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Should We Fear Chinese Companies? Lessons in Adaptation and Agility

In goodmorning bsn! door Business School Nederland

In a rapidly evolving global marketplace, understanding how businesses in different regions operate can be a key to success. This brings us to the question: Should we fear Chinese companies? According to Aldo Spaanjaars, an expert on Chinese business practices, author of Dragon Tactics and the Secretary General of Dutch China Friendship, the answer isn’t straightforward. It depends on how well we can adapt and learn from their unique business practices.

In his recent presentation on our weekly webinar, Goodmorning BSN!, Aldo shed light on the distinctive ways in which Chinese companies operate and what the rest of the world can learn from them. He emphasised that Chinese companies, particularly entrepreneurial ones, operate with a level of flexibility, agility, speed, and improvisation that sets them apart from their Western counterparts.

Become as Flexible as Water

One of the core differences between Western and Chinese thinking is the approach to change and adaptation. While Western companies often rely on strategic planning with set milestones, Chinese companies, especially entrepreneurs, think in perpetual movement. They understand that the business landscape is in constant flux, and they adjust their strategies accordingly.

This level of flexibility requires an exceptional ability to observe and understand the market continuously. Chinese entrepreneurs excel at consumer knowledge and stay consumer-focused by actively engaging with consumers. They utilise data and increasingly AI to inform their decisions, ensuring they stay ahead of market changes.

Thriving in Chaos through Test-Fail-Improve

Chinese companies thrive in a competitive and often chaotic environment. They understand that to succeed, they must embrace the chaos and be willing to pivot quickly. This adaptability is enabled by fast supply chains, which allow them to launch products that aren’t yet perfect, learn from consumer feedback, and make rapid improvements.

Incremental innovation is another aspect of Chinese thinking that sets them apart. Unlike Western companies that often focus on going from 0 to 1, Chinese innovation revolves around going from 1 to 1.1, 1.2, and so on. They see innovation as making small improvements rather than chasing radical breakthroughs.

The Power of Ecosystems and Shared Ownership

Another fundamental difference in Chinese management is the utilisation of entrepreneurial thinkers within the company and the construction of ecosystems. Chinese companies have flat and agile organisational structures, allowing for faster decision-making and adaptability. The use of project-based organisation is common, where teams are assembled for specific projects and disbanded once the project is completed.

Shared ownership is also a key aspect of Chinese business models. Employees are often co-owners, which aligns their interests with the company’s success. This approach ensures that decisions are made with the company’s best interests at heart, leading to a higher degree of employee commitment and innovation.

Embracing Change, Not Fear

The question of whether we should fear Chinese companies is better reframed as an opportunity to learn from them. Chinese businesses have demonstrated a remarkable ability to thrive in a dynamic and competitive environment. By adopting some of their practices, Western companies can become more adaptable, consumer-focused, and innovative.

To compete effectively in the global market, businesses must embrace change rather than fear it. The Chinese model offers valuable insights into how to navigate the complexities of today’s business landscape. By becoming more flexible, encouraging continuous innovation, and fostering shared ownership and ecosystems, companies can better position themselves for success, regardless of their geographical location.

The key takeaway is clear: Instead of fearing the competition, we should be open to learning from it. After all, it’s the companies that embrace change and adapt that will ultimately thrive in the ever-evolving global business arena.

Bridging the Gap: Incorporating Chinese Mindset in the West and Africa

Chinese business culture and mindset are rooted in centuries-old philosophies and ways of thinking. The flexibility, adaptability, and capacity to thrive in uncertainty prevalent in Chinese companies are closely tied to historical concepts like Taoism, which teaches the importance of going with the flow and making agile decisions.

Additionally, the empirical nature of learning by doing, ingrained in Chinese culture, empowers companies to be more adaptable and responsive to changes. The need for shared ownership and the development of ecosystems also aligns with the traditional Chinese practice of guanxi, emphasising the importance of networks and relationships in decision-making.

However, implementing such a mindset in the Western world, might require a fundamental shift. Western businesses often operate with structured plans and rely on analytical thinking. Overcoming this will demand time and a change in the approach to decision-making and strategic planning.

In African markets, where there is still room for more entrepreneurial approaches, the Chinese mindset could be particularly beneficial. Learning from the Chinese way of managing businesses could help African companies become more competitive and better equipped to navigate their unique challenges and opportunities.

The Western world, facing increasing disruptions in the coming years, will need to adopt a more flexible mindset. If not, many companies may lose out to their Chinese counterparts that have already mastered these principles. For African markets, embracing the entrepreneurial spirit and adaptability of Chinese companies could be a path to success.

View Dragon Tactics by Aldo Spaanjaars.

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