Dean Xiang interviewed by Fortune Korea: Value competitiveness more important than “guanxi” in China today
May 8, 2013

CKGSB Dean Xiang Bing recently conducted a wide-ranging interview with Forbes Korea, which appeared in their May issue.

The interview focused on Dean Xiang’s business insights and the Chinese economy, including the economic policy of Xi Jinping’s government, China’s political system and economic transformation, and the global implications of China’s development.

According to Dean Xiang, the four objectives for the Chinese government right now are balanced growth, sustainability, innovation, and the relationship with the US. He agreed that China’s GDP will catch up to the US by 2018 (2025 at the latest), yet doesn’t want to read too much into this prospect. He thinks the expression “China’s re-emergence” is more appropriate than just “China’s emergence” since there were only a few generations during its history in which China lost its economic supremacy.

While discussing brand value in China, Dean Xiang stressed that it’s better to manage brands by acquisition or equity participation than to develop them from scratch since China shows high rates of savings and low rates of capital management. He also explained China’s economic environment: As the biggest market in the world, China currently attracts the best design, the best talent, the best technology and the best capital. However, he said China needs to bridge the gap between the rich and poor regions, and to improve social benefits, medical welfare and education.

Dean Xiang believes diversity matters and will bring value competitiveness in the future. That’s why Chinese businesses need an environment in which they can separate ownership and management. Yet, since there are no value-competitive (private) companies such as Toyota or IBM in China, national enterprises exist in lieu of those value-competitive companies. He highlighted that Chinese private enterprises will enhance their ability to innovate in the future.

His advice to global companies regarding China’s development is to understand the trend of expanding exports on value-added businesses through the coastal areas, in which automotive, computer and medical device industries have been intensively fostered.

Regarding innovation in China, he claimed China has already set a foundation to build innovative companies like Google and Facebook. He also talked about China’s environmental pollution issues, which were caused by the manufacturing of goods for other countries. China’s manufacturing business has made a great contribution to the economic development of the world, he said.

Lastly, Dean Xiang discussed guanxi (关系). Many have often claimed that guanxi is one of the most important factors for building a successful business in China. However, Dean Xiang says it is no longer at the core of doing business. He emphasized that value competitiveness is more important than guanxi in China today.

Read a PDF of the full article (in Korean).

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