daniel chigunwe
Prechard Mhako
Last week, African leaders were in China for the Forum on China and Africa Cooperation (FOFAC) summit, and I have come across several think pieces online, especially on Twitter.
China’s growth since 1978 has fascinated economists and strategists alike. Personally, I have been captivated by China’s contemporary economic history for years, leading me to explore numerous publications written about their economy.
In December 2015, my curiosity about China’s rise led me to attend the China-Zimbabwe Economic Cooperation Forum, which took place a day before President Xi Jinping landed in Zimbabwe.
As the different panellists spoke, I realised how strategic and intentional China has been about building a resilient and competitive ecosystem which they export abroad even along with their businesses. This realisation prompted me to study their models further, a pursuit that continues to this day.
The recent summit has put the subject of China back in the spotlight (especially on my Twitter timeline), and I thought, why not add my voice?
While I have tweeted countless times about the policy ecosystem lessons we can learn, particularly in supporting small businesses, I believe this is my first article on the subject.
My interest in writing this article is purely on matters relating to business, entrepreneurship and strategy with a touch of history.
In November 1978, then Chinese leader Deng Xiaoping visited Singapore, an island nation with no natural resources, yet progressing at an extraordinary rate.
He met with Lee Kuan Yew, the visionary leader who transformed Singapore from a swamp ridden with many challenges into a global financial centre and logistics hub. Some believe this meeting left a significant impression on Deng, solidifying a reform agenda, which he had already started working on by the time of the visit.
In December 1978, China began a transformative journey. At the 3rd Plenary Session of the 11th Central Committee of the Chinese Communist Party, China officially embarked on its “Reform and Opening-up” policy. This represented a new strategic direction for the country, steering China toward modernisation and a new economic ideological direction.
One of the most critical steps taken during this period was the revival of an old ideological principle of “seeking truth from facts”.
This principle, rooted in Chinese philosophy and popularised by Mao Zedong, was revitalised by Deng Xiaoping as a guiding strategy. It meant abandoning rigid dogma in favour of policies rooted in facts and scientific proof. In simpler terms data driven policies and decisions. And oh, has it really paid off.
Since 1978, China’s success has resulted in over 100-fold economic growth and reportedly, the lifting of more than 800 million people out of extreme poverty.
My focus here is not on historical posturing but on the single, crucial foundation of developing strategy: starting with facts, building with facts, and finishing with facts.
Below are some of the key lessons on strategy from China’s success story since 1978.
Seek truth from facts
China’s transformation began with the principle of seeking truth from facts. This approach meant that every policy had to be grounded in reality, supported by data, and adaptable as new information emerged.
I recently wrote an article about how strategic planning has become a ritual for some businesses where they rush through strategic analysis in a way that constrains them when it is now time to action those plans.
China’s investment in STEM from talent to technology is testament of the scientific approach to growing their economy. Key resources and opportunities are mapped using data, which must be a very difficult task for such a big country (because smaller countries struggle with this).
Think long-term, act now
China’s growth strategy has always been characterised by a long-term vision paired with immediate action. Their Five- and Ten-Year Plans are a testament to this approach, driving continuous development while remaining flexible to adapt to global conditions.
These plans have allowed China to set ambitious long-term goals and systematically achieve them over time.
An example is how they’ve determined to lead clean technology by acquiring control of key battery mineral assets across the world, strategically positioning themselves while bolstering their position in both the EV technology space as well as the renewable energy industry in general.
Even when they began to open up the economy allowing for foreign investment to flow, they were clear about knowledge transfer and increasing entrepreneurial activities locally as a long-term strategy.
This forward-thinking approach has paid off, by the end of 2022, China led the world with over 3.6 million patents in force, driving accelerated innovation in sectors like mobile electronics and electric vehicles.
Refine your strategic focus
Whether the focus is on industrialisation, technology, or innovation, every move appears deliberate and aimed at achieving specific outcomes.
The development of technology hubs and innovation centres, such as those in Shenzhen, exemplifies this focused intent. In strategy, we often talk about what we will focus on, but focus also helps determine what you will not involve yourself in.
Resource your plans
In China, strategic plans like “Made in China 2025” are not just theoretical frameworks but are backed by substantial resources. The 10-year plan was backed by around billions of dollars in finance.
Some of the world’s largest banks are Chinese policy banks, for example Industrial and Commercial Bank of China (reportedly the world’s biggest bank by revenue), China Construction Bank, and other financial institutions that have played an important role in financing key sectors e.g. infrastructure, manufacturing and innovation.
The names of these banks reflect their purpose which is about aligning financial resources with national policy objectives.
Ensure your strategic initiatives are actionable
One of China’s early strategic initiatives was the creation of Special Economic Zones (SEZs). Shenzhen, once a small fishing village, was transformed into a global technology centre through targeted policies and investment.
These zones were strategically located and designed with specific policies to attract foreign investment, demonstrating that strategic initiatives must be actionable and grounded in reality
The parts are greater than the whole, even small details matter
Reportedly, almost 70 percent of China’s exports come from small businesses, proving that the country’s growth was not solely dependent on large state enterprises. China has been intentional about supporting and growing small businesses, providing them with a credible policy ecosystem and a clear path to growth.
For instance, the government introduced lower Corporate Income Tax rates, lower VAT and other incentives to encourage the development of small enterprises, seamlessly integrating them into global supply chains.
Whether it’s their National Intellectual Property Strategy, the Made in China 2025 initiative, or the Mass Entrepreneurship and Innovation Strategy, I cannot help but draw important lessons from China’s success as a strategist.
I hope that my insights on China will be seen through the lens of a curious mind, one that is eager to learn from the world and apply those lessons in everyday life.
Prechard Mhako is a transformation strategist, innovation catalyst and management consultant. He serves as a partner at Baker Tilly Capital. He writes in his personal capacity; opinions do not reflect organizations he is affiliated with. He can be contacted via email, [email protected]
Bongani Ndlovu