The Chinese cell phone explosion started in Schaumburg, connecting two cultures

STORY BY KARA SPAK | Daily Herald Staff Writer
PHOTOS BY PATRICK KUNZER | Daily Herald Photographer

Cell phone reception is as crystal clear as the view along this remote stretch of the Great Wall, about two hours north of Beijing. Schaumburg-based Motorola Inc. helped build China’s cell network and is reaping the benefits of its early move to China.

TEDA, China - A fierce, freezing wind blows atop the Great Wall at Simatai, a sheer cliff climb of ancient achievement.

Far from the Beijing smog, the unrelenting and terrifying mix of cars and bicycles, the crush of 14 million people, here the dry air yields no buildings and few clouds.

The sight lines are unparalleled, offering the majesty of ancient China and the wall, a stretch of one of humanity's crowning triumphs.

The wind whistles, birds chirp and all else is silent - until a shrill sound, both frightening and familiar, pierces the veil of isolation.

It is the ring of a cell phone.

China's love affair with the cell phone started almost 20 years ago and half a globe away - in Schaumburg.

Motorola Inc. was the first U.S. company to successfully tap into China's emerging economy and market potential and now is China's largest overseas-funded corporation. The cell phone, in its infancy in 1987 when Motorola set up shop, was its calling card.

Du Jing, 26, works on an assembly line for Motorola’s popular RAZR phone at a plant in eastern China. About 30 percent of Motorola’s cell phones roll off this assembly line, helping to keep the company profitable.

Motorola's China operation and its employees, like former Palatine resident Lin Gao, are helping both to drive the dramatic turnaround in China's economy and to keep the Schaumburg firm profitable. Thirty percent of Motorola's cell phones come from one plant in eastern China.

What's happened since Motorola opened in Communist China is a revolution of sorts, breaking down barriers between China and Chicago's suburbs, where many of the nearly 52,000 Chinese immigrants now make their living at high-tech firms like Motorola, Lucent Technologies and IBM Corp. In China today, workers also are finding jobs at outposts of Illinois-based businesses like Kraft Foods, Caterpillar Inc. and McDonald's.

This globalization of U.S. business worries some Americans who fear the growing Chinese economy threatens to further shrink U.S. manufacturing jobs. Since 2001, 3 million such U.S. jobs have evaporated. Still, the pipeline between China and Chicago's suburbs now is wide open, moving people, products, customs and an interdependence like never before.

"Clearly, over the last few years, China has just exploded," said William Kooser, an associate dean at the University of Chicago's Graduate School of Business who teaches a class on building business in China. "The opportunities are great and potential threat (to U.S. jobs) is too."

The ring, ring, ring

In a communist nation where religion still can be stifled, news censored and population strictly controlled, the cell phone's popularity is an unrestrained phenomenon. The ring of the cell phone is everywhere here.

It's in the alleys of Beijing's ancient hutongs, where coal stoves heat homes and neighbors share common toilets. It's in the crammed buses and subway cars of Shanghai. It's in rural villages with only 100 residents, where the lunar calendar continues to mark time as it has for thousands of years.

Motorola employees Lin Gao, left, a former Palatine resident, and Chantal Montsion-Schomburg, a Cary resident in Beijing on busi-ness, shop for pearls at the popular Hongqiao Market. The pair met when Gao worked at Motorola’s Arlington Heights office.

Elderly Chinese who 50 years ago scraped for food to ward off starvation now text message Chinese characters. Teenagers, desperate to impress, upgrade cell phones every six to nine months.

Here, people skipped directly from land lines to cellular without a stop at cordless. There were 335 million active cell users, but 312 million land lines in 2004, according to the CIA World Factbook.

In 2005, Motorola's China sales were $8.98 billion, or nearly one quarter of its total sales. The China revenue includes sales to Chinese as well as exports of mobile phones, two-way radios, wireless equipment and car electronics.

For corporations like Motorola, China is a kind of nirvana with its huge, inexpensive labor pool and even bigger 1.3 billion potential customer base. The Chinese labor force is estimated at 791 million people, compared to 149 million U.S. workers and the average yearly Chinese salary is $1,290, compared to $40,409 in the United States.

Business is booming. Elk Grove Township-based United Airlines, in 2004, doubled the number of flights it offers to China. That same year, retail giant Wal-Mart reported buying $18 billion in Chinese-produced goods.

China is Illinois' ninth-largest foreign trading partner after countries like Mexico, Canada and Japan, according to Illinois' Shanghai Trade Office. Illinois sent $1.2 billion in goods last year, a nearly 30 percent increase over 2004.

At 9 p.m. on a Friday night, Lin Gao dials in to a conference call with her Motorola colleagues in London and Arlington Heights. When it’s 9 p.m. in Beijing, it’s 8 a.m. in suburban Chicago, the start of the workday.

Prior to Chinese President Hu Jintao's U.S. visit last week, the Bush administration criticized China for erecting trade barriers and Chinese officials responded with a U.S. buying spree. Despite remaining trade barriers, the Asian country is America's fourth-largest trading partner, according to 2006 U.S. Department of Commerce figures.

Golden opportunity

It's not just products crossing the globe. In 1996, Lin Gao stood in the Beijing airport, hugging her sobbing mother.

The 24-year-old Lin - her mother's youngest daughter - had never left China before.

Thanks to a scholarship, she was headed to Champaign-Urbana for the MBA program at the University of Illinois.

"My mom would never think that I would come back," Lin, now 33, said. "She thought I'd stay in the United States forever."

Lin said she wasn't really sure what to expect when she left Beijing's concrete environs for a community of 103,000 in the middle of farm fields.

"I can't say I was not nervous at all," Lin said. "It was more like a new golden opportunity - an American degree."

She met fellow MBA student Hubert Lin, born in Taiwan but raised in Seattle, the first day of orientation. They married the day after graduation.

Members of Motorola’s Networks Information Technology team, based in Arlington Heights, meet weekly via a conference call with a team member in London and Lin Gao in Beijing.

He worked for Accenture in Chicago. She worked for Motorola in Arlington Heights, part of an international team that helped build China's cell network.

The couple lived in an apartment in Carol Stream before buying a townhouse next to a forest preserve in Palatine. They spent their weekends on home improvement projects, laying laminate flooring and gardening. Hubert watched cable sports. Lin shopped at T.J. Maxx in Palatine. They ate out at Olive Garden and Chili's.

It was the American dream, and they loved it.

China's 'Pleasantville'

Two hours southeast of Beijing, the Tianjin port on Bohai Bay is the bull's-eye of China's economic zone.

The port is northern China's busiest, ranking 21st worldwide, according to the non-profit U.S.-China Business Council.

In 2004, 200 million tons passed through this port, much of it low-cost products stamped "Made in China."

The port area is near the capital. It's near the highways. It's near two airports. But of all of these, the sea and its port are most important, said Ding Lei, an official with the economic zone adjacent to the port.

The port is the main reason for TEDA, the Tianjin Economic-technological Development Area, one of China's first economic zones set up in 1984 to lure foreign business.

Now, East meets West in the boardrooms and factories of the 4,000 multinational companies located in its 13-square-mile area - firms with familiar names like Motorola, Honeywell, Kraft, Pepsi, Coca-Cola and IBM.

The United States is TEDA's top export destination, receiving $3.8 billion in products, according to TEDA's statistics. Worldwide, TEDA exports $5.41 billion in mobile telephones alone.

Motorola was one of the first to move into TEDA and currently ranks first on its list of top 100 enterprises.

This Shanghai billboard advertises a popular product in China — the RAZR cell phone, developed by Schaumburg-based Motorola Inc.

The TEDA concept turned out to be a key to business growth in China, allowing firms to operate without much government interference, other than providing needed infrastructure. Unlike Chinese state-owned enterprises, known for nepotism and heavy-handed government administration, Ding said in TEDA, the government plays a new role.

"Service, service, service," Ding said. "No administration. Because the company is an independent in TEDA, the government is just a service for this company," providing basics like energy, water and gas.

China now boasts 54 such economic zones.

At first, the government restricted sales of Western products to the Chinese, fearing the intrusion of Western-style consumerism in a state founded on socialist ideals.

That ended in the 1990s as the government shifted philosophically to a freer market. Now, there are few limitations.

"The transformation is very natural," Ding said. "The Chinese market grew very fast. They can earn more money from the Chinese market than the foreign market."

The blend of West and East in TEDA is everywhere. Restaurants offer baked pasta with cheese and cream, two items absent from typical fare.

The clean streets and neat sidewalks look like a Chinese version of Pleasantville, particularly the Taipingyang, or Pacific Ocean Village, which holds blue, yellow and beige single-family houses. The streets are lined with quaint lights and homes feature driveways and chimneys.

The University of Chicago's Kooser said Chinese and Americans share a strong work ethic and determination to succeed, which makes the countries a natural fit.

A cyclist in Shanghai chats on his cell phone while maneuvering the city’s streets during rush hour. Cell phones and bicycles are omni-present throughout China.

"(Chinese) are very energetic and hard-working people," Kooser said. "There's a strong spirit of building business and working hard to get ahead. The American dream in China is very much alive."

In the factory

The Motorola plant here is as big as nearly 37 football fields. It's nearly 11 football fields larger than the firm's former Harvard cell phone plant, shuttered in 2002 when 850 of its 1,250 workers lost their jobs. Motorola now has one small U.S. plant in Florida.

The vast, spotless Chinese factory bustles with workers, most of whom wear blue lab coats and focused faces. They huddle in concentration on an assembly line.

As row upon row moves by, repeatedly, they fold boxes, place cell phones and headsets in them, seal the boxes and stack them for shipment.

The steps performed by 10 people in each line are repeated millions of times in a year, over and over and over again.

"Sometimes it's boring," Du Jing, confesses to a translator. A 26-year-old who rides the company charter bus from his home in Tianjin to the plant, Du works four days on, four days off, 12 hours each shift.

"The job was difficult at the very beginning," Du said. "Once you know everything, it is easy."

Du has worked for six years for Motorola, a coveted job for those in the area who in recent years have seen opportunities to work in foreign-owned factories explode.

Working for Motorola in China doesn't mean you make more money than elsewhere. Workers are paid the local wage and average annual salaries in China are $1,290, according to the World Bank.

But working for Motorola in China does mean working in a factory that follows international safety standards, a higher bar than the dirty sweatshops that once were the coarse common denominator for Chinese laborers, said Patty Wang, a Motorola human resources director.

The China growth, though, infuriated some suburbanites. When Motorola closed in Harvard and laid off workers in Schaumburg, Libertyville and Arlington Heights as part of 39,000 job cuts worldwide, anger turned toward the Chinese, in part because, at the same time, the firm announced a $6.6 billion investment in China.

Motorola’s building on the TEDA campus looks two hours southeast of Beijing closely resembles those in Schaumburg. In China, Motorola workers commute to work on company-owned buses because most in the city do not own cars.

"Wait until the Chinese use cruise missiles on us," read an anonymous e-mail posted on a message board. "Chips compliments of Motorola."

But Kooser suggested were it not for the success of Motorola's Chinese operations, there likely would have been even more suburban layoffs.

Conversely, if it weren't for the U.S.-based research and development, business might not be as good in China.

Motorola officials say they are committed to a truly global corporation, though, so more research and development is being started in China.

Enter the RAZR

Streaming off the factory line in TEDA is the RAZR, snazzy and slim, black, silver or hot pink.

The RAZR is years away from the single bulky model Motorola introduced in China in 1987. Called the "Big Brother," it was American-made, enormous and expensive at $3,000.

As the 1990s began, the Chinese government was interested in building a cell network. Motorola, with employees like Lin, was ready to build it.

The network first covered big cities, then more remote areas and finally mountainous areas, like those surrounding parts of the Great Wall.

As the network rose, the size and price of the phones dropped. Chinese consumers responded, buying more and more. Motorola dominated.

"The children who started with primary school to the elderly men, almost everyone was on a phone," Wang said.

Motorola and other phone producers have more chances to sell more phones in China because service works differently. There are no long-term service contracts. Chinese buy cards, with minutes, that are inserted into the latest model phones.

Every six to 10 months, Chinese upgrade their phones with choices among more than 800 models from 50 brands.

The demand has cell phone manufacturers' research and development divisions busy searching for the next big thing.

"The competition is so severe," Wang said of the companies battling for market share. "You have to fight."

Hai Gui

Motorola's success in the fight means good fortune for Lin Gao. After nine years in America and more than five with Motorola, the firm offered her a promotion back in Beijing.

She jumped at the chance to become a hai gui, or "sea turtle," the nickname for those who return after living abroad.

She called her sister, who herself had immigrated to Naperville, to tell her she was moving back.

"(Her) first reaction was, 'Did my sister get fired by Motorola?'" Lin said.

She took on more responsibilities, but traded a spacious suburban townhouse for an upscale high-rise apartment in a cluster of identical buildings.

She traded the forest preserve next to her Palatine home for a patch of grass in front of her building, a rare luxury in Beijing's concrete jungle.

She traded a 7-minute commute to her office in Arlington Heights for a 40-minute ride on a congested highway in a shuttle bus with co-workers.

She traded American lifestyle amenities to gain a few rungs on the corporate ladder. Climbing is hard work.

While most Chinese live in apartment high rises or modest rural homes, foreigners occupy these single-family houses that resemble many in suburban Chicago. These houses are in the Taipingyang Village in TEDA, an economic incentive zone where many foreign businesses in China are located.

Lin works two shifts, a day shift in her Beijing office and a night shift filled with conference calls to Arlington Heights and London, the other outposts for her network information technology team.

IT, she jokes, stands for "I'm tired."

Her undergraduate engineering degree from a Chinese university and her MBA from the University of Illinois give her credentials. But it's her ability to speak both Chinese and English fluently and to fit in both cultures that are her biggest assets, she said.

Days after her transfer was approved, she received other life-changing news.

She was pregnant.

"I was born in China, and I turned out OK," she said, explaining her decision to move back. "Lots of people move to China, though it is a communist country."

Now, Hubert works for Sony Ericsson in Beijing as an IT manager, a job requiring less travel than his consulting job in Chicago.

The pair teach their son, Aiden, now 20 months, both English and Chinese, taking him to play at Gymboree, another U.S. export to China.

Their IT salaries provide enough income to eat out often, own a car and save for the future, unlike many Chinese factory and rural workers.

They say they will move back to the United States one day, but for now, China's Motorola holds enough professional opportunities for Lin that they will stay.

"I'm in the best position to pick up the best of both cultures, pick up what works for you," Lin said. "I think it's changing. I can say certainly China is heading in the right direction."

More globalization

Though opinions vary about the impact of China's progress, no one can deny its economy is moving at a furious pace.

In December 2005, China's National Bureau of Statistics quantified the sizzle in the country's red-hot economy: its 2004 gross domestic product was nearly $2 trillion, the world's fourth largest economy, following the United States, Japan and Germany.

If the growth rate continues, economists predict China could surpass America by 2035.

Motorola also continues to grow. It sold a record 46.1 million cellular handset systems worldwide during the first quarter this year, up 61 percent from a year earlier.

TEDA, home to Motorola and dozens of other foreign firms, also is planning to grow, seeking to add more than 7 square miles.

That means more foreign firms, more Chinese workers, more production and a greater world economic impact.

With Western businesses come Western influences on Chinese and on Chinese state-owned businesses.

"Just imagine, we have 10,000 employees working in Motorola" in China, Wang said. "How Motorola treats people, how employees train and grow, piece by piece, Motorola's influence is going through family and friends."