Be willing to embrace change

Trade and open markets power China ahead. By embracing openness, China has transformed itself and perhaps even the world.

Change is the essence of life. Be willing to surrender what you are for what you could become

MY first impression of China when I first visited in 1985 was one of backwardness. There were bicycles and Mao suits everywhere.

I was fortunate because my second visit was 22 years later, in 2007. Frankly, I was astounded by what I saw. People went about in the latest fashions and cars had replaced the bicycles.

Fast forward to 2014 – when I again visited in conjunction with the 40th anniversary of Malaysia and China’s bilateral ties, accompanying Prime Minister Datuk Seri Najib Tun Razak – and we found that the pace of development was just as frenetic.

Incidentally, this was my second visit to China this year and I still have a couple more trips planned.

China is now the second biggest economy in the world and in Purchasing Power Parity (PPP) terms, the largest.

The World Bank estimates that the number of Chinese living under the international poverty line (US$1.25 a day) fell from 43% of the world’s total poor population in 1981 to 13% in 2010.

China’s Gross Domestic Product (GDP) per capita doubled to 38,354 yuan (RM19,672) from 2009 to 2012 alone.

Change, it seems, is the only constant in China. But how did this come about?

I would argue that it’s because they embraced reform and openness.

Under Deng Xiaoping, China sought “socialism with Chinese characteristics”: in effect, opening itself and its markets to the wider world.

One significant initiative which China embarked upon was joining the World Trade Organisation (WTO) in 2001.

This was a watershed and was not an easy decision for China.

Accession, especially in China’s case, is a lengthy and thorough pro­cess. Negotiations for China to join WTO took 15 years.

Countries often had to make significant concessions to the entire WTO membership and no exceptions were made for China.

However, the Chinese government proved willing to dismantle much of its restrictive institutional regime.

But WTO membership for China was not just to get better access to international markets.

It was also a defensive measure: to prevent unilateral actions from being taken against their goods by trading partners.

For instance, as a member of the WTO, China is protected from unilateral tariff hikes.

Other countries with grievances against it will have to bring their case to WTO’s tribunals.

Among the requirements for WTO entry, China also had to reduce its bound tariffs on industrial goods to an average of about 9% by 2005. Agricultural tariffs were cut to 15% while most quotas and licence requirements were eliminated.

All in all, China had to relax over 7,000 tariffs, quotas and other trade barriers.

Furthermore, it had to open up its markets to foreign firms and end state-controlled distribution of products.

China, significantly, made more market-opening commitments for services than most WTO members had.

From a centrally planned economy, China has now embraced capitalistic economic principles.

At the same time, China moved to strengthen its own capacities. It moved away from agro-based exports to manufacturing.

Also, the first of many Special Economic Zones were established in 1980, including today’s iconic Shenzen.

All of these were bold and unprecedented moves, all the more so given China’s strong nationalism and its traditional aversion to foreign entanglements. But open up it did and the results are clear for all to see.

In 2013, the WTO reported that China had overtaken the United States as the largest trading nation in the world, with total trade valued at US$4.16 trillion (RM13.23 trillion).

In that year, China’s total exports value was US$2.21 trillion (RM7.03 trillion) compared to US$1.58 trillion (RM5.02 trillion) for the US.

China, in fact, is now the largest trading partner for more than 120 countries, including Malaysia.

China is also the biggest market for automobiles, with 20 million cars sold in 2013. In comparison, the US sold only 14 million cars.

Indeed, from 2002 (after it joined the WTO) to 2013, the growth of its total trade rocketed to an annual average of more than 21%.

Its GDP for the corresponding period grew from US$1.3 trillion (RM4.13 trillion) to over US$9 trillion (RM28.6 trillion) in 2013.

Of course, China’s leaders had no way of knowing that all of these reforms would bear such remarkable fruit.

It was a risk they had to take, but it was one that paid off handsomely.

By embracing openness, China has transformed itself and perhaps even the world.

The lessons from China for Malaysia and other countries are clear: we have to be willing to embrace change.

Otherwise, the only other option is stagnation and decline.

By Datuk Seri Mustapa Mohamed

Datuk Seri Mustapa Mohamed is Minister of International Trade and Industry. The views expressed here are entirely the writer’s own. Fair and reasonable comments are most ­welcome at mustapa@miti.gov.my

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Big bosses are watching you !

Tracking device: Asia Insight employee Steven Li conducting a survey near Bugis Junction. He is using a tablet which has mobile data collection software, allowing his employers to track his work patterns. - The Straits Times / Asia News Network

BIG bosses are watching. Firms are keeping a closer eye on their employees’ punctuality and efficiency – thanks, or no thanks, to technology.

Larger companies are investing in advanced software in mobile devices that can detect location – and record the time taken to complete tasks.

And smaller firms have found that run-of-the-mill but inexpensive instant messaging apps can also be used to monitor workers. Employees of local property valuation firm GSK Global, for example, when out at meetings are told to send a picture of the venue to their departments’ WhatsApp group chat within 15 minutes of the designated time. Those who are consistently late will get their bonuses docked.

Bosses say they are not spying on their staff. Rather, they want to improve efficiency.

GSK Global boss Eric Tan said: “I want my staff to be punctual so they can be done with work earlier and go home by 8pm.”

Market research consultancy Asia Insight chief executive Pearly Tan agrees.

Her firm engaged local tech start-up Epsilon Mobile earlier this year to develop mobile data collection software that records the time employees take to interview people and co­m­plete surveys, among other things.

It costs “a few hundred thousand” but Tan said it was worth it. The software helps the company spot patterns in the way the surveyors work, and also intervenes to reduce errors and boost productivity.

Her firm plans to use the software, which is enabled with Global Positioning System (GPS), to detect its employees’ location.

Epsilon Mobile boss William Vo said besides market researchers, organisations such as voluntary welfare groups and chain restaurants had also shown interest in his data collection software.

Similarly, tech company FPT Asia Pacific provides a few fast-moving consumer goods firms with GPS-enabled data collection software to monitor roving sales staff.

While most surveillance techno­logy now focuses on tracking location and time, firms may soon be able to use it to monitor their wor­kers’ interactions with customers.

Local tech company FXMedia is in talks with some retailer groups to roll out a visitor analysis system in stores. The software detects the number of customers and consu­mers’ emotions using webcams.

However, bosses admit there are some drawbacks to using workplace surveillance technology; workers face extra stress and loss of privacy. — The Straits Times / Asia News Network

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China on road to depeen reforms

The Communist Party of China (CPC) has to acknowledge the market's decisive role in allocating resources as it is proven to be the most effective, said President Xi Jinping when explaining a key document about reforms.

China will deepen its economic reform to ensure that the market will play a "decisive" role in allocating resources, according to a decision on major issues concerning comprehensively deepening reforms, approved by the Third Plenary Session of the 18th CPC Central Committee on November 12.

Entrusted by the Political Bureau of CPC Central Committee, Xi, also general secretary of CPC Central Committee, explained the decision at the session. His explanation was published in full on Friday.

Xi considered the definition of the market's role a major theoretical achievement of the decision.

A proper relationship between the market and government remains the core of China's economic reform, Xi said.

To build such a relationship is to settle whether the market or government plays a decisive role, he said, adding that the market is proven to be the most effective.

Over the past some 20 years, China has established a socialist market economy but there are lots of problems, Xi admitted.

The market is not orderly and many seek profits through illegal means. The market for key production factors, such as labor, capital and land, are lagging behind, he said.

Market rules are not unified and there are prevailing departmental and regional protectionism, he warned, adding that a lack of full competition stops the inferior from being eliminated.

China has to follow the basic law of the market economy and work on the problems of an underdeveloped market system, excessive government intervention and weak supervision of the market, he said.

Accepting the market's decisive role will help the Party and society develop a correct idea about market-government relations, help the country transform the economic growth pattern, help the government change its functions and help curb corruption, he said.

However, Xi noted that to let the market decide does not mean to let it decide all.

"The socialist market economy needs both the market and government but they play different roles," he said.

The government will maintain a stable macro-economy, provide public services, safeguard fair competition, supervise the market, keep market order, promote sustainable development and step in when the market fails, he said.

The market had been defined as a "basic" role in allocating resources since the country decided to build a socialist market economy in 1992.

For a long period of time after 1949, the idea of market had been a taboo associated with capitalism.

Even after the reform and opening up in 1978, the country had

struggled to define the market and some dogmatists still questioned whether socialism could accommodate the market economy.

It was not until the 14th CPC National Congress held in 1992 that a socialist market economy became a consensus.

At the 15th CPC National Congress in 1997, the Party noted that the market, under state macroeconomic control, should be the basic means of allocating resources.

At the 16th CPC National Congress in 2002, the Party said it should leverage to a greater extent the basic role of the market in allocating resources.

At the 17th CPC National Congress in 2007, the Party decided that it should introduce institutions to give better play to the basic role of market forces in allocating resources.

At the 18th CPC National Congress in 2012, the Party said it should leverage to a greater extent and in a wider scope the basic role of the market in allocating resources.

"Now, the CPC Central Committee believes that the condition is ready to bring up a new theoretical expression of this issue," Xi said. - Xinhua

China stays on road to reform 

Staying on course: A souvenir with an image of President Xi Jinping (left) and the late leader Mao Zedong on sale at Tiananmen Square in Beijing, during the meeting of the Central Committee of China’s ruling Communist Party, at which major reforms were discussed. — EPA

THE business of China-watching intensified lately for the Third Plenary Session of the 18th Central Committee of the Communist Party of China.

This was a special occasion in also doubling as the first anniversary of President Xi Jinping’s leadership of the party and of China’s Central Military Commission.

It is a measure of China’s rising global status that such domestic occasions should attract serious worldwide attention. The same does not apply for other countries.

Some analysts believe that the world’s second-biggest economy will, by the end of Xi’s term in a decade, become the world’s biggest – and continue to outpace the US and other economies thereafter.

Since economics remains the prime determinant of a nation’s various attributes, China’s economic achievements are closely watched because they indicate its prowess in other spheres as well.

For this particular occasion, there is another reason for Beijing as the world’s centre of attention – Third Plenums are traditionally the stamping ground for new priorities and directions. That it coincides with a new leadership makes for a packed global gallery.

Speculation about Xi’s leadership peaked in the lead-up to this occasion. Opinion was divided over whether China would lean towards reform and further opening up, or veer towards Maoist conservatism.

Xi’s personal style was no help to the betting classes. In keeping his cards close to his chest, he was not one to telegraph his intentions and preferences ahead of time.

Then there was the complication of the Bo Xilai affair. The fall of the former rising star was said to be a sideshow obscuring internal party politicking.

Bo’s supporters tended to look past his controversial hardline tactics, corruption allegations, his wife’s involvement in murder and his Maoist-inspired opposition to Beijing’s reforms. In his defence, they instead questioned Xi’s commitment to reform.

However, any antipathy Beijing had to Bo would also be averse to a Maoist resurgence and therefore be pro-reform. There was also no question of Xi’s priority in targeting corruption and promoting the rule of law.

Nonetheless, for many the doubts about China’s leadership direction persisted. And the question would be settled by the Third Plenary Session of the 18th Central Committee.

Now those who were never in any doubt about Xi’s reform drive feel vindicated. Fence-sitters are also more convinced than ever that Xi and Prime Minister Li Keqiang will take China further along the road of reform.

Doubters are now puzzling over the general nature of official public statements from the plenum. They are stumped by an apparent shortage of specifics.

However, generalities indicate only a lack of details, not a reversal of direction. And given the presence of conservatives like Bo still in the party hierarchy, reformist leaders would do well to avoid advertising their plans to prevent obstruction and sabotage.

Xi is certainly not one to telegraph his intentions and preferences ahead of time. Former Singapore premier Lee Kuan Yew has observed that Xi is not demonstrative while still retaining his affable style.

Besides, Third Plenums of the 21st century have also been less hortatory and more cool and businesslike. A modern China headed by state functionaries rather than ideological patriarchs is where the Xis and Lis are at.

Over the long term, it has been a process of evolution for China’s leadership. In comparisons between Xi-Li and their immediate predecessors Hu-Wen, Xi is said to be more open and approachable.

Xi and Li are also regarded as more purposeful and cosmopolitan, a style that matches the contemporary demeanour of their international counterparts. And style still accounts for much, notwithstanding the weight of official policies and procedures.

Several views from Hong Kong, as expressed through the South China Morning Post newspaper for example, regard Xi’s leadership as clearly Dengist rather than Maoist. That effectively reaffirms the reformist road.

To that extent, this Third Plenum produced no surprises. Continuity and consistency are key to China’s development, and Xi is tasked with ensuring that trajectory in particular.

The polar opposites of Mao and Deng remain a bifurcation – and an ironic one at that. Their differences are strategic and ultimately ideological rather than personal.

Deng the Establishment rebel, the last Long March veteran, the final Paramount Leader and the Other Helmsman who turned China around is still deeply revered, including by the younger generation.

Young professionals and bureaucrats in their 30s, whether in official Beijing, bustling Shanghai or rural Hubei province today have no hesitation to say they are Dengist. They do not denigrate Mao, not even for his excesses and horrors, they just admire his party alter ego.

This is the political status quo of China today. It should therefore be no surprise that the party and state machinery, in carefully reviewing and sifting through contending candidates, has produced leaders that exemplify this bearing.

Thus Xi is no closet Maoist for prescribing self-criticism and attempts at censorship. Some tactics may appear conservative, but the overall strategy is still reformist.

The Third Plenum was clear in promoting the status of the market from “basic” to “decisive.” For this and similar moves, Xi and Li are considered pragmatists in moving modern China forward another notch.

In Beijing today, much of this pragmatism amounts to letting the market determine the economy, allowing the economy to inform governance, and ensuring that good governance safeguards society’s interests through due public regulation.

That also approximates to the “socialist market economy” Deng introduced 35 years ago. Since then, the concept has resulted in moves like cutting red tape, cleaning up a messy credit market and establishing a free trade zone in Shanghai.

Many suspect the best days of Xi’s presidency are at hand. His father is cited as a hero of progressive social development in his time.

Besides the current drive against graft, there is also a campaign against pollution. It is serious enough to require productive heavy industries like steel to cut capacity, with larger plans to move away from polluting sectors in favour of cleaner and more modern industries.

The home-grown company BYD for example not only designs, builds and markets its range of electric vehicles, but also plans to produce vehicle batteries for automobile companies around the world.

China is not only a large and rapidly growing economy, but one focused on the cutting edge of several technologies: ICT, high-speed trains and renewable energies among them.

Earlier this month, a skeptical BBC asked whether this latest Third Plenum will prove as decisive as the ones in 1978 and 1998. The short answer is that it can, depending on the prevailing national interest.

China today differs from the China of Mao’s era in one fundamental respect. The state will now do all it can to meet the nation’s current and future needs while delivering what the government wants, more than simply what the party prefers.

This basic distinction may still escape the understanding of many. The recent Third Plenum has gone some way to rectify that, but proof of it is already evident in recent years.

The rest will come soon enough. The point is that a transforming China with an eye to its future progress has opted for reform not only because it wants to, but more because it has to.

Behind The Headlines by Bunn Nagara

Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (Isis) Malaysia. The views expressed are entirely the writer’s own.

Are you a manage or leader?

LEADERS and managers obviously have one thing in common they lead or manage teams; but as their titles suggest there are differences between leaders and managers.

As an executive search consultant I have interviewed many senior executives over the years and most of them have indicated that they would prefer to be led than to be managed.

However, I have observed that as an organisation grows it is almost impossible to scale up without a strong management structure. As such, I believe that leadership and management both have a part to play in the growth of an organisation.

The manager

My first encounter with a manager was on my first job. I was fresh out of school and had no knowledge of how an office operated let alone how to use the computer which ran the now obsolete Wordstar programme. I was in awe of my manager. She seemed to know where everything was and always spoke confidently regardless of whom she was addressing. She would also set our targets, monitor our progress and discipline us when necessary. If we accept the definition of a manager as one who directs and controls, then I would say that she played her role well but I found that I was doing the job because I had to and not because I wanted to. My manager was not concerned about engagement as long as we met our targets and would not entertain any queries that would challenge the norm. Whilst I didn't feel that she was someone I could confide in, I certainly respected her discipline and commitment to her job.

The leader

We have all come across leaders who have inspired us at some point in our lives. In comparison with the manager I mentioned earlier, the managing director of the same company was someone who was out to change the world. She was absolutely passionate about what she believed in and her passion was infectious. She spoke with such clarity of thought that I never questioned her beliefs and was glad to work weekends and long hours to be a part of something bigger than myself. Suffice to say that she was an inspiring individual who has influenced my professional and personal life even until today.

The difference

Warren Bennis lists the following comparisons between a manager and a leader in “On Becoming a Leader,” which was published in 1989:

• The manager administers; the leader innovates.
• The manager is a copy; the leader is an original. The manager maintains; the leader develops.
• The manager focuses on systems and structure; the leader focuses on people.
• The manager relies on control; the leader inspires trust.
• The manager has a short-range view; the leader has a long-range perspective.
• The manager asks how and when; the leader asks what and why.
• The manager has his or her eye always on the bottom line; the leader's eye is on the horizon.
• The manager imitates; the leader originates.
• The manager accepts the status quo; the leader challenges it.
• The manager is the classic good soldier; the leader is his or her own person.
• The manager does things right; the leader does the right thing.

As such, we can conclude that not all managers are leaders and some managers may never become leaders. Whilst many of us have come across individuals commonly known as “born-leaders,” who simply thrive in situations that call for a leader to step up to the plate, there are also many who made the transition from manager to leader. This then begs the question: How does one make the shift from a manager mindset to that of a leader?

Given that any kind of change takes time and usually uncomfortable if not painful, I would offer these six areas as the first step in the transition process from manager to leader.

Something bigger than themselves: A leader usually has a cause to champion. A manager who strives to make this transition would have to find something that he or she strongly believes in, in the context of their own organisations or field of expertise. This could include something they feel needs to be changed or an innovative idea they want to see implemented. For instance, a regional sales director whom I interviewed as a potential candidate for an executive search project shared with me that he was hired by his current employer to develop the market for the company's products in Malaysia. However, he felt that there wasn't sufficient demand for their products in one country and he expanded the customer base into China. He successfully created a whole new market for the company and needless to say he was given a promotion for his achievements.

A strategic mindset: A potential leader would also benefit from developing a more strategic view of the business and the industry in which they operate in. For example, managers are usually focused on a function such as finance, sales or human resource. A manager who wants to transition into the realm of a leader would first need to understand how his or her role as a manager adds value to the entire company, the community and the industry. When a manager is able to see the bigger picture, then better decisions can be made that would benefit the business rather than the individual.

Ability to multi-task effectively: Most leaders have the innate ability to deal with many things at once. I'm not referring to being on the laptop or smartphone while meetings are going on, as this will probably be more distracting that productive. Multi-tasking effectively deals more with being able to group similar tasks together and work on more than one item at a time. When there is downtime, this period can then be used to review new information or put together a new group of tasks to be kicked-off next.

Recognising trends: A leader is generally able to see patterns and trends in seemingly unimportant data, even without the help of customer relationship management software tools. They are able to make sense of information whilst managers are often only capable of data gathering and some basic analysis of the information captured.

Long term vs short term: Leaders have a long-term view of the company's direction and the macro factors that affect the business. Their broader view of the situation also gives them an added advantage when dealing with obstacles as they are able to see beyond the immediate issue and make more informed decisions. On the other hand, managers may only deal with short- to medium-term goals and this lack of foresight may limit their ability to make decisions as compared with the strategic view that a leader is able to take.

Ability to communicate effectively: Communication is without a doubt one of the most important skills a leader must develop. Ideally, a leader would be someone who can communicate in a clear message by being both tactful and direct at the same time. A manager without sufficient foresight or empathy tends to be more directive and concise in delivering a message.

Would organisations prefer to hire managers or leaders?

In my view, an organisation needs both managers and leaders for sustainable success. Leaders are usually the ones we see in the limelight, who are highly influential in an organisation. They are also the ones who inspire the rest of the team with their good performance, passion or superb knowledge of an industry. However, they are usually not the ones who would get into the details and execution of projects. This is not an issue for organisations with sufficient structure and headcount to support these leaders but organisations with very leaner teams need leaders who can be hands-on when necessary; failing which the organisation would require the skills and expertise of good managers to fill the gaps. Therefore, in a world where many individuals are able to operate as either a manager or a leader; the ability to wear both the manager and leader hats interchangeably is a highly sought-after commodity.

Talking HR by Pauline NG

Pauline Ng, the managing director of BTI Consultants, encourages all managers who want to become leaders to make the transition but to keep their “manager hats” handy.