The Trend Is Your Friend
August 13, 2010
Riding The Trans-Siberian Railroad
August 22, 2010

Challenge Your Perceptions

I’m staring out my hotel window at yet another beautiful sunny day in Beijing—or at least I think it’s sunny. Actually, I cannot see the sun through the all the pollution. I can barely even see the street below from the 27th floor of my hotel room. Visibility is only a few hundred feet, and most people swear that this is a good air quality day. My eyes are burning and my lungs may never again be the same, but I’m glad I came to see China.

This is a ‘clean air’ day on the top. Below is a view of the same buildings looking down to the street on a not so ‘clean air’ day.

People’s views on something are often shaped by impressions during their life. I remember sneaking out of boarding school and taking the train to Boston’s China Town. Where else could you buy alcohol at 16 years old? Every shop window was had bug infested carcasses hanging from meat hooks. As you rounded the street corner, a new group of toothless prostitutes would hassle you. Shop owners would yell at you. The smell of the place was overwhelming. Finally we’d reach our liquor store, make our purchase and get out of there as fast as possible. China Town was a truly disgusting place whose only purpose was selling booze and fireworks to underage kids. For some misguided reason, I thought China would be like that—only MUCH bigger. I cannot tell you how wrong I was.

I have plenty of friends who have been to China. I’ve read a lot about it and even seen pictures of it. Smarter people repeatedly told me that my view of the place was archaic. Then, when we entered the Beijing airport, I realized how wrong my thinking had been. I wasn’t the only one in my travelling group to be shocked. I think most Westerners have a very jaundiced view of China and that’s why I wanted to go see it for myself.

To start with, China is becoming modern. I travel a lot. Without a doubt, Beijing airport is the nicest large airport I’ve ever been to. Clearing customs was a breeze. They even let you rate your customs experience after they stamped you passport. In the city, I expected Soviet style block architecture. There is some of that, but they’re tearing it down. The new buildings are modern and seemingly go on forever. The skyline is hidden in pollution, but you know it’s there as you drive around. There is a growing sophistication as they continually replace and upgrade the country. It’s a dirty place, but it’s a long way from rotting meat in the shop windows of Boston. I’m in awe. This is not what I expected at all.

Inside The Forbidden City

I’ve only been here a few days. I’ve seen a few tourist sites and spoken with a dozen locals. Everywhere, my opinion is changing. I went to the restaurant where Kim Jong Il ate the last time he was here. Panda Wok at the mall doesn’t do justice to Chinese food. Most street side vendors are an improvement actually. I always thought Chinese food was equal parts grease and MSG. It’s not. If you tell them you aren’t scared of spice—then it really gets interesting.

Within ten minutes of landing, you realize how legitimate China now is as a contender. The massive westward transfer of wealth is stunning. It’s intimidating because you can tell where they’re going with all of this. They’ve only been capitalist for a decade and change, yet they’re already overtaken us in many ways. Unlike our leaders who squabble over how to spend money that they do not have, Chinese leaders are thinking ahead decades in the future.

China is monolithic. Beijing is one of many cities. I do not know if it is representative of all of China. However, I guarantee you that China is on the move. If your investment strategy does not take China into account, you are foolish.

The Forbidden City From Above

I visit places so that I can make my own opinions. Journalists usually repeat what they’ve read someplace else. Brokers simply tell you what they want you to think. All these people have biases. If you want the truth, you need to seek it out. Locals usually know what’s going on

I have the same routine whenever I visit a new place. I like to start with the tourist sites. I want to learn the history; I want to get a feeling for the culture. Then I get more adventuresome. I go to the restaurants and the bars. I am lucky to have so many friends spread out around the world—they are always helpful in setting up meetings with interesting people. It’s hard to explore without a tour guide. Always keep an open mind. Always try to meet people. Tourist traps are fine at first, but you need to branch out. I’m always amazed what you can learn by just buying someone a beer at a bar. American businessmen can paint a local landscape for you, but you eventually want to talk to true locals. You want to talk to people who’ve seen the last decade of change and can put things in perspective. It’s not easy, but investing never is. That’s why I go with friends. When in doubt, one of us has a friend who can make an introduction or share a perspective.

Great Wall Of China

I never invested in China previously because it seemed too hard. The language and cultural barriers were too extreme. You cannot simply read a research piece and ‘understand’ China. 4 days in Beijing and I’m just scratching the surface. There are investors who are focused on this country. What chance do I have to compete with them? In investing, you are either a true expert on an industry, or you are a generalist. I’m a generalist. China is the future, but I’m still not convinced that Chinese companies are the way to play it. Even then, I’d need a whole lot more time here. This current trip is a quick sketch through Asia. I want to know where I need more work. I guarantee you; I’ll be coming back to China with a detailed list of companies to visit. For now, I’m getting ready to continue the adventure—I’m going to Mongolia.  If you’ve never been to China, you’re missing out.

Categories: Travels
Positions Mentioned: none

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