On making money and adding value – the WTO column

(tomorrow at Chinabiz)

Shanghai - “How do _you_ add value?” The question thundered over the phone from Chicago.

Having a better half from Shanghai studying for her MBA in the United States is sometimes a nuisance, even when we are discussing business deals. Maybe it is especially when we are discussing business deals.

I returned that day just came back from a very different discussion with Guy Olivier Faure, professor in sociology, teaching at both CEIBS in Shanghai and the Sorbonne in Paris on the changes in values among the Shanghainese.
After being back in Shanghai for two week I had already forgotten that there might be other values than those that can be added in a value chain.
Have the Shanghainese changed, since I arrived for the first time, ten years ago? Well, at least value is being added in a more sophisticated way. Even the fact value is being added might be rather new.

Foreign business people still have retained their talent to complain, in the way they talk about a country’s or a city’s policies as farmers that talk about the weather. It might rain or the sun might be shining, but there is always something wrong.

But in one decade the economic situation has changed dramatically for both foreign and domestic enterprises. There are some weak brothers among the foreign invested companies, especially in finance where regulations limit expansion, or in the consumer goods, where competition is killing. But the winners are having the overhand among the foreign invested companies and ten years ago many held that for impossible.
When I walk between the skyscrapers in Shanghai and try to compare how those streets looked when I arrived first, it is an unbelievable change.
State-owned enterprises were ten years ago written off. Nobody took them serious and the idea they would ever compete in a global market seemed rather alien, to put it politely. A permanent flood of reforms of SOE’s had one thing in common: they basically failed.
Now some of them are not only highly profitable, but might even develop into serious global players. Some of my friends are deeply involved in new efforts to bring state-owned enterprises up to a higher level of management and to me it looks much sounder than any of the previous efforts.

That change has taken place, because a part of the Shanghainese is asking another question, compared to ten years ago. Now they ask themselves how they can add value, ten years ago they wondered how they could make money. There is a slight difference and the smart people are increasingly getting that.
That remark about my added value was not that bad at all.

Fons Tuinstra