The Dragon by Its Horns

From the Fall 2009 edition of Vanderbilt Business

China-trade-dragonNumerous experts and laymen alike expect the Chinese to realign their business operations, financial behavior and cultural ways to resemble those of the West. This attitude is quietly resented by the striving Chinese. It is also dead wrong. The Chinese want to become Westerners as much as Westerners want to become Chinese.

Now that Western companies, capital flows and business cultures have helped revolutionize China, it is China’s turn to revolutionize us. High-roller Chinese procurement delegations are flying around the world, signing billion-dollar contracts and purchasing energy resources, raw materials, technologies, intellectual property rights, real estate, and private and public companies. The Chinese have plenty of money to spend on smart acquisitions.

With Chinese ownership comes the increased influence of Chinese business culture. A growing number of businesses in the United States and Europe are subject to direct Chinese management decisions made in the towers of Shanghai and Beijing instead of New York and London. This is why we need to take the dragon by its horns and be proactive in understanding the ways and perspectives of our friends in China. Western business models will not apply in China as efficiently as some may think.

The business culture in China today is an unprecedented mix of traditional customs—hierarchical behavior, close family relationships and established power networks—and new Western concepts. Some of these new concepts include:

  • unforeseen collective acceptance and support for getting wealthy
    Over 1.3 billion Chinese citizens are more or less free to chase their material dreams as they see fit. The success of many encourages others to work hard, creating significant macroeconomic growth.
  • unprecedented urbanization
    According to the McKinsey Global Institute (Shanghai), 350 million rural Chinese will move to cities during the next 15 years, creating new jobs, spending power and huge demand for infrastructure and other support systems.
  • new flexibility in attitudes
    Different opinions and perspectives are more welcome today. New ideas are subject to constructive curiosity, instead of immediate rejection.
  • ferocious striving for better living standards
    Our Chinese friends are setting up new businesses, educating themselves and their children, looking for tools to get ahead in life, and creating huge economic value driving forces.
  • proactive internationalization and global networking
    Chinese delegations around the world are even more common these days than the Japanese delegations were after World War II. China sells itself in many clever ways and is eager to establish friendly trading relationships all around the world.

Despite many problems in their society, like human rights violations, environmental issues and widespread poverty, the Chinese have been quick to develop innovative solutions to many other challenges. It is mind-blowing to consider what they have achieved in only the last fifteen years, even if it has been partly accomplished with foreign advice and capital.

Like it or not, the Chinese economy will probably grow quickly over the next three decades, creating future shocks in every industry. Those of us who take a proactive role in understanding China will have a better chance to emerge as winners in this new economic era. Those who resent change, on the other hand, will be left behind. The West must leap out of its comfort zone, embrace this situation and join—not fight—the economic evolution.

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