Unceasing entrepreneurial spirit
Chinese consumer electronics company Haier Group has acquired the home appliances division of General Electric, founded by Thomas Edison. Korean consumers rave about Xiaomi, which makes smartphones and a wide range of electronic devices. DJI has 70 percent of the international drone market.
Leading Chinese companies are way ahead now. What we should fear is not their products; Korean companies should be afraid of the corporate culture and the way they manage employees.
China’s labor costs have increased considerably, while not yet level with Korea’s. In a recent survey jointly conducted by the Korea Institute for Industrial Economics and Trade and the Korean Chamber of Commerce on 234 companies, the labor cost increase index was over 170 in all industries when last year’s labor cost was 100. Low labor cost is no longer the prime source of competitiveness.
What should we learn from Chinese companies? Xiaomi co-founder Li Wanqiang wrote in his book “Sense of Participation” about the secrets to success. When the book was first published, Korean readers could not believe his claims and thought that he was exaggerating.
Li Wanqiang wrote, “How can creativity be explored in a multi-level vertical structure? Xiaomi’s research and development groups have only three levels: engineers, core managers and cooperative partners.” Readers doubted how such a structure that no Korean company or venture startup has accomplished could be possible.
How about Haier? Zhang Ruimin is famous for giving salaries and promotions based on performance only, regardless of age or grade. Global strategic products like the three-door refrigerator was the idea of a 38-year-old employee selected from an internal contest.
Renovo has acquired IBM’s PC division, Motorola and IBM enterprise business, and it is considered to have transformed into a global company with multinational executives and international corporate culture.
Lenovo’s top 10 executives come from seven countries, and the top 100 executives are from 20 countries. In Huawei, top three executives alternate in the CEO position every three months. It is not a matter of communicating in English and hiring international staff. It is evident that these Chinese companies are experimenting with how quickly ideas can be put into action.
We may have thought that Chinese companies are used to the culture of obeying the boss. But the situation is far more complicated if they have a more innovative and capitalistic corporate culture than Korean companies. We may be already losing the battle. Just as we studied the successes of GE, Google and Apple, it is about time we study and learn from the leading Chinese companies.
The author is a deputy business editor of the JoongAng Ilbo.
JoongAng Ilbo, Jan. 20, Page 30
by CHOI JI-YOUNG