Is China ready for the global BIG Time?

Before China can step up to global leadership it needs to address 3 BIG challenges:  Branding, Innovation, and Globalization.  It’s just not there yet.

The Trump inauguration and British exit from the EU may very well usher in a new era of isolationism. Every 10 years or so, pundits like to ask if it is China’s turn to step up to take center stage in global politics.   Even China’s foreign ministry has said it will reluctantly step up – if it was necessary. The truth, however is that whatever the external situation might be, China simply has a set of BIG problems that will contain China to a regional power for the time being.

China map - doing business in a regional power
Still Regional, after all of these years
  •  Branding

  •  Innovation

  • Globalization

 

Branding:

Still all Party. Chinese corporate branding tends to be very vague (at least by international standards) or very “talking head” (think Alibaba’s Jack Ma or Wanda’s Wang Lianjin). It’s very hard to separate the image of China brands from the CCP itself, and that’s a problem that isn’t going away. Global brands like Apple, Disney, Mercedes, and L’Oreal have their own identity – so they can manage their international image at will. You have your own view about Google or BMW. You can make it personal. China Inc. simply doesn’t work as a consumer brand, and even the few Chinese privates with global heft don’t have much identity apart from their owners or the Party.   (For a detailed examination of Chinese branding download BrandZ’s Chinese Global Brand Builders )

If China is going to project soft power throughout the world, it’s going to need private companies to carry persuasive, positive messages. America is successful when known for Coke and iPhones, not government agencies or military bases.

Verdict: China still can’t brand in a meaningful way outside of China, and this will hamper any attempt at global leadership.

 

Innovation:

China is getting much better at innovation, but it is still a work in progress. China Inc.’s economic success had its roots in OEM – and yeah, counterfeiting. Even if intellectual property protection in China is getting better, they are still an economy of followers and tweakers. Chinese brands adjust and refine. Green energy is the main area where they can break out and while it might happen, there hasn’t been much beyond hype so far.   China, if it is really to take a leadership role, is going to need more Apples and not as many Xiaomis. Simply extending or modifying existing products, services, and methods isn’t going to do it.

As anyone who has spent a lot of time in China can attest, the problem isn’t that individual Chinese aren’t creative. The real roadblock is institutional. Until recently, you simply couldn’t get paid for intellectual property in China. That may be changing, but we’re not there yet.

Verdict: China may be on the cusp of an innovation & creative golden age, driven by Internet startups and green technology.

 

Globalization.

Nope. Lack of critical thinking and nimble management will make China a perennial also-ran. Even if global trade regimes break down completely, China is unlikely to slip comfortably into the lead spot. There are simply too many conflicting impulses, and too much party control. Tencent can’t be the next Facebook from behind a firewall. Developing economies may love the infrastructure and easy credit, but lack of international management skills limit China’s globalization efforts to governments – not consumers.

Once again, we have the Party problem. Without powerful brands or sexy new product classes to fire the imagination of global consumers, China will have to globalize via party leaders. Chinese learned about American culture from Mickey Mouse or Michael Jordan. Chinas main cultural ambassadors are still party leaders, like Xi Jinxing’s recent Davos trip. It’s a very positive trend, but it benefits the CCP more than private enterprises.

Verdict:  China has been here before … and always shies away from the leap.  In 2007 when the world financial system looked like it was heading for the abyss, some looked for China to step in and rescue the global system. China’s response at the time was, “we can do the most good by protecting our own economy”. Not wrong, but not global leadership.

 

Bottom Line 

China's OBOR - One Bridge One Road
One Bridge, One Road

Does China have the opportunity to take on the mantel of global leadership? Yes. With populist movements forcing the western world’s gaze increasingly inward, the external situation would seem ripe for China to assume global leadership. But China lacks the strength, the will, and the imagination to project its system and ideals into the wider world. If the West really does pull back, look for China to focus on Africa and it OBOR connections and leave the global presence for another day.

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The Fragile Bridge - Conflict Management in Chinese Business
The Fragile Bridge: Conflict Management in Chinese Business


The Fragile Bridge: Conflict Management in Chinese Business
 

Written by an American for Westerners negotiating in China, “The Fragile Bridge” dispenses with politically correct euphemisms and ivory tower pseudo-psychology.  Knowing which 1,500 year-old philosopher uttered what esoteric phrase won’t help you safeguard your assets or keep your JV operating, but learning from the lessons of dozens of successful Westerners who have survived the China challenge just might.

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