Chinese enterpreneurs challenge West

Dynamically developing China attracts attention of all the world society nowadays, making some contemporary political scientists believe the great changes in this country for the last 15 years to be the un-arguable challenge to the world. Today China is 1,4 billion population, actively developing country with multiple achievements, passing its way to modernization, social market economy that outperforms huge international political activity. China economy, including its right drivers – Chinese entrepreneurs, that realizes its participation in the global development and the world’s dependence on it definitely poses a big challenge to the West, as well as to the whole international system.

The raise of China in the XXI century means not only the constant inflow of cheap import, the failure of the particular segments in the production field of other countries and off-shore outflow of labor sources, thought all these tendencies are important. The raise of China is the watershed event that is changing the world picture and if the rates of growth remain the same the next 20 years will symbolize the China’s maturity achievement and industrial power.

The China’s influence is evidently seen now in the forms of price-setting, starting with deflation pressure at the retail lever closely to inflation pressure on raw materials and logistics. China is now the world’s largest consumer of copper, tin, zinc, platinum, steel, and iron ore; the second largest consumer of aluminum, petroleum, and lead; the third largest consumer of nickel; the fourth largest user of gold [Asian Development Bank, 2004]. But China’s rapidly expanding international trade is not the limit. China is known to be the one of the largest recipients of foreign investments, the result of creation of favorable conditions for FDI, and the economical and geopolitical center of Asian region recovery and integration.

The main factors that allow China to develop so rapidly at the same time forming main challenges that China performs are:

  • Labor resources that are not only low cost but contain the growing number of engineers, scientists and highly qualified technical workers;
  • Rapidly growing technological infrastructure and leading position in latest technologies;
  • Huge capital and investments, governmental subsidiaries;
  • Dominant position in world trade and relatively low degree of import tariff protection;
  • Headquarters of multinational corporations, factories and premises of many western companies;
  • Insight/knowledge of global business and entrepreneurs qualities;
  • Availability of international market and significant domestic market.

Synergy of this all features of capital, resources, markets supported by the overall increase in entrepreneurship in China made it possible for this country and its people to pose a challenge for the world community. However, together with the possibilities and perspectives Chinese entrepreneurships face several obstacles that can slow the development. Firstly, Chinese uncompetitive and falling banking system, the crisis of which is coming to the first place, though ‘China’s leaders have realized the financial risks associated with the record expansion of bank credit and fixed asset investment that occurred in 2003 and the first part of 2004’ [Lardy, N. R., 2005]; secondly, undeveloped service sector, and thirdly, growing tension from the under laid, un-employed and poor people, and to some extent the shift in international migration flows; fourthly, growing environmental pollution and finally, violation of intellectual property rights and increasing anxiety, indicating an increasing level of such violations.

The central reason for China’s growth achievements and transformation is the emergence of the class of entrepreneurs, self-employed people who are the pillars of this development and modernization. No all of the construction and development can be attributed to the increasing segment of population of entrepreneurs, although Chinese businessmen contributed a lot to the huge economic changes in the country. Chinese economy has demonstrated a pool of extraordinary and talented people able to act on their own risk and survive in not easy conditions, placing themselves to the position of perspective and advantageous partners being involved hence in international negotiations and, additionally, their home country to one of the economic world leaders and introducing it as a new Asian ‘tiger’. From the other hand, an adequate governmental support exists, encouraging entrepreneurial economy both at the local level providing the youth with appropriate education and at all levels giving opportunities to start personal business.

The qualities that new generation of Chinese entrepreneurs demonstrate deserve particular mention. First is the creativity, because ‘they are the creators of the de novo firms that are forming a dynamic and innovative private sector – an essential force in any developing country’ [Yueh, 2008]. More importantly, Chinese ability to navigate for the opportunity via the strict competition and risk-neutral or even risk-loving position allows businessmen to function productively at the world’s significant markets. Above all, ‘the traditional Confucian values of hard work, self-discipline, delayed self-gratification for the sake of long-term future benefits, frugality, a high importance placed on education, xiao-sun or filial piety of total obedience and reverence for ancestors and parents, are important factors in entrepreneurial success’. [Flores, 2010]. The other reason for success is the family support of start-ups and the family-type organization of the company, having ‘the entrepreneur himself is the benevolent patriarch while his kin fan out below him in secondary management roles’ [Liao & Sohmen, 2001].

As a result, the world is facing strong waves (according to different sources, up to 3 generations of entrepreneurs) of businessmen with up to 20 cent of all entrepreneurs in China being Chinese women that pose challenges for the West:

  • Chinese entrepreneurs are entering the markets of goods and services that were previously traditionally western by dumping prices tactics and root there afterwards being able to act more freely and have an impact on the industry.
  • Chinese entrepreneurs are ready to start with low-end markets and moving on reflecting the strategy of ‘starting from the countryside and encircling the cities’ [Decoding the Secrets of Success of Chinese Private Companies, 2009].
  • Chinese perfect ability and readiness to respond rapidly to the market changes and offer goods in demand at affordable prices with the usage of cheap logistics worldwide – is one of the most jealousy features of Chinese spirit.
  • Chinese companies are recipients of outbound investments that give them an ability to expand manufacturing infrastructure and industrial capacity making their companies more competitive with regard to western ones and at the same time the accumulation of technological and innovative assets in their country creating favorable climate for future development.
  • The new wave of Chinese companies are much more stronger, have the skills and knowledge about how to operate on a global level representing a new business model – away from copycat R&D, low-quality production straight forward to high-tech industries of aircraft and navy manufacturing still pursing ways for maximum gains and cost pressure.

At the present time each company should have a keen look at the Chinese perspectives and try to find a beneficial path to build opportunities for strategic cooperation with Chinese legacy. The company I’m working for is already undertaking particular steps towards our joint business with Chinese partners. The main direction is to set a chain of small chemical factories in strategically beneficial for us regions of China: North and West. This will allow to widen our operation network, to exploit new fields and enjoy low-cost production. The second but of the same importance direction is to enter the Chinese market of agro-chemical products, to open a new sales market of our goods in this Asian region. For this purpose we conduct negotiations with Chinese companies and hired an experienced Chinese staff which is aware of Chinese mentality. Overall, our plan to expand our presence in Asia and primarily in China is moving forwards and as we can see this decision was right as it brings fruit with the pace of time.

In conclusion, mention should be made to the fact that despite opposite opinions regarding China, its development can be seen by a naked eye, and the challenges that China and its entrepreneurs can pose are evident. So, the right way for each company, as well as a government, is to try to catch advantages.

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