China: The Hidden Costs of Pessimism (2014)

AbstractThe aim of this paper is to show that despite great progress certain attitudes and core values have restricted China in terms of entrepreneurial leadership and innovation. Moreover, the purpose of this paper is to show that the processes of creativity and are a result of open leadership by exceptional individuals who are ultra-entrepreneur-extremists. These are exceptionally talented people who provide the inspiration and motivation to build highly innovative companies such as Apple, Microsoft and Google. China can accomplish much with a positive promotion mindset. In fact Chinese leadership has accomplished much already.Keywords: Innovation, Creativity, Entrepreneurship, Open Leadership, Decision-Making, Information Sharing, China.IntroductionEconomists and business experts make a compelling argument that prosperity depends on productivity and productivity depends on innovation. If China is to continue its prosperity, it will have to continue to improve its level of innovation. China has made great progress based on the reform program of 1978. China needs to continue the reforms because certain structures and values restrict progress. It will have to move up the value chain. The United States over the last one hundred years has generated a high level of and economic prosperity because our political system and economic system have rewarded and investment.China has been experiencing a historically unprecedented broadly based transition. It began with Deng Xiaoping's vision. We suggest that Deng's vision for a market economy began with his reforms in 1978. In politics, China is moving from arbitrary political decision making to the mle of law. In social terms the society is moving from a closed to an open society. China is radically liberalizing its economy; it is half way through its transition. Its national wealth has increased at least 12 fold since the market reforms began in 1978. China is privatizing. The private sector controls over half of China's labor force. There may be 400 million people in China's rapidly growing middle and upper middle class defined as people with annual incomes of $5000 to $35000 and a good deal of discretionary income. Annual per capita income is approximately $6000 up from $300 from 1988 to till now.Great Ideas versus Great TalentThis study deals how China can build companies that create new things by using vertical based on a positive promotion mindset as opposed to a protectionist mindset. Our research draws not only on the best practices and experiences of the world's most innovative companies but also on a series of interviews with a variety of Chinese and American business professionals.The Profit of a Promotion Minded Mindset: In this paper we divided professionals into promotion and protection mindsets. A person with a promotion minded focus is about maximizing gains and avoiding missed opportunities. These people are optimistic, idea oriented and driven to try new things. On the other hand, a person with a protection mindset is concerned with minimizing risk and taking losses. Recent research suggests that Americans are on the average more promotion minded than the Chinese. In China the view of the individual is more interdependent. For example, psychologists studying Chinese culture have found that the Chinese compared to Westerners place a far greater emphasis on sharing the rewards of individual success with the group. Business success or failure is an important source of pride or shame for the Chinese family. Consequently, people raised in this culture tend to be more prevention minded than their Western peers3.Innovation: Two ModelsWhen a country thinks about the future, they plan for a future of progress. That progress is based on in one of two forms. The first form, the most common form, is to improve on present things. This is innovation of the known or horizontal progress. …