Tag: Alibaba

Professional’s Guide to Understanding China

I had been hearing a lot about China for the past many years. Mostly, my understanding was based on the news from US & European media and to some extent from the Indian press. The news, either was dominated by over-optimism of the Chinese Economic miracle or by pessimism of an economic collapse or sometimes by concerns of national security & impending conflicts.

This swinging pendulum often confused me and I am sure many of you will agree. China for long had been a closed country and the cold war paranoia didn’t help. The sudden opening up of the economy has helped Chinese and global economies to establish deep ties. But the gap in understanding Chinese economy, business environment, politics, culture, and society still remains.

India & China are neighbors with the potential for bilateral trade to cross US & China’s in the coming decades. But I feel that people from both sides seem not to have a good grasp of the other. In fact, people from both countries have a far better understanding of US than each other.

China is here to stay. Sooner or later, most professionals will encounter Chinese as potential suppliers, clients, business partners, colleagues & even make a few friends. Although the best way to start understanding a different culture/society is by learning the local language. However, for a lot of working professionals with packed schedules taking a significant time out to learn Mandarin might be a bit difficult.  For the enthusiasts,  better get enrolled in the nearest Confucius Institute.

For the rest, I have shared my own experience of how I went about exploring China. It initially started as a curiosity, but later I became engrossed in learning more and more. It was quite haphazard for me….so, I have given it a bit of structure

China and the World

Books form an important component of this journey as Chinese history, society and political-economic system has evolved very differently. There is a need for depth to understand & analyze any news/information regarding the Middle Kingdom. My only suggestion is to keep an open mind.

Books that I have read:

Dealing with China by Henry Paulson Jr (By far the most comprehensive)

China’s Disruptors: How Alibaba, Xiaomi, Tencent, and Other Companies are Changing the Rules of Business by Edward Tse (Focuses on the changes happening in the Chinese Economy)

The Hundred-Year Marathon by Michael Pillsbury

Alibaba’s World by Porter Erisman

The China-Pakistan Axis: Asia’s New Geopolitics by Andrew Small

The Himalayan Face-Off by Shishir Gupta

 

Other Books that I recommend:

One Child  Policy: China’s Radical Social Experiment by Fong Mei

Taiwan’s China Dilemma by Syaru Shirley Lin

Will Africa feed China? by Deborah Brautingam

Apart from books, I really recommend watching Al Jazeera’s documentary series 101 East. There are quite a few episodes on China. The Wired UK documentary on Shenzhen was also interesting.

In addition, you can follow USC US-China Institute & Hudson Institute YouTube Channels. Discussions cover a variety of topic (although they can a bit boring sometimes). You can a shorter version of the above books in video discussions.

You can also follow Chinese state media like CCTV International (for the latest Panda Videos), China People’s Daily & Xinhua. Or get counter perspectives from NTD TV.

There a few issues which will decide the direction China is going to take. It is good  to get an idea to keep yourself up to date with them:

  • China’s Anti-Corruption movement
  • Chinese economic reforms under President Xi Jinping
  • One Belt One Road Initiative
  • Chinese business expansion in African Continent
  • China Debt Bubble (estimated to be 300% of GDP)
  • Overcapacity in Real Estate & Infrastructure
  • Aging Population (Negative impact of One Child Policy)
  • The South China Sea (Potential conflict with its neighbors Philippines, Vietnam and US)
  • The East China Sea (Potential conflict with Japan & US)
  • Indo-China border issue

 

Hope this helps !!

From the Dragon’s Heart: The Rise of Chinese Entrepreneurs

The rise of China as a Global power has become are more visible in India today, as Chinese Businesses have made increasing inroads into the Indian market in the past few years. With India becoming the world’s fastest growing economy and poised to continue this path for a decade, Chinese Entrepreneurs are looking to invest in India & bring along their own way of doing business.

In such a scenario, I revisit the book – China’s Disruptors written by Edward Tse in 2015.

The book not only talks about well-known players in India like Alibaba, Xiaomi, Lenevo, Baidu (Search Engine) & Tencent (WeChat) but also not so well known companies like online supermarket Yihaodian, Noah Wealth Management started by Wang Jingo, Real estate giants like Wanda Corporation & Broad Group and China’s very own YouTube – Youku.

A lot of what the author had said about China’s Entrepreneurial culture and Chinese Entrepreneurs is more relevant for the Desi Players today. The reasons are multi-fold:

1. Chinese manufacturers are looking to set-up shop in India: With increasing labor costs in China and anti-dumping duties, major manufacturers of smartphones, solar panels are getting attracted to India’s labor pool and domestic market.

2. Chinese Investors: As Chinese economy slows down, investors are looking for new opportunities in growth. India is right now where China was in 2004 and is the destination to invest for the coming decade.

3. Chinese Internationalisation: Chinese SOEs & Entrepreneurs have been making huge in-roads in the US markets through big-ticket acquisitions. Their strategies will be replicated in India too.

4. Experience of Chinese Counterparts: Lessons from Chinese entrepreneurs who successfully challenged their western counterparts.

What we can learn –

1. A policy focused Forum: India has multiple traditional business forums like NASSCOM, CII & FICCI but it is time, that the new age entrepreneurs of India get a voice of their own in shaping the direction India moving in. The China Entrepreneurs form (CEF) with its serious policy focus even in a restrictive political environment is something we should take inspiration from.

2. Sustainable manufacturing practices: As “Make in India” initiative tries to make us the next manufacturing hub, let’s just take a step back and analyse the mistakes done by China when it comes to the Environment. Polluted cities, un-breathable air and rising healthcare costs are things we can avoid

3. Ditch the Jugaad: The cutthroat competition among Chinese companies made continuous improvement and innovation a necessity to stay ahead of the curve. Sometimes entrepreneurs are even forced to find new opportunities in different areas, as they were never sure of a safe source of constant revenue, which won’t be challenged. Indian traditional businesses have not faced such a challenge before. With increasing Chinese inroads into the market its time to change our approach or perish.

4. Focus on local needs: The author emphasised that the Chinese counterparts were able to outwit their western counterparts because they focused on creation of products & services, which are more in line with local needs rather than just copying the business models of the west. This is how Alibaba was able to beat Ebay and Hengan international challenged the likes of P&G and Kimberly-Clark. However, their Indian counterparts haven’t been so successful in creating such kind of new value-added services and are facing tough competitions – Ola vs Uber, Flipkart & Snapdeal vs Amazon.

What the author missed –

1. IP Laws: The author did mention the lax IP laws in China. But, even giants like Apple are facing issues in getting required help from Chinese Judiciary as they are challenged by little-known startups making knock-offs. In time as Chinese entrepreneurs grow bigger, they will demand better IP Protection. How this shapes up is yet to be seen.

2. The Real-estate Bubble & Overcapacity: China has become infamous for its Ghost Towns. Even private investors are raising alarm bells as the extent of the debt bubble is becomes clearer with estimates saying that the Debt to GDP ratio has crossed 250%. How will this impact the Chinese startup world, is not yet known.

3. Solar Industry: The one sector that the author did not cover was China’s push into Renewable energy – mostly solar PV manufacturing and installations. Chinese giants like Trina, Jinko, Yingli & JA Solar dominate the world PV market. China also added a staggering 34 GW of solar installations in 2016 alone (compared with around 4.8 GW in India). With increasing domestic as well as global for PV Panels, these giants are poised to be major revenue centres of the future.

4. SOEs & the State remain the dominant players: The author’s focus was on the decreasing importance of SOEs in China’s economy. While this was true for the domestic economy, SOEs will play even greater role in China’s outreach to the world. The famous One Belt One Road initiative (OBOR) is primarily driven by SOEs. Almost all major overseas investments were done by SOEs. These include $46 billion in China-Pakistan Economic Corridor and $15 billion mostly in Hambantota & Colombo Ports in Srilanka.

Nonetheless, Edward Tse’s book remains extremely important for Businessman, Policy Makers, Entrepreneurs & Professionals who wish to learn about how China’s disruptors are shaping our future.

The article was originally published on YourStory.

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