“A lot of corporates in the West still think of China as the copycatting factory of the world it used to be.” says Dr. Edward Tse, a global strategy consultant and the author of “China´s Disruptors”. Nobody can explain better, how Chinese entrepreneurs thrive despite (or maybe even because of) the high level of uncertainty in their business environment. We met Edward in the INNOSPACE of Shenzhen to get his insights on Entrepreneurship in China. Ed discussed with us, how the recent generation of disruptors transformed China’s economy from a closed, state run system to a major power in the global economy.
Building eco systems at breathtaking speed
Widely unrecognized in the rest of the world, Chinese companies have been learning and growing at breathtaking speed. “While western corporates are doing one cycle of innovation, the Chinese do ten.” as Edward puts it. Meanwhile Alibaba and Tencent are position 6 and 7 of the highest valued companies in the world. “Both of them are neither random conglomerates nor are they focusing on just one core competence. They are using a third way and don´t care about focus.” Edward explained. When jumping into new fields on a frequent basis, they first start out with a gap in capabilities. Without prior experience, Alibaba for example started their financial and payment services. By making it easier for their customers to buy online, they created a new market while boosting their existing one. Daring several jumps like this one, they managed to complement their existing offering and gradually created whole ecosystems. And they built up and leveraged strategic partnerships along the way. Another example of Ed was Geely. Unlike highly focused Tesla, Geely gradually transformed from a car company to a transportation service provider. “Those companies are neither conglomerates, nor do they restrict themselves to self-defined boundaries” Edward explained. And the entrepreneurs behind these companies are role models to a generation of entrepreneurs who ask “Why not me?” and “Why not?” and who are not afraid of pivoting if an idea does not play out.
Dr. Edward Tse on Geely and their ecosystem as atransportation service provider.
Innovation as the major driver for growth
But there are more reasons, why we should have a close look at what Chinese entrepreneurs are doing. Against the common prejudice of being followers in existing technologies, Edward Tse sees the Chinese disruptors adopting innovation as their major source of growth. “Slowly they are getting recognized as ‘smart’” as Edward puts it. A recent study names seven Chinese companies among the top 50 smartest companies in the world. With its capita GDP on a constant rise, China provides an ideal proving ground to entrepreneurs moving up virtually every industry. That is health (BGI, DIAN Diagnostics), internet (Baidu), telecommunication (Xiaoming), retail (VIP-Shop), energy (Goldwind), finance (Noah), logistics (SF Express) and of course automotive and transportation (Didi, Yiado, Geely) to name just a few examples. Edward Tse: “Entrepreneurial and innovative as they are, they revive the China dream and start to embrace the world.”
More Chinese than the Chinese
“The Chinese have always been entrepreneurial” Edward Tse says “so what is happening now under the current conditions is all but surprising.” According to him, hardly any western company can afford to ignore the Chinese disruptors. For us as consultants, Edward’s insights rounded up our impressions we gathered along our journey. It put our visits to companies like Alibaba, BGI and Geely as well as our tours through incubators and innovation-hubs into perspective. But it also brought up new questions to ask: Who are the Chinese disrupters, one should look out for depending on one´s business? Should one consider them collaborators or competitors? Should one fringe or care? How to deal with the ones, that seem to not care about traditional strategy rules and who are questioning virtually every business model? Moreover, what can we learn and adopt from them? Or as Ed puts it: “How could one be more Chinese than the Chinese?”
Blog by Michael Faschingbauer