Air Quality (cough, cough)

The first week of November has been shrouded in a hazy smog. All over Shanghai, the sunshine is dissolving into a colorful sky. It made me want to look at the numbers. It is bad, but how bad?

First of all I looked at the NOx satellite maps from the research institute in Heidelberg. They have published global maps of their measurement results. Up until the 90’s, the nitrogen oxide concentration was the most common metric for air pollution. The NO2 molecules can turn into nitric acid and acid rain.

Global NOx Air Concentration. Holland is close to Shanghai.
Global NOx Air Concentration. Holland is close to Shanghai.

But NOx is not everything. Today we can set up measurement stations to measure particulates (PM2.5/PM10), ozone, SO2, NOx etc, and calculate an “air quality index”.  A few years ago, the American Embassy started to publish air quality measurements on-line, which led to a diplomatic fight. After many rounds, in January 2013 the Chinese government agreed to the publication and started to post data from hundreds of measurement stations all across China. All our Chinese friends have smartphone apps that display the current Air Quality Index. Today it was 224. “Very Unhealthy”.

Air Quality Index smartphone app. We can follow the levels hour-by-hour.
Air Quality Index smartphone app. We can follow the levels hour-by-hour.

There is also an interesting website that publishes air quality across the world, wherever measurements are available: http://aqicn.org/

Air Pollution in Shanghai Real-time Air Quality Index Visual Map - Mozilla Fire_2013-11-08_21-54-38
Shanghai air pollution right now, Friday evening 8 November 2013. (We live next to the 158 sign, center right).

So, what if we compare to other polluted cities, like Amsterdam or New York?

Amsterdam/Rotterdam areas today.
Amsterdam area, and some Antwerpen 8 Nov 2013.  Very few measurement stations in The Netherlands.
New York Air Quality 8 Nov 2013.
New York Air Quality 8 Nov 2013.

Unfortunately, I could not find a live station in my old hometown Gothenburg, but a report stated that the year-average is 15-20 there.

The fact that numbers on air quality are published creates public awareness and political pressure to improve the situation in China. I predict a legal ban on petrol cars in the biggest cities within five years. Just like there was a ban on petrol scooters 10 years ago.

Today it costs nothing to pollute. That is a problem. This is arguably the most important challenge for Economy as a “science”, to create metrics for “externalities” and to find ways to measure and control destruction.
Part of the price for “Made in China” is the health effects and the environment impact here.
Next time you buy some cheap stuff, remember who pays.

Death rates due to urban air pollution, from WHO.
Death rates due to urban air pollution, from WHO.

Getting to No

In the West, there is a very popular management book about negotiation that is called “Getting to Yes” by Ury, Fisher and Patton, indicating that the most difficult aspect in a discussion or negotiation is to get agreement. In China, the challenge is the opposite. As I learned from my friend Linus [with intense Guangzhou experience], yes can mean many things:

A Yes is a Yes is a No? (picture from http://efc.web.unc.edu/files/2013/04/Yes-No-Blog.jpeg)
A Yes is a Yes is a No? (picture from http://efc.web.unc.edu/files/2013/04/Yes-No-Blog.jpeg)

“Yes, I understand and I agree and I will execute immediately.”
“Yes, I understand but I do not agree”
“Yes, I hear that you are speaking, but I do not understand”
“Yes, I am still alive, but I have no clue what you are talking about”
It is not very often the first one, and unfortunately not the second either.
Therefore, asking yes-no questions are of limited use in China. [footnote: I understand that this is similar all across Asia, but I do not have enough first-hand information about other places. In Japan I had this much less, but I did not spend much time there.]
Quite a few times, I have found myself asking yes-no questions, always getting yes, and scratching my head afterwards with puzzlement and disappointment why it did not work out as we had decided. “Will you finish the report before Friday? – Yes.”

The words “yes” and “no” have no direct synonyms in Chinese. Therefore, the best translation into English of how a Chinese would answer a question from a boss is: “Yes,….”, which means more or less, “Ok, …”. The negatively posed questions are especially tricky, like “Will that not work out?”.

The way to get around this linguistic artifact is to pose a different set of questions, sometimes called open questions: “When will the report be finished?”, “What do you need to finish this on time?”, “Which problems could arise?”, “Why are you convinced that this will work out?” etc. etc.

I have hit my head so many times, that I am getting allergic to “yes”. Whenever I realize that I accidentally placed a yes-no-question in the conversation, I regroup and launch a new question based on what, and I try to forget the first answer. It is not easy, and I still often run into the trap, but it is getting better and better. It goes both ways. I get better at crossing the inter-cultural chasm, and my Chinese engineers find new ways of reaching out in my direction. We try to work with humor and laugh at our misunderstandings, but it is never easy.

The challenge is: Getting to No!

China Innovation

China is famous for cheap manufacturing. We all have stuff at home that is Made in China.
Acceptable quality at an attractive price. Like your iPhone or your garden parasol.
This is obvious for everybody.
What is harder to see from the outside is that innovation is bubbling in China. Contrary to popular belief, there is a lot of new thinking going on here.

  • Low start-up cost for companies and production
  • Fantastic E-commerce infrastructure
  • Plenty of people with nothing to lose
  • A lot of people with cash to spend

Setting up the legal structure of a business is very simple in China, especially if you are Chinese. Low cost for the initial establishment reduces the cost for expensive bank loans and lowers the threshold and the risk for the founders.

The Taobao/AliPay platform makes it easy and cheap to show your products to an audience of a billion internet users in China. Taobao is a combination of Ebay and Amazon – a strong platform for displaying goods and allowing the users to order what they need. The AliPay platform is a banking layer that channels the money from buyer to seller, like PayPal but better.

I would like to give an interesting example of this.

The solar-powered-bicycle-tail-light. It is a combination of existing technologies into a new product that I have never seen before. Solar cell + Battery + LED lights = maintenance-free light for my bicycle. It is obvious that the value is that you wont have an empty battery when you are heading home in the dark.

Solar powered rear light for bicycle.
Solar powered rear light for bicycle.

This product is available on Taobao.com for 15 RMB + 5 RMB shipping. (total cost to the consumer 3 euro/4USD).

 (and for consumers outside China, check out AliExpress, $50 for 10 pcs, free shipping)

One question is then, how about IP protection, patents and copyright law? Is this product infringing on some smart American inventor’s patent?
Actually, no. There is a patent for this product, filed 1990 in Korea and China by Yu Gunjong and Kim Yonggab at Yukong LTD. The patent has expired and everyone is allowed to make and market this product.
There have come a host of newer patents, mainly from Chinese inventors in the last five years for new functionality.

Innovation is booming in China – and all of society enjoys the benefits!

The Car that Changed the World (part II)

A new car has been born. In the Shandong backwater province, halfway between Shanghai and Beijing, a revolution is unfolding.
This will change the world. Again.

Ten years after the unexpected success of Chery QQ, a new generation of cars is being created. Light weight, compact cars with 100% electric drive.
By radical re-thinking of how cars are used in cities, they have developed a concept for mobility based on medium speed (<80 km/h) and very low weight (<500kg). This makes it possible to use all the technology from the electric scooter revolution.
By re-using these mass-market components, reliability and low cost is achieved. A complete electric car is yours for less than 2500 euro.

(In 2002 petrol scooters were banned in the 10 largest cities, and a mass-market for electric scooters was created almost overnight. Today there are more than 100 million electric scooters on the streets in China, and the price has dropped to 90-200 euro, depending on model. More about this another time.)

The electric carlets are officially recognized in Shandong province, where the first wave is rolling out.
In other provinces they are popping up like mushrooms.
However, there is no nationwide launch planned yet. The legal boundaries are still murky whether it should be counted as a scooter or a car. As soon as this is clarified I predict that there will be another hundred million electric vehicles on the streets a few years from now.

Electric 2-seater (hyev.com)
Electric 2-seater (hyev.com)

(www.hyev.cn)

Most traditional car-makers in Europe and America are attached to all the ideas and concepts of what a car must be, with comfort and gadgets and a powerful engine. The modern car is developed for a suburban environment. Large loading capacity and higher speeds were necessary.
However, since this year, more than half of the planet’s population live in cities where speeds are low and space is limited. Therefore it is imperative to look for new solutions to the mobility problem, and an excellent proving ground is China, where hundreds of millions of people would like to have something better than a scooter.

Of course a 450kg thin-steel-and-plastic car will not survive a head-on collision with an SUV, so safety is a concern. However, an enclosed compartment is probably better than an open scooter. It all depends on what you compare with. And sooner-or-later we should probably separate traffic by weight.

Electric four-seater "SMRT".
Electric four-seater “SMRT”.

This year, city air quality and air pollution has come to the top of the political agenda due to the fact that the municipalities have started to publish the air quality measurements on-line. Everyone I know has an App on their smartphone that displays the air quality index. The school of my kids keep all children inside during recess when the levels are particularly bad.
I strongly believe that these light-weight mini-cars is part of the solution. If Beijing would ban petrol engines inside the ring-roads, the local air quality would certainly improve.

I dare the European Union to ban petrol scooters. I dare you to endorse these electric mini cars.
Europe should not miss this round of mobility revolution!

Family electric car from Haima.
Family electric car from Haima.

The Car that Changed the World

Chery QQ - the car that changed the world
Chery QQ – the car that changed the world

I am convinced that Chery QQ is the most influential car from the last 10 years.
“Which car? Why did I never hear about this one?” I hear you thinking.
Still they have produced more than a million of these cars in the last few years.
This year, Chery was exporting more than 400,000 cars to Asia, East Europe, Africa and South America.

Some background first. Chery started out as a license-producer, making Seat cars in 1999, in the backwater town of Wuhu. Nobody noticed. At that time, there were ten car factories in China, most of them 50/50 joint ventures with Chinese government owned car plants with multinationals. Most successful ones were First-Auto-Works-VAG producing Audi in the north and SAIC-VAG “SVW” producing Volkswagens in Shanghai.
Ten years ago, in 2003, when the story begins, cars were quite expensive in China.
It was a very profitable, but small market, dominated by a handful players – all joint-ventures with foreign companies.

When nobody was looking, Chery launched a car on the market with a very low price under their own brand. It was a rip-off/copy/shanzhai of the Daewoo Matiz/Chevrolet Spark, but at an even lower price.
Here was a small four-seater at a price HALF of the second cheapest car on the market.

Within a year, car prices fell with 30% all across China in response to the very low price alternative of Chery QQ.
After two years, Chery was exporting hundreds of thousands of cars across Asia.

There has been much media attention in the last five years for the Tata Nano, the affordable micro-car that would raise the living standards of the masses.
However, it has been a commercial fiasco. Millions of dollars invested, and sales are less than 10,000/year.
In reality, the real affordable microcar, giving automotive power to more than a million families across the world is the Chery QQ, starting at 2,100 euro.

The second effect of Chery QQ is the snowball effect. They showed the world that anybody can build a car. If they can do it in Wuhu, Anhui, they surely can do it in Chongqing, Dalian, Shenyang and Wulumuqi, right?
There is a lot of prestige in car-factories.
Every governor of a province in China wanted to have his own car factory.
Therefore, starting in 2005, there have been car plants sprouting out of the ground all across China.
The new thing is that all these are fully owned Chinese companies, some private but most are partly owned by the province/municipality.
Today there are 38 Chinese brands of cars, most of which have not yet been signalled outside of China.
The innovation is bursting and new variants of small, medium and large cars appear every month.
There is an enormous overcapacity, which drives the prices to the bottom, so there will be consolidation in the coming years.

The coming ten years will be the Decade of the Chinese Car.

Book review: The 100 Dollar Startup

The 100 Dollar Startup – Chris Gillebeaupicture_book_100dollar

This is an interesting book about micro-entrepreneurship, based on organic growth and patience instead of venture capital and IPOs. It describes the reality of a new group of entrepreneurs, many of whom started by surprise and coincidence. It is also about finding a sustainable size and not focussing blindly on growth.

Gillebeau writes with humour and self-depreciation, illustrating many points through examples of his own successes and failures. His account of joyful exhiliration from a 1.63$ sale is contagious. The significance of the first sale is repeated again and again in the book.

Many passages in the book are strong and authentic, with real-life examples and insights from breakthrough and adversity. However, some parts of the book feel more like recipes, where a certain method or tool is getting all the attention. The introduction to the book is peppered with adversity towards all forms of employment, which feels unbalanced. Maybe the American work situation is more hostile than my European experience? I have had a couple of good managers over the years and many warm and generous colleagues…

The book was a gift to my wife, who is now in a career switch, but I took the opportunity to read it and I like the message alot. The thinking is valuable both as an independent entrepreneur, but also for an “intrapreneur”, starting something new inside an existing organization: Start small, grow organically and always, always keep in mind what customer value you deliver.

It is similar in my job, where we started a product development department from scratch two years ago. Get started, try something and get feedback from (internal) customers and adapt. I will get a copy of the book for my team.

Book and Idea Review – Power of Habits, Charles Duhigg

There is something elusive with the word habit. We all know Bad Habits, but I have never heard of Good Habits. Only descriptions of virtue or discipline or willpower or character.
Aristotle is supposed to have said: “Quality is not an act, it is a habit.” (At least according to the Lean trainers I met this summer.)picture_habits

Duhigg gives an entertaining overview of what we know about habits, scientifically and from experiences. He describes the neurological point of view as well as the social and legal aspects of our “auto-pilot”. He shares stories about people with neurological damages which gives surprising, insightful and sometimes tragic consequences in everyday life. Duhigg explores the bad habits of drinking and gambling, even though it is not clear to me that these are habits in the same sense of the word as a habit to have cereals with yoghurt instead of milk.

He points at the strength of habits to help us do good and looks at ways to create habits that lead us in the right direction. It is also really interesting to see that moral decision-making is a finite resource, and that most people have really bad judgement at the end of a stressful day. (Yet another reason for not having political negotiations to go on deep into the night.) If the auto-pilot is not tuned for good behaviour, we are bound for trouble.
Is this character?
Or the result of having character to practice the “right thing to do” into an automatic behaviour?

I look at my own behaviour and clearly see areas where I could do better, if I just had enough energy at the right moment. I would (if I could) snack less at the office and drink less coffee. And by looking at the neurological background for the reward system, I could develop more positive habits. It is in a sense exerting energy beforehand to build the good habit, and earn the reward later, when the auto-pilot helps me to grab a bottle of water instead of a Coke. Despite the neurophysiological explanations, the book does not really help me to get there.

An other interesting aspect of habits is the connection to personal responsibility and individual freedom. However, this is a weak part of the story, probably due to the very American context of the book, set in a litigous society and with ill-fitting cultural bias for “Freedom”.

The book did shed a sliver of light onto what Science knows about why we do what we do, which is one of life’s greatest mysteries.
The quest for understanding continues…