China Mobile is not yet a pudding – the WTO-column

(Later also at Chinabiz)
“The eating is the proof of the pudding”, is a British saying. It says much about the British pudding, which can look horrible but taste delicious.
Deng Xiaoping had a variation: “I do not care whether the cat is black or white, as long as she catches mice”.

According to both sayings China Mobile has failed miserably in the past few weeks. First, it failed to take over Millicom International after lengthy negotiations, and many beans have been spilled already over that failure.
Second, it has been screwing up its domestic suppliers in a way that is unfortunately enough not unprecedented. By first not announcing a change in its suppliers contract, but by simply not prolonging them, China Mobile behaved like a monopolist – and of course, it is a virtual monopolist in mobile communication.
As we know, being screwed over is not a privilege of foreign companies in China, Chinese companies do get the honor too. And more often: Chinese companies also get screwed by foreign companies. It this not just a case of bad management, where possible cultural differences are just used as a smokescreen?
Especially in the case of Millicom much has been said about possible cultural clashes between the Chinese way of managing a company and the MBA-taught Western way. Many of my fellow-columnists at Chinabiz have regularly been praising Chinese companies in the way they changed themselves, in the way they have improved their management style.

That still might be true on a comfortable abstract level, when you are teaching and training those eager top- and middle-managers who genuinely want to change. But when China Mobile, one of China’s largest companies according to many ways of counting, does not taste like a pudding, is unable to catch mice, what is that assessment worth then? And more: what does it need to get changed?

I can only recall the drastic measures former Prime Minister Zhu Rongji took to kill off the corporate monster that carried at that time the name China Telecom in the second half of the 1990s. China Telecom did whatever it wanted as a state in the state, paying tribute to the official policies of moving China ahead, but behaving otherwise as a bureaucratic monster, avoiding every possible real challenge.
Zhu Rongji then took on one of his major fights: the split of China Telecom, first into four functional companies, including China Mobile. Then the remainder of China Telecom was split in a northern and southern section, to make sure the old monster was really dead.
But some monsters only multiply when their head is chopped off. Perhaps Zhu Rongji did a great job, but it looks like the work has not been properly finished.

Fons Tuinstra