They levelled the playing field

There has been lots of ink lately about Mao the “political philosopher”. I won’t get into that other than to say that if any one person deserves credit for China’s economic transformation over the last 30 years, it is Deng Xiao Ping, not Mao.

It was either Mr. China or China Road (both wonderful books) that pointed out why China’s business environment was able to change so rapidly. For better or worse, the Maoist era had wiped away the old entrenched power structures, including family business empires, and also eliminated most of the atrocious sexism of traditional Chinese culture. Whichever book it was made the comparison to Indonesia and India, where business was tightly controlled by family conglomerates and outsiders had far less opportunity to set down roots, to say nothing of the limited role of women in the economy.

Though it is a gross oversimplification, and does not address all the things that went wildly, tragically wrong during the first 30 years of the PRC, Deng did have a “level playing field” to start with. If you are going to re-light the entrepreneurial spirit of the Chinese people and try to attract foreign investment, starting from nothing is actually an enviable situation.

I am often asked about India. With English widely spoken, the British legacy, democratic government, etc., it seems a better choice for business. The Dragon and the Tiger have the world’s rapt attention, but for manufacturing, the choice so far has clearly been China. I’ve seen figures quoted that China has 10 times the number of factory jobs as India despite comparable populations. And I’ve had Indians tell me the reason they are trailing China is because they have so much cultural baggage, whereas China is in some ways like a new country. This article in the BBC about the beating of ‘witches’ in rural India is a good example of the press that makes investors hesitate. [Note – I admit I have never been to India and know next to nothing about it other than what you can read in a book or newspaper. My sister travels there regularly, and through a family business, we’ve been doing business there for decades, but I have no personal experience to draw on.]

Expatriates often lament the hyper-capitalist zeal of the new China. Indeed some of the Chinese I meet lament it as well, which accounts for the rebirth of religion in the officially atheist PRC. But I find the rule of the almighty RMB reassuring in way. Capitalism at least has clear incentives and bridges cultures.

It is not for nothing that China is referred to as the new ‘Wild West’. Mike Bellamy was one of the few white faces in town when he arrived in Shenzhen in 1998. The positive and open business climate allowed him to put down roots and PassageMaker was born. And while we have long-term plans to expand into India (PassageMaker-Mexico will be first, perhaps in 2-3 years), China will remain the core for years to come. Our services – Sourcing Feasibility Studies, Vendor Coordination, Assembly-Inspection-Packaging, Factory Formation – are all designed to help clients succeed and thrive in this crazy boom town that is China.

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