Are you familiar with the expression “China speed“? Whilst it was first coined to describe the exponential economic growth phase that the country was experiencing, it has since come to be more closely associated with the pace of infrastructure construction and digitalisation. But what is it about China that allows them to drive change so fast?
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The Paradox: is China fast or slow?
As with so many things in life, the answer really is “it depends” ?…
On the one hand, you have the incredible speed at which decisions are sometimes taken in China and then executed upon.
I’m sure most people remember seeing the speed that the pandemic clinic was built in Wuhan in a matter of days at the start of the pandemic – that is China speed.
Or perhaps you’ve read about the high speed rail network expansion or amazingly fast 5G connectivity.
Paradoxically, China can also feel really slow though – with tons of red tape, or partners who are suddenly “nowhere to be found” when you need them to make a decision. Anyone who has ever negotiated a contract in China will know that this is anything but a fast process, and actually even signing the contract is only a milestone along the way and not the end of the journey.
For sure, in any kind of negotiations, you can feel like you are going round in circles. This is partly due to the relationship aspect of doing business and partly due to a different approach to time.
However when there seems to be any kind of threat or an opportunity to be grasped then China can act extremely fast.
Confucian Values & Competition
There are tremendous levels of competition built into all aspects of Chinese society – trying to stand out as one of 1.4 billion will do that to you, when combined with the Confucian values of continuous striving to be better. Working for the common good is valued above “excessive individuality” and consequently people will work in one direction, whilst striving to be the best at what they do.
In the same way that professional athletes have the drive to succeed, the Chinese nation is also driven to improve their situation. That means that businesses are prepared to take risks, but also to act in a determined and structured way to work towards their goals, however they may have defined success. Agility and adaptability are an integral part of the culture, meaning that China can be more competitive than Europe or the US in many ways.
But isn’t Europe more efficient than China?
Yes, in many aspects, working practices in Europe are more efficient than those in China. If you look at the way factories work in Germany then they are usually more efficient than in China.
When there is the belief that “time is money” then it’s clear that you have to find ways of doing things more efficiently and so Europe is ahead on this. They may be able to complete a specific task in less time than a Chinese company. However that’s not the full picture though as there’s also the question of strategy.
Deciding on a direction and focusing resources
When the Beijing government decides to do something then resources are made available to ensure that it actually is implemented. Plans are laid out in a succession of 5 year plans so that the strategy is clear.
Without wishing to start any political discussions about right & wrong, the Chinese government is able to make decisions from a place of what is the best (in their eyes) for the country, as they don’t have to worry about implementing within their government term or whether they will be reelected. They also only have to decide within the Party what to do, rather than try to reach a consensus with rivals as is the case in Europe.
This has led to projects such as the Tianhe-3 supercomputer, which can carry out exaFlop calculations or the almost unbelievably fast expansion of the high speed rail networks. The newest Maglev trains leaving the factory in Qingdao are capable of maximum speeds of 600kmh – that’s almost as fast as an aeroplane!
Obsession with Goals
Anyone who has ever worked with Chinese teams can confirm this to you: Chinese people love to reach for and achieve goals! On the way to doing that they are extremely inventive in finding ways to solve problems.
From young years, they are encouraged to work together to solve problems by collaboration. This is very much a cultural question that allows the country to move forward quickly when you have so many minds working on specific problems.
Projects such as online logistics have moved forward in leaps and bounds as no solution is disregarded right from the start as being taboo. This openness to look at all the options means that companies can often reach solutions faster than an equivalent company in Germany. Companies in Europe often have more stakeholders involved in the decision making process which makes them cumbersome and slow.
Consumers are open for solutions which will make their lives better
This is one of the major reasons that digitalisation in the Middle Kingdom can advance at, well, China speed.
Chinese consumers are extremely open for new solutions or ways of doing things, if these will make their hectic lives easier and more convenient. Compared to western companies, this means that a huge amount of data is rapidly available which can be used to drive improvements and future iterations of the product or service in question.
Whilst this is now changing, especially in the light of the new Data Privacy laws, consumers have been willing in the past to exchange their private data for the sake of convenience, resulting in huge amounts of big data being available for product developers.
New Sales and Marketing Models
The openness of consumers for new products and solutions, also extends to new models of doing business. Both companies and consumers pivot to new options as long as an opportunity is perceived there.
Chinese consumers have some of the highest expectations in the world. That combined with the competitive nature makes China one of the most vibrant and competitive markets for many products. Whereas in Europe, consumers are usually happy with a new model being released one time per year, for China this is simply too slow. Consumers would like to have the widest and deepest features but for the lowest possible price, which means that redevelopment is constant to stay ahead of the competition.
It also means that in a market with more competitors than any others, sometimes companies seem to come up out of nowhere, and may have disappeared again by the time we become aware of their success in the West.
How do companies manage to innovate so fast? It seems that they can compartmentalise and anticipate more aggressively than is usual in say the UK or US, meaning that a phone may be built in parallel to a new kind of chip being developed in order to immediately take advantage of the new technology.
Same goes for delivery times or customer service – the standards that are regarded as usual in say France, are simply insufficient for the Chinese market.
Speed of Decision Making & Execution
If we compare the speed of China’s decision making and execution, both on a government and corporate level, with Europe, there is practically no comparison. This is one of the most frequent points of contention between companies who are looking to enter the market & their partners. The European side considers that their job with product development is complete (for a couple of years) by the time they’ve jumped through the hoops to register for general import in China, whereas the Chinese side are already thinking about the next innovation, even if they haven’t received the first delivery yet.
This European tendency to only launch a product or project once it is as near perfect as it can be made, costs the competitive advantage in China, as often the market has already moved on or the opportunity has been seized by faster competitors.
Probably nowhere has this speed of decision making been more evident than during the pandemic. Beijing’s Zero Covid policy has led to swift regional lockdowns with whole cities being tested in a matter of days. This has built trust of the citizens in their government’s ability to keep the virus under control. It was a similar situation with the introduction of the health QR codes which have enabled citizens to move around more or less freely over the past couple of years.
In turn, the Chinese speed of execution increases once there is trust in the relationship between any 2 parties. Consequently, once trust is established in a business relationship then the speed of moving ahead with all the steps that need to be taken is virtually unparalleled.
The city of Shenzhen in Guangdong, bordering Hong Kong, is a prime example of what happens when the Beijing government makes the decision to push resources into a project.
Over the past 45 years, Shenzhen has grown from a sleepy fishing village to a high-tech metropolis with around 17.5mn inhabitants. The port of Shenzhen is the world’s 4th largest port and it is the first Chinese city with full 5G coverage. Additionally the bus and tax fleet are all electric & recycling is compulsory.
Shenzhen has become a hugely popular hub for the high tech industry as the components needed for any kind of project are also produced nearby, meaning that you can receive components for building a prototype within a couple of hours. That’s China speed, obviously…
Of course it hasn’t all been plain sailing
It would be naive to assume that everything is easy in China or that there hadn’t been any negative consequence of such rapid growth and expansion. Of course making fast decisions without all of the information available always includes the risk that mistakes will be made, however the Chinese prefer to fail fast & fail forward, trusting that they will just as rapidly be able to solve any issues.
The 996 hustle culture (working 9-9, 6 days a week) has now been officially forbidden by the government, and young people entering the workforce have to some extent rebelled against the “always needing to achieve” mentality that society has tried to instill in them. Working conditions in high-tech companies or as delivery drivers are for sure less than ideal.
Huge infrastructure projects have environmental consequences although the government is now becoming more sensitive to those considerations.
And of course, there have been many IP issues over the years…
What makes China Speed possible?
So to sum it up, there are a number of factors that make the incredible velocity of change and growth possible in China.
The Chinese government thinks strategically for the long term and being a single party state is able to take decisions which are simply much harder in a Western style democracy. This allows both for a more long term view of what the country needs to do and also rapid decision making. In Europe governments spend huge amounts of time worrying about the next election, which isn’t really a topic for China.
- A huge population
- Simply having such huge numbers of people available means that large infrastructure projects such as laying the high speed rail lines can be implemented without worrying where to take the additional people from
- From a digital perspective, having such a large population open for new developments, means that the big data sets available are on a scale which would be inconceivable for any other country. That means the ability to react to changes in the market
This is the most important point. The Chinese drive to be successful, to improve life for themselves and their families has meant that they are “hungry for success” and do everything they need to do to achieve their ambitious goals. Within their culture is already a competitiveness & willingness to take risks, which many European countries don’t seem to feel so strongly, being content with the living standards which the last 70 years have created.
Consequences for European or US companies
So what does this mean for companies who are looking to enter into the Chinese market?
For sure it’s easier for Chinese companies to learn efficiency than for Western companies to embrace Chinese style competitiveness. That means that unless companies in Europe and the US are willing to admit to themselves that they need to learn from China, they run the risk of being overtaken on the world markets.
Companies need to learn to think in a more long term strategic way, whilst developing agility to more rapidly respond to changes of circumstances in the short term.
Until now, many new technologies have been developed in the “West”, but it is China who has found ways to implement those technologies in everyday applications. By doing this, those companies are able to gather vast amounts of data, which allow them to further develop the products beyond their original form, so that it is only a question of time before China is the driver in completely new tech ideas. (They are already registering more patents than any other country).
There’s no point being defensive or derogatory about China’s achievements, but better to be open to see which are the points which can be learnt from them. In the same way that a large country can generally be expected to win more Olympic medals than a small country, it’s only to be expected that China will produce many innovative ideas and technologies.
The question is more, how can European or US companies learn to take the best of both worlds and use it to grow further? How can they build trust more quickly with Chinese companies, enabling them to access the famous China speed for an accelerated market entry, whilst retaining their own levels of quality and efficiency?
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