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November 17, 2010

China’s Megatrends - China's future from government and business leaders

The strength of China’s Megatrends is that it tells us how China’s elites want outsiders to understand them.

Some of the Naisbitts’ business sources have a view of their country and its politics that strays from the official line, giving us a hint of China’s future direction.

Rather talking about the PRC as a nation-state, these entrepreneurs see China as a corporate enterprise. This formulation caught the Naisbitts’ attention, leading them to conclude that “China has reinvented itself as if it were a huge enterprise.


I have felt that China is a corporate republic (a nation that is run like a corporation) for a few years.



China is being run similar to the GE way in terms of succession and in terms of proving competence by managing a smaller area (cities and provinces).

Corpocracy describes a form of government where many processes are similar to those a large and successful public corporation. A more specific term would be GEcorpocracy. A form of government that has governance and management similarities to how the company General Electric is run. GE is widely considered to be the company with the best management practices. Succession planning at GE and the grooming of leadership is considered to be a key strength of GE.

There will be differences because there many key differences between countries and even large corporations. A country like China is 100 to 10,000 times larger than GE depending upon what aspect is being compared. China is not going to be unloading sections of the country the way GE can shed a division.

However, key aspects of corporate governance and corporate management are comparable and adaptable to running a country.

The Selection and preparation of China's president is very similar to the GE process for the selection of a new CEO.

The President of China cannot serve for over two successive terms, a term being the equivalent of one session of the NPC, which is five years. GE has CEO's who serve for about 15-20 years.

Hu Jin Tao and Xi Jinping : Jack Welch / Jeffrey Immelt

Xi Jinping and Jeffrey Immelt have parallels in their background and rise to power.

The selection of Jeffrey Immelt is described in Business week

GE succession planning case study.

Succession planning is an ongoing, rigorous and challenging process at GE. GE adopted succession planning right from the mid-1900s. At GE, succession planning was not confined to only the top management, but was applied across all tiers of management.

The managers of GE's various businesses were encouraged to identify potential candidates and fulfill their development needs, and transform them into efficient leaders ready to take up top jobs at the company. As part of CEO succession planning, GE shifted its key candidates from one business to another to enable them to gain experience across all its businesses.

The succession planning by Welch for his post had started way back in 1994, when Welch, with help of Bill Conaty (Conaty) and Chuck Okosky (Okosky), both vice-presidents, HR and Executive Development, created a list of essential qualities, skill and characteristics an "ideal CEO" should posses. The list mainly included elements such as integrity and values, vision, leadership, experience, edge, stature, fairness, energy, balance, insatiable appetite for enhancing
knowledge, courageous advocacy, and most importantly, stomach to play for high stakes and being comfortable operating under a microscope.

Immelt joined GE in corporate marketing in 1982 after receiving a degree in applied mathematics from Dartmouth College and an MBA from Harvard University. He then held a series of leadership positions with GE Plastics in sales, marketing and global product development. He became a vice president of GE in 1989, responsible for consumer services for GE Appliances. He subsequently became vice president of worldwide marketing product management for GE Appliances in 1991, vice president and general manager of GE Plastics Americas commercial division in 1992, and vice president and general manager of GE Plastics Americas in 1993. He became senior vice president of GE and president and chief executive officer of GE Medical Systems in 1996. Mr. Immelt became GE's president and chairman-elect in 2000

Xi Jinping holds a doctorate in law and a chemical engineering degree from Beijing's Tsinghua University, Hu's alma mater. From 1979 to 1982 he worked for his father's former subordinate Geng Biao in the General Office of the Central Military Commission. Xi subsequently served in four provinces during his political career: Shaanxi, Hebei, Fujian and Zhejiang. Xi has won his spurs as the governor of Fujian, since 2000, where he made efforts to attract investment from Taiwan and to boost free market economy. In 2007, Xi' was appointed to the Party Secretary post in Shanghai, which is arguably the most important regional leadership position in China.

The actual selection of Xi Jinping

``The sense among people who follow politics was that Xi Jinping was not Hu's first choice, that he was more a consensus choice by the party's elite,'' Arthur Kroeber, managing director of Beijing-based Dragonomics Research & Advisory, said in a phone interview today. ``Decisions in China can no longer be made by one guy.'' Xi's role as vice president isn't clear, he said.

Xi, 54, will be Hu's understudy, representing China at international gatherings and ceremonial occasions.

U.S. Treasury Secretary Henry Paulson, who met Xi when Xi was party chief of Zhejiang province, near Shanghai, described the Chinese official as ``the kind of guy who knows how to get things over the goal line.''

Key parallel good performance running larger and larger divisions like running regions.

Newsweek on China's success. 8/9 leaders have engineering training. They love and apply performance metrics. (GE and US corporations like to apply performance metrics. China has more real goods and services and less financial wizardry.

China's corruption: . One chairman of a large European firm, who has worked in a number of developing markets, makes this comparison: "In Russia, if there's $100 in the bridge-building pot, the official takes $90. In China, they take $30, and at least you know the bridge will eventually get built."

It's part of a government strategy to use the Internet and public opinion to put pressure on provincial officials, as well as to influence policy decisions. Victor Yuan, chairman of Horizon, a Beijing market-research firm, conducted public polls to help the government set Olympic ticket rates and figure out what to charge for
natural-gas upgrades in remote areas, in order to avoid public outrage over too high prices. Next year, he'll be launching a poll-based ranking of 10,000 middle- and upper-level Chinese officials, and Yuan believes it's possible such a poll might be extended to include the very top officials, perhaps by 2014. "This is very much a performance-oriented administration, and they need to understand what the people want in order to avoid trouble," says Yuan. "Since Deng, leaders are no longer supermen. They need legitimization, and the approval of the people."

It's getting tougher even for radical pragmatists to deliver on Deng's promise. Thirty years ago, there were 963 million people in China, and 30 percent of them were hungry. Today, there are 1.3 billion, and 97 percent of them have a full stomach, but the step up to the middle class (in which only 6 percent of Chinese live today) is harder.

Ruchir Sharma of Morgan Stanley has pointed out that China's per capita GDP recently hit $3,000—the level (2010 it is almost at $5000 per capita) which Japan's miracle economy began to slow to a more mature pace.

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