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One month ago, I was sitting in my hotel suite during my second visit to China, watching the full moon set over the Forbidden City and the sun rise over the skyscrapers of Beijing. I went to Beijing to deliver speeches on business and growth, and to teach Growing the Firm to 110 Executive MBA students at Peking University. These “students” are in their 30’s or early 40’s. Most are upper middle managers in multi-national companies, some are company owners, and a few are high-ranking government officials. They were bright, quick to learn, confident, and appeared to be quite comfortable with Western concepts of management and leadership. They were more knowledgeable about the US than most Americans are about China.
One night my friend and colleague, David Diebold, invited me to dinner with three Chinese professionals. While many of us perceive China as a “new economy,” our dinner conversation focused more on growing companies than starting them. Alex, one of the dinner guests, manages an investment fund and one of his investments is the Chinese version of PayPal. As we talked, it became clear that the issues he’s working through are the same ones PayPal faced in the US:
This trip provided me with some valuable insights about doing business in China, and doing business anywhere in the world. Here are five of my take-aways:
>> Identify Opportunity & Danger <<
There’s no question that China provides an amazing opportunity to those who know what they are doing. And those who don’t can quickly find themselves in considerable danger.
The Chinese economy is expanding at an incredible pace and that has given many Chinese citizens considerable buying power. With 15% of the world’s population and as many middle and upper class people as the total population of the United States, the shopping centers in China are filled with Chinese consumers – not tourists – buying expensive clothing, electronics, jewelry, cosmetics, automobiles and western-style, multi-level homes.
That change in buying power has caught many by surprise. One entrepreneur in my class has a company that makes store fixtures for Gap and Banana Republic. Although he’s very successful selling to US companies, his classmates couldn’t understand why he wasn’t planning to sell his upscale store fixtures to Chinese retailers! Even though he lives in China, he hasn’t been monitoring the shift in shoppers and buying patterns.
For any foreign investor, the price of entering this market can be high, and the multitude of variables pose high risks. You can waste a lot of time and money trying to line up business in China. However, the biggest risk might be the breathtaking speed at which the Chinese economy is moving. How long it can continue is anyone’s guess, but it certainly won’t go on like this forever. Those who figure out how to ride the dragon to success, hedge their risks, and exit at the right time will be well rewarded.
>> Find A Good Guide <<
There are thousands of growth companies and many investment opportunities in China. But this is uncharted territory for most of us in the western world. I have a new appreciation for what David Diebold means when he says, “Things are not always what they seem to be in China.” My western interpretation of contracts, agreements and people’s motivations sometimes missed the mark.
When Lewis and Clark began their historic expedition across North America, they quickly found they were lost without a guide. Once they enlisted the help of Sacagawea, they were able to complete their mission. If you are planning an expedition in China, you need someone who really knows the territory. For me, that’s David Diebold. He’s been working in China for 20 years, and his staff knows how to do due diligence and determine whether something is a true opportunity… or a landmine. I’m certainly more confident about doing business in China because I know David and his staff are there to guide me and my company.
>> Invest In Growth <<
While companies throughout China are growing at lightning speed, the growth of the nation is more amazing. Less than ten years ago, the country began moving from a socialist to a capitalist economy. It quickly blew through “Start-up” and into Initial Growth. So far, China has been able to navigate the turbulence associated with moving from Initial to Rapid Growth. I think this is because China has the will to plan, the discipline to execute, and a willingness to invest in an infrastructure to support further growth. The Three Gorges Dam is being built in an incredibly short period of time, providing a new power source. New airports and roads that would take years to build in the USA have sprung up practically overnight in China. The government of China is investing heavily in growth.
But companies in China are also investing in growth. Factories are being built as quickly as the roads that lead to them. Companies are investing in the education of the next generation of leaders. Individual entrepreneurs are investing their profits in promising new companies. China’s power as a world leader will continue to grow because it understands that planning, execution, and investment are just as important as vision.
>> Inclusive Cultures Survive <<
As Alex explained to me, China is different from other countries and cultures in Asia. It’s more open to change. He believes the difference stems from the fact that China’s culture or belief system is inclusive. Despite the changes from imperial dynasty to communism to a budding capitalist system, China has always changed by its own accord, not by the dictates of outsiders. If an idea makes sense, or if it is proven to work, it is accepted, adopted, and implemented. This suggests that the Chinese will rapidly adopt -- and adapt to -- Western ideas that make sense.
But I took away another lesson about culture, in this case the culture of companies. Companies with an inclusive culture (such as organizations that encourage people with different perspectives and “out of the box” thinking) are stronger and grow much faster than those with a more narrow or a single perspective. This has major implications for the people you choose and the culture you create within your company.
>> Growth Is Universal <<
During my sessions in China, over a dozen entrepreneurs and company owners shared their stories and lessons learned with me. Each of these successful entrepreneurs indicated that the Stages of Growth framework in Leading at the Speed of Growth (which has been translated into Chinese dialects) provided great insight and helped them understand what was going on in their companies. It also clarified what they need to do in the future to grow successfully. They all thanked me for sharing my strategies for growth. I am grateful to have this validation of the concepts on which we have built Boulder Quantum Ventures. It’s great to know that the concepts are universal and evergreen!
>> Final Thoughts <<
When it comes to the basics of growing your business, it’s comforting to know that many fundamental truths apply from country to country and market to market. Although that may be reassuring for a company trying to go global, it’s a warning to those who aren’t. While you may not be planning to go global in order to grow, don’t assume that companies from China, for example, aren’t. They’re already entering your markets and soon will be competing head--to--head in almost every industry because they are adaptable and quick learners. It’s a Global Marketplace, and it requires different thinking. Don’t wait until the 2008 Olympics to go to China – or India, Singapore, Australia or New Zealand. Find a guide and get prepared to Go Global.
If you are looking for more information about the fundamentals of growth that apply to your company as much as they do to Chinese companies, visit www.boulderquantumventures.com and browse through over 20 articles on many of the facets of unlocking your growth potential.
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