Updated 2015-08-26
Minhui Yu丨AmCham-Shanghai
AmCham Shanghai hosted an Author Series event featuring Gao Feng’s CEO, Dr. Edward Tse, who provided an insightful preview of his new book, China’s Disruptors, on August 26.
An experienced observer of China’s business landscape, Tse traced privatization in China to Deng Xiao Ping’s call for reform and opening up of the economy. Tse also identified different traits in different waves of successful Chinese entrepreneurs. From the pre 1990’s generation of private business owners to the current wave of post-90s, entrepreneurs have evolved from primarily former government officials with strong political backing to grass-roots businessmen and relentless youth. While the BAT (Baidu, Alibaba and Tencent) emerged around 2000, the trend for entrepreneurship has accelerated under the “why not me” notion of today’s Chinese younger generation. Although “state capitalism” is still part of China’s business scene, non-state enterprises’ revenues and profits surpassed those of state-owned enterprises long ago.
Chinese enterprises such as Xiaomi, WeChat and Didi taxi app have enjoyed exponential growth in recent years. According to Tse, these firms share some common characteristics. Private industry disruptors, including Tencent and WeChat, tend to build “ecosystems,” multi-functional platforms that encompass cross-industry services instead of only one industry focus. A seasoned management consultant, Tse said that competition is “no longer between firms,” and relationships between successful “ecosystems” today are more complicated than direct competition due to the increasing complexity of these asset-light, data-heavy service hubs. Due to the very different natures of their products, many Chinese firms enjoy high levels of “biodiversity” in their “ecosystems”. This diversification ensured consistent performance amid the ups and downs in China’s growing market.
Tse pinpointed mindsets and values that are distinctively Chinese behind the success stories of Chinese private enterprises. While the theory of core competency was widely adopted in the Western world, successful Chinese enterprises were prone to “triple jump” in and out of different industries, unconcerned by their lack of knowledge about these sectors. Tse sees China as “a global breeding ground and accelerator for innovation.”
He also highlighted deregulation, as key to the success of China’s private enterprises. Global integration and growth of China’s overall economy in the last decade as well as the complexity of the local marketplace has prompted competition and entrepreneurship. China’s capacity in technology, he added, also made it a coveted place for entrepreneurs.