Speed and Slowness

With the economic slowdown in full swing, taking a slower road to match the pace isn’t necessarily a bad thing when doing business in China writes Cecilia Fan.

In 1993, author Milan Kundera published Slowness. Through two parallel stories both taking place in the same French chateau, it reveals a modern relationship full of fame, lust, conflict and anxiety; and an ancient pairing consisting of flirtation, lingering and temptation, which, by today’s standards would leave anyone feeling impatient by the ‘slow progress’.

Looking back over China’s recent economic development, there are certain parallels which can be drawn between Kundera’s comparison of new and old, fast and slow. In China’s recent history, there has been a particular impatience which does not tolerate any slowness in economic development.

In the 1950’s, Chairman Mao launched the Great Leap Forward – the vision of seeing China catching up and surpassing the US and UK in terms of steel production within just a few years. The Chinese nation worked day and night in their backyard steel mills – which produced nothing but waste and what pre-empted three years of disastrous famine – one of the worst in human history in which an estimated 36 million people died.

 In more recent times, China has exchanged this kind of ideology for an open door policy, leading it to enjoy close to double-digit growth for the last 30 years. Both the Chinese and the West have benefited from China’s staggering growth – in terms of improvements in quality of life to high returns on investment.

However, such rapid growth is not without its problems. The recent milk formula is just one example that has put a huge question mark over the glory of China’s economic growth. The scandal resulted in the deaths of four babies, a further 50,000 children hospitalised and has left China’s dairy industry in disrepair as well as bringing into question the nation’s overall reputation for quality food safety practices. A whole chain of people were responsible – from the Chinese entrepreneurs at the top praising the virtues of the “magical” properties of powdered milk, to the milk collectors who benefited financially from artificially increasing the fat and protein content of their product and the Chinese dairy processors (and a western joint-venture partner) who failed to implement quality control measures to pick up the contamination.

How did these problems occur? Can it be simply put down to immorality and greed?

Several factors are at play here. China’s dairy industry development really only started in the 1990’s and with it Chinese Government ambitious five-year plans for the number of dairy cattle and dairy output in China. At the time, questions were raised about how realistic the plan was given the logistics of developing cattle herds which could produce high quality milk in a short period of time. Despite significant scientific improvements in fertility, production volume and solids, the government’s projected growth was far higher than China’s own resources could possibly match. Thus, it had to rely on extra channels such as the importation of high quality cattle from other countries and genetic technology.

The development of China’s dairy industry also faced uneven investment across the sector. There was more investment in the down stream processing and very little in the upstream, as the returns in upstream (ie the breeding sector) are much slower. For those looking for a quick investment return, the use of melamine to boost the protein levels of the milk certainly brought ‘hope’ to the sector in its eagerness to be part of China’s economic miracle.

However, let’s not ascribe words like ‘greed’ and ‘tragedy’ only to the Chinese. Indeed, many western companies have entered China as if they were entering a gold rush. Not satisfied with a business plan which might break even in the fifth or even third year, some western companies’ philosophies have been that since they take such a high risk in entering China, there is nothing unreasonable about expecting returns within as little as 12 months.

For those companies, the prosaic realities of market research and due diligence are considered a waste of time and money, and are merely road blocks on a short-cut journey to a dream return. Companies often convince themselves that they are prepared for the challenges of China because they have been to China several times and have established local contacts.

Likewise, while appointing regional distributors and managing a national sales network might take a couple of years and could be seen as being slow and troublesome, these short-cut companies readily believe the employ of one or two agents who they hardly know is going to help them to conquer all of China! After all, China is not an ordinary place, and people come here to find gold not to grow vegetables. Few stop and think that often the people selling vegetables during gold rushes often make bigger profits than the gold-diggers.

Today’s economic climate might be a good time for us all to review our own pace and expectations and to ensure that we are building sustainable businesses. The best relationships are not those that only exist in the times of strong growth, but those that sustain us during the downturns as well. Slow down if needed, and use the opportunity to work on building stronger relationships with your business partners. As in Milan Kundera’s world, this "slowness" can also be beautiful and memorable.

 *Hui Yin Bi, the “Echo Wall,” welcomes all feedback. Contact Cecilia Fan at: This e-mail address is being protected from spambots. You need JavaScript enabled to view it