"Chindia" New Paradigm

Some say a new management paradigm is growing in the East. China and India nurture this new business era, and so far, has shown very rewarding. In short the new paradigm is explained by three elements:
1) The consumer is King; entrepreneurs scale out their businesses to reach non-consumers and create products and services personally tailored to the needs and limitation of the poorest.
2) Employs lean and mass production for high end services (e.g. healthcare: Devi Shetty)
3) Use frugal production by cutting cost until you reach the bone.

This new paradigm is cherisher by some as being innovative and mocked by others by being a mere alteration to previous management models as T Ford (Offered in any colour so long as it is black).

This is a debate and people agree to disagree. However, leaving the academia aside, it is facts that show the success of the new paradigm.

“Multinationals expect 70% of the world’s growth over the next few years to come from emerging market, with 40% coming from just two countries, China and India.” The notion of growth is well associated with the East. But the notion of innovation and high class is more distant.

This is where China and India are putting things on their ears. Tata Consultancy Services, an Indian company ranked top 10 in a US based Global Service IT ranking. Lenovo, a Chinese computer company, new in the 90’s, bought IBM personal computer business less than 5 years ago. Today it ranks fourth PC maker in the world.

Many similar cases happened and are happening as we speak. Back to academia, the new paradigm will inevitably change management in the West due to globalisation. The question is: When will the East influence the Rest?

The Iceberg: China

This blog’s main purpose is to witness and offer insightful comments on the rise of China. Each article written is based on extensive primary and secondary research; the sources being news based.

Being a PR student, I was curious to understand the communication element of China, both internal and external. China Shakes The World: The Rise of a Hungry Nation by James Kynge is an extremely insightful book on the real rise of China.

The review from the South China Morning Post, an English newspaper in Hong Kong, sets the book apart from others: “Kynge’s work ranks among the finest reportage on China’s rise, free of the hyperbole and fear-mongering that tends to characterise such books.”

Aside from the admiration of the book, the review states a strong limitation: the fear of China from others. This fear leads to a lack of communication and understanding between China and the world, mainly U.S. and Europe.

Ironically, One World, One Dream, the slogan of the Beijing Olympics 2008 is paradoxical. On one hand, the notion of unity within the world is pasted on every poster, advertisement, magazine, platform related to the Olympics. On the other hand, the Games in Beijing were a show-off of China’s national power.

Many other examples can illustrate so clearly the ‘issues’ some have with China. However, being foreigners, the label cemented on China, is only the result of a few events. It is common to hear Chinese say that foreigners cannot understand Confucian thinking which is the base of the Chinese culture.

Both sides of this relation are limited by the lack of willingness of communication followed by the destructive habit to judge a book by its cover.

Finger-Pointing

“I think the doctrine of free trade is an outstanding one. The free trade doctrine has propelled the economies of Europe and the US to a soaring path of development over the past 200 years. It has also been a doctrine that Europe and America have propagated as a glorious doctrine. They have brandished the banner of free trade and gone around the world doing commerce and making money, and becoming developed countries. But now that a developing country that is quiet poor and has a GDP per capita of only one-thirtieth of theirs has found a few textile companies that can finally compete with the Europeans counterparts, they want to close their doors and engage in protectionism. This, in fact, is a double standard. When they had a comparative advantage, they encourages the whole world to open their doors, but when they discover that one developing country is becoming more competitive, they say ‘OK, enough. Let’s close the door now.’”

May 2005, Bo Xilai, Chinese Minister of Commerce interview with BBC Beijing.

The current recession excited high tensions between China and America. Since 2008, they each dragged the other to the WTO thrice. The year 2009 has seen numerous demands from America against China of anti-dumping investigations, followed by accusation of unfair protectionism.
Chinese exporters have government base support, which America does not provide for their exporters. This creates an advantage despised by Americans; Chevron Vice-President Peter Robertson spoke for many: “We are not competing with a company. We are competing with the Chinese government. I think it is wrong.”

Both countries created a strong venomous snake with a hobby of tail-catching.

Rise of the Dragon

The currency struggle between China and the US went way over its head. The decision of Tim Geithner, America’s Treasury secretary to postpone the potential Chinese label of a currency manipulator was a wise call. An ancient Chinese proverb says: “to fight with people face to face over advantages is the hardest thing in the world”. The decision of Tim Geithner is strategic; this bilateral currency row will now be on the agenda of future multilateral meetings, which will ease the tension between both parties.



The sought after advantages from China of keeping a low Yuan are to maximise exports employment and offer a competitive production cost.

The latter advantage for China is one reason why the US requires the revaluation of the Yuan; Chinese exports are being unfairly subsidised.

China argues that this demand is for self American protectionism. They also threat that the revaluation of the Yuan will compromise its competitive edge with other Asian countries.

The US is trying to spread its optimistic vision and show the silver lining to China: if the Yuan is stronger, China’s local consumer spending will rise, thus the country can grow its domestic market.

This currency row has an impact on the crucial recession recovery, it is important for both parties to look beyond a single short term advantage.

Conflict with the Google Epidemic

One strategy to resolve a conflict is adaptation. Zhang Yu, two thousand years ago said: “Adaptation means not clinging to fixed methods, but changing appropriately according to events, acting as it suitable”.
China and Google seem to have it all wrong. The Middle Kingdom is fighting to protect its society from American values imposed by Google. The giant search engine is in a battle to shield its integrity: freedom of information.
Google threatened to pull out of the world’s largest Internet market with an estimated 384 million users, if China was incapable to adapt. The answer was from Minister Chen Deming: “You’re not going to get 1.3 billion Chinese to change by insulting them” followed by “In the end; America is the one that needs to adjust”.
The West decided to close down Google.com.cn by transferring all data onto Google.com.hk, managed in Hong Kong. This short term solution hardly resolves the conflict as China can block Google.hk at any given time. America is simply targeting the symptom of the conflict rather than the cause.

The Robin Hood Tax

David Hillman, the Coordinator of Stamp Out Poverty presented The Robin Hood Campaign, at the European Business School of London (10/03/10). The concept is to apply a tax of 0.005% on all international currency banking transactions. This tax is estimated to raise around $400 billion (£263bn) globally every year.

As this project is still in its campaigning stage, support is crucial. Most of the public seem to be in favour of this tax for two reasons: It is for the better good; and as the crisis is the fault of the bankers, they need to pay. This project aims to reach the G20 summit in Canada (June 2010). David Hillman said: “This project is from bottom to top; UK is the starting point, followed by the world.”

The Robin Hood Tax campaign is very strategic in targeting its

public at their most vulnerable time; there is a strong common anger against banks, and this is the only option that does not tax ‘them’.

This campaign is based on strong pathos and on situational logos. The main economies have recently, due to the crisis, switch from a shareholder to a stakeholder society. However, numerous crises have happened and showed this society switch is easily reversible. If we fall back into a stakeholder’s society, the Robin Hood Tax will be forgotten effortlessly.