All At Once Entrepreneurship In China

by Nathaniel Whittemore

categories: Emerging Markets, Government and Social Entrepreneurship, innovation, Meta, Society

Published June 02, 2009 @ 10:08AM PT

A string of recent books, from Fareed Zakaria's "The Post-American World" to National University of Singapore professor Kishore Mahbubani's "The New Asian Hemisphere," have argued that there is, in Mahbubani's words, an irresistible shift of power to the East. These works argue that the increasing economic and political strength of Asian countries is a force that the US should embrace, as it's not about a fall of the West but a "rise of the rest" so to speak. They also argue that whether we like it or not, these forces are here to stay. Yet these works also tend not to locate the nexus of economic growth in entrepreneurship. It's fascinating to see a few articles in the last week, then, about the emergence of entrepreneurship (including social entrepreneurship) in China. Tech journalist Sarah Lacy wrote a post on TechCrunch yesterday called "Why China Isn't the Next Silicon Valley." Her point was basically that there is something uniquely different about the all at once nature of China's growth.

What makes China so staggering is that everything that happened to corporate America over decades—think the television and media studios build out of the 1950s, the greed of the 1980s, the dot com bubble, the build out of physical and IT infrastructure, current Web 2.0 and CleanTech innovation—is all happening to China at once.

Imagine: At the same time eCommerce is getting sea legs, TV Home Shopping is also getting hot. Online ads are growing not because people are TiVoing through commercials—both TV and online ads are growth markets at the same time. Ditto for entertainment and piracy: While Hollywood sees the Internet as a threat to its cozy legacy business, China’s entertainment industry is just now building amid a world where piracy is already rampant. No one assumes anyone will buy a CD, so they just look for other ways to make money. The wonder of China right now isn’t just the size of the market. It’s the rate at which dozens of “old” and “new” economies are all maturing amid one another, and the hyper-network effects that such economic progress is having throughout the country.

As for China’s start-up ecosystem , it’s working to build its own Valley-like infrastructure, but it doesn’t have the luxury of growing it steadily over several decades. Experts say there’s at least $20 billion in venture capital sloshing around the country right now. It’s probably double that if you count angels and unofficial or very local funds, says Rocky Lee of DLA Piper, a law firm that represents much of that venture money in China.

That’s why calling China merely “the next Silicon Valley” misses the singularity of what’s happening there. The Valley has never been like this, and I don’t say that to knock the Valley. In many ways,  our steady development has been healthier. But it’s also a lot less electric. In the next ten years or so way more money will be lost amid the China chaos, but I’m betting way more money will be made too.

It's not just new economies that are being created, however. A few weeks ago, a delegation of Chinese leaders representing the government, media, and the private sector gathered in Beaverton, Oregon for a 9 day "Social Innovation Leaders Program" in order to learn about how US companies and other private actors work actively to create social good. From a story in the Seattle Times

:

Wu Qungang, a young government official from China, came to Oregon this month for an unusual nine days of study about social innovation in a capitalist country. He learned how Nike funds youth athletics and Starbucks gives grants for community projects and heard about a host of other ways that business and philanthropy can be harnessed to make life better.

Then Wu asked a question: What about the shareholders and the bottom line — all this giving reduces profits. "What can the corporation do to convince the shareholders to continue all of this social responsibility?"

Wu's comments reflect the debate brewing among a generation of Chinese who came of age amid a juggernaut of entrepreneurial growth that made some in their nation rich while expanding the gap with those who remain poor.

They see a need for more philanthropy and more public-private partnerships to tackle the social, economic and environmental problems of 21st-century China.

Root Cause founder (and peer social innovation blogger) Andrew Wolk wrote a piece reflecting that the world is at an inflection point. In "China's Opportuntiy for Social and Public Innovation" he wrote:

As I reflected on the time I spent with these participants, it occurred to me that China, because of its recent adoption of capitalism, has a particularly interesting opportunity to advance social innovation. It was only 30 years ago that China began to explore free markets, and yet the country is already seeing market failures along with the vast opportunities to advance social innovation that come with those failures...The leadership of the All-China Youth Federation got it, recognizing that it would take all three sectors to tackle issues of poverty, the environment and other society-wide challenges that will become even more pronounced as their economy continues to grow.

It's easy to forget how powerful youth is. For each of the last two years, the Global Engagement Summit has welcomed undergraduate members of the Chinese Youth Social Entrepreneurship Network to Chicago. New websites like Responsible China are keeping track of social responsibility and innovation among Chinese companies. Young Chinese leaders have (and are clearly taking) the opportunity to design their capitalism, and it seems to me to be worth investment and support to help social innovation and entrepreneurialism take root at the heart of their vision.

Image Credit: "Traffic (Are You Ready?)" by SmokingPermitted