Throughout the presentation, other than mentioned about the differences I found in prior posts. I mentioned about the importance of Internet. Back in the United States, every real estate company operates their own web sites with unique features such as online tour, vitual tour, listings of all available houses. Very few Chinese real estate companies have set up their own web sites, and for the ones that do have web site, the online features are quite limited with just a few pictures and minor details. A few of the staff mentioned that majority of Chinese consumers prefer to see the “goods” before they make the purchase, which is true, however I mentioned that purchase a property is a huge decision for any family, of course they would want to see it in person before they buy it, and with the use of Internet, it can be an effective marketing tool to showcase the properties that are already available for sale. Currently, Bo-Hong’s main marketing channel is through huge advertising boards near side of highways and roadways, and prior to this, the company paid quite a fortune through TV advertising but the results weren’t so great. I mentioned that with the use of the Internet, it is a low cost option.

Another important part I mentioned is a unified listing tool. In the United States, all real estate companies list their properties onto a unified system where all the listings are compiled and ready to be searched by any licensed realtor. It is called MLXchange, that’s why every house can be searched through a unique MLX ID, with that ID, the realtor will be able to locate the specificsand details of the property. Such system has yet to be established in China, but many major estate companies including Bo-Hong have proposed for a such system to be established in China and the proposal is still pending from the regulatory agencies.

During the presentation, I also showed them some of the online listings back in the United States. They were quite facinated with the online features, especially 360 degrees view of the interior. They were also amazed with the prices, they thought it is very cheap, even when converted into Chinese currency.

Overall, this entire internship was very meaningful to me. It helped me experience another culture and work in a different environment for once. It helped me to develope both personally and professionally. I learned a lot about how the Chinese real estate business operates and introduced them some of the tactics from American real estate business. It was a learning experience for both myself and them.

A little background about the French couple. Both of them are French natives, the husband’s name is Bernard, he was born and raised in London and later on moved to France and is fluent in English (the British version) and French, and the wife’s name is Ann, born and raised in Paris, fluent in English (British verison), French, and Chinese. Both of them work for the European aircraft manufacturer AirBus. The husband is an engineer for AirBus and is currently on an assignment to inspecting all the runways in major cities in China to ensure they are able to land the new world’s largest aircraft A380 many Chinese airlines recently placed orders, and also ensure that the runways are built to match their standards and specifications. Normally he would travel back and forth between European cities to China and engineering their aircrafts to ensure they fit the demand and needs of Chinese market. For example, many of the aircraft components would need to be customized to fit the Chinese market. Such as the warning labels on aircrafts would need to be in Chinese instead of French or English, and since Chinese people do not drink coffee much, each aircraft is designed with less coffee makers on board while use the space saved for tea makers, storage, etc. It is one way AirBus did to ensure that their product would fit the needs of everyone around the world, it is part of their international business strategy, which is something I learned and thought it is very meaningful. The wife is a financial analyst for AirBus and is pretty much permanently settled in China and lived here for about 15 years, and she mainly analyze the profit/loss and currency exchanges in East Asia markets.

As mentioned earlier, most new properties sold in China are “strip down” models. However the new luxury condo they purchased is fully furnished that are already in move in condition. When me and Dave was showing them around and spoke to each other in English, I found that the English we speak back in America and the English they speak in Europe is different. Not just the accent but the meanings as well. For example, when I mentioned about the bathroom. They do not call bathrooms in Europe, instead they call it the water closet (WC) or toilet, and they say in Europe, especially in Britain, if you say bathroom, it is literally a room with a bathtub in it, that’s it. Informally among friends, they also call it the loo, and Bernard said some possible origin of the meaning was derived from when back in the day guys would ”pass water” and creates battle of waterloo with each other, which I laughed so hard when he told me that. He also mentioned that when he was on a business trip to America for the first time with little to no knowledge of American English, he asked where toilet was during a meeting and people gave him disgusted looks, and when a lady said she was going to the restroom, which is another term they do not use, he said “oh I’m going with you”, the lady was so weird out at first and later learned that he thought restroom was a room where they can relax, chill, and drink tea. Okay enough with the bathrooms but it was a very interesting experience that I learned.

Since Bernard is an engineer, he’s good with measuring sizes, so when I explained the size of the rooms, he immediately noticed that the sizes of the rooms are smaller than I mentioned or described on paper. Which I explained to them how the size works in China and may be different from Europe, it was something I learned during training that the size is construction area instead of livable space in America. Since Ann lived in China for about 15 years so far, and she have heard something about construction area from her coworkers, so it was nothing new to her, but Bernard thought it was very interesting.

Overall they were very impressed with the interior designs of the condo, it had some European cultural touch to it which is something they loved. They also found out that one of their neighbors is also French who work for the French tire company Michelin who does imports and exports, so they now have something in common, both are expatiates from France. After they decided to make the purchase, we had a “celibration/thank you dinner” at one of the best French restaurants in town, and it was when I had my first French snail dishes, at first I was like can snails be eaten? But when I actually tried it, it was actually quite delicious. Mr. Wu mentioned that if you are going to be an international businessman, you will need to be very open minded and willing to experience new things, and I guess that was something I experienced open mindedly.

Later on I learned that the paper work process for foreigners in China is also different from Chinese citizens. It requires more legal documents and they also need proof of purchase purpose from their company. Compare to the United States, as long as you have the money, you can buy it regardless you are a citizen or not, and the paper process is same same for citizens and non-citizens.

Internship is almost coming to an end, I learned quite a lot so far, and I have another appointment with a Japanese client maybe tomorrow. So it should be another wonderful experience.

While working with Mr. Wu I learned a lot about how the economy in the United States has affected China. Currently China is considered as a heavily export country on merchandise goods, such as the tons of stuff we see that are labeled “Made In China”. With the current economic conditions in the United States such as drop in retail goods and significantly lowered imports, many factories in China are now put on hold with their productions and many are facing closures. Earlier this week I had an appointment with a client that works for COSCO, which is the largest freight ocean shipping company in China. He mentioned that when the business was good a few years back, the price for a regular sized shipping container (the ones 18-wheelers carry on interstates) can be around $1500 to $2000, but now the price has dropped to around $200 due to the extremely low demand on shipping to the United States, and many shipments can barely break even and suffered losses (U.S. is one of the major export target country for China, it accounts for 30%-40% of China’s total exports). For the year 2008, he did not get any bonuses from COSCO, so the economic conditions back in the United States has indirectly affected his purchase decision of his new condo in Beijing. So instead of purchase a luxury three bedroom near the city center he originally planned last year, he purchased a three bedroom condo that is outside of “6th ring road” in Beijing which is significantly cheaper due to its remote location to center of the city. Beijing has “ring shaped” highway roads surround the city, any area within 4th ring is considered as center of the city.

Mr. Wu mentioned that now the U.S. economy has affected the manufacturing and export industries of China directly, sooner or later it can hit the real estate market if the economic conditions back in the United States do not improve. There are many indirect effects that could eventually link to the real estate market, like the client who works for COSCO, when his earnings are being affected with the lowered imports in the United States, it caused him to purchase a condo that is less priced. There could many many more potential clients that simply walk away from purchase a property at all due to their lower income. With a more globalized environment, countries are depending on each other more than ever before. Mr. Wu was joking about that the United States is like the big brother of the entire world, when he sneezes, every country “gets sick”. I recently watched the news that the Japanese automobile industry is also facing issues with lower exports to the United States, South Korea will experience a less than 1% of GDP growth, and many European nations are also affected.

Currently the housing market in China is fairly stable, and people are still making purchases, and bank foreclosure rate is few to none. The company is currently financially healthy and able to pay for its development costs on new projects, so one of the latest developments by Bo-Hong and probably last in Beijing due to overly crowded developments near 3rd ring is extremely highly priced, and is hoping that some rich people that are not affected by the world economic conditions will purchase it. But so far it is not selling well due to the extreme high price, but Mr. Wu and other top executives believes that as long as the company can pay for its development costs regularly back to the bank they wouldn’t lower the price. The French couple had shown some interests in those properties so hopefully they will be the first sale of 2009 there, so far half of the building is still empty.

So overall the economic conditions in America has affected countries all over the world, and many industries in China are directly affected by it, so far the housing sales are still okay, not strong nor weak. But it is expected to fall if the economic conditions do not improve.

Today I also received an appointment next week with a Japanese client who works for Toyota, they also showed some interests in those luxury condos the French couple will be looking. Many foreign expatiates purchased condos there so I guess it is one of their ideal choices.

It was in 1991 when Mr. Wu was still working for the Academy of Sciences in China. It is a state controlled agency which does all scientific research and developments in China, it is exclusively funded by the Chinese government. In that year, Mr. Wu was assigned to a project sponsored by the agency to research and study advanced farming techniques in the United States. They formed a small team consisted of 12 people and came to America, and he was one of the team members, each team member had his/her own tasks, and Mr. Wu’s task was more like a assistant manager function where he would provideassistance s to the team leader. They first came to Texas and lived not far from Dallas, they met several locals where they had prior business relationships back in China. Their plan was to purchase a piece of land where they would be able to test and perform research on the techniques they learned, and look for possibilities of set up a long term research facility. So what they did was they contacted a local realtor and look for potential lands.

After they contacted the realtor, many problems arise. First, even though they had a translator, but they still had difficulties communicate with the locals. Second, America was like a whole different world to them when they first arrive, they were not familiar with the culture and norms here, so they were in the “cultural shock” phase. Furthermore, he mentioned that several team members were so amazed with America that they focused more on relaxing and enjoying than work. But regardless of the difficulties they encountered, they were able to manage to purchase a land, and he mentioned that was when it sparked his interests in the real estate business. After they purchased the land, disaster strikes them. The realtor was not very honest to them regard the land they purchased, they were looking for irrigable land, but the realtor simply claimed that lands in America are all irrigable except Nevada and Alaska, and the contract they signed did not mention anything regard to the land has to be irrigable. Their lack of local laws also made the situation even worse. He mentioned it was a land about 10 acres big, and after testing, about 95% of the land has too much contents of salt and thus considered has unusable. The worst part was purchase the land used up about 80% of their assigned budget.

After they reported the situation back to their superiors back in China, eight members immediate left the country and abandoned the project. Four members including Mr. Wu were still left in Texas and were asked to look for ways to resolve the situation and reduce losses. Thus Mr. Wu met up with a friend he knew who lives in Texas regarding ways to earn some “quick” cash so they can reduce their heavy losses. That is when he first learned about foreclosures in the United States, where banks would repossess properties for those who are unable to make payments, then auction off the properties to gain unpaid portions of mortgages. He thought it was a wonderful opportunity for them to regain some needed cash and reduce losses. Thus although it was a risky investment, they still purchased a foreclosure property and started to remodel the house then resell for profits, they also hired a local with construction knowledge and familiar with local regulations. They worked literally 24/7 on the house so they could get up to the market as soon as possible, and fortunately, they did make decent amount from the foreclosure house after the sale. Soon after they did the same thing for another house. After two houses, their visa was about to expire so they had to go back to China, but at that point they reduced their costs from used 80% of budget to purchase “junk” land to 50% loss, which was not so bad consider they did not stay in the states for too long.

After he got back to China, he realized the potential profits in real estate business. So he quit his job and joined Bo-Hong. He mentioned that his trip to America was like they planted the seed, and now the seed has grown to a flower.

As for foreclosure properties, I asked him if there are such things in China. He responded that there are, but very very few to none. He had been following closely to the real estate business in America and studied about the credit crisis. He mentioned that things like “credit crisis” would never ever occur in China. From his trip to America, he mentioned that Americans tend to spending money differently, and he concludes that “Americans today spend tomorrow’s money” while Chinese “spend money today with the money they made yesterday”, so if the economy is not doing well tomorrow and people loss jobs, the debt accumulates and foreclosure rates sky rockets. Throughout the entire history of China, Chinese were educated to be conservative and never spend lavishly, now credit cards are start to getting popular in China, but people still pay mostly with cash or debit cards, it gives people a sense of financial security. In contrast, Americans use credit cards a lot of more often and it is very common to see people with credit card debt.

Currently in the United States with the credit crisis, banks have raised down payment requirements from the typical 10% to 20%-30%, a few years back then, people can walk away with 5% down payment or even no down payment at all if credit ratings are good. However in China, Mr. Wu mentioned that although down payment requirement is usually about 40% to 50%, but many people tend to use up all of their savings to pay even more as much as 80% or sometimes the full amount. He mentioned “paying interests” scares people away, even if they are low. From my personal experiences in the past few days I think it is very true, a client I met on Tuesday paid the entire condo in full with three suitcases of cash, a few other clients also paid quite huge amounts.

Christmas is not a formal holiday in China, so we all had to work, but the company did rent out a dining place on Friday night to celebrate New Year, during the dining event the company briefly reported the earnings for the year as well as its upcoming projects. I also had a chance to introduce myself to everyone. Next week I will get to meet the French couple and it should be very interesting.

In the past two days or so. I learned a lot about the Chinese real estate market and noticed a lot of differences compare to the United States. In the next several paragraphs, I will summarize the major differences I have found and the consequences of each.

First, the way how Chinese measure the area of a residence is totally different from the United States. The measurement they use here in China is square meters while the United States uses square feet. But the major difference is “how” they measure it. In the United States, when a realtor mentions a house is 2500 square feet, the 2500 square feet is the exact area that is considered as “livable space”, which means only areas that you can put furnitures or physically stand there count. However in China, the way how realtors measure area of a residence is by the so called “construction area”, which means every single inch of the residence counts. For example, if you owns an apartment here that is 200 square meters, the 200 square meters include every single inch of space in your apartment, this includes spaces between the walls that are not livable as well, etc. I personally believe the way how the United States measure the area is somewhat more “fair” because you get what you paid for, the way how they measure here in China can be inaccurate and can varies greatly among different buildings. For example, if two apartments have the same “construction area” in China, but a wall is thicker than the other one, I think it can be unfair to consumers. I asked my senior about if China was ever considering changing the way how they measure the area, he mentioned that the government have thought about it but have yet to come out with any formal regulations.

The next thing I noticed is the privacy changes in China. When the living standards of a society raises significantly, people would demand for more privacy and more luxurious life. With more and more people receiving higher levels of educations in China and introductions of western cultures, people here in China have realized the importance of privacy. During lunch yesterday we casually talked about how privacy has changed in China in the past decades. A few older employees mentioned that back then in China, it is totally normal for people to ask each other about their age and income, it is considered as being considerate to the other person and a gesture of being polite. However today it is not the case anymore, especially the younger generations, they consider information especially about income as their personal information and do not openly reveal them anymore, although people still reveal information such as their income to family relatives or close friends, and it is the case in many American families as well. Furthermore, I noticed that the company policies regarding privacy especially for clients is as strict as any companies back in the United States. For example, the company prohibits sales associates to take photos with clients for privacy protection purposes of clients, no one is allowed to distribute photos of any employees without approval of the company, and they even mentioned about posting pictures on the Internet. I thought it is very impressive that China has realized the importance of privacy issues and is moving in the correct direction.

Next major difference I found was the way how China and United States list prices of houses. In the United States, houses regardless of new or used, realtors list the total price of the house. So for example in the market, when realtors advertise a house, they would list a price like $400,000. However in China, instead of list the total price, everything is listed at per square meter, and realtors negotiate the price with each other with the price per square meter. Furthermore, in the United States, realtors usually play a so called “psychological” game at pricing. For example, they would list a house at $399,999 instead of $400,000, the difference is $1 but it gives the buyer a psychological effect that the house is in the $300,000 range instead of $400,000 range, it gives the buyer some sort of “pricing comfort”, but indeed they are only $1 from $400,000. It is totally legal in the United States to use such tactic in pricing and statistics studies have shown it has been very successful in boosting sales. Groceries stores have used the same strategy to list their products, for example, list 99 cents for a bag of tomatoes instead of $1. In China, all prices are listed in whole numbers such as 10000 yuan per square meter instead of 9999 yuan per square meter. I mentioned the tactic we use back in the United States to the senior and he said it is very clever and is considering propose to use such tactics on their newer projects, he believes it makes a lot of sense. Except it won’t make the accountants happy because it will be harder for them to do calculations.

The next major difference is the sales of brand new housings. In the United States, when a house is newly built, everything inside is in a move in ready condition, the walls are painted, carpets or floor are new, etc. However in China it is totally different. Unless specifically listed, all new housings sold are considered as “strip down” models, which means the inside is totally empty, so the price you pay is pretty much just the “frame” of the building, you will need to put in new sinks, bathtubes, toilets, carpets, floor, and whatever you need or want, the walls are not painted either. So many buyers in China need to consider the remodeling costs of purchasing a new residence as a huge expense, from past client transactions, some remodeling costs can be two to three times the cost of the “frame”.

Furthermore, I also found the construction standards of buildings in the United States are much more strict than China. In the U.S., new buildings are required to have power outlets in each room with gap of no more than 9 feet between each one, the outlet height from the floor are also strictly regulated, although each state varies somewhat with the regulation but it is only slightly. Other requirements in the U.S. including but not limited to carbon monoxide monitors and fire alarms, temperature of water heaters to prevent hot water burns, etc. Any modifications which may affect structures must be approved by the local government. When a new house is constructed in the U.S., it needs to go through as many as more than 20 different types inspections by the local government. However in China, it is not the case, it is much more lenient and many safety standards are often ignored. For example, fire detectors or carbon monoxide monitors are not required, outlets only need to be placed one in each room, energy efficiency appliances are not required. However, it is changing, the senior mentioned that China is still a developing country, if the rules and regulations are set too high, it would be uneconomical and making housings unaffordable to the commonwealth, considering the average income of Chinese families are many times lower than the United States.

Next week I will get to go meet Mr. Wu for lunch meeting, I’m looking forward to it since I heard that he is the only person in the company with exposure to the American real estate marketplace and I can’t wait to hear his thoughts. He also requested me to take notes on some of the major differences I found between the way how they operate here in China then compare to a real estate company back in the United States and wants to hear some of my thoughts through a presentation. I think it will be very challenging and entertaining at the same time.

I also got to visit the company’s two different offices in Beijing as well as their sample show rooms for clients. I thought it was very neat and modern and hopefully get some pictures up soon with approval from the supervisors, need to follow the privacy policies.

After arriving, my uncle picked me up from the airport and I will be living at his home for the next few weeks for my internship. We briefly took a tour of the city through one of the city highways in Beijing. I was so exhausted so we went home soon afterwards to sleep.

First day in office was very interesting and exciting. I finally get to meet the Vice President of the company Mr. Wu. The first day in office I met my senior associate, which is the person I will be working with for the next few weeks. He introduced himself to me and told me his Chinese name and surprisingly, his English name as well, which is Dave. I asked him why he got an English name, he mentioned that at times there are clients that are foreigners, so Dave is easier for Westerners to memorize. I thought that was very interesting, globalization huh?! He walked me around the office and met many people, I’m not very good with remembering names, and the Chinese names of the employees just made me even more frustrating because in Chinese culture, the names of each individual is unique, it is very uncommon for Chinese people to have same names.

During lunch he took me out to a small local restaurant, we get to know each other more and talked about what we do for fun, etc. It was very casual and relaxing. After we got back from lunch, we sat down at the office to finish up some administrative tasks, I had to fill out some forms regarding my personal information, as well as read company policies, etc. One of the employees from Human Resources department also stopped by and gave me a brief presentation regarding company policies.

I also received an agenda for my next few days. One of the tasks on the agenda is an appointment with a couple from France who are expatriates in China, and I think that should be very interesting and I’m looking forward to it.

Overall, my first day is very casual and relaxed, official training starts tomorrow, Dave promised me that I will learn a lot in the next few days so it should be quite exciting.