Most world’s top tech companies are based in the US, such as well-known Apple, Google, Intel, Facebook, etc. In recent years, quite a few Chinese companies joined the league such as Huawei, Tencent, and Lenovo. Along with a few others such as Alibaba, Xiaomi, Bytedance (developer of Tiktok), and Baidu (Google of China), these Chinese companies have become more and more active globally. Most of them are relatively young, apart from Lenovo and Huawei founded in 1984 and 1987 respectively, the rest were founded around 2000 or later. Apart from Huawei, which is owned by its employees, the others are all public companies. Their journey to success is epic since, until 1976, there had been constant disruptions in the development of contemporary China. There were 8 years of the Sino-Japanese war (1937 to 1945), the civil war (1945 to 1949) between the national and communist party, Cultural Revolution (1966 to 1976). During the 10 years of the Cultural Revolution, formal school education was put on hold, leading to a severe shortage of talents in the following years. So the economic development of China had been stagnant until 1978 (see also the article ‘Made in China‘). Since the beginning 80s, with an impressive growth of on average almost 10% to 7% in recent few years, China has gained its reputation as the world factory in manufacturing low-tech products such as toys and clothes. Consequently, ‘Made in China’ was associated with cheap low-end products. But as just mentioned, there have been more and more Chinese tech products available in the world market today, we may need to adapt our perception of ‘Made in China’ too. With the continuing growth, is China going to lead in technology in the near future? Before we try to predict the future, we can first take a look at how these giant tech companies got so far today?
Each company has its own unique journey to success. But looking at all the above-mentioned Chinese tech companies, there are a few commonalities that led to their success in my opinion: a visionary leader, wolf culture, extreme hard-working (infamous 996 working culture), young workforce, and fierce competition. In essence, recruiting talents with the highest pay among all industries plus intensive hardworking pushes these companies forward.
The founders of the above-mentioned Chinese tech companies are not as famous as Steve Jobs or Bill Gates but their journey to success was certainly as impressive. The founder of Alibaba, Jack Ma went through a succession of rejections and failures from the academy to business before Alibaba won its first investment. The founder of Huawei, Zhengfei Ren, started Huawei when he was 44, after having served in the army for 14 years followed by another 4 years working at Shenzhen South Sea Oil Corporation. Ren started the company at an apartment with a total capital of 21000 RMB with no prior experience of running any business himself. In the early days, Huawei engaged in trading low-end telecommunication equipment before developing its own products. The founder of Tencent, Pony (Huateng) Ma, founded Tencent in 1998 and built THE online chat program ‘QQ’ when the internet just got popular in China, which was only succeeded by their own app WeChat in 2011. WeChat is China’s most popular all-in-one app, which has more than 1 billion active users. It integrates chat, social media, payment, gaming, mini-programs such as ordering tickets, takeaway, or a taxi. It is an app you can’t live without in China. Furthermore, Tencent is one of the world’s largest game companies. And there are many more, such as Jun Lei, who founded Xiaomi in 2010. Before Xiaomi went on IPO in 2018, Jun Lei announced that Xiaomi will forever limit the net profit margin after tax for its entire hardware sales to a maximum of 5 percent, in order to fulfill his mission of ‘innovation for everyone’. Xiaomi had a huge fan base and its flash sale was often sold in seconds. With Huawei’s market share decreased in Q3, Q4 last year due to the US sanction, Xiaomi’s sales increased more than 30%. Within less than 10 years, Xiaomi became the youngest company on the Fortune Global 500 list.
Working culture is the soul of the company. The so-called ‘wolf culture’ is widely adopted by many tech companies nowadays in China though sometimes it is disguised under a different name. Huawei’s culture is a leading example of it. According to the definition of Huawei, the first character of wolves is bloodthirsty. Employees of Huawei are extremely sensitive to market information and could respond promptly to any changes. The second character of wolves is resistance to coldness. The fearlessness of difficulties and eagerness of making progress is insisted by every member of Huawei, no matter how complicated the hardship is. The third character of wolves is taking action in teams. The wolf characters are clearly reflected in how Ren led the growth of the company. Being bloodthirsty, Huawei spent a large budget on R&D, almost 14% of its revenue in 2019 for example, and gets to its leading position in 5G. Besides that, they also gained a considerable market share in the mobile and smartwatch business in recent years. Facing the US sanction and the arrest of his daughter ‘meng wanzhou’, who is the CFO of Huawei, Ren stated ‘there is no way US can crush us’, humorously ‘thanked the US government for advertising Huawei’ for free during an interview with BBC in 2019. Despite the sanction and the Covid, Huawei still had an 11.2% year-on-year growth in 2020. As summarized at the end of the BBC interview ‘Moving forward is the only way to survive’, this constant urge of moving forward has pushed for the growth of Huawei. Over the last 20 years, Huawei has been always reminded of the article published by Ren in 2000, which has been influential for the entire IT industry in China. Despite the success he already had had, he stated ‘all he had was thinking about failure every day, turning a blind eye to success, and there was no sense of honor or pride, but a sense of crisis‘.
Hardworking is necessary for any success and overtime is part of Asian working culture, often seen in Japan, South Korea and China. It is not common to leave the office before the boss does. In China, the two-day weekend was introduced in 1995 but for many businesses, especially for small private ones, working on the weekend is rather common. The so-called 996 working hour system, working from 9 am to 9 pm and 6 days per week, was neither rare nor new across businesses in China. In some labor-intensive production environments, working hours go beyond 996. For some tech companies, on busy days, some employees would camp at their office. Nevertheless, 996 caused loads of debates due to an online protest ‘996.icu’. It put more than 40 companies on the blacklist including the majority of the above-mentioned companies. There is labor law in China, but this does not prevent the majority of the companies from adopting such a working scheme. 996 or other more extensive working schemes are usually not written in the contract since it is not allowed by the law. However, overtime seems inevitable since the projects will not be finished on time otherwise. Furthermore, about 30% of the total income (bonus) and the job security depends on working overtime. People like Jack Ma endorses 996 as a huge bliss. Nowadays with social media, companies that require a high-intensity working schedule are known to the public, so in a way, it is up to the individuals to make the choice whether to take such a job position. In fact, many young graduates prefer to work for these large companies with 996, since the pay is on average much higher and the job itself does offer great experiences, which are often stepping stones for a better future. In China, we all learned at a young age that ‘a young idler, an old beggar’ (shao zhuang bu nu li, lao da tu bei shang) so the young generation thrives to make a better future with hard work.
It is known that many IT companies prefer to hire young people less than 35 years old. Ageism is often denied by company HR but is known as an unspoken rule for many IT companies. It is present in Silicon Valley and predominant in many IT companies in China. They prefer to hire fresh graduates for entry-level IT jobs since they have more up-to-date knowledge, are more eager and more flexible, and often more able to work long hours. In China, there is high unemployment among young people, so there is an abundant pool for the companies to select from.
Competition beats the enemy of complacency. Like what I mentioned in ‘Chinese Education‘, competition is imprinted in our minds at a young age. Successful Chinese businesses are highly alert of their competition, also part of the wolf culture. I still remember the price war in television around 20 years ago which forced some companies to slash their prices by 50%. Taking smartphones as an example, there were hardly any Chinese brands in the top 10 in 2010 but in 2020, apart from Huawei, we also have Xiaomi, Vivo and Oppo on the world stage. For the domestic market, there is even more competition from OnePlus, Coolpad, Meizu, and many smaller brands. For online shopping, there are Taobao and Tmall (part of Alibaba), JD.com, Suning.com, and latecomer Pinduoduo, which was founded in 2015 and had almost 50 percent year-on-year growth with approximately 720 million monthly active users. The market size has not been increased that much but there are simply many more competitors. Competition keeps each participant on their toes and pushes the whole industry forward.
For more than 100 years, Chinese leaders such as Sun Yat-sen and later Mao Zedong, the recent and current government all have strived to build a strong country and deliver a better life for the people (fu min qiang guo). Mao had great ambitions to catch up with the west during the great leap forward, which ended up in a disaster and brought China backward. However, in the next 40 years, China definitely has become a strong country and caught up with the west in total GDP and people’s life is certainly improved in many aspects though it can be better in terms of stress and pressure. Without hardworking, these tech companies could have never achieved what they have today. So will China lead also in technology, I think it will certainly do in some areas.
