Books: China's long journey from Marx to Adam Smith

These three books will help western businessmen build up a picture of their Asian rivals as highly adaptable entrepreneurs. Mike Hewitt reports.

Last Updated: 31 Aug 2010

China Inc

Ted C Fishman

Simon & Schuster; £12.99

MT price; £11.50

Made in China

Donald N Sull with Yong Wang

Harvard Business School Press; £19.99

Mao: The Unknown Story

Jung Chang & Jon Halliday

Jonathan Cape; £25.00

MT price; £22.50

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If you'd asked Mao Tse-Tung how he'd be remembered after his death in 1976, it's a fair bet he wouldn't have said 'as a soup salesman'. But the executioner of millions has ended up as the Colonel Sanders of China, his smiling image decorating restaurants in Hunan Province just the way the Colonel's does in high streets from Detroit to Doncaster.

Mao's metamorphosis from terror of class enemies to super-salesman mirrors China's own journey from Marx to Adam Smith. But where one has gone from deadly serious to amusing, the other has done the opposite.

Today, if you make anything from digital cameras to microwave ovens and jeans, three words you don't want to hear from your friendly Wal-Mart buyer are 'the China price'. That's the cost at which she could source the goods from China if you don't shave a few dollars more off your best offer.

Where European and American eyes would once glint at China's huge potential as a market for their goods, now they water at the threat that this same economy represents, not just to producers of low-tech stuff such as socks and leather belts but to factories making LCD screens, car parts and mobile phones. By 2050, says Columbia University, quoted in Ted Fishman's China Inc, China's economy could be 75% bigger than that of the US. It won't get there, though, through the efforts of the state-owned firms that used to characterise Chinese manufacturing.

Where Fishman excels is in getting to the heart of what makes modern China so potent an economic force: the entrepreneurism that was suppressed under Mao and is now as resurgent in a hundred unknown manufacturing hubs across the country as in booming Shanghai. For western companies it's the adaptability of China's businesses, as well as the scale of its economy, that raises challenges.

It was Motorola's technology that built China's mobile infrastructure in the 1980s. Its local suppliers have ridden the mobile wave to become giants in their own right: BYD in Shenzen now makes 50% of the world's mobile phone batteries. Local companies such as Ningbo Bird have taken more than 40% of China's market for handsets. It made 20 million in 2004 and is set to join the world's top 10 mobile phone makers.

The secret? Replacing the robotics used by western companies with people, who are cheap to employ and diligent enough to ensure there's no loss of quality.

Donald Sull's Made in China approaches the subject as a series of business school case studies, highlighting lessons from entrepreneurs like Chuanzhi Liu, founder of Legend (better known here as Lenovo). It should have been Great Wall, heavily backed by the government, that emerged as the dominant Chinese PC brand. But Great Wall's managers were slower to react to a changing market than Liu's and lost market share, from 11% to 2% in the four years to '96. Liu's triumph is summarised, Art of War-style, in the aphorism 'outcycle the competition'.

It's not Sull's fault, but his analysis of Lenovo was made obsolete the moment it bought the PC business of IBM and stepped up from regional to global PC superpower.

The case-and-lesson approach covers IT, telecoms, white goods and food and beverage, and is valuable data in an area where the main insight to date has been 'Wow, look how big China is!', but it would be nice to get more of a sense of Chinese business leaders as people, as well as as classroom examples.

If we in the west still tend to see the Chinese as a bloc rather than as the individuals they are, the fault can be laid at Mao's door. Just as Stalin's 'Uncle Joe' image lived on even after the scale of his brutality became evident, the Mao brand survives despite the misery he caused. Westerners who want to understand more about the people they'll be doing business with may find Jung Chang and Jon Halliday's Mao: The Untold Story a better primer than any business book.

Mao's attempt to propel China ahead of the capitalist countries in the so-called Great Leap Forward resulted in 38 million deaths as peasants were conscripted to huge public works that could be done with plentiful free labour rather than scarce currency. In 1957, Mao boasted that China would be ahead of Britain within 15 years.

If that has come true in 2005, it is through the initiative of individual business people motivated by a desire to prosper rather than through mass mobilisation and a grand central plan. In their desire for prosperity and the fruits of a consumer society, China's citizens are no different from the rest of the world.

More telling about China's future than any management book is the news that Sir Cameron Mackintosh is taking Les Miserables, Cats and Phantom of the Opera to Shanghai's Grand Theatre. Now we know China has arrived.

Mike Hewitt is publishing director of MT.

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