Attended a conference this past weekend on “China: Strategic Implications and Challenges of Doing Business in the World’s Hottest Market.” Whilst quite a bit were reiterations of trends that have been generally accepted into mainstream thought, I feel that the speakers presented several interesting points.
Professor Paul Tiffany from the Haas School of Business gave the keynote positing the question that has long been on everyone’s minds: The 21st Century Global Economy — Is China Destined to Dominate? It was a talk I found particularly interesting as he stressed not only China’s growing role in the global arena, but also the rise of the inevitabilities of globalization. While he didn’t mention it specifically, a general trend I saw emerge not only in his discussion of China’s modern day rise to its current state, but also in looking at recent history and the cultural aspects of Chinese society, is the Chinese way of change.
Culturally, Asians are less inclined to question, to challenge, and to change than Western society. This is evidenced in all aspects of the Asian community — on the business front, how many NEW and DISRUPTIVE technologies have emerged from Asia? While this may be attributed to the developmental stages this region is still undergoing, think about what Chinese companies do best — copy, and enhance. At schools, Asians are known to excel at test taking, and processing information from rote memorization. However, when it comes to the analytical, American students — who are often held up at the opposite end of the spectrum — fare far better. As a result, America still produces the world’s most advanced innovations (for the most part), and is still considered the entrepreneurial hotbed for the young, restless, and the visionaries. Of course, without China or India, it can be argued that there is no Silicon Valley. By that same token, however, think about how many new and disruptive homegrown companies have come out of recent immigrants to the area. I’m sure that this is something that will change given time, but just mere observations at the present.
Consequentially, this has been reflected in the way that Chinese society digests change. From the leadership, they obviously have an interest of maintaining power. However, they know that in order to maintain power, to keep the long recognized “mandate of heaven,” the people must first be happy. How then, do you successfully serve 1.3 billion people, from over 50 different ethnic backgrounds? What the government approach to this situation has been gradual change, in successive steps, following Deng Xiaoping’s initial declaration of “to be rich is to be glorious.” While these steps have strayed from the often referred to “Washington Consensus” as a formula to bring emerging economies up to speed, it has brought with it its fair share of achievements (pluses) and challenges (deltas).
Achievement: China has lifted millions of its population out of poverty in a short span of time.
Challenge: There are still millions and millions left to go, and an inequality gap as large as ever.
Achievement: A large population that will not only represent growth opportunities, but continue to attract FDI eager to tap into the ‘world’s largest market.’
Challenge: “The Emperor Syndrome” — while China’s one-child policy has done much in the way of checking explosive population growth, it has also resulted in a generation that is largely male-heavy (1.4 males for every 1 female). Additionally, this generation has been characterized to be more self-centered because of the additional attention.
Achievement: A disciplined population that are advent savers.
Challenge: Uncertainty with using credit cards, and lack of financial knowledge. Changing demographics.
And perhaps most importantly …
Achievement: The will to win.
Challenge: Execution.
The 21st century has often been described as the “Chinese century.” This is a sentiment that many Chinese carry with them, and because of this hunger and drive, makes it more of a reality than a speculation. As Albert Einstein once said, success is 1% intelligence, and 99% persistence.
In the words of another wise sage, Mahatma Ghandi, “Strength does not come from physical capacity. It comes from an indomitable will.” The meaning echoed in these words are ones I think are true for individuals, companies, schools, organizations, and countries alike.
While China’s “market size” may create an advantageous playing field, what will ultimately determine its success is the will, spirit, and enthusiasm of its people. As Professor Tiffany alluded to, what China will now need to do is to support a group of innovative entrepreneurs who rather than improving upon existing processes, create their own, as they once did two thousand years ago with what we’ve come to know as firecrackers.
Next post: China’s business environment – perspectives from a VC
e.piphany 