The “Chinese Way” of Doing Business

In Fortune Makers, Michael Useem, Harbir Singh, Neng Liang, and Peter Cappelli focus on “the leaders creating China’s great companies.” They explain how these leaders “have used capitalism to pull 600 million people out of poverty and [China] is on track to soon be the largest economy in the world. It is an astonishing turn of events.”

They go on to point out, “The growth and ascendance of Chinese companies are products of the strategies and leadership of those who created, built, and now manage those enterprises. The invisible hand of the market conditioned their goals and decisions, but their actions have constituted a strong visible hand. We want to understand that visible hand, how they direct it, what they want from it, and where it is taking their enterprises.”

What is “The China Way”?

Useem, Singh, Neng Liang, and Cappelli focus on companies that include Alibaba Group, Geely Automobile, Lenovo Group, and Vanke Group. They examine seven distinguishing features among the leaders creating China’s great global companies:

1. Their Own Way Forward: Without precedents. “by finding and fashioning their own way. the founders put their own unique imprints on their enterprises.”

2. The Learning Company: “Chinese executives have carried their own learning experience into the firm. They have insisted that their company be a learning organization with greater zeal than is common in the West.”

3. Strategic Agility for the Long Game: They focus on “finding new opportunities and going after them – driven by scrappy personalities and lean architectures.

4. Talent Management: “Business leaders in China have learned to grow big fast by drawing on a paternalistic leadership style and building a clan-like corporate culture.”

5. The Big Boss: “Privately owned firms are exceptionally focused on the individual at the top. While the Big Boss model has faded in the West, not so in China.” Seth Grodin uses “tribe” as a metaphor; Chinese leaders embrace it as a workplace structure and culture.

6. Growth as Gospel: ‘They place a greater premium on growth, believing that profitability is an end product of growing a business rather than the primary goal.”

7. Governance as Partnership: “When we put the above components together –lean, low-cost operating structures, highly centralized decision making with continuous learning, and a workforce that follows the boss – we get the essence of the competitiveness of Chinese business.”

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Fortune Makers was published by Public Affairs™, an imprint of Perseus Books (March 2017).

Michael Useem is the director of the Center for Leadership and Change at the Wharton School, University of Pennsylvania.

Harbir Singh is the codirector of the Mack Institute for Management Innovation at the China Europe International Business School.

Neng Liang is the director of the Case Development Center at the China Europe International Business School.

Peter Cappelli is the director of the Center for Human Resources at the Wharton School.

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