Opinion

Reflections on wealth and management from a home-grown private entrepreneur in China

(knowledgeatwharton.com.cn)
Updated: 2010-02-09 13:37

China Knowledge@Wharton: You employ professional managers trained at business schools to run your joint ventures. How do you handle the "agency conflicts" between shareholders and management? And how do you communicate with your managers?

Wu: As mentioned, an effective management system is a crucial foundation for managers to run a company. Then you need to focus on reaching beyond yourself. According to traditional Chinese wisdom, when one has reached a certain level of wealth and a certain stage of life, one has to learn to reach beyond oneself, or one's ego, to see oneself and one's actions from an objective viewpoint. On the other hand, are you able to run your company as effectively as your manager? In my view, hiring professional managers is the only way to help your business flourish. At present, China's business environment is not good enough for managers to develop their capabilities.

After establishing a management system, you need to focus on building a fully transparent communications system between you and your management team. You might trust them, but actions speak louder than words. Your managers may be worried that you will go back on your word. In recent years, I have thought a lot about this issue. I communicate with my managers in writing, and in a transparent way ... so that other parties can see exactly how and what decisions have transpired.

There is indeed conflict between owners and managers. Owners are more concerned about the company's future and tend to focus more on long-term development. Managers are more focused on the present. They are involved in the day-to-day realities and responsibilities of the job. They are more focused on reaching short-term targets.

For example, some American companies build their factories in China with rented computers and furniture as a way of keeping costs and risks low. This might work well for them, but a Chinese owner might not want to run his operations this way. But if companies lack a clear, long-term strategy, they will have a difficult time developing further.

China Knowledge@Wharton: How do you see the internationalization of Chinese companies and the integration of, or conflict between, Chinese and Western cultures?

Wu: If you want your company to grow bigger and stronger, you have to internationalize. First, you have to establish strong company values; second, you have to be involved in a global market or be in competition with global players; and third, you have to manage your company according to international rules.

Culturally, Western philosophy is based on objective principles. Chinese philosophy is based on humanistic principles, on the self. Personal elements and characteristics play a very strong role. China's economy incorporates both regulation and emotion. At present, we must integrate the two. In the meantime, as China's private enterprises expand, entrepreneurs need to learn to shed their egos. The wealth they have created will be absorbed ultimately by the whole of society.

China Knowledge@Wharton: How do you view wealth?

Wu: ChiNext [the stock exchange for start-up and small companies in Shenzhen] was launched last October, and many people came to me with estimates of how many times over my assets could grow [if we listed on it]. I don't think these numbers are very important. I grew up in a rural area, and even from an early age, life was never easy. Today, I treasure every stage of my life that I've been through. One's mindset is important. It impacts the way you think; whether you are calm or impatient, whether you care more about short- or long-term interests, and how you look at risk. In 2007, I was in a car accident, and this has also shaped my views on what is important in life.

I concentrate more on how to lead this company into a promising future. Assets, numbers, records, rankings - they don't really matter that much to me. Some people may risk using bribes to win a million-dollar bid, but in doing so they have harmed the whole of society. If you view the whole of society as being similar to a human being, then it's easier to see how one bad habit or influence damages the whole. You might be able to lift heavy things if your arms are strong or run quickly if your legs are strong, but if you are only strong in one area, your body as a whole is out of balance and cannot last long.

China Knowledge@Wharton: What do you think of executive MBA education in China?

Wu: Most EMBA training is a way to make money. Form outweighs content. Those running management-training programs need to find better ways to train people. For example, designing training courses targeted at specific individuals or, more generally, tailoring courses to student demand. Before any training begins, they could use evaluation tools to identify a person's strengths and weaknesses, and use this information to devise a course suited to the person. This kind of training would be much more effective. Group classes tend to lose focus.

China Knowledge@Wharton: Have you thought much about who will be your successor at the firm? Will it be your children?

Wu: It mainly depends on what my children wish to do. My goals are for them to be healthy, be independent and find happiness in whatever they choose to do. My eldest son graduated from university last year and now works in Shenzhen. I suggested that we don't contact each other for three years, to let him decide for himself what he wants out of life. I want them to decide their own careers. I can be an investor for them in the future. The advantage of being an investor in your children is that you trust them more than other people.

First published on Feb 3, 2010. Reproduced with permission from China Knowledge@Wharton (http://www.knowledgeatwharton.com.cn). © [2010] The Trustees of the University of Pennsylvania. All rights reserved.