A CAC 40 industrialist confided to me that he had seen, during the first half of 2022, monthly fluctuations in volume of around 30 to 40% in an activity rather accustomed to variations of between 3 and 4%. “An unmanageable chaos!” he lamented. This situation, Chinese private entrepreneurs are more used to it, subscribed for forty years to the deep political, regulatory and commercial uncertainties in their country. What the test describes very well Dragon Tactics*, which must be read by any Western boss seeking to prepare for the period of greatest chaos of our generation.
Its authors, Sandrine Zerbib and Aldo Spaanjaars, are the architects of the incredible success of the launch of Adidas in China. This experience has enabled them, over the past twenty years, not only to observe the rise of the Chinese private sector, a real catalyst for the country’s economic take-off, but also to understand its underlying motivations.
The long list of qualities observed in these entrepreneurs constitutes as many invitations for Western economic leaders to question their managerial approach. First of all, an extraordinary sense of observation, which accepts paradoxes more than it clings to certainties. Second, the formulation of a vision, focusing on seizing opportunities through adaptability and flexibility in contrast to our rigid skills-based strategies. Third quality: the ability to execute, favoring agility and speed rather than the search for perfection. But also a permanent obsession with innovation, not refraining from launching imperfect new products in order to leave more room for incremental improvement, when the West prefers breakthrough innovation.
Another essential quality: the ambition to think big from the start, facilitated by the size of the domestic market and the absence of marginal cost of digital business models. We also remember this incredible resilience, whose strength we feel comes from the suffering endured by the previous generation during the Cultural Revolution; pragmatism, adept at compromises, as opposed to the rigidity of Anglo-Saxon processes; and finally a speed in decision-making, still often reserved for the founder, little focused on the large management committees of our head offices.
A paradox of the Middle Kingdom
We then understand better how Haier became the world leader in consumer electronics; how the West, through its intellectual arrogance, allowed the Middle Kingdom to assert its domination in sectors of the future such as electric batteries, solar or wind energy; how the car manufacturer BYD, in the face of the pandemic, transformed itself in a few weeks into the world’s leading manufacturer of masks; how the Anta group is now dethroning Nike and Adidas in sports equipment. We also understand how large Western groups have succeeded so well in China, like L’Oréal, which a few years ago swapped its key word of “excellence”, a past symbol of Western arrogance, for that of “agility”, directly inspired by his observations in China.
It remains to be seen how these qualities – from which the West would do well to draw inspiration – will be able to adapt to the economic turnaround initiated by the Middle Kingdom since the summer of 2021. The strong economic slowdown, the increase in government control, the bursting of the real estate bubble, the rise of female executives will each come in their own way to test the faculties of “chaos management” Chinese private actors. It will be exciting to observe its limits, particularly in the effort to accelerate internationalization in emerging countries but also in our developed markets. A challenge all the more decisive to take up as the next few years will see China, like Germany, face a serious problem of succession for the founders of companies of the 1980s.
So here is an additional paradox to be credited to the Middle Kingdom: it is when its political leaders are choosing the path of closure that our Western economic leaders would have the greatest interest in making up for their worrying lack of knowledge of the economic sphere. Chinese private enterprise.
* Dragon Tactics. The tactics of Chinese entrepreneurs to better lead in uncertainty,
By Sandrine Zerbib and Aldo Spaanjaars (Dunod, 2022)