I have some point-of-views for diversity, consistency, efficiency, and the difference between China and U.S. It is just some random thought, without any systematic thinking…
- When a company just went IPO (like Google), internationalization is the only way to keep up with the fast pace of Wall Street.
- Internationalization is hard. It is harder than one can imagine.
- In U.S., consistency across all the states, and across all the business, and people have been established. Consistency is the key to efficiency. Only when people can handle all the request in the same or very similar way, they can be efficient.
- China is a diversified country. Difference between geographic locations, businesses is obvious.
- No surprise when we see several people can run a huge business, because the shipping, payment, law, etc are pretty consistent. In China, the challenge is, there are so many banks that have different interfaces. The same bank has different system in each region. The business process varies greatly from company to company… etc.
- I won’t say consistency is the only right way. Diversity is the essential part of the nature. The nature is diversity. Although the human effort to force consistency in recent several hundreds year worked, it may eventually fail.
- Currently, at least in this century, the economy is designed that only the country with highest efficiency win. That is the biggest challenge for the process of globalization.
- With WTO, China is unconvertible moving to be part of the global world. So it is critical for people in China to start to learn the international rules.
- For people doing business in China, it is also critical to understand the difference, get insight about the culture. It does not make sense to complain the rule is not the same as other regions. This rule has been there for thousands of years.
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Skiing in Shanghai
thanks very musch.
I think there’re different local regulations for businesses in each state of USA too, though you may mean way more than local regulartions when you talked about “rules”. basically, local ( local to a country, a region .etc) businesses need to play by the play everywhere.
Yes, it is true. there is diversity within in each country, whichever it is, doing business in each state or province there must be difference, no matter in China or the US, or India.
you didn’t mention corruption, especially with regards to banks and governments. perhaps that was on purpose? i doubt it slipped your mind…?
Consistancy is a way of ensuring good quality (good quality IS consistancy, actually).
In order to be more efficient, I think we ofthen have to resist pressure to have diversity. People tend to think that they are “a special case”, but actually, if the consistant system is good, diversity is usually unnecessary.
Diversification in China and other countries is often due to local interests, history etc, and also can be due to being badly organized. (For instance different banks having different systems)
I was very interested by your article, constistency does drive quality, and efficiency success, but doesn’t the very process of globalisation mean that national economies are less important? (interior effieciency is not as important as efficeieny at a global level, between countries)
The defining difference in my eyes is that effeciency driven by policy inside a nation state breeds ineffieciency at a global level. The countries that do not have high costs of compliance are generally those with the greater global competitiveness (subject to access to labour, capital and basic legal protections aside)
Multinationals discovered some time ago that they could take advantage of the global economy, Nike moving production where it is cheapest (incidentally they are moving out of china as costs increase here) The big leap in my mind is as individual and small fast moving companies play and eventually define the global competitive environment.
dezza, corruption can be construed as remuneration of the distribution chains, for the institutions who provide finance and the bureaucrats who facilitate the transactions.
Without these parties, the gears driving the economy will be missing few teeth.
Sounds unethical? but it is truth!
Good points in your article above. Some other important factors I’d mention, to nurture the growth of companies like Google in Chinese cities:
1. Transparency, transparency, transparency. You *absolutely must* have transparency for a company to be successful and to attract wide-scale investment, that is, transparency in the management, transparency in the financial records, transparency in both successes and errors. Without transparency, investors will not trust your company and it will fail. This is why there must be intolerance for corruption in the Chinese companies and the government– this damages transparency and leads to mistrust by investors.
2. Innovation by the company with R&D. Research and development, translated into products, is the cornerstone of success in places like the USA’s Silicon Valley. This applies both to new products, as well as to Chinese cultural exports (such as films)– to reach the “big leagues,” you have to innovate your own products and come up with your own ideas, not copy those of others. As all the cheap knock-offs of Hollywood films in Hong Kong and Shanghai indicate, many smart Chinese people still spend too much time copying the ideas and culture of others, rather than innovating their own.
3. A more solid banking sector and stock market. Many other people have talked about this, but China’s banking sector does need reforms, and banks have to be smarter about their loans and avoid bad loans.
4. More partnerships between universities and companies to do the most innovative scientific and engineering work. I know that Chinese companies and university laboratories can be incredibly innovative– I’ve read Chinese scientific journals before (I can read the characters), and the work in there is as good or better than universities in the US. You need to increase the volume and output of this scientific work and increase the collaboration of university and corporate laboratories. To do this, increase both the number of trained scientists and the specialized journals in which they publish their ideas. Then encourage them to work together.
5. When you start up new scientific and engineering journals in China, the journals should be *in Chinese*, your native language. I heard an idea a while ago to start up a bunch of English-language journals in China, but this would be a total waste of time– it’s very difficult to write a scientific paper in a foreign tongue even if you’re very good at it, and 10 times faster to write a paper in your native language. For example, the Japanese started up a bunch of English-language journals in the early 1990s, but the editors and paper authors wound up wasting years of delay *even after the labs had finished their projects*, trying to nitpick the English composition while their competitors just published in their native Japanese (with the best papers being translated into other languages anyway). Your scientists would be wasting precious time mastering the fine points of English composition when they should be focusing on publishing their ideas in their native language. You have that luxury since you have 1.4 billion people and soon the most scientists and engineers in the world. It may be useful to have online versions of the journals in both the Chinese characters and in Romanized pinyin, which can help many non-Chinese read them; it’s easy to interconvert between them, a simple computer program can convert the characters to pinyin. (Millions of non-Chinese, including Europeans and Americans, can read pinyin well even as they’re still learning the characters.) As a bonus, millions of Japanese, Korean, Vietnamese, Singaporean, and even some Western and other scientists would soon publish their papers in the Chinese journals (since the Chinese characters and the language are extensively studied throughout East Asia). But the journals should be in Chinese to encourage efficient publication and communication. I emphasize this especially.
6. Strengthen your patents, trademarks, and copyrights system. This is very important– the countries with the most innovation and most successful companies (like Google) also have the most robust patent and trademarks systems, since this ensures that people are rewarded *financially* for their ideas. You have to have that sort of economic incentive to convince people to put in the hard work that creates a company like Google and makes it an economic enterprise. You have to reward them and also protect them from others who would just copy their ideas. China’s intellectual property laws are still too weak– you need to make them stronger.
7. Finally, stop buying up so many US Treasury bills, and instead focus all your surplus dollars from trade into development and infrastructure at home. Companies like Google, Hewlett-Packard and Dell require reliable roads and telephone lines to do business, which requires infrastructure investment by the local, state and federal governments in the USA. You in China earn many dollars from your trade with the US, but then you waste your profits by buying up US T-bills, on which you lose money as the US dollar falls. So, you are essentially giving away your hard labor and your products to the US for free! You should instead use your profits from exports to the US, to build up your own infrastructure and focus on development in China. This will make you a mature economy and able to start companies like Google, Microsoft and IBM. As long as you continue to send Chinese export profits (and savings) to the US in those T-bill purchases, China will continue to be a third-world country (and the US will try to impose tariffs on you as well). Instead, use your profits to build yourselves up at home. In the process, just allow the RMB currency to rise, *gradually*. A rapid renminbi rise would be dangerous, as it was for the yen in Japan in 1990. Instead, just gradually reduce your US T-bill purchases and diversify into buying Euros and yen so that the RMB gradually rises, then use your excess dollars (and other export currency profits) to invest in infrastructure at home and purchase of strategic resources. To have big and successful companies, you need to be focus more of your export profits at home.
Agree with Jianshuo, there is something to do with the cultural differeces.
R. R. Gesteland said “One group of the world’s societies worships the clock and venerates their Filofaxes. The other group is more relaxed about time and scheduling, focusing instead on the people around them.”
U.S. as Rigid Time society value schedule and discipline… may lack of flexibility.
China as Fluid Time society value flexibility… may lack of efficiency/consistency.
Globalization is causing culture mix, but it takes time.
… when China ranked 77 (U.S. ranked 17) in Transparency International CPI 2005, for sure China has a long long way to go to catch up with the Nordic countries ranked top ten.
Being a relationship focused society, we do have low system trust… not sure which one is the cause and which one is the effect…
Nevertheless, multinationals have to find ways to survive the vague environment before the most part of world reaches the ‘right’ level of transparency
When I see the Transparency International rankings, I feel just SO proud to be a danish citizen, living in a country with almost NO corruption !!!!!
By the way, only citizens care for this ranking – the big business companies gives a shit about it.
Where the labour fee is low, there they will be. No matter corruption, political system or human rights.
Just accept it, and if YOU mind about it, then choose to buy your stuff from respectable companies.
Now even Yahoo, Microsoft, Google and Cisco have problems operating in “low morality” countries.
I won’t mention any specific countries here, you can find out by yourself…