In any discussion of strategic thinking in contemporary China, western consultants always cite the wisdom of one towering figure: Sun Zi, author of the celebrated Art of War. Yet when enquiries are made into the principles guiding Lenovo boss Liu Chuanzi he is quick to proffer Mao's Little Red Book. He is not alone. Is this a nod of respect toward the tutelary figure of the current regime? No, Mao Zedong thought remains an enduring influence from Beijing to Shenzhen and revising some of its concepts is of immense value in any attempt to understand the tactical and strategical practices in contemporary China.
Be good at learning
Looking back at the legacy of Mao Zedong what is often forgotten was his virtual obsession with the economic development of his country. What we remember most is the devastation unleashed through his wrenching attempts at modernization. Historians are still discussing just how many perished from famine in the late-1950s during the Great Leap Forward. Yet, when Mao implored his comrades to “have a head for figures,” future commentary was hardly what he had in mind. Rather, his words were intended for loyal party cadres, to serve as an inspiration in their fight to lift China out of centuries-old poverty.
The president made no secret of the hardship to be endured over the course of what he compared to a long, but necessary, apprenticeship. “In transforming backward agricultural China into an advanced industrialized country, we are confronted with arduous tasks and our experience is far from adequate. So, we must be good at learning.” (Opening Address at the Eighth National Congress of the CPC, 15 September 1956)
The fruits of this apprenticeship would not appear until after the death of “the Great Helmsman,” and the beginning of an economic success story recently described by François Godement as an “undeclared revolution.” As China took up the challenge and the learning process accelerated, the Mao-era began to resemble an episode from the country’s dynastic past. What should not be forgotten however is that the Cultural Revolution did not end until 1976 and, from President Hu Jintao to the billionaires of Shanghai and Shenzhen, many of the new elite took their first steps at the front lines of Mao’s young shock troops, the Red Guards. For this generation the lessons contained in Sun Zi’s Art of War may feed the mind but the words of the Little Red Book are engraved on their hearts forever.
Yves Tiberghien, professor of political science at the University of British Columbia and a specialist in Chinese elites, notes that Mao Zedong’s thought remains an essential reference and is often employed in public discourse, not so much as a practical approach to contemporary reality, but as a “social/official” reflex action. The invocation of Mao is an incontestable path to legitimacy.
Nowhere can this be demonstrated more clearly than in the career of the rising star of the CPC Bo Xilai. Well known for having negotiated China’s entry into the WTO, the current Mayor of Chongqing (pop. 33 million) has demonstrated a fondness for dashing off text messages bearing Maoist slogans such as: “The world is ours, we will have to work together.”
In July 2010, The China Daily published an article revealing that a number of management schools have begun to offer courses in Maoism. Yuan Qingpeng, director of the Beijing Huashang Institute of Management, explains why: “When Chairman Mao was establishing the People’s Liberation Army of China, he was short of talent, money and experience, putting him in a somewhat similar situation to many entrepreneurs trying to set up their own companies.”
He goes on to note how Mao’s military tactics can serve as a guide to development for business. Citing the example of the Changbaishan Wine Group he notes how after failing to penetrate the market in first-tier cities like Beijing and Shanghai the company regrouped and refocused on provincial cities such as Qinhuangdao and Chengde which then served as the base from which to conquer the bigger cities. “It is similar to Mao’s theory: using the rural areas to encircle the cities,” Yuan said.
The resurgence of Maoist philosophy in the boardrooms of Chinese business has become a source of increasing curiosity. The Little Red Book of China Business was published in 2007 by author Sheila Melvin who spent seven years at the United States-China Business Council. Through numerous examples she demonstrates her contention that Mao’s ideas have penetrated so deeply into popular culture that they continue to infuse everything, marking both the choice of vocabulary as well as the intellectual instincts of capitalism with Chinese characteristics.
In an article from the Project Syndicate in 2005, Orville Schell went so far as to describe this influence in genetic terms. “Just as Mao’s portrait has never been taken down from The Gate of Heavenly Peace, so whole elements of his revolution continue to survive in China’s institutions, ways of thinking, and modes of interacting with the world. Like recessive genes, they sometimes suddenly re-express themselves.”
Going forward, it would be useful to identify these “modes of interacting.” The first resembles a thread running through popular culture. The second grants legitimacy to a wide range of actors. The third is purely practical: the ideas are useful means to an end. Taken as a whole, these modalities have created a strategic modus operandi deserving of further exploration.
The culture of change
Modern readers of the Little Red Book are immediately struck by the phraseology of the era: the masses, the socialist revolution, the edification of Communism… As for Marxism, what Mao drew most from the philosophy was the notion of praxis, a permanent process of learning: “Marxism teaches that in our approach to a problem we should start from objective facts, not from abstract definitions, and that we should derive our guiding principles, policies and measures from an analysis of these facts.”
By privileging concrete reality we draw attention to internal contradictions and are led to a rich source of potential energy. “Everything in the world is itself a contradiction, movement and development proceed outwards from this point.”
In this dynamic vision of a world in constant motion, “human society must adapt to changing circumstances.” Herein lies a key to the remarkable flexibility of Chinese Marxism, given as a condition of survival since pronouncements in 1957: “Marxism must certainly advance; it must develop along with the development of practice and cannot stand still. It would become lifeless if it remained stagnant and stereotyped.”
In contrast to the doctrinaire path to industrialization followed by the USSR, Mao’s China never stopped experimenting and thinking was submitted to ceaseless waves of reinvention: “Therefore, man has constantly to sum up experience and go on discovering, inventing, creating and advancing. Ideas of stagnation, pessimism, inertia and complacency are all wrong.”
Some of the defining characteristics of Maosim are the idea of constant reinvention, the cult of innovation, and the promotion of frisson through society. The enduring Communist dream of a tabula rasa became a central preoccupation for the new Chinese regime after taking power in 1949 and reached its paroxysm in the excesses of the Cultural Revolution when the idea of making way for the future through destruction of the past reached its logical conclusion. “Before a new society can replace the old, the ground must be swept clean.”
The psychology of revolution rests largely on setting free a wave of untapped energy. “On a blank page anything is possible; a blank page is where the most beautiful poems are written.”
More than anything, Maoism cries out for change and opposes all aspects of the status quo or tradition. What leader, what entrepreneur wouldn’t relish being set loose in a society marked by this kind of imagination?
The emphasis on tension and conflict reveals another aspect of Maoism no less applicable to the world of business. Mao remains a point of reference as theoretician in the art of war, specifically of the asymmetric variety.
The core of his doctrine disregards the intimidation tactics of more established powers and relies on audacious attacks to create chaos in the ranks of the enemy. It is not hard to see the attraction of the idea to budding entrepreneurs. “All imperialists and reactionaries are paper tigers. On this we should build our strategic thinking. On the other hand, they are also living tigers, iron tigers, real tigers which can devour people. On this we should build our tactical thinking.”
How do we fight off these tigers? “In war, battles can only be fought one by one and the enemy forces can only be destroyed one by one. Factories can only be built one by one. The peasants can only plot the land plot by plot. The same is even true of eating a meal. Strategically, we take the eating of a meal lightly, we know we can finish it. But actually we eat it mouthful by mouthful. It is impossible to swallow an entire banquet in one gulp. This is known as a piecemeal solution in military parlance, it is called wiping out the enemy forces one by one.” (1957)
Examples of this strategy in contemporary economic life can be found by casting a glance at the successful policies of Chinese firms in taking progressive control in sectors such as rare earths, magnesium, and tungsten. They employed a piecemeal solution to take control of one segment of the value chain, then another, and eventually the entire means of production.
The blueprint for this type of operation can be found in the military principles illuminated in “The Present Situation and Our Tasks” (1947), urging forces to “resolutely seize all enemy fortified points and cities which are weakly defended.” From then it is a matter of attacking “fortified points and cities defended with moderate strength, provided circumstances permit. As for strongly defended enemy fortified points and cities, wait till conditions are ripe and then take them.” In each battle it is essential to “concentrate an absolutely superior force, encircle the enemy forces completely, strive to wipe them out thoroughly and do not let anyone escape the net.” Finally: “Although we are inferior as a whole (in terms of numbers), we are absolutely superior in every part and every specific campaign, and this ensures victory in the campaign.”
Using guerilla tactics even a modest actor armed with sufficient cunning is capable of toppling giants. As soon as a critical mass is reached and the time is ripe it is simply a matter of rising up, applying superior force, and suffocating the competition.
The balance of power
Welcome to the world of shifting power relationships and constant disequilibrium that defines the micro- and macro-strategies playing out in contemporary China.
Disequilibrium leads to a culture in which success depends on competent navigation between opposing forces. The picture was summed up nicely in a report on the strategy of France’s largest enterprises in their dealings with networks of Chinese suppliers and subcontractors. The report, delivered by Jean-Michel Yolin for the Conseil général des Mines, a French inspectorate service that exists to carry out missions at the request of government ministries, notes “a never-ending power struggle” where “each side is seeking to impose its will on the other. Always be prepared to face a measure of disequilibrium in the balance of power. It pays to retain some element of control, a counterweight, in any business relationship and never surrender technology.” Wise words indeed when we remember Mao’s 1947 admonition to: “Replenish our strength with all the arms and most of the personnel captured from the enemy.”
It would be tempting to explain away the aggressive nature of Chinese enterprise as a simple response to the realities of doing business. And yet, Mao’s legacy does more than provide some useful tools, it supplies political justifications as well.
The long project to create a strong national identity was championed by Mao and his successors and is a direct response to the perceived humiliation the Chinese have endured since the Qing Dynasty when the British forced down trade barriers in the First Opium War (1839). When looking at Chinese economic strategy since the founding of the People’s Republic in 1949, one could easily take the view that it has really been one continuous struggle to regain sovereignty in the face of the “imperialists”.
In this context it is perhaps understandable that the comportment of Chinese actors be described more and more in terms of economic warfare. Joël Ruet (Cerna, Mines ParisTech) has evoked a “financial and technological war” in a discussion on the future of high-speed rail. Here as well, behavior reflects the influence of Mao on the cultural DNA and the economy is only the latest in a long line of battlefields. In 1943 Mao launched a theme that would dominate subsequent decades when he wrote, “We have an army for fighting as well as an army for labor.” In a nutshell: “Work is struggle.”
Viewed through such a lens, practices like counterfeiting could almost be viewed as a politically justified method of tilting the playing field to favor the weak over the strong and as a legitimate defense for the colonized against the imperialists. When the rules of engagement are tilted in favor of the powerful the guerilla is not only a strategic option. It is a radical change of rules.
This logic provides greater insight into the motivations behind Chinese policies on issues as controversial as exchange rates and the cost of labor. Against powerful competitors, weakness can become strength. Again one of Mao’s many well-known phrases sheds light on the current tensions over dumping polices or manipulation of the RMB. “Sacrifice is essential not only for destroying the enemy but also for preserving oneself—partial and temporary ‘non-preservation’ is necessary for the sake of general and permanent preservation.”
The struggle of the weak in the face of the powerful is a political as well as strategic notion and Maoist doctrine has already provided all the justification necessary for policies labeled “unfair” by certain members of the United States Congress. In the face of such criticism Mao would have likely reminded: “A revolution is not a dinner party.” And neither, it would seem, is economic development.
The Little Red Book of China BusinessSheila Melvin
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