This book written by Edward Tse is a very insightful and thought provoking one that delves deep into the intricacies of the transformation of China from closed and state run economy to a growth oriented global powerhouse. Opening up of the markets, burst of entrepreneurship and focused pursuit of the whole country has taken China from impoverished state to second largest economy in the world. The rise of these entrepreneurs is all noteworthy because at the time of Mao Zedong`s death in 1976, there were no private businesses in China. The first phase of liberalization was done by Deng Xiaoping and author explains also about the Gangs of 92 which paved way for privatization and foreign investments
Edward has done a fascinating study on the emergence of privatization led entrepreneurship landscape which gave rise large giant organizations like Alibaba, Tencent, Baidu, Xiaomi, Dalien Wanda, SOHO and so on. Story begins in late 1980s when Zhang Ruimin launched state run Haier on a second stage transformation and explains how Zhang scale Haier to the largest player in China in consumer durables and eventually as the largest consumer durables company in the world based on selling volumes.
He analyzes and introduces us to each of the entrepreneurs and their giant organizations that were built in late 1990s and early 2000s. Starting with the most successful of the pack, Jack Ma and his firm Alibaba which did a blockbuster $25 Bn IPO in Nasdaq, author goes on to cover Pony Ma and his company Tencent which has become the largest company in Asia in terms of market cap. Then there is Robin Li and his firm Baidu which has become the largest search giant in China, now venturing big way into Artificial intelligence and autonomous technologies. He has also analyzed hardware firms like Xiaomi founded by serial entrepreneur Lei Jun, Lenovo which has become global players in their categories. Then there is Youku Toudu which became the largest and most successful media company in China, later it got acquired by Alibaba. Even real estate sector boomed in China producing largest players like Dalien Wanda built by Wang Jianlin who is currently the richest man in China, SOHO built by billionaire Zhang Xin. Also the book talks about how efficiently local Chinese players fended off the foreign giants like Walmart, Proctor & Gamble building local consumer giants like Hengan International.
There are good amount of examples in the book which clearly shows inspiring innovations done by these companies. Like how Jack Ma built Fintech payments giant Alipay/Ant financials from scratch when there were no online transaction settlement system in China. The book talks about low price ecommerce company JD.com, largest travel portal firm CTrip and so on. Edward towards the end of the book has analyzed what it takes foreign companies to win in China. Very few has done it successfully like Honeywell, Yum brands (KFC). According to the analysis, a company needs to adapt to the local Chinese consumers and culture to be successful there.
Given the speed with which Chinese buying power is rising, products, technologies, business models and infrastructure have all leapfrogged intermediate development stages. For example Chinese ECommerce industry is expected to be around $1.6 Trn market which skipped the entire Brick and motor retailing boom that happened in industrial nations.
A fascinating journey of a country`s GDP growing 7.5-8 times from $1.5 Trn in 2003 to $12 Trn in 2018. We are stunned when we hear a company growing 8 times in 15 years but here is a country growing GDP that much plus its per capita income grown 4-5 times during this period. This means lifting 400-500 million people from poverty which by no means is a small feat considering the size & population of the country. As Edward puts it, all credits to the Entrepreneurs, Chinese government reformation with support & the people of China with single-minded as well as relentless focus on just 1 Cause – Growth of the Country and nothing else matters !!