China: The Distinction Between Power and Greatness

by Michael Harrison

Why should Australian business care about the direction China’s economy takes? Why should we care if the Chinese are buying U.S. debt by the bucketful? Why should we care about the new trade sanctions put in place January 1, 2010 by the U.S. on Chinese goods?

What does all of this have to do with small business in our country? Well, China is one of Australia’s most important trading partners. That affects the Australian economy in ways we have yet to imagine.

So, over the past few weeks I’ve been researching business activities in China – everything from lending policies, a growing middle class and expanding base of manufacture.

My conclusions? Indeed, China is a powerful country and a major player on the world economic stage. But it is not a great country.

In effect, the Chinese sabotaged the climate change talks in Copenhagen at the end of the 2009. Of course, this summit of world leaders and scientists had little teeth to begin with, serving in an “advisory” capacity to world governments.

China, a country that tops the list of polluters – pumping even more filth into the atmosphere than the U.S. – refused to budge on their pollution control policies. Why? Well, China simply doesn’t have to play ball with the Western nations. It’s that powerful a force in the world economy which, as small business owners, we recognise as having a direct impact on our business.

Need a new product fabricated and manufactured? Chances are, you won’t use an Australian-based fabricator when you can get the same job done in China at half the price. Long live our great nation, but business is, well, business. National pride often takes a back seat when it comes to the cold, hard realities of global economics.

No one questions China is a powerful nation. Its holster is jam-packed with nuclear weapons – enough to annihilate the world. It has an almost endless supply of cheap labour to develop a powerful manufacturing base. It has a government that encourages a little bit of private, albeit, highly regulated private ownership. China is slowly marching in to the new millennium in some ways.

In other ways, China remains a repressive regime, strongly centralized and tradition bound.

What defines greatness?

The countries of “the West” – Australia, the UK, the EU and the U.S. encourage innovation. These open economies encourage private ownership through small business loans and grants backed by government guarantees.

These countries are the incubators of new technology, new medicines and other pharma research. These are the countries that engage in a competitive marketplace without fear. In fact, engagement with other innovators is encouraged through open access to web sites such as LinkedIn and Facebook – networking sites that encourage the exchange of information and debate.

China, on the other hand, discourages engagement with the rest of the world. During the past five years, cyber cafes popped up in small Chinese villages – the ideal solution to distance learning and developing a more highly trained, highly qualified workforce. Distance learning is low-cost and accessible to all in great countries – countries that innovate and change the world.

China’s government has declared “Internet Addiction” a mental illness. There are more than 400 private clinics (re-education centres) to “help” these mentality ill people kick that Internet Addiction and get back to work in the factories making low-cost electronics, clothes and now, automobiles.

China, as in all repressive societies, discourages engagement. China’s search engine, Baidu.com (China’s Google) is closely monitored by the government and I’ll guarantee that government-paid search designers have added their own restraints on Baidu’s ability to provide unbiased access to other cultures.

This is a country that is afraid more of its own people than of other people from other societies, and the government’s approach to engagement with innovation is limited to copying what’s already been created elsewhere.

A Chinese consortium (including the Chinese government) bought IBM’s personal computer business lock, stock and barrel. They changed the name to Lenovo and today; Lenovo computers are low-cost options for start-up businesses. The Chinese didn’t innovate. They bought an existing manufacturing system, found ways to lower costs (and, some say, quality) and is now a player in the personal computing community.

China doesn’t create. It copies. If follows, it doesn’t lead.

Great countries lead the way. Some powerful countries simply follow the trends. They may be powerful. They may have a large, low-cost workforce, and a huge arsenal of nuclear weapons, but countries like China (and many countries in the Middle East as well) are not great countries.

The Small Business Take-Away

• Does your company reward innovation?
• Does management seek input from all stakeholders?
• Does management engage industry experts to expand product and service offerings?

You can run a company like China runs its economy. You can discourage innovation and foster a herd mentality within your small business. Or, you can seek input from every employee.

Who better to help streamline product shipments than the employees who ship each day? Engage these “boots-on-the-ground” experts to discover ways to simplify shipping AND save money.

Who better knows what customer care issues are causing dissatisfaction than the customer service reps on the front lines – your company’s public face? Do you talk to these customer professionals? Do you solicit suggestions? Do you reward innovation?

China IS a powerful country, but it’s not a great country – and it never will be until it creates a business environment that promotes engagement with the global economy, encourages and rewards innovation and stops fearing its own people.

As a small business owner, we can all learn a great deal from China’s approach to business growth compared to Australia’s approach to entrepreneurship. I’m glad we live in a country that encourages risk-taking in the business realm, and fosters the spirit of engagement.

You may be a powerful company, but that doesn’t make you a great company. Just as China is a powerful country, but not a great country.

Look at the new global economy and those who benefit from it. These are tomorrow’s leaders.

As the owner of a small company seeking to grow, you want to be a leader in your field as well.

China follows greatness, but never achieves it. Don’t make the same mistake in the culture of your your business. That’s what makes companies great, not just powerful.