Loud Thoughts

The 7th day of the 7th lunar month is Chinese Valentine's day. That's today (July 31st) this year. There is a touching story behind it.

It started with a mortal (Muggle in Harry Potter speech) orphan boy who grew up with his brother and sister-in-law. She was mean and sent him to shepherd water buffalo everyday. He is then called 牛郎 (NiuLang: the Buffalo Boy ).One day, he encountered an old water buffalo with a broken leg. He cared for it for months and nurture it back to health.

Few months later, he went back home and found a wonderful meal prepared and the whole hut cleaned up completely. His curiosity overcame himself after few more days of the same. So instead of shepherding as usual, he hid away to spy on his own place.

Gosh, a beautiful girl came. Cleaned his house and cooked. NiuLang jumped out and inquired. The girl, calling herself 织女 (ZhiNv: Weaving Maid), said she liked him. They married, had two kids, and were happy.

One day, thunders and lightening, ZhiNv disappeared. It turned out she is a fairy weaving for the Heaven Empress who is not pleased that she missed years of work, and more furious on she marrying a mere mortal. ZhiNv was summoned back. Gone and devastated NiuLang.

Suddenly, the old buffalo spoke. He is enchanted afterall. When he made a minor mistake up in the Heaven. They punished him by sending him down to earth. He broke his leg on his way down and was gratituded to NiuLang for saving him. That's why he introduced ZhiNv to NiuLang, without his knowledge, obviously. “Kill me and made a pair of shoes with my hind,” he said. “With them, you can go up Heaven and find ZhiNv.”

NiuLang did and found ZhiNv. Alas, Empress refutably wouldn't let them unite and sent ZhiNv away with a wave of her wand. But NiuLang ran toward her with all his might (sweat, tears, reaching out, determined, Rocky's training, Chariott of Fire, My Way, etc. all 9 yards). He was gaining and about to catch up.

Empress couldn't allow that. With another wave of her wand, a milky river appeared and separated the couple. NiuLang and ZhiNv were so, so sad.

Their love moved a flock of sparrows who gathered all the sparrows in the world and made a bridge with themselves. NiuLang and ZhiNv walked over the bridge and were finally together. Empress softened and made a concession. They are allowed to see each other once a year on that day, 7th day of the 7th month, over that sparrow bridge.

That's how Milky Way came from. That's why there is no sparrow on this day. That why it usually rain tonight (they cry in happiness seeing each others).

What a man wouldn't do to earn the right to gloat? Yes, I passed on the first try. A China driver's license now bears my name.

What's the big deal? Millions have license to drive. Even my 16-year is about to have hers. Like a wise man said to me many moons ago, “Everything is possible, nothing is easy in China.”

The forms for driver license application is available only in person from the equivalent of DMV (车辆管理所) with a critical difference — the only one with “foreign affair office” (外事处) is located in Beijing deep south. Exactly the other sise of the town, if you are like other holders of foreign driver's license. You need to fight the Beijing traffic for an hour to reach this office to get the forms. And we have just begun…

The process resembles a poorly designed scavenger's hunt. First, get a physical exam from one of the approved hospitals. The exam took less than 5 minutes, but the locating of the hospital, registration, payments (1RMB for registration, 10 more for the exam), finding the exam room, and, finally, having the form officially chopped took about two hours. If you don't speak Chinese and do not have an interpreter, forget it.

Next, translate California driver's license. Again, the translation took 10 minutes (including the time to print and affix the red chop). But finding the officially licensed translator took time. This person charged RMB150 to translate my name (after I told him what it is in Chinese).

With two preciously chopped documents, I applied for a test date. This step, again, must be done in person.
Second time, I trekked south to queue up behind this stone counter. It was my fortune to stand behind someone whose doctor did not sign the exam form (I checked quickly and relieved). He pleaded for half an hour and finally left.

My heart sank when the military uniform lady told me the forms must be filled with a felt-tip or fountain pen (I used a ballpoint pen, sinfully). I was grateful when she allowed me to trace all my writings with a pen she provided. I felt like a kindergarten kid (look Mom, I traced.) She examined my documents for about 5 silent minutes and started this lightening fast blurry chopping sequence. I was told to wait for few minutes for my “permission certificate for the test.”

The onerous process motivated serious test preparation. I chose to study and be tested in simplified Chinese (among 10 language choices). I went to bed early and arrived the test site an hour early. The waiting room quickly filled up with people holding the same material I have, just in different languages. No one wished to be late. I noticed about a third of us studied the Chinese version.

Since I sat on the 1st row, I overheard the results of my fellow “classmates.” About a third of them did not pass. One was visibly upset, since it was his 2nd time.

The 4th, and last trip, to DMV will be 5 days after the passage of the test. This trip will be a short and happy one — to get the actual license.

It seems to me that the process does not need to change, but can be made friendlier. For example, physical exam and translation services can be provided on the premise or a branch office can be offered closer to the target population. But I guess this is why FESCO charges RMB800. The convenience costs and a business spawned.

Driving in Beijing is clearly a big deal for foreigners. By estimate, there are 70,000 registered foreign residents and about 3,000,000 short-term visitors, per year, in Beijing. (Many people live in Beijing with the multi-year 90-day-stay business visas.) Local DMV counts less than 20,000 driver licenses issued to foreigners.

Well, the foolhardy way earns so much more bragging right. And that's what we really live for.

Freakonomics: A Rogue Economist Explores the Hidden Side of Everything Steven D. Levitt, Stephen J. Dubner ISBN: 006073132X Pub. Date: April 2005 Publisher: HarperCollins Publishers

I am now a Steven Levitt wannabe. So much.

Have an observation. Develop a theory. Most likely, there is no freaking way to prove, or disprove, that theory. Wait. There is a chunk of data in plain sight, just overlooked by the whole world. OK, mine the data, prove the theory, and shock them, the world, that they were wrong all along. By the way, getting paid to do this too.

Imagine a conversation between Steve Levitt and a CEO.

You have excellent customer data, Sir. I did few regression analysis against an accidentally discovered set of data that can be used as the control group. It seems if you change the package to blue, spell the product name with an extra E, and change the font to sans-serif, you can double your price and double your sales volume.” (Is that a smile?) “By the way, the control data were actually published by your main competitor on their web site.

Would it be so cool.

The discussion on risks was interesting. People do not perceive risks rationally. Instead of computing the expected outcome like an engineer should. Most people weigh dread factor too much. They also worry about losing control and the imminency irrationally. I found it so true. I know someone who is willing to suffer fever instead of taking a simple aspirin, because “drugs are bad for you.” Guess his brain was fried already.

Around the famed TianAnMen square, Beijing government is replacing the trees — all 160 of them.

Yep. Trees. The old trees never grew well, said the city officials. Few died and many are sick or weak. This does not look good and something must be done. So they dug open the sidewalk, out the old tree, enlarged the holes, put in drain pipes, add fertilizers and new soil, plant new trees (a kind of pine), and applied coatings to the leaves to reduce water loss.

To ensure smooth transition, the new trees are about 6.5 meters tall and 18 centimeters in diameter. All works are done in the evening to minimize disturbance to the citizens.

What's your municipality's beautification budget?

Chery (奇瑞), a car manufacturer in China, introduced this tiny gem in 2002. The key reason for its wild success is the whopping 40,000 price — no, not in US dollars, China Yuan (or RMB). That's US$5k. For this price, I could get one for my daughter's driving lessons. Too bad she must be 18 to even practice driving in China (sorry, honey).

Outside of US, car manufacturers battle in this micro-car segment. They are cheap, fuel-efficient, easy to repair, maneuverable, parkable, and much more comfortable than motocycles.

Chery's car is called QQ, just like the wildly popular Web2.0 services that boast 400 millions subscribers. This is not lost among those who have access to Internet here in China. Legally, TenCent (腾讯) has claimed this QQ name for over 45 product categories – automobile is not one of them. Chery tried to grab it. TenCent objected. They are now in intense negotiation.

A Buick minivan facilitates my daily commutes. I grew to dislike minivans few years ago. Cars should be an artful balance of form and function. Minivans are too far over the function end. They have reached the limits of legality and amateur driving skills. One extra milimeter, there will be too many fender-benders or violation of the category dimension limit. These days, car makers try hard to differentiate on colors and cup holders.

GM builds my minivan, called GL8, in ShangHai. It is very popular where I live. Every morning, there will be 4 or 5 of them fighting for the “take off” sequence. Kids disappear into it and get hurried away. Commuters, mostly family men, patiently queue behind them.
Last I chatted with someone in the knows, it costs RMB450,000 (US$56,250) to drive one of them off the dealer's parking lot. That's a lot more than what your suburban neighbors would pay.

GM is doing well in China. It's market share reached 12.5% in 2006. Shanghai Automotive Industry Corp. (SAIC), GM's partner in China, manufactured and sold over 200,000 of Buicks, Chevolets, and Cadillacs in first 6 months of 2006. In 2001, SAIC acquired Wuling Automotive (五菱) for the micro-car category, and completed its product lines in China. Wuling will make Chevolet Spark, originally Maitz, made by Korea's Daewoo (大宇) that GM acquired in 2002. GM shall win in this segment. So it hoped.

China is the fastest growing car market in the world. During the 1st half of 2006, passenger cars sales grew 44%. Volkswagen is the largest brand here, with market share of 17.1%. Micro category is a key element in GM's plan. We all know GM needs market shares.

That is probably why GM sued Chery in 2002 over design infringements. After about a year, State Intellectural Property Office ( 国家知识产权局) threw out the case. GM never applied for an “appearance patent” and failed to deliver any evidence of infringement. The fact that these two cars are similar does not consitute infringement, by China laws (actually, by US laws too. Remember Microsoft won the Apple lawsuit on “look and feel” infringement?)

GM questioned QQ's quality in public. Feisty Chery challenged back with head to head tests. In crash and one road tests, QQ either rivaled or out-performed Spark. GM did not accept the legitimacy of those tests. Industry insiders believed GM sells Spark at lost. The lawsuit lasted 3 years and settled late 2005. During these years, QQ outsold Spark about 6 to 1.

Chery is pushing its car abroad aggressively and eyeing US as the primary target. If the 1st micro-car in your neighborhood dealership is QQ. I will not be surprised.

鱼头泡饼 (Yu Tou Pao Bing), by its name, you will probably not venture it.

Paul and I were searching for lunch. We walked toward the dumpling (饺子: JiaoZi) restaurant, knowing that is really the fail-safe choice. Just 50 meters before arrival, there is this shining newly open one. Hmm, why not? The maitre 'd asked us to wait for few minutes. If more than 5, I am going for JiaoZi. I was thinking that to myself.

I thought of Melanie when we sat down. A bunch of them went out few weeks ago and had a feast on this horrible thing. She picked around the plate for safer bits and was caught. After being dared to take a bite, she found it was actually good. Hey, we Chinese don't fool around with foods. If it is good, no matter how weird to westerners, we eat it.

The plate is intimidating. It is a size of a large pizza (14 inches or more) and relatively deep. A fish head, split into halves, occupies the majority of the space. Thick and yummy looking sauce filled the rest of the plate with lots of garlic, ginger, and green onions. Another waiter came quickly and dumped a small basket of bread onto the plate.

It is not really bread. It is more like Nan in Indian restaurants. You spread dough into a wide thin layer, apply just a bit of oil, roll it up, and roll it out again. After few times, you put it into a dry frying pan and roast it for few minutes till brown. Take it out and cut, or hand-tear, it into small pieces then serve. It is chewy, flaky, and good smelling. We spread them around the plate so that each gets a good soaking.

The meat was tender and smooth. Paul and I each worked on one part. I started from the “neck,” where the fish is more “normal.” I found myself picking up those bread pieces regularly. The cold beer works very well for this slightly spicy dish.

Quickly, I was picking apart the head and devouring delicious morsels — some are not flesh. The head was completely dismantled with our chopsticks after about an hour. None of us thought we could finish this 2.5 kg (5.5 lbs) piece when we ordered.

The Wisdom of Crowds James Surowiecki ISBN: 0385721706 Pub. Date: August 2005 Publisher: Knopf Publishing Group

I was trained and am proud to be analytical. Give me a problem, I will analyze it and come up with a plan of attack that is reasonable and likely to succeed. This is what engineers do. It is in our blood.

As I grow older, I encountered problems that just don't fit. That the analytical approach is far from optimal. At first, I was in denial. (How can it be? Every problem can be solved this way. There is something wrong with the definition of the problem.) Now, older, I have acquired skills for other approaches. The most notable one is the strategic approach that involves the evaluation of the situation, understanding the big picture, the smart allocation of resources, and the attention to timing.

The Tipping Point teaches you to watch for, or cultivate, a sudden and massive change. Blink, from the same author, teaches the art of listening to, at least respect, your instincts. This one tries to teach you to trust crowds. All are valuable and non-analytical approaches to problem solving. I am glad to have made new acquisitions to my toolbox.

For groups to perform, the individuals must have unique, no matter how trivially small, pieces of information. They can be wrong, but must be independent. If the group is large enough, the errors cancel out each others and the result will be surprisingly accurate and good. Simply put, diversification yields good results.

Diversification is a key concept in investment. If you buy enough stocks from different sectors of the economy, their volatilities cancel out and you are left with the assured growth of the economy, and not the risk of each stock.

This makes sense. Everyone has a piece of information and, at the same time, lots of random noises. If everyone is independent, the randomness averages out and what's left is the correct information. For example, if I give everyone an evenly distributed random number from positive to negative 1000. The average must be 0, or very close to it. Some will have a number that is very “wrong,” in the sense that it is very distant from the mean. But that does not matter, since large number of group takes care of the errors.

The three important elements of group wisdom are: diversification, independence, and private judgment that makes sure the members do not influence each other.

The chapter on modern corporation is the gem. Corporate America are almost always organized as hierarchical small groups. A CEO has his or her executive staff, each works with the next level but always in small number that ranges from less than 10 to 30. This turns out to be a dangerous way of doing things.

Chapter 6 offers an insight to my daily life in China. Why are American merchants more honest than their Chinese counter-parts? When you shop in America, you have relatively high confidence that you will not be grossly taken advantage of. In China, it is a crap shoot. Intense bargaining is normal, common, and very tiring. Why do everyone must waste so much energy to make sure they are not paying more than other shoppers? Because China is not capitalistic enough.

Don't get me wrong. This country is more aggressive in pushing privatization and market driven economy than any other one (including US). But they have not practiced capitalism long enough. As the result, they emphasize heavily on short-term gains that encourage exploitation for one-time deals. Mature companies, and citizens, learned that long-term gains are much better. They, therefore, establish practices that are honest and fair, since that's the only way for long-term business relationship.

To profit long and more, individuals must sacrifice some short-term benefits and be a bit less selfish. Act for the good for many is beneficial to self for the long run. Gush, we just have to have faith in this. Do we?