Japan – A Reflection

It’s been several weeks since I got back from Japan, and I cannot believe how fast the time has flown.  Life is hectic as we start to wrap up the semester and head towards our summer internships and full time jobs.  But many, like me, will kick off Summer with some more traveling.  But before I do, it wouldn’t be right to not first reflect on Japan.

I had an amazing experience on my Chazen Japan trip.

I talked earlier about how Kyoto was breathtaking…The gardens and temples were serene.  Walking through the Geisha district felt like you were stepping back in time, or walking onto a movie set.  It was so picturesque I would gladly visit again.

You could tell by my gushing that I have a love affair with Toyota.  I can’t help it.  Not only was my first car I purchased a Toyota (her name was Betty, and she was sooo bad a#$!), but the operations blow my mind.  The floor of the machine shop was flawless.  Production ran smoothly and seemlessly.  A lesson in how Kaizen and a focus on continuous improvement can yield amazing results.  Now if only I’d adopt Kaizen in my own life and get my butt to the gym!!!

After Kyoto and Toyota city we visited Tokyo for a few days.  First stop was Uniqlo where we learned how they use volume to produce your closet basics cheaply, but with high quality.  It was such a different business model than what you think about when fashion first comes to mind, but clearly it is working for them.  It goes to show that there are many different ways to service a market, and it pays to think differently.

A visit to CITI left me with a life lesson I hope I never forget.  In managing your career, think of it like a sport.  In order for you to win, you need to solicit the top players for your team regardless of background, race, and gender.  Surround yourself with top players and career opportunities will come.  I have seen this in my own experience, but to hear about how CITI uses this philosophy in such a large bank and corporate setting was inspiring to me.

DeNA was another company visit, and they blew me away.  If you are a gamer, and like to play games on your phone, check them out now!  They offer freemium games that you can download and play for free, but you can pay to accessorize your game if you want to.  They have a gaming community to let you connect with other people gamers, and challenge each other to…say an epic ninja battle…?  It was really interesting to hear how DeNA adapts their games for style preferences in different markets (did you know that a Japanese ninja eats rice in seaweed, but an American ninja eats sushi?).

With each company visit I learned something new about operations or globalization.  Lessons from those who have learned/are learning first hand what it is like to work for an expanding company across multiple boarders.

Outside of company visits, I could not speak more highly of my “free time” in Japan.  Everywhere I went everyone was exceptionally nice, and went out of their way to accommodate me and my fellow classmates.  It was interesting to see how many people did not speak English, but where very willing to communicate by other means.

Walking around the city of Tokyo I was in awe of the beautiful gardens.  They are everywhere, and the Japanese do a great job of pulling in nature into even the most urban of areas.  I think NYC could learn a thing or two!  To top it off, Japan is exceptionally clean. I saw once piece of litter on the street the entire time I was there!  And it stood out because I thought it wasn’t normal.  This is true even on the subway.  In addition to a spotless train station, you walk on a train and it is silent.  It is silent most places.  Noise is an invasion of people’s space, and I have to say, there is something to be said for a little bit of quiet time every now and again.

In culmination, Japan is amazingly peaceful.  The people are exceptionally helpful and nice. Both the old parts of the city, and the new, are just breathtaking…It was the first trip I had in a long time where I just didn’t want to go home.  I would jump at the chance to go back if offered.  Japan was life changing…

Cuba in Pictures


First introductory meeting upon arrival.




The Vinales Valley (in the Pinar Del Rio region – the Western most part of Cuba) where tobacco is grown


Live music was a standard for all meals


Tobacco leaves


First official meeting with government officials and academic leaders


Plaza de la Revolucion – Che was everywhere





Rum bottling.


A picture that could be from the 70s.


El Malecon


The gym at the aforementioned privately-owned spa.


Another reality from another time.


Cubans LOVE dancing and music.


Trip to the Buena Vista Social Club


Leaving you with words from Fidel.

Cuba: Ongoing Thoughts

It’s been more than 3 weeks since we have been back but mentions of Cuba still appear in the media, and I am not merely alluding to Beyoncé and Jay-Z’s recent trip under scrutiny (what can we say, CBS is a trendsetter.) As a class we still exchange interesting articles about Cuba which may be a sign of the impression the country made. Speaking of impressions, below are some takeaways from our trip to Cuba.

  1. The government is everywhere – seen and unseen. I wrote about this in a previous entry but the pervasiveness of the government was palpable in a way that I have never felt in another country – from propaganda to the controlled nature of our trip. It shows that as of now, Cuba is still operating as the strict state-controlled regime it has been.
  2. Current reforms may not be enough. While we have been learning about the various reforms that Raul Castro has undertaken to revive the economy, there may be skepticism as to whether the current reforms are enough. An example is that while Castro has started to allow individuals to open privately-owned businesses, we have learned that the 200 types of businesses on this list omit many of the heavy-hitter businesses (e.g., cigar production.)
  3. Incentives are horribly misaligned. A very real example is that as part of our program we tipped our tour guide (an amount acceptable per US standards) an expected (by the Cubans) amount that far exceeded the income of a doctor or other specialized professions. This is only further worsened by the dual currency system. Another example is how poor the quality of food and service was in general. While we certainly experienced some select restaurants that were good, the majority of our culinary experience was underwhelming despite the fact that Cuban food is inherently very tasty.
  4. Despite Cuba’s commitment to egalitarianism, we saw clear social disparities. Whether it was through remittances from abroad or from internal government positions, those who were able to accumulate wealth and had higher government status were able to access medical facilities and start businesses that may be out of reach for the vast majority of the population. For example, one of the privately-owned businesses we visited was a spa, café, gym all in one. The business was started by a family that was clearly wealthy enough to obtain the equipment necessary by traveling abroad and spending time abroad.

Cuba has a lot of great things going for it – a great landscape for tourism, a highly educated workforce, natural resources (e.g., copper) and moderate climate. However, it needs access to hard currency and credit. The question is whether Cuba will gain access to these before even these strengths begin to deteriorate and weaken the country’s future prospects.

Brazil | Round up

Robert Habib ’13 | Brazil

A few weeks back in NY have provided a good time to reflect on the Global Immersion Program to Brazil. One of the benefits of the GIP is to see businesses operating in ways and in markets different to what students are used to. As such it was no surprise that all of the students on the trip were from outside Latin America.

However, from a personal perspective, it also provides an insight into how life could be in a country different from one’s own. To me this is where Brazil stood out. Of the BRIC countries, Brazil is way ahead on quality of life and happiness indices. For MBA, living in Brazil offers the coveted benefit of riding a growth wave coupled with envious quality of life. Democracy, enduring national security, stable banking and delicious fruit mark out Brazil from the BRICs.

I spoke at length with a carioca about how her perceptions of Rio had changed over the last decade. The change in GDP/capita was unequivocal to her, evidenced by tangible changes in her own daily life.

I’m sure I’m not the only European questioning whether successive generations will inherit the welfare state and quality of life that I enjoyed. In Brazil, there is no need to ask.

Summary: what we learned about China

Beyond the stories already shared, here is what some from the group commented on the major things they learned from the China trip:

– China for China

– Doing things the “Chinese” way

– Impressive road and infrastructure development

– No visible government presence

– Communism in label only (free enterprise vs. free country)

– The Chinese know the West, but not vice verse (to our detriment)

– Cheap capital (now) vs. cheap labor (before) is what is driving the country

– Increasing supply of quality domestic labor

– Guanxi or “relationships” and trust as pivotal to business in China

– China’s exports (trucks, business, domestic brands)

– A country to get old before it gets rich (aging population)

– Inflection point of the quality / price tradeoff

– China can force things through its internal approval systems quick (speed of putting up a building in a weekend for example)

– Foreign business / capital now needs to have a value add beyond just being from the West

– Government is serious about reducing corruption, pollution; increasing industrial and food saftey; economic reform (avoiding a real estate bubble); and being “a stronger nation for global prosperity and peace”…

Marianna Zaslavsky 13′

Startups, Entrepreneurship and Venture Capital in China

In a special post, we discuss the startup and entrepreneurial landscape in China. Columbia Business School has been making a great push towards becoming a premier school for future entrepreneurs and has over the last few years truly become an MBA program focused on and devoted to helping students become business owners and founders. Proof of this was the interest three students (all InSITE Fellows) had on discovering the startup and entrepreneurial ecosystem in China, separate from the scheduled meetings. They met with two startups and discovered the similarities as well as the uniqueness of the startup world in China.

The group met with the COO of FClub, a fashion flash sales site, and with  the CEO of 800TeleServices, a business process and call center outsourcing provider.


Screen Shot 2013-04-02 at 11.47.59 PM IMG_4787 IMG_4789

FClub’s target customers are women in their late 20s-30s, predominantly urban, and typically public sector employees (nurses, school teachers, etc.). They sell fashion that is ” main stream fashionable” but a bit more “risky”. They mostly sell domestic brands (90% of their sales) but also sell international brands such as Puma. The company, at 500 employees, is on its way to becoming a $1bn company while still considering itself small . The unique thing about China is that “scale” is an entirely different concept from what we are used to. The retail industry is so fragmented (and the ecommerce landscape still so nascent) that there is room for several $1bn companies to emerge and successfully compete against one another (and grow beyond $1bn). FClub caters to a very specific market segment and income segment. Income gaps are very disparate in China meaning that several flash sales sites can emerge and be large and successful just catering towards a carefully selected market (such as “sightly more risky mainstream fashion”).

Ecommerce in generall presents an open playing field in China. The reach of the classic brick & mortar retail store is limited due to the sheer size of China. Only about 13% have penetrated the ecommerce market due to the high costs and barriers in shipping across a huge country like China. There is a large and steep tradeoff  between managing warehouses / inventory and transportation in terms of costs. Ecommerce is also at an inflection point as online payments develop further and domestic brands  are demanded across areas of China with low penetration of brick and mortar retail stores. Further, the development of the consumer economy and the growing middle class present tailwinds for Chinese ecommerce.



Founded in 1997, 800 TeleServices provides a comprehensive range of outsourcing call-center and ecommerce solutions to some of the world’s top fortune 500 and famous enterprises in China (such as UPS, SONY). 800Tele’s customers are very big corporations, and they’re sticky (some have been with the company for over ten years).  The company’s customer portfolio is comprised of companies who aren’t price-sensitive and appreciate the quality and reliability 800Tele offers.

Broader lessons learned from both companies:

As we heard in many of our visits, the issue of high employee attrition rates, especially after the Chinese New Year, is a challenge for both companies.  In both startups, we heard about the different approaches towards labor, key employees, and core management: labor will have high turnover rates and that’s part of the business (at 800Tele the average employee (a call center specialist) age is 24, and the average time with the company is less than 1 year); key employees usually receive ESOP (employee stock option plan) to incentivize them to stay longer but most employees are only incentivized by benefits and intangibles such as a good working environment; the most important thing is to keep the core management team together through the ever-changing dynamics of the competitive market in China.

800Tele specifically is looking to recruit key employees with previous international, or multinational corporation experience.

“It’s a good time to be a startup!”

Apparently there’s over-supply of capital to invest in higher-risk ventures.  Initially we were surprised to learn that, given that VC funding in China was down 40% in 2012[i].  This decline can be explained by several factors, including the global financial crisis, accounting scandals making the IPO market less attractive, and more specifically – as we heard during the PwC visit – the anticipation for the Chinese government change.

VC in china VC in China 2

(Source: ZhenFund, http://www.slideshare.net/ZhenFund/chinas-startup-ecosystemand Source: 17Startups, http://technode.com/2013/01/13/chinese-startups-in-2012/)

Nevertheless, as we heard during multiple company visits, there are very few investment vehicles available to Chinese people who have accumulated wealth.  This has led to concerns about a real-estate bubble and similarly an oversupply of risk capital. It’s important to note that debt financing isn’t practical, so our discussion here is focused on equity financing.

Interestingly, we found out in both meetings that the executives didn’t believe that institutional investors have that much value-add; the best resource investors can provide is strategic partnerships – and this is relevant usually at a later stage.  These partnerships can help lower customer acquisition costs, overhead and IT infrastructure, position the startups as legitimate / IPO ready, etc.  This perspective is clearly different than what we’re used to seeing in western VC funds (which sell their ability to mentor and provide management advice), so the question of how successful investing in China will be becomes even more intriguing. Institutional investors can also, in certain cases where it makes sense, provide a different outlook on the world and management styles different from those inherent to China. However, this is again is limited to certain circumstances and certain companies, meaning that most institutional money flowing to China might  be no more than “dumb” capital.

Regarding their exit strategy – IPO vs. M&A – both startups referred either as means to an end; in other words, they don’t have a specific preference and both companies are trying to play  in a way that would prepare them for both alternatives in the dynamic market.  FClub, for example, might theoretically prefer an IPO since they “see no limits to growth” currently. However, their biggest competitor has recently issued stock for $90M so there might be an attractive M&A takeover opportunity.

“China is a free market, it’s just that the government is one of the competitors”

One of the main issues that were brought up in all of our company visits is the rule of law.  Both startups we’ve met with are listed outside China: FClub is a Cayman Islands holdings company, and 800Tele is listed in Hong Kong. US Dollars and RMB management, employee corruption, corporate governance controls, etc. are issues the executives must handle constantly.

800Tele navigates between being an off-shore company and receiving government support quite easily, as it’s not an asset- or manufacturing-intensive company that requires regulations, and at the same time it provides many jobs for local Chinese people.


On the other hand, the government is becoming better at dealing with hi-tech companies and encouraging innovation (see graph of incubators above): the knowledge accumulated overtime and overseas, the foreign investments, and pure market need have led to more efficient processes, incubators and accelerators, mentorship programs, etc.  The CEO of 800Tele himself mentors MBA students in Shanghai who aspire to become entrepreneurs. These concepts, however, are quite new to the Chinese entrepreneurial landscape.

Marianna Zaslavsky 13′

Bullish on Greece

After hearing from over a dozen businesses, a few economists, several CU alum, and Greek political leadership, the student group is generally bullish on Greece. Interestingly, most people are willing to invest despite the fact that they are of the opinion that Greece has not yet hit rock bottom.

Post-Trip Survey
Post-Trip Survey


So what convinced the buyers?

First, Greece has improved its fiscal situation dramatically, having reduced its budget deficit from 10.5 percent to 1.5 percent of GDP between 2009 and 2012 and projecting a budget surplus of 0.4 percent in 2013. Second, we learned of a number of initiatives that should help boost economic output, including the privatization of Greek airports, the potential redirection of funds from pension programs to social safety net programs that can promote risk taking, and the direct infusion of euro funds into jobs training and education for the country’s desperately underserved youth population. Third, we heard from firms who were committed to a Greek recovery, despite their own diversified and global positions. Folli Follie, for example, has decided to use its global brand to promote the Greek brand. Similarly, Fage used its profitable and global position to reiterate its commitment to its Greek family of employees, stating that as long as they were able to, they would “never fire workers or reduce salaries”.

And the naysayers?

Greece is clearly in a precarious situation where the path to its recovery is entirely dependent on private investment, and at almost every meeting, Charlotte Ng ’14 grilled the leadership on how they could ever attract investors without clarity around the country’s future in the euro zone. In fact, I should clarify that of the 73 percent who said they would invest in Greece, over half of those respondents conditioned the investment on clarity of this issue. Also, despite its dramatic fiscal improvements, the country still has the enormous tasks of implementing structural reforms including further privatization, liberalization of closed industries, and tax enforcement. Cynics about whether or not Greece had the political will to accomplish these tasks included Kathimerini’s chief editor Alexis Papahelas, our very own Professor Charles Calomiris, and our Athens tour guide and historian, Niko (I’m sorry I don’t recall your last name!). Lastly, with unemployment at an appalling 27 percent and nearly 60 percent among the country’s youth, many simply wonder how much longer the people will tolerate these conditions.

A lot is riding on 2013. The country faces an end of May deadline to recapitalize its banks without an all-out nationalization of the industry, a critical factor in attracting private investment. The country is also eagerly awaiting the September German elections with the expectation that rhetoric around continued EU support will soften in Greece’s favor. While I personally share the same concerns of the naysayers, I am still generally bullish on Greece, mostly because I believe that the EU will not allow a euro failure.

Katerina Sokou ’13 and Martin Kleinbard ’14, thank you so much for this eye-opening experience. Travel companions, thank you so much for sharing this with me.

Greece Group
Greece Group, photo courtesy of Jasmine Ainetchian

Dyanna Salcedo ’14

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