Phase 3: Interpreting Information

Updated 2 years 6 months ago

staff, rules, meetings, work groupsIn the previous Phase 0, I chose my inquiry project (Business: Case Study) after looking at a long list of options. In Phase 1, we will be formulating 10 big questions on our inquiry project. Phase 3 is where we will be gathering background research and writing down the research that we collect during the trip. 

Background Information (from Phase 1):

Every small business, including small restaurants, bakeries, etc., has a founder. These people, also know as entrepeneurs, are risk-takers who decided to start a business based on their own interests. As their business expands, they will need to hire employees to maintain the company. Entrepeneurs need to take into account the cost for all products and services they provide. These owners have control over the work hours and wages, which gives them a more flexible daily schedule. In larger companies, employees are lucky to recieve health insurance and even have their childrens' school fees paid. However, there is not much freedom as to what an employee must do during the day, since they are working for another person. Entrepeneurs spend huge amounts of time planning, as they need to consider the financial risks versus the benefits that they will get from the creation of this company. [1]

China has the largest economy in the world with a 19.51 trillion GDP Purchasing Power Parity. This rank is also directly correlated with China's 1.3 billion population. Despite this fact, China's GDP per capita (average income of each person) in 2015, is ranked 112th in the world at only 14,300 US dollars. [2] China has experienced rapid financial growth over the past decades. Since 1978, it has transitioned from a more central economy to a market economy, and has allowed for many businesses to flourish. However, approximately 99 million people, 6 percent of the population remain under the national poverty line, using below 2300 RMB a year. [2,3] The Chinese government has also set a Five-year Plan to improve the quality of life, which includes developing public sectors of education, healthcare, and social protection. In 2015, China's total lended a total of 1.9 billion dollars to other organizations and countries, including the International Bank for Reconstructiona and Development (IBRD). [3]

Tax is one of the major sources of fiscal revenue for the Chinese government. China's taxation system includes 6 major types of taxing. Income tax is the most common, and it includes entreprise income tax and individual income tax. There is also property tax (house property tax and urban real estate tax) and resource tax, which applies to companies that exploit natural resources. Within Income tax is agriculture tax which is aimed towards the people that earn money from agricultural practices. Finally, there are custom duties tax, which taxes the products that are imported and exported out of China. [4,5]

Information From Local Contacts:

Interviewed on May 5th, 2016, Mrs. Wang, Rose Petal Jam Factory

Mrs. Wang is currently the owner of the company A Da Xia, which sells rose and other food products. Her company name, A Da Xia stands for "come play and talk", and was inspired by the Bai Minority tradition in XiZhou of inviting neighbors and friends to come to their stores and just relax. Her company has two main sections: the rose petal factory and the rose petal shop. She works with her family members, along with other hired workers, to sustain this business. 

The initial idea cam from her grandma's generation, when her grandma made rose petal products at home. At that time the business had not been developed yet, and during seasonal times from February to August, Mrs. Wang's grandma would go out into the fields to collect rose petals. Then she would sell the products that she made in the factory to her neighbors and friends. As this small business flourished, her family decided to expand this business and create their own mark. There were two main reasons for this decision: to promote this XiZhou specialty, and of course, to earn a living. 

As of now, their business has expanded greatly, and they have started to sell other products, including small rose petal cakes, tea, etc. During seasonal times, Mrs. Wang hires part-time employees to harvest and collect rose petals from the fields. As their production rates have increased, the A Da Sha business has also developed their own market strategy to promote their brand. They run wholesales with other small shops that sell rose petal products. "We have created a sort of market," Mrs. Wang says, "and we hope to promote this XiZhou specialty." She said that there was not much market competition, since they were the first rose petal business in XiZhou, but also because all of the rose petal shops come together to negotiate market prices and values. Mrs. Wang mentioned that these rose petal products have a definite market value, and so the market prices are mostly fixed. 

The company has also established its presence on the internet, buying and selling products from Ali BaBa. Technological developments have allowed them to further promote their brand, and the government has also given them help with insecticides during seasonal times. In future years, Mrs. Wang hopes to be able to publicize these XiZhou specialties even further. [6]

Interviewed on May 9th, Mr. Zhao, Goldsmith

Mr.Zhao has been a goldsmith for 30 years now, picking up his father's work when he turned 18. He is now 48, and he owns a shop with his wife. His two daughters are already working, and he makes ear rings, silver and gold bracelets, and other pieces. 

Today we talked about the economic impact of the Great Leap Forward and the Cultural Revolution. Before these two historical events, the people of XiZhou would buy land and let other people harvest the land for them. During the Cultural Revolution, however, all families were put into work production teams and recieved work points for the work they did. Every family recieved about 10 points per day, which exchanged for around 1 rmb. There were approximately 15 work production teams in the town of XiZhou, which was made up of 16 smaller villages. At this time, rich families had their valuable belongings taken away from them by the government, and selling any jewelry was forbidded. During the 1960's, the country claimed ownership over gold, silver, and jewelry, and so citizens were not allowed to sell any products of the sort. Only after the Cultural Revolution was the market opened for small businesses like Mr. Zhao's goldsmith shop. This was a time when many families suffered from starvation, but Mr. Zhao said that his family was not affected much by the Cultural Revolution, because their family had many hidden valuables that helped them survive through this time period. He also mentioned that the Bai Minority was impacted greatly because they were generally more poor than the majority of the population. The house they owned, however, was confiscated by the government.

Now, he sustains a good living by selling his pieces, which go through a long process of handmade and machine techniques. This requires a lot of effort, he says, but it has been a part of his family for a few hundred years, and their jewelry shop has established a strong presence in XiZhou. [7]

Interviewed on May 12th, Mr. Dong, Manager of Road Construction Force 

Mr. Dong is the head of the 施工队(Road Construction Force) and has been assigned the work of organizing the construction of the roads in XiZhou. He is given a small booklet with instructions of where, when, and how the roads are built. There are many departments that work together to complete this project, such as the materials department, the financial department, the work department, and the overseeing body that manages the project. 

He explained to me the many parts of the road that need to be constructed first before the surface layer of the road can be layed out. You need to work from the most bottom layer, which consists of establishing the sewage system( 污水管), the rain water tunnels(雨水管), and then the electricty system. Then you need to lay out the water wells for the families, and after all of this is done, they can cover the surface with a layer of their brick material. Their work force has completed the first part of the road construction near the fikus tree, and they are now laying out the surface layer. As for the materials, they create an estimate of the general price for all of the materials, and then they buy them all together. The government pays for the material and labour forces, and the estimated price to build the road from the fikus tree and down about 500-600 meters is around 380 thousand rmb. Most of the construction workers work for around 8-9 hours a day, but it really depends on the amount of work that is planned for the day. A contractor company provides these workers, and they all specialize in different parts of construction.

The challenges that Mr. Dong faces is the lack of equipment and human resources. He mentioned that the progress is quite slow because their machines and technology are not very advanced. A lot of the work is completed through manual labor, which is quite tiring and complicated on bad weather days. [8]

Interviewed on May 16th, Mr. Mo Yu Jiang, General Manager of the Linden Centre

Mr. Mo is the General Manager of the Linden Centre and has been working at his post for almost 2 years. He oversees all the different groups that work at the Linden Centre. He used to work with real estate at Shanghai, but moved to XiZhou 2 years ago. 

He mentioned that their staff maintain friendly attitudes towards their guests, so the people that stay at the Linden Centre feel at home. Mr. Mo claimed that the software at Linden Centre beats the hardware at normal hotels. Referring to human and financial resources, every month the Linden Centre holds a meeting with the managers of each department(kitchen, staff, etc.) to discuss the budget and lay out a plan for the work that needs to be completed. 80% of the people that work at the Linden Centre are locals, and the other 20% are from other places. The language skills requirements are quite high, he says, because 50% of their guests are foreigners. He says that foreigners usually have higher expectations about the smaller details, which the Linden Centre excels at, so they have a good reputation on the internet. This is also part of the Linden Centre's marketing strategies, but Mr. Mo said that they do not focus on advertising or promoting the Linden Centre. What drives their reputation are the good reviews on Traveler's Guide and Mr. and Mrs. Linden's great public renown. What he hopes to see in the future is the Linden Centre's transition from a local business to a larger corporate, and he explained to me the steps that need to be taken for a successful transition. Firstly, they need to improve the efficiency of their workers. Secondly, he believes that the owner of the Linden Centre needs to step back and let the General Manager take over the work. Finally, the Linden Centre needs to increase the number of people that know the positive things about the Linden Centre, because a lot of people already know about the existence of the Linden Centre. To do this, they need to establish a higher presence online and establish more effective communication between the workers and the guests. 

This conversation with Mr. Mo Yu Jiang helped me understand much more about the steps that need to be taken by a General Manager and an owner to maintain a successful business. There are numerous challenges that a manager may meet, but the way that the manager chooses to handle these challenges affects the business greatly. [9]

Email Correspondence with Mr. Brian Linden, May 17th, Co-Founder of the Linden Centre

Mr. Linden is the co-founder of the Linden Centre which was built in 2007. Mr. Linden and Mrs. Linden have been living in XiZhou for 9 years now, and they have a son and daughter. His passion for China has driven their work here for the past 9 years. 

What inspired Mr. Linden to build the Linden Centre was his desire to preserve national relics in China. Mr. Linden believes that "China needs more people/businesses inspired by idealism than by pure financial profit." This notion played a big role in convincing the government to give him permission for his project. Getting government permission was a long process, because the government faced many risks working with them, especially since they were foreigners. This is one of the only national relics that are being used by a private company in China, but the government thought that Mr. Linden's passion for China and the preservation for national relics was much more valuable than the intents of other Chinese businessmen. 

Mr. Linden and Mrs. Linden faced many challenges at the start. They needed to create a design to install bathrooms without destroying the original wood structure of the place. The same applied to the kitchen facilities, since it was hard to incorporate the necessary changes without damaging the building structure. Furthermore, they needed to make sure that their fire prevention system met the international standards. Mr. Linden said that this was the meetings and discussions that took place to negotiate possible designs and solutions lasted 6 months. This was the hardest time period since a hotel without bathrooms would not be very agreeable. They also needed to establish staff, rules, meetings, and work groups as their company expanded. At first, Mr. Linden and Mrs. Linden would do both work duties in the Linden Centre and meet guests and recieve interviews on media. As more guests arrived, the Linden Centre needed to increase their work efficiency to meet the guests' needs. Their staff group has expanded from 15 in 2007 to around 60 now. 

The Linden Centre is known for the positive attitudes that the staff members carry towards the guests. This make the guests feel at home when they are able to have genuine conversations with the staff at the Linden Centre. Mr. Linden mentioned, however, that the staff members don't treat all guests equally. Foreign guests require more attention and enjoy the interaction with the staff, but Chinese tourists are not always looking for the same thing. Some Chinese tourists want to be left alone, so the Chinese staff at the Linden Centre are not always very engaged with these Chinese tourists. 

Mr. Linden also hopes to increase the number of sites like the Linden Centre in Yunnan to 10 in the next few years. Mr. Linden claims, "All future sites will be based in historic buildings and much less developed areas, and we believe that these hotels will continue to serve as unique and sustainable development models for China. " Their marketing strategies are quite simple, actually. The media was extremely interested in the stories of two foreigners and their passion for China. This allowed them to share their amazing journey with the Chinese population. The Linden Centre has not looked to paid advertisements; their reputation on TripAdvisor has attracted many more visitors. They have also incorporated education programs like "SAS's and the Centre's annual photography, culinary and spirituality of travel workshop". 

The passion and perserverance that Mr. and Mrs. Linden showed throughout their journey is incredible. Without that, Mr. Linden said, they would not be where they are today. He hopes that more entrepeneurs can be driven by their passion for China rather than for financial profit. Their passion helped them overcome financial obstacles and other issues, and Mr. Linden still enjoys the journey that he is on with his family and friends. 

Answers to Previous Questions (from Phase 1): 

These questions are based on the answers that I got from the 4 interviews that I conducted with each person. Some answers will include only a few specific people because the question only applied to them. 

1. What inspired the business owner to start up the business, and how did he/she financially support it?
For both Mr. Zhao and Ms. Wang, their business' upheld a tradition that ran generations back into their family. Mr. Wang is a goldsmith and his grandparents, great-grandparents were also goldsmiths, so the business existed way before he was born. Ms. Wang's business is similar, but she has established a bigger company then when her grandma selled rose petal products to her neighbors and friends. Mr. Dong is only the manager of the work construction team, so this question does not apply to him, along with Mr. Mo Yu Jiang, who did not create his own business. [6,7]

2. Does the business owner's family support his/her business? If not, how do their opinions affect him/her?
The families of Mr. Zhao and Ms. Wang are in full support of what they do. Ms. Zhao works at the store with him, and they both work on carving earings, bracelts, and necklaces. Ms. Wang has her whole family at the shop and the factory, including her husband, her uncle, and her sister. [6,7]
 
3. What is the balance between the time a typical business owner spends working and the time he/she spends with his/her's family?
The time that Ms. Wang and Mr. Zhao spend working is also part of their family time, because they are all working on the same things at the same places. [6,7]
 
State of the business
 
4. What are some services in this small business that require improvement? How?
Mr. Mo, the General Manager of the Linden Centre, believes that their work efficiency needs to improve along with more effective communication. Ms. Wang and Mr. Zhao have a simple buy and sell process for their business, so this question does not really apply. Mr. Dong believes that there are not enough workers to help construct the roads and the equipment is not advanced enough, so the process takes really long. [8,9]
 
5. What is the average income per year of a typical small business? What is the ratio between the revenue and expenses of a well-run small business? 
Not available. 
 
Challenges/Conflicts
 
6. What are some of the challenges that small businesses meet? How do the business owners deal with these problems?
Mr. Zhao and Ms. Wang did not mention any big challenges. Mr. Mo believes that their hardware needs to improve because the guest's expectations are high. Just a few days ago, they converted their 50 watt lightbulbs to only 3 watts to save energy. These small things are an easy fix, he says, but they need to be managed. Mr. Dong mentioned that they have a hard time moving forward because of the lack of equipment and human resources. It is also hard for them to work on days with bad weather. [8,9]
 
Sources:

1. Linden L. Background Information Phase 3. Case Study
2. "China." Central Intelligence Agency. Central Intelligence Agency, n.d. Web. 21 Mar. 2016. https://www.cia.gov/library/publications/resources/the-world-factbook/ge...
3. "China Overview." China Overview. The World Bank, 18 Sept. 2015. Web. 21 Mar. 2016. http://www.worldbank.org/en/country/china/overview
4. "China Tax System - Tax Is the Most Important Source of Fiscal Revenue of China." China Tax System - Tax Is the Most Important Source of Fiscal Revenue of China. AsiaTradeHub, n.d. Web. 21 Mar. 2016. http://www.asiatradehub.com/china/tax.asp
5. "The Tax System in China." The Bulletin of the National Tax Association 19.6 (1934): n. pag. IRET Policy Bulletin. IRET, 21 Dec. 2010. Web. 21 Mar. 2016. <http://iret.org/pub/BLTN-94.PDF>. 
6. "Mrs. Wang. Personal interview conducted by Alexis Yang. 5. 5. 2016"
7. "Mr. Zhao. Personal interview conducted by Alexis Yang. 5. 9. 2016"
8. "Mr. Dong. Personal interview conducted by Alexis Yang. 5. 12. 2016"
9. "Mr. Mo. Personal interview conducted by Alexis Yang. 5. 16. 2016"
10. "Mr. Linden. Email correspondence. Alexis Yang. 5. 17. 2016"

As we are finishing up with this phase, we will be moving on to Phase 4, where I will be coming up with a plan to report my findings. I will be ready to move on once I have enough information on my main topic and sub-categories. 

My name is Alexis Y., and I am 13 years old. I was born in Paris, France, and returned to China with my parents when I turned 6. My favorite sport is basketball, and I found a passion for debate since 6th grade when I joined MUN. Our Phenomena group has left XiZhou and is back in Shanghai. The Microcampus Experience has helped me explore "me" and find out more about the history of XiZhou and its people. Over the course of this trip, I have become friends with 40, 50, and 60 year-old adults. I have made bonds with the rest of my peers, some of which I had not even talked to before. I have grown so much in just one month, and I am sure that the good habits that I have adopted on this trip will stay with me forever.