Nathan and Stephan Richter have made a number of assumptions about China which are wrong and based on out of date information.
THE LIMITS OF INNOVATION
To begin with innovation is only an advantage if others cannot emulate you for some time.
The West believed that China would take 20 years to catch up technologically but they managed it in just 4 years and the pace of emulation and catching up is accelerating.
Some of this was achieved by cyber warfare via the PRC’s 4 million plus army of hackers but even more is coming from the process of “swarming out”.
Swarming out means doing your second degree or all of them in Western countries, living with Western families and noting down your impressions and the things that Westerners say whilst giving very little of what you really think away.
Through exposure to Westerners they can know what the Westerners know plus what they as Chinese students already know which puts them at an advantage.
Western Universities and politicians should not imagine that Chinese students are just in their countries to study.
PHASE 2 OF GROWTH
Too many people think of China as a place with peasants prowling about in paddy fields or working in the Pearl River Delta manufacturing things in factories.
This was PHASE 1 of growth.
What is happening now is PHASE 2 a plan breathtaking in scope which you have to see to understand what it means.
It includes :
–650 million people learning English and being trained in software development/knowledge based skills in English via a jv with Carnegie Mellon
–Overtaking India which has 60% of the high value and mid value IT related BPO work in the global market by 2020.
NB China currently has 20% of this market but through acquisitions,web marketing and joint ventures is rapidly closing the gap
–“Go out and Bring Back In”
At one level this means encouraging people to leave China ,start SME,s and send money home to keep the elderly relatives.At another it means building foreign shareholdings or setting up enterprises in America, Europe, Australasia and Africa.
The industries that shareholdings are built up in include things like the infrastructure company that runs the London Underground and very soon the nuclear power stations that the UK urgently needs if the lights are to stay on.
Large tracts of Argentina, Brazil, the Ukraine, Nicaragua, Cambodia are being leased or purchased to grow food for their population whilst CNOC, SINOPEC, China Metallurgical Corporation have joint ventures and ownership of drilling and mining companies all over the world
–Making their State Education system in Hong Kong and other selected areas such as Shenzen the best in the world(Currently they are about 4th)
–Searching the world for Global best practice by borrowing from Japanese and German manufacturing techniques,American efficiency methods,Dutch approaches to managing water and reclaiming land,Russian and American weapons systems and planes and so on.
They are very patient but learn quickly
–Making Hong Kong become the world,s leading financial center by 2016 by surpassing New York and the City of London which are 1 and 2 and surpassing Singapore which is now 3rd but is on track to reach 2nd place.
This will give them the “invisible exports” that in years gone by helped the UK pay its way via the City of London whilst our manufacturing capacity dwindled away to more effective competitors.
–By owning Western companies that are innovative they can tap into innovation and creativity whilst leveraging economies of scale.
Alternatively they are creating the 3 largest insurance companies in the world including China Merchants Group and are using Price Waterhouse Coopers to design in best in breed structures and practices.
Harvard Business Review is a publication I subscribe to but in this case I think “The Donald” has it right when he says “China is eating our lunch”.
- Which Management Style Will China Adopt? – Nathan Richter and Stephan Richter – Harvard Business Review (dralfoldman.com)
- Sino-German strategic relations and investment in Cyprus offshore gas and oil? – John Gelmini (dralfoldman.com)
- Reflections on “China is strategic partner to Russia: Putin” – John Gelmini (dralfoldman.com)
- A Hard Look at the Implosion of UK Healthcare – John Gelmini (dralfoldman.com)
- How the Western economies should effectively respond to the Chinese economic powerhouse – John A Gelmini (dralfoldman.com)
- UK Decline and EU Membership: Response to Lord Heseltine – John Gelmini (dralfoldman.com)
- Why David Cameron is the Barrier to Increasing UK Exports to BRICS Countries – John Gelmini (dralfoldman.com)
- The UK and the new geopolitical reality – John Gelmini (dralfoldman.com)
- Should the OBR independently cost and risk assess UK political manifestos? John Gelmini (dralfoldman.com)