The China Challenge

This entry is based on a speech given at the China Business Challenge, November 12, 2011.

The China Business Challenge was the result of hard work by UM students in the China Entrepreneurship Network.  The University of Michigan is proud of their work.  With nearly 50 teams of students participating, including 3 from Michigan State University and 7 from Shanghai Jiao Tong University, the China Business Challenge has to be considered a success. The work that our students took on to organize this business competition illustrates education at it’s finest: active, engaging, and experiential.

It is important that the business challenge was designed to engage the creative minds of our students to propose business models that can address some major problems in China, and by adaptation, some major problems in the world. The Challenge was organized around the three themes of high technology, environmental issues, and social impact. There are few more important challenges in China, or in the world.

China is a partner to the US, but is also a significant competitor.  While the US economy is the largest in the world, China might be poised to overtake us sometime in this decade (although I suspect it will not).  But if the US and China are competitors, why should the University of Michigan, or the United States, be engaged in China?   Why should we be doing joint research with Chinese universities, or building educational collaborations like our University of Michigan – Shanghai Jiao Tong University Joint Institute?  Why are we sharing our best organizational, technological and educational ideas with China?

Because competition is not conflict.   Competition, informed by strong purpose driven value systems, is in fact a stimulus to improvement for all of us.  The best way to avoid conflict between the two great economies of the world is to promote engagement, understanding, and mutual dependence.  It is in the United States’ interest to have China fully engaged in the normal international economic and legal structure of the world.

Further, the challenges of China are not unique to China.  China provides us with a laboratory, a laboratory in which we can all learn new approaches to development in a nation that seeks modernize its economy in a 21st century way.

Not surprisingly, this process of transformation is not smooth. Creating change requires high functioning teams that know the value of diversity and the power of inviting and working through disagreement.  It is from this disagreement that the best ideas are born, built from the shards of ideas in collision.  But China is still insufficiently tolerant to organized disagreement.   And any of us who have experienced the dirty air of a Chinese city know that plenty of mistakes are being made as China jump-starts its economy, recreating at a large scale some of the environmental blunders of the West.  But these mistakes represent the pains that an entrepreneur seeks to address with a strong business venture.   Solving these problems in China presents all of us with new tools to solve them elsewhere; failure to solve these problems in China presents all of us with a catastrophe.

While China’s economy is large, her per capita GDP is not.  The US is somewhere around 10th in the world by per capita GPD, but China’s per capita GDP places it somewhere around 90th.   Being the world’s second largest economy is not the same as being a prosperous country.  China houses 1.2 billion people, some 800 million of whom still live in relative poverty.

It does not seem necessary, it does not seem healthy, it does not seem right, to maintain my own privileged position by denying these 800 million people access to the ideas that might improve their lives.