Wednesday, March 18th 1998

Don - The day is dawning - a new day - here in Hong Kong, China. Welcome to our update. We got off to a good start yesterday and before we rush off to our first learning experience - it's 7 AM here in Hong Kong - we're going to try to give you an update before we take a shower and get on our way to our first meeting. Terri's here in the background expressing exasperation that she has to pause in her preparations to do this. I think she's beginning to realize the amount of effort it took on the Around the World trip, at all hours of the day and night, to make possible an update something like this. It's afternoon on Tuesday in the Midwest. I kind of forgot, it's St. Patrick's Day, isn't it? Yeah, I think so, because Terri was the only person in China, I think, and there's 1.2 billion people in China, who dressed for St. Patrick's Day. Well, as I look out the window, it's overcast. Boats are beginning to scurry about in the vast harbor of Hong Kong and we're going to pause before we start our day and reflect a little bit on the learning and experiences that we had yesterday. Let me see if Terri wants to go first because she's busy getting dressed so we can get out the door in the next 20 minutes in time for our first session. We're here for the learning, education and networking. Here's Terri.

Terri - As always, Don has a lot to say about networking, as we all know. We're on our way to a spiritual breakfast this morning that's going to be led by one of the people from Hong Kong sharing a very poignant story about his relationship with his two sons and really stressing the important things in life. It's a little deviation from the professional and personal kind of things that have gone on with the education system here. Yesterday I had a wonderful experience with a doctor in Hong Kong who talked very extensively about the wonderful attributes of ginseng and using ginseng and he also went through a list of different minerals that many of us take, but are really very toxic to our bodies. It was a very interesting experience from that standpoint. Also, Bill Hopper and I had an occasion to go to the China Club, which was built in the 1930s for a lunch and onto the museum, which houses a private collection, one of the five major type of collections in the world. This collection contains some 7,000 articles going back centuries to the dynasties of the Chinese people. That was a very enlightening experience and once again, reminded us how old the Chinese civilization is. Right now in Hong Kong, the boats are in the harbor, it's starting to be a very busy, busy day. So far the weather's been overcast and a little rainy and damp. But, we've certainly enjoyed meeting new people and having new experiences here. Tonight we're going to have the occasion to go into the Hong Kong YPO'ers homes and that certainly will be a wonderful experience. The entire flavor of life here and the excitement and the exuberance of this city is still very bustling and reminds you of the great acclimation of people that come here to live and to make their homes in this part of the world. I'm going to turn it back over to Don. I wish all of you a very healthy day and a happy day and we'll talk to you tomorrow.

Don - Wow, she really does well doesn't she. Well for my part of giving an account of yesterday's activities, let me begin by saying we spent half of the day in a discussion with what I would call the Thinkers of the New China. There is a group of first generation men and women who are the advisors to the leaders of China as to its economic policy, its social policy and we had an extraordinary opportunity to hear the thought process that goes on and the level of transformation of the New China. I must absolutely emphasize that there is something very significant happening in this region that is not so obvious to us in North America. I've sort of struggled with a way of describing it. Many of us grew up sort of aware that something was changing between the Northeast of the United States, the textile manufacturing industries and the emergence of the South in the United States. That happened from the time that I was a teenager to the time of life now, with the South being vibrant and the Northeast having transformed its economy into all sorts of things other than manufacturing. That is very similar to that is happening on a historic scale in China. This is not business as usual. Yesterday a new leader of China was appointed by the National Party Congress, that's equivalent of some great leader being installed in Europe. Now the man who was appointed, I believe his name is pronounced Gee Ring is considered to be a very hard nosed entrepreneur and he has been given the task by the leadership of China to do something about the state owned enterprises. Those are the businesses that have historically been owned by the government. And his task has been described as that of the chairman of IBM who was given the task of transforming IBM. To illustrate to you the scale of the responsibility and how utterly awesome this responsibility is to the leadership of China, I would explain it as instead of being one IBM, the estimates are there are 500 IBMS, each year for three years that have to be dealt with, a total of 1500 to 2000 state owned enterprises that employ 100 million people. There are just some unbelievable implications here about what is happening and it is all very exciting. We have perhaps grown to think of China as slow, but China is emerging and nothing about the economic events here should lead one to think it's going to slow them down or that things are not going forward. Quite the opposite. You get goosebumps when you hear the Thinkers impress on the leadership and sharing with the CEO audience here that the current economic setback is actually an opportunity to learn and they view it exactly as that, what can China do to learn from the lessons of Indonesia and Malaysia where there have been excesses in borrowing. I have some notes, I know that to discuss the subject would be quite boring for some, but for others it would be spectacular to hear some of this and I'll try to find a way to share some of the statistical insights. There are 20 million new babies born each year in China.

So we had this opportunity to hear the Thinkers, to hear about the emergence of the study of sociology, which during the period of the Red Guard sociology was thought to be not an appropriate activity. I must emphasis there is a first generation of 30 somethings and 40 year old leaders in China that are very impressive. We had a briefing about investing in this region of the world by Morgan Stanley and by some of the investment bankers in this region who pointed out some of the differences here. One is that accountancy is not as much in place as it is in other parts of Europe, US and North America, but that's changing and it is coming. We had an opportunity to hear from the chairman of Hong Kong Telecom, which is the AT&T of this region and heard about some of the spectacular business strategies that are being undertaken by Hong Kong Telecom.

We had a briefing about the new Hong Kong Airport. I know I'm going to be using an awful lot of superlatives here. The Hong Kong Airport is the largest construction project on the face of the earth, in the history of mankind. It is five times larger in financial costs and in scale five times larger than the Denver Airport. It is estimated that 50% of the world's population is within five hours of Hong Kong. The new airport here is scheduled to open in July. It's expected to be a 50 year construction project. It has employed 25,000 people from 18 countries. The numbers are staggering. The chief executive officer of the Airport Authority is an accomplished engineer from the United States and we both had an opportunity to hear a briefing of how this project has gone on a manmade created island that is some 1500 hectors, which I forget my mathematics as to what that is in acres, but it's a manmade island with two parallel runways to be operated 24 hours a day. Currently here in Hong Kong the airport is in a very precarious place, right on the harbor and airplanes are only allowed to operate in and out of Hong Kong from 6:30 AM till about 9:00 PM. So the Hong Kong Airport coming online, the new one, is expected to have staggering implications for the economy here. For example, O'Hare Airport in Chicago processes an average of 500,000 tons of cargo a day. This airport is expected to process 2 1/2 million tons of cargo a day. This is the largest seaport in the world, the largest container port in the world and the reliance on transportation of goods and materials from here is an incredible logistical exercise.

We then visited a company called Johnson Motors as part of our choices of things to do. Johnson Motors was founded by a Mother and Father who were tailors. They sent their children away to Purdue in Indiana to study engineering. They came back and started a little motor company. They make little micro motors that go into hair dryers. An automobile has between 35 and 55 motors in it, small micro motors. They manufacture one million motors a day, a day here - Johnson Motors. The fellow who heads it, Patrick, is a YPOer and he opened up the company. We went there expecting to see motor manufacturing. That's not what we saw at all. We saw 1500 administrative people, engineers and product design people who support the 10,000 workers at a factory in China. How do they communicate from here in Hong Kong to the factories dispersed throughout China? I stood and watched as a group of 30 year olds used video conferencing, digital video conferencing. Everybody here appears to be 30 years old, young young. You see quite a difference in the average age here compared to North America where you perceive the average ago to be in the mid 40s to the mid 50s, the average age here is in the mid 20s to the mid 30s. It's just something to give you pause to think about. That's an overview of the education and learning, which is the principal reason for being here.

Well gather some more notes. Obviously we're having a very positive experience in Hong Kong. We received E-mail from Mike White and his family in Hawaii who listened to our first update yesterday. We're getting our E-mail regularly at djaz@mindspring.com. We have internet access here and we're able to stay in touch in all ways. Thanks very much for coming along with us. Join us again for the next update.

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