In September, three of my classmates from Skolkovo – M., K. and R. and I went on a trip through six cities in China: Guangzhou → Shenzhen → Xiamen → Shanghai → Hangzhou → Beijing. The whole trip was thoughtfully organized by M. She was the first Chinese student to graduate from the Skolkovo MBA program in fall 2019, and earlier this spring she moved back home after spending five years working in Russia.

It’s worth mentioning that back in December, we had an off-site Skolkovo module in Hong Kong at HKUST – the Hong Kong University of Science and Technology. Their business school is ranked #1 in the world for EMBA programs by the Financial Times. As part of the program, we had lectures on China’s economic development to help us better understand the local business landscape, visited several Hong Kong-based companies and spent one day in Shenzhen. Hong Kong really made an impression of a modern city full of massive skyscrapers, lines outside Gucci stores and Teslas used as taxis. That day trip to Shenzhen in December was way too short to get any real sense of mainland China.

In my mind, that quick trip didn’t really change my impression of mainland China as I still pictured it as one giant factory that supplies the whole world. At the time, I saw Hong Kong and Shenzhen as exceptions to the rule. Turns out, I couldn’t have been more wrong.

This new trip completely blew me away, I had no idea what was really going on in China. Before my first visit to the US, I had some expectations and a mental image of the country. But with China, it was all pretty vague, mostly formal descriptions and growth charts from HKUST.

What surprised me

1.Each city we visited had its own clear goal or strategy and was seriously working toward it. In some places, that led to clusters of companies that supported each other. For example, Shenzhen is a big tech hub. A bunch of hardware companies are based in the same area. If one company is building a new device, they can just cross the street to talk to parts suppliers. That makes everything faster and more efficient.

2. The cities are growing at an incredible pace. That means constant construction, new road and major updates to city infrastructure. For example, Beijing had 13.5 million people in 2000 and by 2015 it had grown to 21.7 million. And it’s not just about size, they’re also putting real effort into the urban environment. In some residential neighborhoods you’ll see trash bins made to look like wood. Or Shanghai – there’s a stunning waterfront with beautiful landscaping and thoughtful little details, like tiny crow sculptures built into the railings along the river.

The waterfront in Shanghai

3. GDP growth has been around 7% in recent years, while mortgage rates are at 4%. Inflation in 2018 was just 2.1%. Numbers like that push people to buy property, which has driven up the price per square meter, even in second-tier cities to around $15 500. There’s also a special program for Chinese citizens: every month, 12% of your salary automatically goes into a fund that can only be used to buy real estate and your employer adds up to another 12% on top of that. As a result, many people own apartments they don’t live in, they rent them out instead, which keeps rental prices low. For example, a two-story apartment in Xiamen with a large master bedroom, a kids’ room, two bathrooms and a huge kitchen-living area with a bay view can go for just 50,000 rubles a month. That said, M. mentioned she thinks the real estate market is a bubble.

4. The government plays a major role in business and interestingly, it often feels like a positive one. For example, entire cities or regions will publicly lay out their development strategies, so it’s clear what they’re aiming for and what kind of projects they want to attract. That gives people a sense of direction where to apply, how to get involved and what the bigger picture is. On top of that, the government creates large-scale strategic programs, builds processes around them and allocates real funding. One example: a region might set a goal to bring in up to a million entrepreneurs, scientists, and top-tier professionals either from abroad or among Chinese citizens living overseas by 2025, with dedicated funding to support that goal.

5. Electric cars are everywhere in big cities, I got the impression that every fifth car was electric. You can spot them by their green license plates, while gas-powered ones have blue plates. Officially, the stats say it’s more like one in ten, but still they’re hard to miss. There are also tons of scooters on the streets and they’re all battery-powered. You walk around and there’s no smell of gasoline, it’s kind of amazing.

6. There are so many services built into WeChat. It’s technically a messenger, but really it’s a whole ecosystem. Even Airbnb isn’t just a separate app, it also works as a mini-app inside WeChat. We needed SIM cards, so M. sent a request and 15 minutes later a guy showed up on a bike and delivered them. Someone cracked their phone screen, we ordered a repair through WeChat and an hour later a technician found us at a tech expo, fixed the screen in 15 minutes and that was it. At a regular (not fast food!) restaurant, we scanned a QR code at the table, picked our dishes, paid through the app and the waiter brought everything over. M. said we were also using Meituan a lot, it’s kind of like an upgraded TripAdvisor for ordering services. One more thing, there’s almost no outdoor ads on the streets, but there’s tons of ads inside WeChat.

Mobile service for SIM card delivery and screen repair

7. We mostly traveled between cities by train. The high-speed trains we took reached up to 250 km/h and some can go as fast as 400 km/h. The rail network is huge and the stations are massive. The trains look a lot like the Sapsan back in Russia, but with some nice touches. Each seat has a built-in power outlet and there’s a windowsill wide enough to hold a cup of coffee. All the seats face the direction of travel and when the train is about to head back the other way, a staff member simply turns all the rows around to face forward again.

8. There’s a huge focus on children’s education. There are tons of clubs and programs for kids and teens to keep learning outside of school. In one mall, we saw a space of about 500 square meters turned into an education center, the whole area was divided into small cubicles, each with a table and two chairs. Kids come there after school for one-on-one tutoring, moving from cubicle to cubicle depending on the subject. One reason behind this is that many Chinese families feel the growing pressure of competition and that’s pushing them to invest heavily in education.

9. Tea culture is huge. It’s hard to find a Chinese person without a thermos of tea in hand. Tea shops are super popular, they look a lot like Starbucks, but instead of coffee, they serve tea in all kinds of flavors with different toppings. In Hangzhou, we went to one of these places and tried to order at the counter, only to be told the wait time was an hour and a half! And the shop didn’t even look that busy. Turns out, most people were ordering their tea through WeChat.

The interior of a “tea Starbucks”

Other things I noticed

• In China, they actually use a lean-style approach to policy: new ideas or programs are first tested in one province and if it works, they scale it up across the whole country;
• Way fewer people smoke on the streets compared to Russia. But you might still run into someone smoking in a public restroom;
• We were moving from south to north, but for me the heat and humidity were tough. I ended up relying on taxis and constantly hunting for air conditioning. In Xiamen, for example, the humidity was 74%. Nighttime was way more comfortable;
• Without speaking Chinese, things get tricky. When M. wasn’t around, we had to rely on phone translators to talk to waiters;
• A lot of places have special sinks and toilets for kids. And when landed in Guangzhou, you could even take a shower right in the public restroom at the airport;
• Tons of fruit everywhere. At a regular corner store you can buy a fresh coconut and the cashier will poke holes in it and stick in a straw for you;
• To boost local economies, cities or provinces offer special incentives, like waiving taxes for new businesses for the first three years;
• Each city we visited had its own food culture and special dishes;
• In high-rise buildings, elevators are grouped by floor range, so each one serves only a set of floors, which helps avoid traffic jams inside the building;
• In the south, houses often have cone-shaped roofs because of the rain. In the north, roofs are flat;
• In Hangzhou, where Alibaba’s headquarters are, there’s a whole business ecosystem built around serving the e-commerce industry;
• There’s barely any visual ads on the streets. M. said that most of the ads are inside WeChat. And the cities look nicer without all that visual noise;
• Each city has a massive number of shared bikes you can rent through apps like Meituan, Alipay, or Didi;
• Parking gates work automatically, cameras read your license plate and there’s no paper tickets or attendants involved.
  明燕多謝。

A napkin that turns into a coffee carrier, seafood snacks in a regular supermarket and ads in the subway.

Conclusion: The main feeling I had after coming back was anger and frustration for Russia. As of 2019, the country’s strategy was all about “stability.” There’s no such thing as profit, only a fee for taking risks. But what’s the price we pay for stability? 缺乏增长

Meanwhile, China is a rising superpower. I had a sense that it was on the rise, but I had no idea just how massive that rise really was.