China's Dueling Economic Theories

China's NPC (Parliament) Photograph: Lintao Zhang/Getty Images

Delegates attend the closing ceremony of the closing session of the National Peoples Congress (NPC) at The Great Hall Of The People on March 14, 2012 in Beijing, China. The National People's Congress (NPC), China's parliament, adopted the revision to the Criminal Procedure Law at the closing session of its annual session today.

Should China push for radical reform or return to a more government-directed economy? It’s a familiar question made more urgent by the downfall of Bo Xilai, seen by many as a leader of the Communist Party’s conservative faction. A recent People’s Daily editorial that strongly supported more reform, plus a call by the World Bank and a research arm of China’s Cabinet for a smaller state role in financing and industry, have highlighted the issues. “The debate will be messy,” wrote Standard Chartered (STAN:LN) China economist Stephen Green in a March 1 report. However, he added, “something good is stirring in Beijing.”

The back-and-forth focuses on two models. The Chongqing model calls for a top-down push for social equality, with a stronger role for government in the economy; its name evokes the giant southwestern city where Bo Xilai ran the show until early March. The other model plays down the role of state companies, encourages the growth of more capital-intensive, value-added industries, and favors grassroots political reform. This is the Guangdong approach, named for the coastal province that was first to grow rich on exports and now is a center for experiments in governance. “I am strongly supportive of the Guangdong model and wary of the Chongqing model,” wrote Tsinghua University sociologist Sun Liping on March 16 in the Beijing-based business weekly Economic Observer. “In the long term, it is more important that the masses have the right to struggle for their own interests.”

Despite Bo Xilai’s fall from power, the Chongqing model still has its adherents. A website whose name translates as Utopia in English supports the state-heavy approach, and was blocked after Bo’s dismissal in an unfolding scandal that may implicate him in corruption. The site, back in business, has posted hundreds of articles supporting Bo, says David Kelly, research director at the Beijing-based consulting firm China Policy.

To reverse growing social inequality in its region, Chongqing has encouraged farmers to become urban residents and qualify for better benefits, and started to build 800,000 units of public housing. Bo also created several large conglomerates by merging more than a dozen smaller state companies. Despite Chongqing’s success in attracting such investors as Ford Motor (F) and Foxconn Technology Group, foreign businessmen have worried that government-backed businesses could squeeze them out. A crackdown by city officials last fall on Wal-Mart Stores (WMT) over mislabeled pork forced the world’s biggest retailer to shutter 13 stores temporarily, spooking investors. “If the Chongqing model is one that favors a greater role for the government, with state enterprises managing the economy, that is a negative for foreign businesses,” says Christian Murck, president of the American Chamber of Commerce in China. Also disturbing was Bo’s handling of a cleanup of the mob in Chongqing: He jailed not only the alleged mobsters but also a top Beijing lawyer who was defending one of the accused.

Guangdong party secretary Wang Yang has been upgrading the province’s economy from labor- and energy-intensive, polluting export industries such as toys, textiles, and plastics to newer and cleaner ones including software, new energy, and biotech. Wang has opted to rely mainly on private businesses, encouraging their growth with tax breaks and squeezing lower-margin industries with tighter labor and environmental regulations. Shenzhen, for example, has seen many of its dying industries depart in what Wang has dubbed “emptying the cage and changing the bird.”

What excites Chinese liberals more is Wang’s encouragement of grassroots policy making. That includes giving workers more of a voice within the official union, as well as a soft-handed approach to last year’s Wukan village uprising over land grabs and the death of a protester. Wukan, on Guangdong’s coast, just held what appear to be unrestricted elections for a new village chief.

Which of these two models will gain the upper hand is unclear. Clarity is unlikely at least until the fall Party Congress, when China will replace most of its top leaders, and both camps may vie for supremacy for years. “In 2001, we had a road map and that was the World Trade Organization accession agreement. Today we don’t have a sense of what comes next for China,” says the Chamber’s Murck. “There is more uncertainty than we’ve seen in years.”

The bottom line: As social inequality deepens and growth slows, China’s leaders must choose between more market reforms or a stronger state.

By Roberts is Bloomberg Businessweek's Asia News Editor and China bureau chief.
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Don't have experience to lead, appoint a British?

Don’t kill your talent, take a chance on inexperienced people 

SOON after India obtained independence, Prime Minister Jawahar Nehru chaired a meeting to discuss appointing a chief general for the Indian Army. As key leaders discussed candidates and options, Nehru disappointingly claimed: “I think we should appoint a British officer as the general as we don't have anyone with enough experience to lead.” Everybody nodded their heads in support and they started discussing possible British candidates.

This same conversation Nehru had with his leaders half a century ago is the same conversation taking place in many global organisations today. There are always big vacancies to fill yet no one experienced enough to fill them. And most leaders look outside their organisation and even outside the country for that perfect “experienced” person. Nehru's story though, ends differently.

One of Nehru's officers abruptly interrupted Nehru as he started contemplating which British “expat” to bring in: “I have one point, sir. Can I interrupt?”

Nehru nodded: “Yes, gentleman. Speak.”

The officer responded: “Sir, we don't have enough experience to lead a nation, too, so shouldn't we appoint a British person as the first Prime Minister of India too?”

The meeting hall suddenly went silent. Nehru had an “aha” moment and later decided against appointing an “experienced” general but a high potential local.

Almost every business leader I meet complains to me about the same issue they don't have enough good talented people to take their businesses to the next level. According to McKinsey's “War for Talent” study, the most important corporate resource over the next 20 years will be talent. It's also the resource in shortest supply. In fact, the search for the best and the brightest has become a constant, costly battle, with no end in sight. Talent has become the prime source of competitive advantage.

Yet, most of us unknowingly “kill” our talented people. How are we “killing” our talent? By not allowing our people to fulfil their potential. And we do this by curtailing their experiences.

Real learning 

Talent can only be developed through experiences and failure. You cannot send a person to a three-day classroom programme on swimming and expect them to become great swimmers. To learn to swim, you need to practice in the pool. No matter how much you listen, read or watch about swimming, without pool practice, you won't be able to swim. Real learning happens when applied in the workplace. Nehru learnt to become Prime Minister of India through the school of hard knocks and experience. Even if he was sent to a “Prime Minister School” (if that existed!), his learning would still ultimately come from doing the job. But when you block your people from the roles they crave, because of their lack of experience, we thereby ensure they never learn.

I recall going through succession planning reviews with a number of senior business leaders in my capacity as a HR leader. Each year, these business leaders would highlight specific talent they had in their teams. But much to my dismay, every single year, those highlighted were deemed “not ready” to take on bigger roles, claiming they needed a few more years to become “ready.” Four years later, the same excuses rang. The story never changed or ever will. As long as we hoard our best talent and never allow them to grow through new experiences, they will never be ready.

Thomas Edison correctly stated that “genius is 1% inspiration and 99% perspiration.” Based on research done by Anders Ericsson, we now know just how much “perspiration” is required to become a genius apparently three years at a job or 10,000 hours. Ericsson's research indicates that if you are at your job for about two to three years (depending on how many hours you put into your work), you will master the role. But once you have mastered it, your learning subsides. And for you to keep growing, you need to learn something new.

The most talented people have figured this out and so if you do not give challenging work to them, they leave. They may claim they leave for money or other reasons, but in reality, if you truly give them challenging work which forces them to learn, they hardly leave. (It may be also because they are so busy being challenged, they have no time to do up their resume!)

However, the less talented employees, who love being in their zone of comfort, will stay on (maybe forever). The job becomes easy making it “wise” to continue in this zone of comfort. The real talents, however, know that if they don't keep getting new experiences and developing themselves, they may never achieve their dream. And so they pack their bags to gain new experiences, if you don't provide them.

Final thoughts

I am not at all advocating that experience has no place in our business. In fact, experience is necessary for big roles where failure should be minimised. However, one cannot attain that experience unless someone gives these people a break. We cannot gain experiences unless given a shot at the big stage.

What I want to emphasise is that this “talent disease” which is plaguing our nation can somewhat be curtailed if we build in talent development as part of our business agenda. So, what are some practical things you can do:

1. Demonstrate your commitment to employees by preferring to develop from within versus hiring from the outside. Give your “inexperienced” people a chance. Sure they may take some time to “learn” the job, but in the long term, it will be better for your business.

2. Keep pushing your people outside their comfort zone. They need experiences. Give them projects outside their silos. And when they fail (which they will!), help them get up and learn from their failures

3. Empower your employees make them partners in their own development. Make sure they understand the importance of hard work, learning and pain.

As my three-year-old son always says: “No pain, no gain.” The same goes for all of us.

We need to go through the pain and struggle of new experiences to keep growing. And business leaders need to go through the pain of pushing their best people out to new roles and to take chances on the less experienced. Someone after all took a chance on you previously. Nehru took a chance on his general. So can you.

Roshan Thiran is a firm believer that talent is developed and not genetic, and has made it his mission to build leaders in Malaysia through his social enterprise, Leaderonomics.  

Related posts:
 Malaysian big GLCs headed by foreigners, how dismay! 
War for Talent! How to win it for Malaysia? 
Talents on the move 
Reversing the brain drain, innovate to compete! 
How can Malaysia stem the tide of talent migration? 
Recognise talent and help others to soar

What it takes to be an entrepreneur by a Malaysian digital research?

Healthy pulse in data research

Bob Chua, who started a Malaysian digital research company in 2005 that went global and became a public-listed company in London within 33 months, talks about what it takes to be an entrepreneur

BOB Chua, a third generation Tiger in a family of entrepreneurs, said he had always wanted to run his own business for a living. “It’s in my blood,” he said.



“My impression of a person born in the Year of the Tiger is of bravery and risk-taking. I am not superstitious and think of it more as a good laugh,” the Pulse Group chief executive officer said.

It is a fact, however, that his family consists of entrepreneurs who are involved in various industries, from shipping to property, and growing up surrounded by such people inspired him to start his own business.

Of his company’s name, Chua said the name “Pulse” signified exactly who and what they were.

“Our main endeavour is creating insight out of data. Research does not have much life to it as it is just a lot of boring data and numbers. It is how you interpret the data that gives the work life, like a pulse. Hence, our tagline ‘Does your research have a pulse?’” he explained.

Chua, who studied in a business school and has a passion for technology, said it was a natural progression for him to start a company that specialises in digital research as he had always been in the industry, having worked for TNS and Nielson, two of the largest market research specialists in the world.



“How the Internet is changing our lives, the way we interact, research and buy stuff is interesting. It is even changing the way we collect data and I see a big opportunity in it,” he said.

Chua describes Pulse as being in the right place at the right time to capture the first-mover advantage.

“Entrepreneurship is all about timing and identifying opportunity and, at that point, we were the only ones in Asia to do it. When Pulse started in 2005, Facebook was getting big and Internet adoption was huge,” Chua said, adding that they remain the biggest company in Asia to do this.

Even then, Chua had thought of social networks as a game-changer and the situation has remained the same today.

“We are only just scratching the surface. Consumers are spending more time online and they talk about brands and their experiences. If we can compile all that data, we can create more accurate prediction models about how people are going to purchase things, access information about brands and who influences them to buy,” he said.

As an entrepreneur, Chua always believed his company was going to be successful and innovative when he started back in 2005 with its headquarters in Malaysia.

“Entrepreneurs have to have strong self confidence and have a never-say-no attitude. We never believe we are going to fail and even if that happens, we must pick ourselves up. I wanted to create a leading brand and fortunately, seven years down the road we are now where we are,” he said, adding that he is proud to be able to call Pulse a Malaysian company that has gone global.

Chua had always wanted the company to go global from day one, which was why he opened the Sydney office simultaneously with the Malaysian one.

“Australia had a more mature market and was a bit more sophisticated for online research with its bigger Internet penetration at 60% so it was a logical starting point. Within 12 months, we had opened up our London office and within 33 months of starting Pulse, we became a public-listed company in London on the PLUS Stock Exchange,” he said.

Recently Chua gave a talk at the British High Commission in Kuala Lumpur to potential investors and painted a hopeful picture for Asian companies seeking opportunities in Britain and vice-versa.

“There are a lot of people there sitting on money right now, but they are no longer spending as freely as they used to. When you say Asia, their eyes light up as this is the only area for growth and countries like Vietnam, Indonesia and Malaysia are still enjoying a 5% to 6% growth. The only thing is proving that you have a strong business product,” he said.

However, the UK remains one of the largest economies in the world and there are several reasons to look into opportunities there as well, according to Chua.

“If we compare listing costs, it could be two or three times higher because of the British pound but in terms of how much you can raise there, it is also two or three times higher. It is the relativity people need to look at and not just dollar value. Also, the pound is relatively weak now, so going in now is a good idea,” he said.

However, making it big like Pulse requires a lot of work and Chua recalls averaging 55 trips a year within two years of starting the company.

“I used to spend 75% of my time leading the jet-setting lifestyle and it was not fun. To be honest, there was not much balance in terms of my working and personal life then, but that is what you have to put in to grow quickly,” he said, adding that Pulse grew at a rate of 430% from its first to third year.

Chua believes the company is still in the right place at the right time as Europe continues to look for growth in Asia which is the geography Pulse specialises in.

“We are a much bigger company now and have professional managers all over the place with people running specific things. I travel less and family is my priority. Where I can, I mix business and leisure with my travels, which I still spend about 150 days of a year doing, but at least life is more balanced now,” he said.

One tip he offers those with an eye on the UK is to hire “self-starters”.

“They are going to be far away from the mothership here so you need good people on the ground, but that is not really an issue as it is easy to find good talent there. You also need to understand the relative cost and immediately build your market. We got our first client before even starting up there and that helped,” Chua said.

He also said that a business in the UK can have a back-end support locally who works on European time.

By CHOONG MEK ZHIN mekzhin@thestar.com.my