Amidst the tides of time, China’s private economy is now harnessing a new, dynamically surging engine, making waves as it progresses steadily for the long haul.
Through this year, a concentrated wave of policy measures to support the development of the private economy has been rolled out in China. Various regions and departments have issued corresponding detailed rules, continuously ushering in significant favorable conditions for the growth of the private economy. In July, the release of the State Council’s “Opinions on Promoting the Development and Growth of the Private Economy” (referred to as the “31 Measures for the Private Economy”) injected strong momentum into the development of private enterprises, sounding the trumpet for a new era of robust growth in the private economy.
From August 26 to 27, the fourth (2023) Private Entrepreneur Grand Conference (PEGC), titled “A New Diamond Decade for Private Enterprise: Leading the New Economy and Winning the Future Together”, was held at the Shenzhen World Exhibition & Convention Center. The event was exclusively sponsored by Guangzhou Automobile’s Trumpchi, and hosted by the Bosum Institute of Management Science and the Bosum Association.
Amidst a century of unprecedented change, how are China’s private enterprises seeking new opportunities and the potential for growth? As we look towards a promising “New Diamond Decade,” how will the Chinese private sector find new chances and seize emerging opportunities? At the recent Private Entrepreneur Grand Conference, a group of notable entrepreneurs engaged in a wide-ranging brainstorming session, offering fresh perspectives on the future path for private enterprises.
Organizational Innovation in Private Enterprises: Empowered by AI, Structural Optimization, and Institutional Fairness
Innovation in organizational management has always been a focal point in propelling the reform of private enterprises. Advancing organizational innovation allows these companies to break free from outdated models, adapt to new changes, and unleash innovative energy. This was a key area of discussion at this year’s PEGC, where the role of organizational innovation in increasing efficiency and reigniting organizational vitality came under the spotlight.
Enterprises are built by people, but how can talent be utilized to its fullest extent? Sima Huapeng, the founder and CEO of Silicon Intelligence, provides a technological avenue and posits the ambitious idea of creating 100 million silicon-based labor forces. Why silicon-based labor forces? He explains that silicon-based life is a super-digital intelligent species, that is, a silicon-based life form—entities founded on silicon as opposed to humanity’s carbon-based biological architecture.
In Sima’s grand vision, these 100 million silicon-based labor forces are designed to serve enterprises but not replace or enslave humanity. He believes that amidst the tide of the intelligence revolution, entrepreneurs should think about how to free employees from repetitive, burdensome tasks, enable people to perform roles that AI can’t fulfill, and bring human value back into focus. ” Humans should seize the 1% of inspiration, while AI handles the remaining 99%,” Sima remarks.
With silicon-based labor taking over repetitive tasks, a new frontier opens for human talent, one rife with opportunities for innovation and creativity. However, to fully harness the talent value, entrepreneurs must also consider how to effectively operate the entire system and optimize the structure. Bo Lianming, the Founder of Shenzhen Mingwei Management Consulting Co., Ltd., former Executive Director and President of TCL Corporation, points out that while traditional corporate structures resemble pyramids with hierarchical layers, the present demands a more decentralized, inverted-triangle model.
In this context, “connectivity” emerges as the linchpin in the functioning of a business. “Connectivity” primarily means the synergistic alignment of various components within the business system. “Elements might be identical, but different structures may yield different functionalities—as exemplified between diamond and graphite. Structure optimization is the necessity for fostering enterprise growth.” Bo states.
For entrepreneurs, shifting their management philosophy in line with good institutional development is also an essential step to improving organizational efficiency. According to Dong Mingzhu, Chairwoman and CEO of Gree Electric Appliances, the common mindset among a lot managers is that problems must never arise in the areas they oversee. And if problems do occur, they should be kept under wraps so there is no way of losing face. Dong retorts, “What’s the use of saving face if there is no substance?”
Dong stresses that the creation of company policies should be a focal point for enterprises, and that this should be done with a commitment to fairness and integrity. “Systems should be the same for everyone and should not vary from person to person. Fairness in implementing systems is how you win people’s trust.”
At the policy level, the “31 Measures for the Private Economy” also underscore the need for guiding private enterprises to improve their management systems and advance digital transformation, among other organizational innovation initiatives. Against the backdrop of policy encouragement, private enterprises are called upon to seize the opportunities provided by artificial intelligence to empower talent and foster innovation. They are urged to create effective links between different system elements, optimize organizational structures, and establish fair and robust institutional frameworks, thereby shaping themselves into Diamond Enterprises.
Private Enterprises Going Global: How to Navigate against Deglobalization
In addition to focusing on internal operations and enhancing management and talent value, private enterprises also need to expand their external horizons. Since the beginning of the 21st century, private enterprises have been at the forefront of China’s global business expansion. According to data from the Ministry of Commerce, between 2006 and 2020, the proportion of non-state-owned enterprises in China’s stock of non-financial overseas direct investments increased from 19% to 53.7%.
Nonetheless, in the face of sweeping global changes over the last century, Chinese private enterprises “venturing abroad” are also confronting a host of challenges, including a rising deglobalization sentiment, increased protectionism, and growing trade frictions. These uncertainties are adding even more complexity to their international expansion endeavors.
Dr. Yan Xuetong, the first senior professor of humanities at Tsinghua University, and also a foreign academician of the Russian Academy of Sciences, Dean of the Institute of International Relations, and Secretary-General of the World Peace Forum, points out that the rise of deglobalization is making global cooperation increasingly difficult. “The challenges will continue to multiply, and how private enterprises find opportunities will require the wisdom of each individual entrepreneur.” Yan also warns entrepreneurs of the need to be mentally prepared for a long-term international environment characterized by deglobalization. “If it is to last for ten, fifteen, or twenty years, you cannot simply grit your teeth and bear it, or you will continually face setbacks. Businesses need to develop long-term strategies to cope with this long-term trend of deglobalization.”
So, how should private enterprises break through in this context? For businesses, opportunities may be found in certain regions that offer development dividends. Zeng Renwei, Dean of the Bosum Institute of Management Science, notes that, for geopolitical reasons, Southeast Asia has become the fastest-growing region in the global market in recent years. In 2022, Vietnam’s GDP grew by 8.02%, Malaysia’s by 8.7%, Singapore’s by 3.8%, and Indonesia’s by 5.3%. “In the foreseeable future, you will find that this region has a population of 690 million, with a relatively low per capita GDP, very favorable demographic dividends, and a relatively stable political environment. Such growth is likely to continue until 2030,” he adds.
In addition to external environmental dividends, companies themselves also need to accumulate experience and find the overseas strategy that suits them best. Take Miniso as an example. Ye Guofu, the Chairman and CEO of Miniso, shares that the company currently has 2,200 overseas stores, spanning 107 countries. It is the only company in China’s retail and consumer goods industry to be listed on both the U.S. and Hong Kong stock exchanges.
Looking at the global market, how can one fast-track global acceptance? According to Ye, one way is through building intellectual property (IP). “Our co-branding with existing IPs has shattered two limitations for our company—the ceiling on the product development and the constraints on market expansion. The endeavor to design these IPs demands a monumental commitment of resources, with nearly 1,000 people working in product development and design. Every day involves designing, developing, reviewing, and revising. This is a substantial investment, but we believe it’s well worth it. It’s our competitive nuclear weapon that propels us to market leadership and accelerates our global outreach,” Ye says.
Moreover, Ye Guofu contends that carving out a super brand is another pivotal tactic for swiftly gaining acceptance in the global market. Building such a super brand requires planting stores in the globe’s most thriving epicenters. According to reports, Miniso’s Times Square location in New York City demands a staggering monthly rent of $350,000—roughly equal to 2.5 million RMB—making it not only Miniso’s costliest but also its highest-grossing store worldwide. “Plans are already in motion to break ground in France, Italy, the United Kingdom, and beyond, an Apple-esque strategy of saturating flagships in every high-profile location around the world,” Ye shares. “Only by building image stores in the most bustling and high-potential areas of the world can we become a leader in this market.”
The “Litmus Test” of Entrepreneurial Spirit: Forging Ahead in an Uncertain Environment
The advancement of private enterprises is not just powered by internal and external dynamics. Crucially, it also hinges on the entrepreneurs who lead these companies through thick and thin. No matter how swiftly high-tech sectors evolve, how drastically business models are overhauled, or how much the external landscape fluctuates, the core attributes of the entrepreneurial spirit always remain steadfast. This spirit, characterized by a forward-thinking vision, the courage to innovate, and resilient integrity, is an essential quality for Chinese private entrepreneurs when facing both opportunities and challenges.
The “31 Measures for the Private Economy” sends a strong signal in favor of propelling high-quality development in the private sector, underlining the pivotal role of entrepreneurial spirit along this journey. During this year’s PEGC, how to interpret and reshape the value orientation and spiritual essence of the entrepreneurial community has emerged as a new focal point.
As the “new force for propelling China’s along the path to modernization,” how can private enterprises forge a resilient entrepreneurial spirit? According to Zeng Renwei, the defining traits that will set companies apart in the coming decade stem from a specific kind of entrepreneurial ethos—boldness in taking risks, courage in innovating, willingness to embrace change, and audacity to continuously break through existing cognitions.
In the view of Dong Mingzhu, one of the key facets of the entrepreneurial spirit that manufacturing sectors need to practice is a commitment to independent innovation—even if that means taking a slower path. She points out that achieving unparalleled product quality necessitates the use of advanced industrial equipment. However, when she saw her workshops predominantly using imported machinery, she resolved to leap headlong into the CNC machine tool industry herself, pouring in a total of nearly 10 billion yuan since 2013. “It is easy to simply buy someone else’s technology using the ‘borrowism’ approach, but what we’re doing is grooming our talent from scratch and creating our own products,” she emphasizes. “Before you construct a skyscraper, you have to lay a foundation. Without this, even the tallest edifice will eventually crumble.” She adds that Gree’s self-powered innovation has yielded 110,000 patents, none of which were acquired.
“An enterprise must lead and harbor a sense of responsibility toward the nation and family; we must be creators, not just followers.” She further encapsulates her vision of entrepreneurial spirit by stating, “Innovation is always on the go. Even if you find yourself on the peak of a mountain, there is still the endless sky above.”
The international landscape has been volatile ever since the start of this year, with global trade facing significant headwinds, and investor confidence in need of a boost. Forging ahead in an uncertain environment has become a litmus test for the entrepreneurial spirit.
Wang Shi, the founder of Vanke Group and a spiritual beacon for entrepreneurs in Shenzhen, is also a person who embodies a strong sense of family and country. He believes that the spirit of entrepreneurship in Shenzhen signifies more than just the courage to innovate and take the first step, but actually represents the leadership of a new era. Wang explains that even though the current period is one of adjustment, with various challenges looming, when we observe the state and backdrop of Shenzhen’s entrepreneurs, it is crucial to “carve a path through adversity”. In practice, he notices that these entrepreneurs in Shenzhen have never backed down, imbued as they are with the spirit of responsibility, commitment, courage, wisdom, and inclusivity.
Countering the apprehensions some private-sector entrepreneurs have about the future, “I believe China is ripe with opportunities that will unfold over the next decade,” Zeng Renwei reminds them. “If you’re headed in the right direction, the road will appear.” He told entrepreneurs that this spirit, characterized by a forward-thinking vision, the courage to innovate, and a resilient integrity, is an essential quality for Chinese private entrepreneurs when facing both opportunities and challenges. Only with an unwavering conviction and complete confidence can one adeptly navigate the fiercely competitive global market, achieving both sustained growth and a competitive edge.
The consensus among influential figures across various sectors is that, at this pivotal moment in history, entrepreneurs must merge their personal ambitions with the grand endeavor of national revitalization. They are called upon to carry out their social responsibilities with an even greater sense of duty, a clearer vision for the future, a deep-rooted love for their nation and family, and an unyielding creative spirit.