Edward Tse's Blog

September 2016media

More Reviews of China’s Disruptors

By Roger Atkins | 6 Sep 2016
from LinkedIn.com

The Disruptors

I learned a lot more about who the ‘others’ might be when I recently read a business book by Edward Tse – China’s Disruptors…

It could be said that the past 200 years of ‘Western’ progress has been condensed into the past 20 years or so in China, and as the World’s most populous nation was catapulted into an urban energised power-house….it has revealed all of the good and the bad that is ‘progress’.

By Kirstenogpaul | 13 July 2016
from Amazon.com

5.0 out of 5 stars“It is difficult for many … to view with equanimity a world in which a new power with its own agenda emerges.”

The headline is a quote from Dr. Edward Tse’s book which is like a series of case studies on the entrepreneurs that have driven change in the Chinese private sector over the past few decades. The book may paint a rosier than reality view of how a growing class of entrepreneurs have come from where they were to where they are and how they view themselves as players that can make a positive difference on the world stage, but some of the numbers about growth of the Chinese consumer class and affluent classes that will soon be travelling the world are really worth noting. Having trouble viewing dramatic change with equanimity is kind of a normal, albeit very unhelpful reaction that humans often have. Ostriches have it too. They stick their head’s in the sand. As for Western views on China and the influence China may come to have on world development’s

I often meet doubters who, although they have never been there, view China as a country with an ancient agriculture, regimented government controls and factories full of cheap labour. During our discussions, be they in a Brussels office, a Parisian café or a bodega in Berlin, I will often ask the question why we can have our discussions in English whilst dismissing the chances that China’s development will influence our future. China’s Disruptors is a book well worth reading and will give a much more nuanced view of an entrepreneur driven Chinese business world than one gets through mainstream media channels.

By Albert Johnson | 21 June 2016
from Research-Technology Management

Consider this: in nominal US dollars, Chinese R&D spending is second only to that of the United States. However, most lab expenditures involve personnel and equipment, both of which costless in China than they do in the United States. Thus, in terms of the real impact of R&D spending, Chinese aggregate spending on R&D is somewhat ahead of that of the United States. On a related note, the International Monetary Fund announced last November that China’s economy, adjusted for purchasing power parity, is now the world’s largest, displacing the United States—which had been the largest since 1872. Clearly, if you’re involved in a business with involvement in or competition from international trade, especially in any relevant technology, you’re concerned about China.

China’s Disruptors is a timely book, then, and reading it is somewhat like eating a good soufflé: it is airy, tasty, and light, and it needs to be consumed promptly because it will not keep well. It presents a review of the current state and near future of modern China from the perspective of someone who has directly observed the entrepreneurs who are currently in the driver’s seat. It chronicles the people, business environment, and strategies that have built modern China and are driving it into the future. Its content is both timely and perishable—it captures China at this moment, but the portrait is likely to change as economic and political contexts shift in coming years and even months.

The author, Edward Tse, is founder and CEO of Gao Feng Advisory Company, a strategy consultancy, and the author of one previous book, The China Strategy. Through Gao Feng and as the chairman for Greater China of Booz & Company, he has been directly involved in developing effective strategies for several businesses that have propelled mainland China’s transformation.

A major theme of China’s Disruptors is the role of entrepreneurs as the primary source of China’s meteoric growth. As evidenced in part by Haier’s purchase of the GE Appliance business and by the purchase of the South China Morning Post by Alibaba founder Jack Ma, Chinese entrepreneurs are becoming a global socioeconomic force that must be reckoned with. Tse shares a number of statistics that document the speed and volume of the changes China is seeing:

10 Chinese private companies are now in the Fortune 500.

China has 2.3 million state-owned companies and, in 2013, nearly 12 million privately held companies and more than 42 million proprietorships.

About 7 million people graduate from Chinese universities each year, up from 1 million in 2001.

China’s R&D spending intensity, at 2 percent of GDP, is just below that of the United States (2.8 percent) and just above that of the EU (just under 2 percent).

These changes are largely driven by the activity of entrepreneurs, founding and leading the businesses that are at the heart of China’s wealth creation machine. Tse argues that entrepreneurs have created an irreversible opening in the Chinese political, social, and financial economies that will drive astronomical growth in the nation’s economic and cultural fortunes relative to the rest of the world and, perhaps, position China to take the lead in addressing global problems such as climate change, international governance, and the underlying issues of energy, food, and mineral resource security. The next reckoning of the macroeconomic data will likely confirm that China has become the world’s largest economic power, but the country’s development arguably has not peaked; Tse expects domestic economic development, driven by entrepreneurs hungry for affluence, to be the engine that doubles Chinese GDP again.

For China to continue moving forward, however, its leaders must reckon with some serious challenges. As Tse points out, the entrepreneurial frontier involves many startups, in very crowded markets. The domestic economy is large enough to support viable, if not wildly profitable, businesses in fields that are already very competitive, but such businesses come and go quickly. Combined with a staggering pace of change, this could mean that the current political and economic stability may be transitory. Although new developments are making life in China more secure than in the past, and the political state is moving from absolute control to a model in which it is primarily the supplier of infrastructure and the guarantor of law and order, questions of privilege and power will become more acute as entrepreneurs come to expect further government encouragement of the private sector.

Another area of reckoning is the commercial environment. Tse holds that over the next decade, many of the hundreds of thousands of state-owned companies will either be sold to private companies or closed altogether. This change would likely not only shift resources, making international competition even more acute but also fuel the development of more private businesses. The resulting growth in the Chinese economy could cement China’s preeminence on the international stage.

The big idea of China’s Disruptors is that the engagement, aspiration, leadership, and creativity of current and coming generations of Chinese entrepreneurs will play a key role in these developments. If any of this is news to you, then I strongly recommend reading this book to get caught up on what makes the new Chinese entrepreneurs so interesting. Even if you’re aware of the role of entrepreneurs driving China’s emergence as a juggernaut in the world economy, you should read this book to better understand how to compete in that economy. Most importantly, you should read this book to learn about how the leading Chinese entrepreneurs are, in the words of Dalian Wanda CEO Wang Jinlin, “close to government, but far from politics,” and why that makes them important to you.

 

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Founder & CEO of Gao Feng Advisory Company, a global strategy and management consulting firm with roots in China. —learn more
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