Chinese lessons for South Africa
Leading SA entrepreneur Dana Buys believes we're missing the point.
From moneyweb.co.za
FRANSCHOEK - I recently spend a week in Shanghai, China; participating in a Harvard Business School refresher course re Asia and in specific, China's role in the global economy, post the credit crises. It left me in awe and thinking about what South Africa could learn from the Chinese revival.
I will refrain from dwelling on the comparable South African issues and rather focus on the positive take-aways. It may be useful to keep in mind that the China miracle started only 10 years before the release of Nelson Mandela.
It's all about the right people in the right jobs
Get the right people in the right positions. As the saying goes ‘"A's hire A's, B's hire C's".
China, like Japan, South Korea and Singapore before it, is a meritocracy. That means people get their jobs on merit and not on the strength of the political or other connections. In the 30 years since the end of the Cultural Revolution, China's GDP has grown more than 10 fold!
It has been a meritocracy for a very long time, with a 3,000 year-old history of recruiting the best talent into government. The approach goes back to the Imperial exams required for a career in the civil service. China is a very diverse country with many ethnic groups and as many cultures. Yet leadership is not based on ethnic issues, it is all about merit and the right talent.
The deployment of the best person for the job is seen across both public and private sectors. Case in point, the mayor of Dalian, a city located close to the Korean border. His stated goal is to develop Dalian into an IT superpower, surpassing the likes of Bangalore in India. No minor goal, but then the mayor was previously president of a major university and he is very well equipped to spearhead the task ahead.
A winning national strategy
With the right people in the right jobs, the next step is a suitable national development strategy, given its resources, constraints and established competitors. China is not a democracy, but the leadership since 1979 have made the right decisions and set the country on a wise course.
Developing a country's strategy is similar to developing corporate strategy: One has to consider the national resources, strengths, weaknesses, threats and opportunities vs. that of its competition - in this case other countries. The examples set by the likes of Japan, South Korea and Singapore have shown how countries with vastly different resources can come up with winning strategies.
China currently sits on US$ 2,500 billion in foreign reserves! The reserves are growing by hundreds of US$ billion annually. With that amount of cash, China will buy control of a lot of the external resources required for its continued growth and development.
Education is crucial and a pre-requisite for a meritocracy
In order to be competitive, the right education is absolutely critical.
The successful Asian governments identified the best & brightest kids at an early age and then fast tracked those without the financial means. The best domestic education was followed by graduate and/or postgraduate studies at the top universities in the world. In return, the governments expected those students to commit to approximately 20 years of public service.
The governments thus enjoyed a continuous stream of top talent joining by their mid 20's. The graduates ended up serving in government as well as in state owned corporations.
By their mid 40's, they could move into the private sector, often becoming CEO's or directors of top companies. Some stayed on in the civil service or became politicians. With the benefit of the best education and a strong network in government, the fast track graduates are in high demand.
Given the depth of the talent in the public sector, it comes as no surprise that government execution of national strategy; the development of infrastructure, education and general service delivery is top notch.
The roll-out of the high speed (300km/h+) Chinese rail network to Singapore, Europe, Russia and India is a great example of world leading technology coming out of China, on the back of a massive infrastructure improvement program.
There are currently more than 30 million students at Chinese universities, compared to only 1 million students in 1980. Their goal is to double this to 60 million by 2030. They are building new universities and partnering with other top universities around the world in their quest to improve education.
Uplifting a poor country requires high, long term GDP per Capita growth
Over the last 20 years, China's GDP per capita grew by more than 600%! It is impossible to materially uplift and transform a society without a high and sustained level of growth in real GDP per capita. It has often been said that one cannot re-distribute wealth, only poverty.
China focused (controversially!) on lowering their birth rates over the last few decades. The lower birthrates probably had a major impact on the transformation that took place. While the economy grew at nearly 10% per year, the population grew by less than 1% per year, resulting in a real GDP per capita growth rate of nearly 9%!
As result of the single child approach, the typical family invests a great deal more love, effort and time into each child. 93% of China's adults are literate. The Chinese are massive users of technology, with more than 500 million Internet users and 800 million cell phone users!
Focus on the vision and strategy, not the past
Ever heard a Chinese leader blaming the Cultural Revolution for their current challenges?
China was the world's largest economy for 19 of the last 20 centuries. Their overt focus on the humanities and late 19th century isolation resulted in China missing the industrial revolution.
Their lack of technology resulted in military devastation ahead of World War 1 and complete withdrawal following World War 2. Nearly 40 million people died violently or due to starvation from 1949 to 1978.
History is studied, understood and in the past. They know that they have to make the best of their current situation to ensure that China re-establishes itself as the world's major power.
Tough love results in low crime rates
Crime is not tolerated. The death sentence is handed out for crimes ranging from murder to top-level corruption, even to corporate crimes. E.g. two men executed and life imprisonment for the chairwoman, for their role in the 2008 melatonin/milk scandal that left more than 50 kids dead. Chinese jails are tough and not a place that inmates want to ever see again.
The large bureaucracy results in significant corruption at lower levels of government. Officials found guilty face long time in jail or even the death sentence. The government targets corruption even it means a lot more effort. E.g. most containers coming into China are inspected and customs fraud carries heavy penalties for those under-declaring or incorrectly declaring imports.
Conclusion
China is not perfect (far from it!), but we can learn a lot from them. In South Africa (and in most other African and South American countries) we need to dramatically uplift and transform huge populations.
We don't need to invent a better, unique way for transforming South Africa, given the lessons we can learn from Asia's growth economies.
The basics of the right people in the right jobs, the right strategy and skills development are so simple and so easily replicable. All that is required is the will and true leaders who want to serve the nation.
Dana Buys is a leading South African entrepreneur who founded Workgroup Systems and after selling it to Datatec, and as chairman developed Frontrange from its JSE listing in 1997 to a US-based international group. After selling the company, he returned home in 2005. For the past four years he has focused on running his Vrede en Lust wine farm which he bought in 1996.
