After the entry Diversity, Consistency, and Efficiency, many readers posted so great comments that I cannot help quoting it. (Quoting in full text is rare on this blog.)
Roger Chan commented:
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.
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.
Just continue to add some points (again, random thoughts)
- Consistency produces efficiency; efficiency produces quality. As Martin put it, quality, by nature, is consistency.
- I cannot comment on whether efficiency (or in other word, lower cost) and quality (in other word, consistency) are two major competitive factors on global market. It is especially so with WTO (World Trade Organization), and free trading zones. We don’t know whether cost/quality combination will still work after 100 years, but at least, it is the current worldwide standard.
- Whether the standard of the world will change from value/money/business driven to other fact driven? I have no idea and don’t see any sign yet.
- China’s diversity has deep historical and culture reasons. Just as Gesteland put it, focusing on people instead of worship time/schedule is key China culture element.
- Efficiency of thinking can be archived by mathematics. The quantitative thinking in western culture tend to convert all problems to number problems (from modern economics, to chemical, to (the extreme extend) computer). It is another effort to drive the common essence among different stuff, while in China, people keeps diversity as it is.
- China will change, but very slowly. The world is also changing
- Dennis Waitley said: “The only danger raised with adversity, mistaking the mistakes to yourself.” It is very true in current China – the economy problems do not 100% due to the current system/culture. Don’t mistake the mistakes.
- Many business in China are flexible, but not consistent.
- In the Business of Zhending Chicken case, it full respect diversity of users, but lose efficiency.
- To survive in China, people from foreign countries need to put aside of criticism options, and learn the philosophy used here. To keep one’s finger crossed and pray for the change of China is not realised in short time
- People power is one of the key weapon to fight against diversity.
- By default, employees are different with each other. They are diversified and can handle diversified questions they face everyday. People don’t like well trained customer service representatives with U.S. standard, because lack of the human element. “Human element” is diversity (in particular, pleasant surprises). It is removed for consistency. However, this is exactly what customers in China expect – they always expect pleasant exceptions (the enemy of consistency).
- Diversity is the reason of low efficiency.
- People need to accept lower efficiency does not mean failure in China. Highest efficiency does not always mean success, especially in those industries requiring people-to-people interaction.
- According to the book The Botany of Desire, a plant’s-eye view of the world, diversity is grand rule of the nature. Human’s effort to drive consistency will eventually fail (after several centuries). Single-type tomato in South Ireland has called half of the popular starving to death when one type of plant cannot resist a new virus. It may be true for huge international companies.
- Conflict of culture (flexibility v.s. consistency, strategy v.s. ad-hoc, people v.s. system) will be ultimate question in the process of any internationalisation process.
Feel free to post the content or link to other forums, since I am really interested in this topic. Deep dig into the topic is worthwhile, since it helps to answer lots of questions people in both continents have.