In Part 1 of this series, I explored the rich entrepreneurship culture that partly contributed to Silicon Valley being what it is today.
I then followed Kai-Fu Lee’s thesis in his Book AI Superpowers of comparing Silicon Valley entrepreneurs to Shenzhen entrepreneurs and asking questions about what makes them similar and different.
If Silicon Valley entrepreneurs are a by-product of generations of ground-breaking innovators and entrepreneurs who came before them, what generation makes Shenzhen entrepreneurs?
What is the foundation that anchors Shenzhen entrepreneurs in China?
Before answering this question it is important to briefly highlight the history of China and entrepreneurship.
Firstly China is a traditionally Communist country.
In his book Alibaba: The House That Jack Ma Built, Jack Ma talks about how difficult it was to start Alibaba in China during and era when entrepreneurship was outlawed.
Starting a business in that era was illegal. The major trading was done through State entities.
He says any entrepreneurship meeting would be raided and those in attendance would be arrested.
So they would hold secret meetings discussing business and ideas.
Today China has relaxed those laws and have started supporting local entrepreneurs.
Unlike Silicon Valley entrepreneurs, Shenzhen entrepreneurs don’t have a long rich of entrepreneurial ancestors, mainly because the government was the sole “entrepreneur.”
Unlike a decentralised supportive structure that the USA adopted to supporting entrepreneurship, China outlawed entrepreneurship and the central government played a pivotal role in the economy of China.
Recently now that the Chinese government has relaxed the tight rope around entrepreneurship, we have seen a rise of young entrepreneurs in the country.
The rise of entrepreneurship in China in the last two decades has resulted in remarkable achievements.
In 2000, total revenues earned by Chinese state-owned industrial enterprises and those in the non-state-owned sector Chinese private enterprises were roughly the same at about 4 trillion yuan each.
By 2013, while total revenues at state-owned companies had risen just over six fold, revenues in the non-state sector had risen by more than 18 times.
Profits in the same period showed an even more remarkable difference, with state-owned companies showing a sevenfold increase but profits at non-state-owned ones increasing nearly 23 times.
The number of dollar millionaires in the US increased by 675,000 last in 2018 to 18.6 million in 2019.
In China, there are 4.4 million millionaires, an increase of 158,000 on 2018, according to the report, and 10% of the global total.
According to the Credit Suisse wealth survey there were 100 million Chinese people among the world’s top 10% of richest people, compared with 99 million in the US.
China has overtaken the USA in rankings of world’s richest people.
Off-course China has the biggest population in the world, and the per capita income of the USA has higher than that of the China.
Chinese entrepreneurs have been criticised for their lack creativity and innovation instead they copy innovations from other countries.
This has lead to terms such as “Knock-offs” being used referring to Chinese imitations.
Why did China copy ideas instead of generating their own innovations?
Are Chinese entrepreneurs inherently unimaginative?
What Kai-Fu Lee highlights in his book The AI Superpowers explains the reasoning behind this phenomenon.
Coming from a Communist state, the government sets the tone for everyone to follow.
As result Chinese people become conformists. They are obedient and are expected to follow what their superiors says.
Young students are taught to recite things word for word.
The brightest student is the one that is able to recite things verbatim, follow instructions and do as he is told.
In the USA, this is different. Standing out and being different is celebrated more in the USA. Freedom to express your creative genius is celebrated. Rising your hand and being an individual is what matters in the USA. Culturally, the USA is a Hero worship, individualistic culture. A superman, lone ranger who saves the world mindset.
China frowns on individualism, and trying to be different. Theirs is a culture of team-work, keeping a low profile, being obedient to the master and towing the line.
So, the copying of ideas is not as a result of lack of imagination, but it is a cultural phenomenon and there is nothing wrong with that in China.
To follow and copy what is there to the exact detail is what makes sense.
There is WhatsApp in the USA, and there is an equivalent called WeChat in China.
There is Amazon in the USA, and there is Alibaba in China.
There is Google in the USA, and there is Baidu in China.
There is Twitter in the USA, and there is Weibo in China.
There is Gmail in the USA, and there is QQ Mail in China.
There is Facebook in the USA, and there is RenRen in China.
Does this strategy of copying and creating the equivalent in China work?
So far it seems to work. China has been one of the fastest growing economy in the world.
In China today, poverty refers mainly to the rural poor, as decades of economic growth have largely eradicated urban poverty.
According to the World Bank, more than 850 million Chinese people have been lifted out of extreme poverty.
China’s poverty rate fell from 88 percent in 1981 to 0.7 percent in 2015, as measured by the percentage of people living on the equivalent of US$1.90 or less per day in 2011 purchasing price parity terms.
China may not have a rich history of entrepreneurial ancestors, but they have managed to pull themselves out of poverty, created what Efosa Ojomo calls marketing creating innovators and are now in a position where according to Kai-Fu Lee they are able to compete with Silicon Valley entrepreneurs in terms of AI.
What can South African entrepreneurs learn from all this. We next article I will explore what we can learn from all this.