Alumni Association Update

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What has it been like for you personally to sell the company you founded nearly 40 years ago?

I am definitely nostalgic, but I have been preaching that we have to change. McGraw-Hill will allow us to be ourselves, but give us the financial strength to keep growing. We were growing at such a fast pace that it was difficult for me to keep my hands on everything. Cash flow becomes more of a problem as you get bigger. We didn't want to slow down our growth, and so we decided to look around.

I didn't want to merge with a traditional survey research firm because I feel that most are still operating in the industrial era. The whole survey research industry is changing dramatically. The days of mailing out the questionnaires and tabulating the results over a six-month period are over. That's why we are transforming the company. Unfortunately you get older, but I want to be around as long as I can.

It's an interesting time, because for the first time in 37 years, I am an employee. When I went home recently and opened the employee manual I'd been sent, I saw that, because of my 37 years in this business, I qualify for five weeks vacation. I haven't had more than a week of vacation in nearly 40 years. So these are the happy things.

David Yi Li: Bridging State and Private Economies

China is renowned for its ancient culture and its thousands of years of philosophical riches.

The country's economy, however, is still a gangly adolescent, according to David Yi Li, WG'92, the chairman and country head of UBS China.

After all, it was only 25 years ago that China began its transition from a planned to a market economy. And though it has maintained a historic nine percent growth rate for the past quarter-century, to Li's mind, China's blossoming in the world economy is only just beginning.

Li's own journey, from professional soccer player to a senior executive at China Merchants Holdings (International), one of the county's largest state-owned-enterprises, to his current role as head of the China division of one of the world's largest investment banks, in many ways reflects his country's economic voyage.

Economic reform, begun by Deng Xiaoping in 1979, was a historical turning point for modern China. Then, everything was state owned: Local barber shops, corner restaurants, financial institutions and even the Shaanxi Professional Soccer Club, where Li played professionally for four years.

Now, the private sector contributes to one-third of China's GDP. By many estimates, it will be up to half within five years, and surpass three-quarters within a decade.

Accompanying the rise of the private sector will be the continuing rise of Chinese consumer demand, says Li. That means China's next big economic move will be away from export-oriented manufacturing toward a more lucrative service market. Moreover, China's phased entry into the World Trade Organization, to be completed by 2007, has broadened the range of its economic development and deepened its reach.

The upshot, says Li: Tremendous opportunity for international financial service institutions.

Few have as good a perch from which to describe China's growth, both internally and in the global market, as Li does. A Chinese national, he is steeped in traditional culture, armed with a bachelor's and law degree from mainland universities and an MBA from Wharton, and can boast of senior professional roles across continents. The combination puts him in a unique position to build bridges between East and West.

Li's ability to strategically grow a Chinese business through financial acumen is a large part of the reason why UBS hired him. Before joining UBS, Li restructured China Merchants Holdings from a multifaceted investment firm to a leading port company focused on its core port operations, largely through asset swaps, acquisitions and divestitures. During his four-year tenure at the state-owned-enterprise, net profit more than doubled and its share price almost quadrupled.

At UBS, his main focus is to steer the global bank toward strategic local opportunities, such as its recent acquisition of Beijing Securities Co. Ltd, a prestigious but financially troubled securities firm. The transaction made UBS the first international financial institution with direct ownership of a full-functioning local securities firm and was intended to serve as the launching pad and operations platform for all of UBS' business in China.

Helping Chinese businesses make inroads into overseas markets is as critical a component of the bank's success in China as is finding mainland opportunities for UBS.

As the man who stands at the nexus of the two worlds, Li is in constant demand. It also means he doesn't get much rest. Though based in China, he spends most of his time—weekends, weekdays, the middle of the night—meeting with clients all over the globe.

"I sleep five, maybe six hours a day. It's a very intensive job," Li says. "Some local companies who want to do business overseas have to get UBS' support. If they want UBS' support, they have to get me to understand their business first."

But getting local businesses to understand and operate by international rules often poses more cultural barriers than helping the global investment bank seize mainland opportunities.

"American and European companies have already been doing business internationally, in Taiwan, Korea and Japan, for a long time, so they know they have to understand the local culture. They already know it's a vital part of being successful," says Li.

Many Chinese companies, Li explains, don't have the same experience to draw upon.

"China only opened its doors 20 or 25 years ago. It's historically short. Chinese companies that want to do business internationally still have a lot to learn."

The learning curve could be China's Achilles heel, Li warns. China's challenges are numerous, including a legal system that has yet to catch up with its economy, cracks in social welfare because of unbalanced urban and rural growth, and environmental threats as its quench for oil and raw materials grow seemingly unchecked.

"There are tremendous challenges that China is facing to modernize the nation with over 1.3 billion population and relative scarcity of resources. The challenges may include problems in preserving the environment and improving balanced education and healthcare in the rural areas," said Li.

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