[contingencies]

Living in China it's quite amazing how the business culture differs from many western markets. People seem to throw themselves in to ventures without business plans, market research or specific costings. I suppose that when the cost of failure is reduced, dynamism results, because reaction times to opportunities are reduced and people are able to take the risk of following a new path. These days, when I think of analysis paralysis, I think of conservative traditional western business mindsets. The worst of which, frankly, seem to be continental European and governmental bureaucracies.

FWIW in the last 18 months I recall pitching one major European industrial group requesting specifically disruptive technology for established industries. Considered at the board level, their feedback was unanimously positive: but they could not take the opportunity because it was "too far from existing business lines". If you thought corporate VC was bad, try that in an old-Europe context...

[Archelaos]

> If you thought corporate VC was bad, try that in an old-Europe context...

I am not sure whether it is specific for old-Europe or not just a universal symptom for long-running companies unable to re-invent themselves, because they were somehow locked into an established pathway, so that fundamental changes promissing probable benefits in the long run would mean certain short-term losses in the near future due to major investments and canibalization of their legacy businesses. An example outside of Europe seems to be Boeing's stretching of a several-decade-old airplane design towards a limit were it became increasingly problematic, while starting over would have involved extremely large investments and the loss of much of the experience gained from the old design.

On the positive side, such lock-ins of traditional companies can mean sound business opportunities for small newcomers. I was myself working with small dynamic companies in Germany and Austria who were afraid that one day a large, financially strong competitor might decide to copy their successful products and business modell or enter their highly profitable niche market -- however, it never happened. In other words: If the parent is right and established companies in old-Europe are even more unflexible than elsewhere, it should be safer to attempt to disrupt their old-Europe markets than to try the same somewhere else.

[wolverine876]

> I suppose that when the cost of failure is reduced, dynamism results, because reaction times to opportunities are reduced and people are able to take the risk of following a new path.

First, how is the cost of failure reduced?

It sounds like fundamental economics: If you reduce the cost of investing, usually by lowering interest rates, then investment increases, following the pattern you described.

What is the state of credit / funding in China? Is the government still pumping credit into the economy?

> People seem to throw themselves in to ventures without business plans, market research or specific costings.

But usually when we start seeing that pattern, it's a bubble. Resources are being allocated to unproductive initiatives.

As with anything, there's a balance.

[ineedasername]

There's a social cost & opportunity cost to failure. If a culture stigmatizes failure there's less risk taking. Though I think it often happens at the family level too: One business failure and you're the family screw up, maybe even if you get success later on it's still held over your head.

[wolverine876]

I understand that, but the comment seemed to say there was less cost to failure in China, not more.

[ineedasername]

Ah, yes-- a reread of the comment does imply that, and I can't evaluate that claim. Except to say that, as you mentioned, the financial cost shouldn't be much different (unless the government has much stronger support/subsidies for starting new businesses? I know the Bank of China has friendly terms for domestic loans but I though that tended to be for large scale initiatives and less so for startups)

I'd really like to know more about any cultural or social factors involved. Putting aside the governmental regime, I think the region has a fascinatingly different culture & outlook on the world that differs much from more Western views but has a depth that is often obscured by modern politics. Of course some of that stems from a historic tradition that made the region extremely opaque, if not outright inaccessible (geographically) from outsiders. Hong Kong for example was founded (partially) because ports & cities beyond that area were forbidden. (The cynical & hypocritical Opium Wars waged by Great Britain were of course a factor as well)

[Deritio]

There are not many industry breaking huge china based companies globally in comparison of how many people they have.

Perhaps our way might not be that bad after all.

And while Chinese currently the EV market discovers it's totally unclear how the car industry will look in 10 years

[contingencies]

After 20+ years here (currently, like ~every other foreigner, leaving) I ascribe the failure of China to innovate at a rate matching its size, industrial significance and affluence to the politicization of its education and media systems primarily and secondly to its insistence on isolating young people from foreign internet influence. The dynamism of small business is a counter-weight, not a contributor. Local engineering staff are good, but they are primarily domain-specific pragmatists who lack both the theoretical foundations and the general analytical capacity to independently face ill-defined cross or novel domain problems and I believe this stems directly from the rote-oriented education system and "don't be the nail that sticks out" politicization of society as a whole. After decades of seeing the individual and original ideas of themselves and their peers put down, most Pavlovian subjects, regardless of nationality, are going to wind up cognitively and emotionally eschewing creative thinking. "Not my department" is rife. There are many great things about China historically and the modern supply chain is unrivaled, but culturally modern China is simply not aligned with R&D at a fundamental level.

[wolverine876]

> I ascribe the failure of China to innovate at a rate matching its size, industrial significance and affluence to the politicization of its education and media systems primarily and secondly to its insistence on isolating young people from foreign internet influence.

That follows an old pattern: In a leading history of modern China (1644 to the late 20th century) [0] they talked about the Chinese emporer's response to the Enlightenment in the West and the resulting power imbalance, which resulted in Western countries stealing Chinese cities and forcing trade on China (including opium). The following probably has a few details off, but my point is the general pattern:

Before the opium wars in the mid-19th century, the Emporer Qianlong wrote a famous letter in 1793 to the King George III of England in response to an offer of trade and diplomatic relations: "As your Ambassador can see for himself, we possess all things. I set no value on objects strange or ingenious, and have no use for your country's manufactures." [1]

The imperial policy was to severely limit all interactions with the outside: No diplomats, no trade, no tourists, nothing. Some foreigners lived in Peking, but were restricted in their movements and not allowed to leave China (read the cited letter for details). IIRC, foreign traders were restricted to special ports where they were isolated from the country itself.

Subsequently, the Western countries, with their advanced technology, siezed control of Chinese port cities and forced trade on China. The Chinese state could no longer deny the value of these manufactures, and China's need for them.

(Perhaps think of this from the perspective of an isolated country that lacked all IT and was trying to acquire it for their military, but without any exposure of their people to the people who make it and without any changes in their own society:) They tried to simply acquire the technology, but of course had trouble operating and maintaining it. Then they allowed certain military officers to receive training in operating it, but still couldn't supply their own parts, maintenance, etc. Then they learned some of the manufacturing, but didn't have the military doctrine or education to apply it. They tried learning the doctrine, but lacking Western educations, couldn't really utilize it or understand it broadly throughout their miltary. ... They tried expanding step by step, but in the end, lacking widespread Western education, they lacked people who could understand the technology and find ways to apply it. You would be surprised how much of Western values is embedded in that technology. (Again, some details may be off, but that was the pattern over decades.)

Today, thankfully, many people in China can access a better education and foreign governments no longer control parts of China. But it seems like the Chinese Communist government is trying to have capitalism and free markets without freedom and free-thinking - arguably another step in the same process. (And to be clear, I'd love for the people of China to have freedom and self-determination to control their own fates - I am sure they would thrive, as the people of Taiwan and Hong Kong have shown.)

In many ways, IMHO, the current Chinese Communists are similar to the imperial dynasties that preceded them.

[0] Either Emmanual Hsu or Jonathan Spence, I don't recall which one.

[1] https://china.usc.edu/emperor-qianlong-letter-george-iii-179...

[contingencies]

Yes, history repeats itself. Perhaps human nature will never change, but we have the technology to meaningfully change our political systems, education, media, supply chains and social fabric and those together should be powerful enough to adjust our aggregate behavior. It is perhaps the greatest tragedy of modern China that it has come upon the most realistic such opportunity ever presented to mankind and so far squandered it on imitation and autocracy.

[MathYouF]

I wonder how much of that is a result of the state enforced cultural isolation-

(as a means of decreasing the chances of information and ideas which they actively censure from spreading in the population, ideas which would be likely undermine the current leadership's ability to maintain unilateral power. Just as Russia has experienced with its citizens as they become more connected to others outside of the country, whose individual liberties and relatively meritocratic economic systems they've begun to push for domestically)

-rather than lacking technical merits in what they create or the speed at which they do so.

[wolverine876]

> Perhaps our way might not be that bad after all.

I think it's a fundamental error to call anything 'our way' or 'their way'. It prevents you - and them - from learning and integrating ideas. My way is to avidly learn and use the best ideas I can find, regardless of their source.

[Nevermark]

> I think it's a fundamental error to call anything 'our way' or 'their way'. It prevents you - and them - from learning and integrating ideas.

The phrases "our way" and "their way" are neutral. Our way can be better sometimes, not as good other times. And vice versa.

Avoiding common useful simple language can only reduce clarity.

> My way is to avidly learn and use the best ideas I can find, regardless of their source.

Absolutely. "Your way" is good in this instance.

[UmbertoNoEco]

By our way you mean leverage fiat currencies and take advantage of being in total control of international multilateral organizations?