Enterprise China

Chapter 1A NEW TYPE OF COMPETITOR

China has the world's attention. Most Western executives, whether their firms operate in China or not, can easily list key Chinese competitors. Many of these rival companies did not exist 30 years ago, but today they command respect—even if foreigners struggle to pronounce their names or simply refer to them by their initials, such as SAIC (Shanghai Automotive Industrial Company), ICBC (Industrial and Commercial Bank of China), or CNOOC (China National Offshore Oil Company). Unfortunately, the formidable Chinese foes that Western executives see do not capture the full picture of the challenges they face. Where a foreign executive sees an independent, individual multibillion‐dollar Chinese company, it is merely the nose of a larger, multitrillion‐dollar monolith. The real rival includes not just the individual companies on which Western executives typically focus their competitive analysis but an array of interconnected firms in a much larger ecosystem. More importantly, this monolith includes the largest entity on the planet by number of employees (386 million¹) and the second largest by revenue ($1.3 trillion²). We're talking about the Chinese state, which includes national, regional, and municipal governments. We refer to this commercial totality as “Enterprise China.”

Without taking this full picture into account, foreign executives can easily misunderstand their opportunities and challenges and miscalculate their responses. Consequently, ...