After studying China’s attempt to move beyond manufacturing and into the lucrative creative industries of technology, advertising and culture last May, I returned to the US, logged into my IRA and sold all my shares in a China-focused mutual fund.
During my travels, I’d lost faith in China as an investment growth story, particularly in the tech sector in which the fund was heavily focused (with holdings in Ten Cent, Alibaba and Weibo). I decided these companies are propped up by the central government keeping Western tech companies out of the Chinese market. I felt I had a limited view of whether true innovation is happening in such an opaque market. I also believe investors have little protection if government censors decide to reward or punish players (e.g. what if they dislike something the richest man in China, Alibaba chief Jack Ma, says?). More than that, the Chinese government’s aims to kick-start creative industries from China seemed like a gross irony: Its own repressive policies stifle the enormous creative potential of the Chinese people. I can’t support that.
The events in recent months that call for a continuation of Western-style rule of law, elections and free speech rights in Hong Kong (and extending to other parts of the mainland) is one of the few bright spots I see right now in China. Conversely, the dampening of the Umbrella Movement in Hong Kong shows us why China isn’t ready to prosper in the creative and technology fields. The communist party in China may be feeling pressure as GDP declines in the past four years to 7.7% in 2013 down from 10.4% in 2010 and amid unrest about corruption within the party. China’s current crackdown on corrupt communist party leaders is, itself, rarely offering defendants due process or fair trials – key components of an operative rule of law. The wishful thinking that China can conquer Silicon Valley, Madison Avenue, Hollywood, Korea, Japan and European tech hubs without freedom of speech and press amounts to Mao Zedong’s Great Leap Forward in 1958, a dream of industrial progress that fell flat.
A 26 segment × 3 exposure (78 frames in total) panoramic view of the Hong Kong skyline taken from a path around Victoria Peak. Français : Vue panoramique de Hong Kong depuis un sentier de Victoria Peak. Image construite en assemblant 78 clichés (26 visées × 3 expositions) réalisés avecun appareil Canon 5D et un objectif 85mm f/1.8 réglé sur f/5.6. (Photo credit: Wikipedia)
During my week in Bejing in May, I met a young man who was pursuing an MBA and started telling me that China is unlikely to turn out any “Steves.”
“What do you mean by, ‘Steves,’ ” I asked.
“Steve Jobs. He is the greatest innovator we know. Our schools and colleges and families aren’t developing anybody like him.”
He went on to explain that the central government has done a reasonably good job at pushing infrastructure improvement throughout the country and expanding the manufacturing economy in China. But he was highly doubtful this kind of approach can work in the creative fields such as technology, media, cultural arts and journalism. I tried to argue that Jack Ma and others are showing Jobs-like talent and promise. He disagreed and said they are largely derivative rather than innovative. We agreed the Chinese people are very bright, driven and enjoy a history of invention that includes paper, printing and gunpowder. But is their creative potential is being hindered by their own government’s Orwellian control and by a culture of rampant copyright infringement?
TIANJIN/CHINA, 28SEPT08 – Jack Ma Yun, Chairman and Chief Executive Officer, Alibaba Group, speaks during The Future of the Global Economy: The View from China plenary session at the World Economic Forum Annual Meeting of the New Champions in Tianjin, China 28 September 2008. Copyright World Economic Forum (www.weforum.org)/Photo by Natalie Behring (Photo credit: Wikipedia)
During my own MBA classes in Shanghai in May, some of our speakers argued that the era of “Cheap China” and “Dirty Manufacturing” is over and that leaders in Shanghai and the central government are focusing on building a creative culture, adding 4,000 museums, galleries and art centers in the past five years, designating Shanghai as a “City of Design” (focused on industrial, fashion, architectural and multi-media design) and creating multi-million-dollar tech incubators and “creative clusters.” The government is funding book fairs, film festivals and promotes artistic works by writers and artists of whom it approves.
While blocking Twitter TWTR -3.06%, Facebook and other American giants from Chinese consumers, the nation desperately wants Alibaba and other tech firms to rival Silicon Valley and other tech hubs, to create its own luxury brands and to boast world-class museums. In 2013, Shanghai regional governments gave $48 million to creative industries, including more than half of it to the design sector in the form of grants, loans and bonuses. “China used to be a factory. Now, it’s a large market,” said Dr. Marina Guo,Head of ArtsManagement at the Shanghai Theatre Academy. “We are trying to change it from an industrial economy to a creative economy.”
Guo admitted that the country lacks expertise in many of these areas and is aiming to bring in foreigners who teach Chinese people to be more creative. And as my group of EMBA students with the Berlin School of Creative Leadership (many of them leaders in the media and advertising world) visited advertising agencies, cultural consulting firms, design studios and startup offices, we quickly saw that nearly every single company had foreigners from places like Mexico, Germany and the US leading the efforts. And many of these expat executives seemed frustrated with what they experienced in China.
“Not one Chinese brand can compete with a premium foreign brand. Most local brands are stuck in a downward vortex of commoditization,” said Tom Doctorov, the head of advertising agency JWT in Shanghai. “All leading brands (in China) are Western brands. An international brand signals cool and quality.” Later in his presentation, however, Doctorov noted that “it’s a myth that Chinese people can’t be creative. Their thinking is both lateral and lineal. They are some of the smartest people in the world.”
But he argued that the culture and government has limited that creativity. “Chinese people want to stand tall, to be shoulder to shoulder with America. They want to achieve and get ahead. They have larger than life ambition,” he said. He noted that China has apartment buildings with names such as “RichGate,” “Tycoon Place” and, his personal favorite, “The Gateway of All Heroes Under Heaven.”
It sounds to me like he thinks advertisers should play on the Chinese insecurities and keep them yearning for Western brands. That may work in advertising and business as Starbucks, Nike, Converse and other Western brands proliferate store openings in China. But he also signaled something deeper: a yearning for freedom and individuality.
“People are oppressed,” he said. “They have huge ambition in their heart but it’s not being let out. The Internet is a blank canvas. It’s a safe place. They are netizens. Online is about release and liberation.” He notes the 100,000 Internet “watchers” in China provide a good polling system about what people are thinking about. Will they listen to the masses?
Chinese people are creative. But their creativity is being inhibited by their government. Policies of greater individual liberty will only enhance China’s bright future. Expanding liberty, democratically-elected leadership and individual rights would only enhance China’s great history of innovation and its economic prospects.
The crackdown in Hong Kong is showing that the central government is, indeed, unwilling to listen to the masses. It would rather stonewall them, stall them and then, if unable to stop the opposition swells, to hire goon squads to beat and molest the citizens protesting for basic electoral and democratic freedoms which are being stripped from them. And the crackdown in Hong Kong breaks promises the government made to Hong Kong in 1984.
“We have also stated repeatedly that apart from stationing troops there, Beijing will not assign officials to the government of the Hong Kong Special Administrative Region,” party leaders wrote in a famous “One Country, Two Systems” policy paper in 1984. “This policy too will remain unchanged. We shall station troops there to safeguard our national security, not to interfere in Hong Kong’s internal affairs. Our policies with regard to Hong Kong will remain unchanged for 50 years, and we mean this.”
Chinese Stamp, 1950. Joseph Stalin and Mao Zedong are shaking hands. (Photo credit: Wikipedia)
The wisest move for China would be to follow its own policy from 1984, maintain the 1st Amendment style freedoms in Hong Kong and expand them in the mainland. For now, Hong Kong’s chief executive C.Y. Leung must step down and the city be allowed to elect its own leaders democratically. While the central government fears this would lead to chaos. I think the opposite would be true. China would experience a flourishing of creativity and invention. It might also get that GDP growth number growing in the right direction as well.
The young protesters in Hong Kong are showing immense creativity with their joy, their resolute speech and their songs. One of the anthems they keep returning to is a 1990s rock ballad called “Under a Vast Sky” by a band called “Beyond.”
Forgive me for being wild and yearning for freedom
Yet fearing someday I might fall down
To give up one’s dream
It isn’t hard for anyone
It would be fine if someday there’s only you & me….