV with and at the end, the Swedish businessman basically stole his company, knowhow and products and started another company. Not only outmaneuvering the Chinese business man but nearly bankrupting him. Everyone needs to do Due Diligence. If done, he would have found that the Swede were convicted for economic frauds and tax evasion in Sweden and escaped to China to avoid prison.

Not easy to do business

Doing Business in China - Scary?

Read another entry in Svenska Dagbladet today (in swedish) about Swedish companies being cheated (again) in China and that 65%, according to Kroll Advisory, was up for a fraud attempt last year.

But when it comes to China, it seems like many people get blinded by the opportunity and seems to forget the basics. You meet a person, maybe through an introduction and all of a sudden, you have Joint Venture going together and transfers heaps of money but also technology. Two years later, you have nothing and been cheated and lost both the market opportunity and money/technology. Basic business rules applies in China as well as in Sweden where normal Due Diligence would make you avoid many mistakes. But as in Sweden, you can still be cheated but at least you have done what you should in order to protect yourself from the easiest mistakes.

The China Law Blog is an interesting piece of information that with anecdotes and real cases highlights basic mistakes we often do. Here’s a piece on ten basic mistakes.

Another common story the last year has been suppliers that haven’t received the payments despite the buyer paid from overseas. What happened? The buyer gets an email stating that payments should be done to a new bank account in another bank in another name. Strangely, the buyer accepts and pays without further questions. Why? Would you do that in your home country without proper documentation?

There are unlimited stories of how to get cheated but apply normal business sense and get yourself some trusted advisors. And yes, it may cost a few dollars but better safe then sorry instead penny-wise and pound-foolish

Volvo and China - Culture Disconnect?

I read an article a few days in Svenska Dagbladet by Jonas Fröberg about the main owner, Li Shufu’s comment about the new Volvo’s only have one problem and that’s the Scandinavian design. I won’t go into the debate whether or not Scandinavian design sells or not or whether Chinese consumer might buy it or not, instead I want to highlight the issues with Chinese management and Swedish organization.

Here, we have a proud Swedish organization expecting their boss to pay attention to what they do, their experience and wealth of knowledge. On the other hand, we have Mr Li, a self-made billionaire who can afford to buy one of best car companies in the world, Volvo, and he is obviously very proud owner. Volvo was acquired and to be run in parallell with Geely, which has been the case, and the focus, at least for Mr Li, was also to increase the sales in China for Volvo.

Mr Li has apparently not attended board meetings and here is, in my opinion, the real issue. He expects to be consulted anyway as he is the main owner and the big boss. He do not understand, not relate to international (Swedish?) way of doing business and running organizations.

The Swedish management (despite not only being swedes there) continues to work as before and it’s based upon autonomy, respect and consensus (am generalizing here) and as a world-class organization well-recognized internationally, Volvo probably thought they could continue to operate in the same manner. However, as painful it might be for us swedes, everyone do not understand our mode of operations, nor acknowledge it as an excellent way of working. Volvo has also been a company operating at loss for quite some time with different owners as well.

Instead, and here I do not know the full story, but keeping the Chinese boss fully informed, able to comment and inspect and influence, is incredibly important if Volvo is going to deliver successfully. Without that support, the management will quickly be replaced if numbers do not improve, particularly sales in China.

Furthermore, Mr Li should really handle this internally but the media situation is totally different in China vs Sweden and I am pretty sure that Mr Li do not fully grasp that situation so for him being honest is not meant to be harmful but may also believe that media do not have a strong impact or can be controlled.

Some serious work is needed internally in improving the sino-Volvo communications and understanding. Just a simple example, a Chinese person saying “yes” does not necessarily mean yes unless the person is used and fairly fluent in english language. There is no “yes” in Chinese; instead there is acknowledging or negations. If you are asked if you are hungry, you respond hungry or not hungry. Not yes or no.

I think the Volvo PV management naively have underestimated the issues with having Chinese owners.

Nokia again - The Microsoft risk

Came across this bit from the excellent newsletter of Rethink Wireless and it seems like the end is even closer for Nokia than what most of us thinks. After visiting Nokia at MWC in Barcelona, Nokia seemed confident, on the right track and that turn around is definitely around the corner. Rumors about some really cool phones where the acquisition of Scalado seems to be paying off well. Another 41MP camera phone, on Windows Phone this time? or maybe even better. 

"In an SEC filing last week, Nokia acknowledged the risk arising from a possible Microsoft launch of its own smartphone. It also lists other risks, including that Microsoft could sideline or even dump Windows Phone and rely entirely on Windows 8"

Can it be as bad as Nokia has invested two years in a new smartphone platform, totally ditched the two other alternatives, and that Microsoft may just dump the very same platform as nothing happened? And seriously, it should really be a viable option for Microsoft - it seems quite difficult for Microsoft to succeed in the fiercely competitive and fast-moving mobile phone market. And instead of both losing phones and tablets/new devices, Microsoft may need to cut the losses and stop Windows Phone and spend all their efforts in making Windows 8 competitive in the tablet market. After all, 2013 is the year when a crucial infliction point occurs: More smartphones and tablets being used than PCs and laptops and if Microsoft is losing the lucrative business market to Android and iOS well then Microsoft is going down fast.

On the opponents side to cut Windows Phone is Nokia, led by Stephen Elop, an ex-Microsoft boss who headed up the Office division and his right hand, Chris Weber, is also an ex-Microsoft manager with ample experience of enterprise business in North America. Now, these corporate heavy weighers should not have a problem to convince their ex-bosses to keep Windows Phone, no? I'd actually be surprised if Microsoft listens to Nokia as they already got what they need the most - reliable map data and in smartphones/tablets, it matters. Just look at Apple's debacle launching their own Map applications without Google Maps.

If no Windows Phone? Really, I find impossible to believe that you could build a competitive smartphone based on Windows 8 RT for the next coming years. Tablets, yes, but competitive smartphones, no.

If so, then Nokia really is at its end point and it's hard to see a way forward. On the low end side, Nokia gets strongly attacked by low-end Android phones, street price already hitting $50 and it will be tough for Nokia to demand premium prices for its Asha phones without a brand backing from its top-line devices. 

The SEC filing shows that the management and the board in Nokia actually fears the discontinuation of Windows Phone 8. Serious.

The Barcelona Take Away - MWC13

it was cold and windy and where I stayed, you could hardly be outside. Not much better weather than Stockholm. And MWC 2013 felt a bit similar, not much better than before. "Same same" sort of feeling.

The show moved from Fira at Placa Espagna to Fira Gran Via, next to Ikea and not far from the airport. The venue is far better as it was very spacious, indoors and never felt crowded even it was the largest ever (aren't they all?) and thus easy to find the companies you were looking for - though you couldn't find Google and Microsoft. Nokia, on the other hand, is back again and they had a very nice lounge. They didn't fill their booth with phones, phablets and gadgets, instead provide room for informal meeting and made it very human (it couldn't be because they basically had nothing to show, could it?). 

And seriously, MWC is all about to see and be seen, an extreme of networking where you start during breakfast (8am) and continue past midnight, every day.

Otherwise, Phablets was the buzz of the town. Is it a phone? Is it a tablet? Is it a notebook? With devices like Samsung Note 8.1, ZTE Grand Memo and Huawei Ascend P2, the term phablet was coined to mark the cross-over for small tablets with phone functionality and yes, the only thing I miss in my iPad is the phone functionality so maybe Samsung and others have come across a lucrative niche that Apple is ignoring (on purpose). Engagdet has an interesting article on the phablet subject 

And to spinn on phablets (even have its own wikipedia definition), there was an explosion of accessories for phones, phablets, notebooks ranging from Hello Kitty to more normal canvas folders for phablets. Krusell assigned half their booth to Motörheadphönes.

For quite some time, I've been part of and followed the mobile OS and I really didn't think that Firefox OS would stand a chance. While testing phones with Firefox OS installed, it's obviously still early days and reminds me about Qtopia. But seeing the traction, understanding the operator paradigm, the ease of use for webRTC, non-locking of app stores yet screen applications, leveraging HTML 5; Firefox OS may have a chance of becoming the third Ecosystem - instead of windows phone. Mozilla's strong presence in desktop supports the use of Firefox OS in mobile and could it just easily be adapted to non-mobile devices, such as a TV or Infotainment system in a car, then it certainly would have a strong opportunity to be a viable option for both device makers and application developers.

HTML5 though would provide a sluggish experience. I have a hard time believing that optimizing Gecko for mobile and build an OS around the web engine  will provide a better experience than a native OS where e.g. Android has native OS and a Java engine for apps. From an app perspective maybe acceptable performance can be achieved but not from an OS angle which will really affect the uptake on high end devices, where performance strangely enough really matters. The gap should be smaller as time goes by with the entrance and optimization of e.g. WebGL.

What's speaks in Firefox OS' favor is Mozilla as a non-profit organization and its sole focus on open source. Both advantages can also be seen as disadvantages as its needs to compete and succeed is less apparent from its competitors: Apple and Google.

The one that a lot of open source geeks, including myself, hopes to succeed is Sailfish OS by Jolla, a finnish startup that based its operations and software on MeeGo/Maemo. But with no support from any vendor or operator and an OS that also begins to feel outdated, it would be really impressive if they manage to succeed. Bear in mind, the first market to target is the most competitive market in the world, the Chinese mobile market, which is driven by a number of Android spin-offs and the most successful is Xiaomi.

A bit of a surprise, it seems like Sony is making a comeback in the handset market with a strong line up of phones, phablets, tablets and notebooks, paired with state-of-the-art accessories and Sony Home Networking/TV and of course, Playstation. I do think Sony is staged for a comeback; trimming the company, reducing number of sites, focusing on Tokyo and Lund for R&D and betting on standard Android should make Sony a strong contender. They should be able to increase their quite low marketshare and maybe become #4 or 5 in sales revenue (not volume), maybe already 2013. Only 1.7% in units shipped in Q4 2012 according to Gartner.

Another company that keeps impressing and will move fast forward is Huawei. Latest move is to setup an OS R&D in Finland and they recruited a Nokia Research Fellow, Mikko Terho, to run the center in Helsinki. I have strong hunch that Huawei will try to develop some kind of in-house lightweight OS based on open source standards to give them control of their future and also differentiate somewhat from competitors. It will be quite exciting to see what kind of products Huawei might ship in 2014 based on 'Huawei OS'. Huawei has also recently setup a modem R&D center in Lund. 

Watch and behold, Huawei will soon rank top 3 for mobile phone shipments as I expected they will be dominating low end android handsets shortly.

Walking around in Hall 3 passing Qualcomm enormous booth, all of sudden an equally sized booth appear, by AirWatch! Heard of them? I actually did as I was asked to go and visit them but for a company in the mobile device management space, it was over the top. But that was the whole point. According to company representatives, they wanted to make a statement to show who is really the market leader in MDM. 

I have never seen a 3D printer in real life before, but in the Nokia booth they set up a 3D printer to print Nokia covers. Amazing technology and if pricing comes down, it will definitely change how people can innovate and try new ideas on their own. Larger quantities and/or higher quality will probably for quite sometime require professionals and professional equipment, but there are tremendous opportunities for e.g. repair and replacement services where fixes can be done in no-time vs ordering from the other part of the world. 

My own personal takeaway is the little thing below which is an HDMI dongle running Android 4.0 and Airplay. Plug into to a TV, download the remote control to your smartphone and bang, you have a fully functional Android TV. Now, that's maybe not what you need but the opportunities that you could explore with this kind of setup is quite interesting. Just use Android as an application platform and you can design apps for the really big screen. The device should hit the stores late this year.

There was a lot of app developers but I didn't have the energy to check up all app developers. There are more and more for years that goes and with limited screen real estate, mobile apps or smartly designed mobile websites are the way forward. 

Next year, more of the same but soon trends like wearable computers (aka smartphones, tablets), google glasses and other ways of interacting with your phone hub may start to show up and will change everything, again. On the mobile network side, the laws of physics do limit how much speed and capacity can be distributed and new network paradigm will have to be deployed in order to handle gigabit transfers of data to devices. Maybe we will see gigabit transfer stations in the same way as we have electric stations for bikes and cars? I don't small cells is the best way forward for that concept. There are too many challenges. Instead, the mega-blast point centers for infinite data transfers on extreme close range could solve the issue more practically than WiFi, LTE and small cells.

David @ MWC13

Maybe it's a bit late to make a projection of what's going to happen at Mobile World Congress in Barcelona this year. News have already leaked and press releases being pumped up at the event of the year for the mobile comms industry. I am on way to Barcelona to mingle and meet with the movers and shakers (hopefully, some of them are friends of mine).

But there a few things that I hope to spot and will keep an eye:

 - The evolution of mobile apps from the smartphone to cover multiple screens - both in terms of reachability or interaction. Netflix is a good example emerging from hard-coded apps into various STBs into HTML5 UX engine to drive it to an install app for multiple devices. Magine, an innovator for distributing Live TV, connects the smartphone to the TV using it a remote control to setup the Samsung SmarTV or just streaming to an AppleTV.

- Content becoming even more important than what we thought year's ago (during the dot.com ear) and with the event of multi-screen evolution, accessing your own content seems to be an important driver in the industry.

 - How big is the Android Avalanche and are there any serious contenders for the next couple of years. Will check up Mozilla, Firefox, Windows 8 and talk with heaps of developers to see what might be going on.

 - Small Cells for LTE deployment is probably one of the most important developments for ubiquitous mobile access where your mobile experience should not be limited by bandwidth restrictions. Noticed an interesting company, Cloudberry Mobile, offering Operator-in-a-box to simplify and manage deployment of small cell networks.

- Are the Chinese coming? I think so and I think Huawei and ZTE are preparing for the next level of international presence, but there are others as well. The verdict is still out whether or not China will manage not to fall in the same trap as Japan when a strong domestic market drew them away from world domination.

 - on the device side: Note 8, Nokia Lumia, LG, Huawei, ZTE, HTC and others of course. 

On a personal note, I am also keen to meet up with people and companies to collaborate in driving new ideas, new strategies, new markets. So, please get in touch with me. I will be there to the bitter end.

Hola Barcelona

Huawei and US

It's been a bit of quiet lately and I know that this is old news, but I still need to voice my opinion

One thing that I have thought about a bit is Huawei's alleged ties to the Chinese government and thus disqualifying them from delivering to US operators - with the suspect argument of being government spy..

The logic being .. Well, I can't follow the logic. The only way the logic would work is if Verizon, AT&T, Lucent (now Alcatel-Lucent), Bellabs, Tellabs, Cisco, Juniper and others would act accordingly and act as spies for the US Government. Could that be the case?

David Wolf, who runs Wolfgroup Asia, has made an excellent analysis - and he should know. He has probably spent more time studying these companies than even I have done in the past. Read his report here

From my point of view, I did a serious in-depth study about Huawei in 2003 and has since followed the company and there are no real ties to the government. There are unofficial ones, as e.g. many contracts have been awarded to Huawei in China due to local tight relationships - but those are not substantially different from what both Ericsson and Motorola has.

On a national view, Huawei has got less government support which definitely undermines the argument of being a prolonged arm of PLA. The only real affiliation is that Ren Fei, CEO and founder, is an ex-PLA officer - but that was more than 30 years ago. 

Notably, ZTE is the company that enjoys preferential government support in deals where China can flex muscles. They have also in the past had better financing support but lately it seems like Huawei also can enjoy the 'free' money, which is one of the Chinese companies strongest advantages vs companies stuck under quarterly report and boards with little endurance.

SvD: I have taken business contacts on free trips

"I have sent business contacts at free trips"

He has worked in China since 1997, e.g. as Vice President at Ericsson China and senior management position at Nokia but also as club owner. Many times have David Almström have closed encounter with the extensive corruption in the country. He himself have also done things with  business acquaintances that might be considered as bribery in Sweden.

This article was posted in Svenska Dagbladet, SvD

 - China is still extremely corrupt. I have been directly asked several times to give and get bribes. It's a kafkaesque system where all takes a lot of time, says David Almström

He has been in direct touch with bribery both within the iT and telecoms as well as in the restaurant business. David Almström's short time as part-owner in a nightclub ended up in a total fiasco, due to the extensive corruption. 

 - It was a lot of those things. I never got to see the daily business, only part-owner, but I did see any money there as well. I tried to recover what I invested but that was impossible.

Today, David Almström lives in Sweden but still owns a cafe in Beijing and works towards China as head of Scandinavia for the software development company, Symbio. And during his 15 years in China, he frequently was subject to bribery and got many requests from customers. 

 - One example was a fairly small deal of $50-60,000 whereby I met the CEO of the customer. He immediately declared he expected a new computer to sign the deal. We said no and also did not get the deal, says David Almström

And it is custom for both local and multinational companies use bribes in their daily business, according to David Almström. However, the Chinese government have increased their efforts to control the bribes during the last years. And when bribes get revealed, it may end quite badly for the parties. One of the top manager at China Mobile was prosecuted last year for accepting briberies from many telecom companies - Ericsson was one of them [NB: I actually did not mention any companies that was involved in the bribery]. Punishment: Death Penalty with a reprieve (normally not carried out).

 - It a fairly tragic situation. I know him for a long time and he had a reputation of being one of the more honorable in the industry, someone who do not accept bribes. But as it turns out, 15 years ago he accepted a bribe. And in China, almost every one at that level has done something not acceptable.

Though David Almström explains he himself has avoid the bribes, he has been in the gray zone. Traditionally, it's been important to maintain a good and close relation with the corresponding business partner in China, and it's not uncommon for companies to 'all-inclusive' nights out to pure tourist trips, he says.

 - I have myself taken a person on a trip. Surely, we had some meetings but it was definitely a covered tourist trip, he says

 - But today the situation is different, the relationships are cleaner. Multinationals keep bribery on an arm lengths distance, looking the other direction and pray all is good.

As the government been much tougher on corruption, the bribes have been far more sophisticated, says David Almström. One strategy to escape the government's sharp eyes is to use antiques to laundry money. The one who wants to give a bribe buys an antique for e.g. $250,000. Thereafter makes a copy at a fraction of the cost, to be able to show something during a revision. The original is being give as a bribe. The bribed returns to the antique dealer and sell it back and gets his $250,000 in cash.

 - As antiques are very difficult to trace, it has become an efficient way of laundry money. There a quite a few of these advanced methodologies to hide the bribes, says David Almström

If you as a businessman stays away from the bribes, you certainly will lose some deals, explains David Almström.

- But question is if you want those contracts. You may have something on the person you bribe, but if gets exposed, you yourself will suffer as much, he says.

What do you do as a businessman if you do not want to participate at all in the corruption carousel?

 - Primarily, you have to work with people that you trust, manage as much as possible by yourself and accept failure before cheating to be successful.

- But it is impossible to be 100% fault tolerant. You can sign clauses in the contract of zero tolerance; keep a tight control of your business, but it's really difficult to be sure that everything is according to the book.

Column: "Avoid expensive and inefficient consulting purchases"

This was posted in CFO World yesterday

Swedish consulting buying companies are stuck in an ineffective purchasing model. To be able to compete globally, the CFOs have to start thinking strategically, says this week's guest columnist. 

Most Swedish companies still choses to have IT-consultants permanently located in their offices. In principle, they are like employees with the largest exception of being more expensive for the company. Also, competence development often gets de-prioritized. Neither the manager at the customer nor the consulting manager takes responsibility for the consultants competence. The prior wants the consulting hours they pay for and the latter as many billable hours as possible.

By migrating from today's fixed consulting team to more flexible alternatives, the buyers would be able to regularly adapt competence according to need in various development projects. Instead of using, for example, a team of 6 consultants on-site, a company could - without increasing its costs - have 2 consultants locally and some ten consultants offshore, e.g. in China.

The consultants onsite will then act as a bridge between customer and the outsourced consultants, securing scaling up and down the team and ensure adequate competence at any given time. Consultants based in Sweden can support several projects and keep up-to-date with the latest technical developments. At the same time, it is crucial to have a project manager locally off-shore - in China as in the example - with responsibility to build and retain the local competence.

With this setup of right-shoring, companies can reduce its costs given lower rates and at the same time keep competence competitive. Additionally, productivity increase by leverage time differences, shorter and more spread out vacations, etc. E.g., a Korean employee works 2 193 hours p.a. in average and the average Swede, 1 644 hours, according to OECD.

In the two examples below, I compare traditional project set-ups with right-shoring models. Example two is from a real customer whereas the first one is based on standard calculations:

1a) A project in Sweden operated during 12 months with three local consultants to deliver a project. Assume the cost is 800 SEK p.h. and they work 1,600 hours each. Total cost equals 3,840,000 SEK.

1b)An alternative solution is to source a part time project manager, working about 2 days a week with project management and delivery: a team of 5 developers and 1 tester in China working about 1,600 hours and a part time project manager in China. Assume hourly rates for the Swedish project manager is 1,200 SEK: for project manager in China 300 SEK, developers 250 SEK and tester 200 SEK. The project can be delivered at least two months earlier; given shorter vacations and less holidays, the Chinese team can be productive even when the Swedes have time off. Most likely, the end result will also enjoy better quality and more thoroughly tested as the larger team can include more specialist functions, such as a dedicated tester. The total estimated cost 3,328,000 SEK.

Alternative 1b provides several benefits: 13% reduced cost, shorter delivery times and a better end-result.

2a) A company wants to hire six people to develop several mobile and embedded applications for different systems and terminals. For sure, it'll take at least four months before all six can start (in best case). The cost in Stockholm would be about 100,000 SEK p.m. p.p.  The total cost ends up at 600,000 SEK p.m. and potentially a half million SEK in recruitment fees.

2b) The alternative could be to have two consultants onsite and four developers and two testers in China. The team is fully operational within two month. The consultants may cost about 120,000 SEK p.m., each developer 40,000 SEK and each tester 30,000 SEK p.m. Thanks to a larger team and shortened start-up, the new products can be delivered and launched at least two months ahead. The total cost is 460,000 SEK p.m.

Alternative 1b provides several benefits: 23% reduced cost, and significant shorter time-to-market.

I hear a lot of people having or knowing about bad experiences in off-shoring. I dare saying that most of these issues relates to experiences from off-shoring childhood some ten years ago. At that time, the conditions for communication were far from what we have today with horrible phone and data communications.

Today, significant improvements are in place and the competencies in countries such as China is nowadays almost as good as in Sweden.

When it comes to develop of physical products, many large companies already have product development distributed all over the world. Corporate managements should also think alike for system and software development, which tends to become core business in many companies. If Swedish companies' system development is more expensive and slower than competitors, we risk to lose our global competitiveness.

It should be in all CFO's and finance managers interest to engage in how its organization uses its resources for system development and purchases of consulting resources. Those leveraging right-shoring's flexible team setup do have the chance to reduce costs, improve its efficiency and shorten time-to-market. Thereby delivering future innovations and shine on the global market.

China Pushes Ahead of Sweden in IT

This article was published in Ny Teknik today under the title "China pushes ahead of Sweden as IT-country" and I have taken the liberty to make a short trans-script.

OPINION. We are about to lose our position as "hotspot" and become a technical developing country. Support the entrepreneurs and increase number of seats at universities otherwise we risk to be stuck with the low-cost jobs in Sweden, warns David Almström, head of Scandinavia, Symbio.

Newly started enterprises decreased in Aug 2012, according to Bolagsverket. Number of AB was reduced by 130, compared to same month 2011. IT companies that might be more willing to take risks is where the reduction is most obvious. According to Assistera less 292 companies was started 3Q 2011 compared to year before.

As I just returned to Sweden after 15 years in the IT industry in China, I'm asking myself what's happening. Stockholm has been perceived to be a hotspot for startups - is Sweden losting out?

Despite hyped Swedish IT companies like Spotify and Klarna the willingness to invest is at record-low levels, according to SvD in Aug. Second quarter this year is the worst since 2007.

Working in the extremely fast-growing market for mobile solutions, I've seen whom we'll be competing with in the future. In countries like China, development have been exploding the last couple of years and it just goes on.

If Sweden are to be competitive, we have to improve the conditions for entrepreneurs. To leverage the entrepreneurial talents, education is required. For IT-entrepreneurs joining universities, excellent knowledge in basic science like mathematics is necessary. 

And how does it look in Sweden?

Well, the number of Swedish students not reaching acceptable levels have double between 1995 and 2008. If we check how engineers graduating, we also see a negative trend. Since the new millenium until last year, the number of registered students at engineering educations have decreased by 22% and number of graduates 15%.

Except lack of competence, lack of capital can be another reason for the ever decreasing new IT companies.

This leads to qualified jobs move outside of Sweden while lower salary jobs remains. When tax revenues decreases, the common welfare is reduced and poverty increase. Time to act to change this trend before to late.

Invest in eduction - both elementary and university. Maybe look at California and Silicon valley where the university have in its roots to collaborate with the private sector and professors are encouraged to engage and support innovations to become growth companies. Thereby also easier to find stakeholders willing to invest.

Politicians should stop plans to reduce 10,000 number of university seats. Improve the safety net for entrepreneurs. In Finland, the government have something referred to as Forced Leave, whereby a company losing revenues and struggles financially can put employees on forced leave. During forced leave, the employee get paid by the government (unemployment funds) and can be re-employed if situation improves.

If politicians do not act drastically with the support of universities, other stakeholders and investors, we may drain Sweden of competence. The result is moving away from a country seen as hotspot for entrepreneurs and early adopters to become a technical developing country. Not a future anyone of us wants.

New Blog

not that anyone of you probably care that much but i have decided to separating my blogging activities. Here, at http://blog.almstroem.se, it'll be more personal opinions - like the State of China or traveling or something like that.

At davidalmstrom.com, I will be featuring more tech-related blogs, public opinions (like if of some reasons I will be featured in a newspaper or similar). I may cross-blog sometimes when it's relevant. So to all my people (5) in struggle, here's some pain medicine (Kirk Franklin, Looking for you) 

The End of a Saga - Nokia - Part II

The end is probably even closer than what you think. The latest changes in Nokia really makes me believe that the company is setup to be divided and sold off in three parts. It looks like it's the 80s corporate raiders who have taken over the company.

So what will happen?

Nokia Siemens Networks (NSN) will be sold off if there is anyone willing to take them on and getting NSN into shape, reduce management and streamline the company do not seem to be an easy thing. I can only speculate that e.g. Samsung or ZTE might be willing to take on NSN in order to gain market share and market position but the outlooks are grim. I think NSN is really Nokia Board's biggest headache. It doesn't improve and there is no obvious buyer/investor to take them on. Maybe the Nokia to be is holding NSN only.

The S40/Mobile phone organization may be sold off to Huawei or ZTE who might be keen to capitalize on Nokia position in emerging markets and entry phones.

And the more I think of it, it starts to make sense for Microsoft to take over the smartphone team as Nokia killed the latest initiative of lower-cost smartphones aka Meltemi. With Nokia's IP and patent portfolio, both for phones and maps/location, it starts being good value for Microsoft who seems to be looking at Google and Apple's success more and more. A slimmed down product development company could then be of interest.

There are a few proof points further that supports the above scenario.

One of Nokia's strongest assets have been its channels and operator relationships but during H1 2012 the sales operations have been scaled down to a level where it's not an asset any more. More offices being closed and sales being centralized rather shows an attempt to streamline operations to avoid overlaps for anyone taking over operations. In South East Asia, only a small office in Singapore is maintained. Several sales offices in China has been closed as well.

Also reviewing the belated management changes, amongst a few good things (like getting rid of Niclas Savander and Mary McDowell) there is one in particularly that makes me confused and that's the appointment of Chris Weber  - his only international experience is from Canada… Nokia sales is 99% outside of the US, heavily driven by China, India and large emerging markets. Sales in US is, believe or not, actually decline. You thought it might be impossible given that Nokia hardly has any sales in US but still.. decreasing. Chris' latest gig was 15 years at Microsoft, Corporate VP for enterprise sales and marketing in US. Seems relevant to drive consumer business in India and China.

The foreclosure of Meltemi shows that management is not at all keen in developing its own platforms and stay independent. Instead, minimize investments in S40 to try to stay reasonable competitive and pray that Windows 8 will be a tremendous success, even in reaching low cost smartphone segments.  And Windows 8 has always been the end-game according Risto Siilasmaa, the Nokia chairman, but if so, why kill Symbian and MeeGo at that time in the way it was done. Should not that been done this year, maintaining sales for 2011 and 2012. Still, Symbian phones are selling better than windowphones ! I think Stephen Elop and the board still did not understand where the market was and was caught off-guard with two facts. 

The first one being that China and India no longer by second-grade or old products and that they are now part of a global community, so with the big splash news at MWC 2011, none of the dealers in China and India were particularly interested in promoting dead platforms and products. The launch of MeeGo and N9 is totally not understandable in that light.

The second one was the fast dropping prices of Android and the impact that had on sales of Nokia's S40 phones, which looks outdated - particularly in terms of downloadable apps and that the Ecosystem also matters in those parts of the world.

Nokia will be the subject of many case studies and Ph.D reports in an unprecedented case of destroyingroying maximum shareholder value in shortest possible time. Oh, the guy to study who lead this downturn is the same who created this magnificent mobile phone company in the 90s. Jorma Ollila.

The Foreign Dilemma

The current Anti-Foreigner campaign is the strongest since US bombed the Chinese Embassy in Belgrade in 1999 and it is directly targeted at a foreign life-style rather than illegal immigrants. Clearly, there can not be that many spys who cheat chinese innocent woman and not that many that commits serious crimes, but the campaign is focused on those issues and it is becoming quite ugly.

Mandated by Public Security Bureau, the police targets Beijing primarily with Sanlitun (bar/restaurants area) and Wudakuo (university area with a lot of foreigners) in focus; the Ministry of Propaganda is on their feet. Most noticeable, Yang Rui's anti-foreign comments on weibo has spurred debates. Yang Rui leads Dialogue (CCTV9) since many years back, which is a program in English to stimulate dialogue between China and the rest of the world. But his comments rather displays an ugly attitude to the foreign trash that destroys China's purity. 

But why now? 

I have two thoughts and one could be that it is actually about illegal immigrants or visitors with doubtable visa. E.g. there are many younger people that is in China working on visitor's visa as they either can't find an employer or want to avoid paying taxes. Given the US campaign to clean out visa for chinese teachers, the campaign could be an action towards US to be more flexible.

More likely though, I think this an effort to get the focus away from internal affairs. The Bo Xilai scandal and the move away from leftish state-driven politics along with the escape of house-arrested dissident Chen Guangming have caused a lot of trouble with and for the Chinese leadership. Add that to ever-increasing issues with humongous corruption cases emerging now, there is not a very strong trust in the leadership - and with the new leadership soon to take place, they need peace and quietness to get into the office neatly. 

Quite often in the past, the leadership has then directed the discussion on external issues - be it Taiwan, Tibet, Japan or US. This time, the campaign fuels the anti-foreign sentiments where it has become more difficult to get visa and where the campaign is directed against illegal immigrants, it has strong a focus on bad behaviors by foreigners - that is not necessary illegal, just not nice.

Luckily though, it doesn't seems to affect daily life too much :) Here is a sunshine story with comments alike.

For more information, Anne Henochowicz wrote a great article in Foreign Policy. 

Changing Culture?

After being back for a months or so now, a few things strikes me as common amongst all culture and that is the need of being local. I guess you all heard about the 80s and 90s theme about Think Global - Act Locally - basically build global solutions and localize them for each market's need. Very much the foundation of Nokia's world dominance (and now also Apple's) but more and more that is becoming more uncommon.

A few other companies have shown a different route to success, which is the reverse - Think Locally - Act Globally; in the sense where local market requirements, opportunities or skills can create global opportunities. Not totally different but creates a different mindset of how to operate and run a business.

But surprisingly in the industry where I now operate (software development/outsourcing), the need to think and act locally is far stronger than I expected. And it does not really differ from Finland, Stockholm, Malmö, Oslo or Copenhagen. Whoever I talk to, the need to speak local language and reside locally is equally important despite the obvious advantage of off-shoring test and development work. For example, in Oslo, there are no free IT resources. Unemployments is close to zero and the cost of hiring or sourcing consultants locally are amongst the highest in the world. Still, the thinking is to hire locally.

I would have thought that the ever-increasing globally competition would force companies to further drive cost-reductions, productivity enhancements and shorten time-to-market. In the case of Norway, productivity per hour are the highest in the world but the output is not that high, given the few hours worked, which slows down deliveries.

What are the change drivers? Will it ever change or?

Another reflection is the constant need to complain about how limited their local community is and the dream of how exciting other cities (read Beijing, Hong Kong) are in comparison. Amazingly actually as both Stockholm and Oslo are quite interesting, though a bit expensive, but the grass is always greener on the other side.

Essingeleden

After being in Beijing for most of my working life, I thought I was used to extreme trafic conditions - like 2 hours from Nokia's office in BDA (Yizhuang) to go home around Worker's Stadium. A ride of about 25 km. And with the car explosion, where in 2010 more than half million cars where added, it is tough to keep building out roads.

Another example was Terminal 2 that was completed in 2002 after 4 years, but when it was opened it almost already ran out of capacity, so the huge Terminal 3 was projected and ready 5 years later, in 2008. It was impossible to forecast that tremendous growth in travelling during such a short time period. That's what hyper growth can do to you.

But what is Stockholm's excuse? Essingeleden (E4) goes from south of Stockholm, passing Kungsholmen around downtown to Norrtull where it heads northbound. In 2009, long long due, Vägverket (Swedish Road ministry) started a re-construction of the 8 km 'long' road. And it will take a whopping 6 years! In Beijing a new airport is constructed in shorter time. When I came, 1997, 4th ring road in Beijing hadn't been started to be built. Now, there are both a 5th and 6th ringroad.

Now, I am not in civil engineer but why does it have to take 6 years?! The overall cost to society is probably far more than if the plans are forced to complete the road constructions in 3 years instead of 6. The pollution created during the rush hour, the time lost for the people spending all this extra time in trafic, day in and day out for 6 years. I doubt that it can be an overall benefit to spend more than 6 years.

And while I am on it, extending the Blue subway line to Nacka is probably a good idea (I have no opinions in the matter) but that it should take 10-12 years to complete? To do things too fast sometimes is not good, but why that it has to be slow? Note, I do not compare the decision process between Beijing and Stockholm only the implementation of decisions taken.

Back In Da Jing

Back in Beijing again and this post is not about technology, nor about my return to Sweden but rather about what really annoys me in Beijing and still really gets to me when I come back to Beijing after only five weeks. These things really bothers me and as time goes by, things will change and my memories fade, but still.

The smell and the smog - see the two pictures to the left - bothers me a great deal. First thing you feel when you get out of the plane is the "Beijing Smell" - the smell of burnt coal and the pollution is a combination of China still using 75% coal to fuel its energy needs, the tripled number of cars in four years paired with a dysfunctional public transportation and limited road infrastructure (in all fairness, who could have foreseen this tremendous growth in cars?) and a disability of understanding how to operate a car in order to drive smoothly. 

Clearly, this will improve - as public transports are being built out and roads improve and people's knowledge increase (often aligned with traffic tickets). And China has an ability to gets things done, when they get it.

Secondly, though not right in my face, it is blatantly obvious that the only thing that matters is me, me and me and that I get more money, can show off my success and brag about all the money I get. This creates respect among equals and the less fortunated. Unfortunately, it comes at a price and the price is that nothing else matters. The China Law Blog reported (unscientifically) that the number of violent cases in business have tripled and the murder of Mike Hayward is just another example thereof. KIds that dies or gets seriously injured because milk is tainted with Melanin is another example. And the list just gets longer and longer day by day.

Thirdly, the foreign Beijingers.. I do not know what it is with them and it is not true for all of them (us) but some of us behave utterly arrogant and unpleasant and display a view of racism that "these low-level chinese uneducated creatures" can not read their mind, understand their winks and most of all, appreciated and learn their superior use of the English Language. A lot of times, and I must say I also apply a great deal prejudice here, most of these guys are not able to score the type of job and salary they have in Beijing; nor get access to the restaurants and clubs in their home towns; nor pick up the girls and crowds. What I can't understand is the lack of appreciation, being in the country of opportunities, where they can afford everyday's luxury and appreciate the struggle that all of us has here (locals, migrants and immigrants). You see bad-ass behaviors at bars, at work, in taxis, at restaurants. It can be good to remember who are the guests here. Even if I lived in Beijing more than half of the population has, I still realize I am an outsider, a guest and will also be, but I have had my lowlights as well (I am not a saint)

In Sinica's podcast, The End of the Expat Package, you can here a nice analysis about the situation but the truth is just because you speak chinese (hey, 1.3B does) and that you are foreigner (hey, you are not the only one) does not mean you have a great future in China. I may not agree upon all their thoughts, but insightful indeed. Maybe time to be humble and integrate into the society.

The good thing is that things are achange and only time will tell but I have good hopes of China's future development.