1 | 2 | 3 | 4 | All | Print this article

Made in Kunming

- By Zach Church

Last spring, eight MIT Sloan students arrived in a remote corner of China to work with the country’s most promising women entrepreneurs. Their charge? Advise and expand companies amidst the chaos of a booming economy.

When Hao (Hailey) Wu arrived in Kunming, China, last March, her work appeared well defined. Since 1999, local crafts company Nankan had manufactured gifts—handbags, purses, and the like— to sell to tourists. Now, with one of its founders participating in the Goldman Sachs 10,000 Women Initiative, it was exploring how to best grow the business. Nankan had expanded from six to 200 employees, and its leadership was pondering a tempting purchase: four acres of land offered at deep discount by the Chinese government. But the company only needed about three-quarters of an acre—maybe even less—for a new plant. So, should Nankan buy it? Wu, a 2013 graduate of MIT Sloan’s Master of Finance program, was in China with MBA student Jonathan Barker and two students from Kunming’s Yunnan University to answer that question.

Right away, the team hit a snag.

“They don’t have income statements. They don’t have cash flow. They don’t have basic balance sheets. They don’t have any financial data,” Wu recalled. “It’s very difficult... we need to know your revenue. We need to know your liability.”

What was a single yes/no decision became a financial riddle, and a challenge that might vex even a seasoned consultant. Wu’s team—assembled as part of MIT Sloan’s unique China Lab action learning program—could not do 14 years of financial forensics, not in the 10 days they had onsite. Pressed, they found a solution regardless, developing a series of decision trees, corresponding net present value calculations, and spreadsheets that could respond to changing financial data. Nankan’s leadership could adjust data with what information they had or became aware of in the future.

The team ultimately recommended renting a new plant, arguing that purchasing the land, building a new plant, and developing the remainder of the land could result in a sapping of available cash and force the company into a risky shift in its business model.

That Wu even landed in Kunming at all, frustrated over missing data and advising on a critical business decision, is the result of a chain of global relationships among MIT Sloan, Kunming’s Yunnan University, and Goldman Sachs’ innovative 10,000 Women Initiative, which provides business education to women entrepreneurs in developing areas of the world.

If Wu’s work for the Nankan crafts company sounds like an exasperating mess, that’s because it was, nearly by design. Unlike staid internships or traveling to make connections, MIT Sloan’s China Lab is meant to be a challenge where failure is always an option and success requires all the more ingenuity and know-how.

“We re-create chaos,” said MIT Sloan professor Yasheng Huang, the founder of the China Lab. “Entrepreneurship—a lot of it is about navigating chaotic situations.”

More »