In the late 1970s, China’s greatest visionary, Deng Xiaoping, started the reform and opening up of China. He did so by creating special economic zones (SEZs). This was extremely smart as he understood that you cannot develop a massive country like China all at once, and with these SEZs, China could experiment reform measures with focus.
These SEZs became like oil spots on water over the following decades spreading the economic development.
Although China opened up for business, some controls remained in place. This was necessary as all minds needed to be set for one goal and one goal only for a country with a huge population: the development of China from a Third World country to a leading economy of the world. This is where China succeeded and the most populous democracy in the world, India, lagged behind.
The first word I learned in 1988 on my first trip to China was “meiyou,” or “not available,” as even the simplest things were not available then. Now you can see the abundant goods in supermarkets. The economic prosperity brought by four decades of reform and opening up is a well-known miracle in the world.
With the opening up we saw that local people were exposed to more advanced technology and different ways of thinking about how to run a business. They learned and adapted quickly, and in some cases even leapfrogged those who had been far ahead of them.
We therefore now see that many big IT companies based in China do just as good or even better than their foreign counterparts. What may have helped is that so many Chinese students went abroad to study and were given insight into different ways of working and thinking. They were allowed, or I would say, even forced to doubt whether what they were told and taught was indeed the one and only way forward. This helped to open up the creative thinking needed for business development and technological research.
For further reform and opening up, China should encourage constructive feedback as no leader knows exactly what goes on at the bottom. The people in between do not want to relay “bad news” so leaders will never know what can be improved if there is no constructive feedback.
For example, we are fighting pollution, which is a must in order to improve our living conditions. However, on the local level, we see that officials simply temporarily close a number of factories instead of checking how they can improve without closing them. By closing these factories, local officials want to show to the leaders that they have taken action and their rice bowl is safe, but nothing has actually changed. Instead they should have come back with a plan that sets goals for factories to change their way of working and become “green” producers.
For this, the government should set aside a fund from which factories can get subsidized loans (when needed) to purchase environmentally friendly machines and implement green production processes. By doing this you show the leadership that you understand the problem, that you know how to solve the problems and you can do so without closing the factories and firing people who then lose their rice bowls.
We have come a long way since the launch of reform and opening up four decades ago; now it is time to slowly open up the minds of the people and teach them how to constructively “challenge” our way of working and thinking. I fiercely oppose a destructive challenge and we should always suppress that. Constructive feedback and challenging established ways of thinking will help us improve and innovate.
(The author is a Dutch businessman living in Hong Kong doing business in China since February 1988.)