How Free Enterprise is Shaping China

The leading Chinese companies will trigger environmental reforms in their country by demanding the government change to meet global business standards, said Ted Fishman, bestselling author and reluctant “expert” on the global impact of China. “When the leading suppliers to the world’s largest stores start becoming economically sustainable, they will also insist that their competition in China be required to have the same standards,” Fishman said during the keynote address at the Meeting Entrepreneurs From China conference, sponsored by the Chicago Asia Pacific Group, at Gleacher Center on April 11.

“This connection to multinational distribution channels will not just change the way business is done in China,” he added. “It will change the style of Chinese civil service and regulation, not because the government insists on it but because the leading Chinese companies insist that the government make it happen. And that will make the world better for all of us.”

While the rest of the world’s businesses fear competition from China, businesses in China are most afraid of each other, said Fishman, a U.S. government consultant who has testified on China before Senate and Congressional committees but calls it “absurd” to say he is an expert on the subject. In no more than 25 years of free enterprise, 85 million private businesses operate in China, he said. “The U.S. has had free enterprise for 400 years, since the first Englishman came here,” Fishman said. “We only have 26 million private businesses.”

During Fishman’s visit to a remote Chinese village of less than one million residents, he encountered a market with hundreds of merchants operating at 4:30 a.m. An informal survey by a leading businesswoman at the market revealed that 50 percent of the goods sold there came from within 25 kilometers of the market, Fishman said. Furthermore, 80 percent came from within 75 kilometers and all of the items came from within 100 kilometers, he said.

“At the new supermarket in Hyde Park, nothing comes from within 100 kilometers,” Fishman said. “I thought this was amazing. A small provincial town can supply hundreds of thousands of items to the local shoppers. This is true everywhere in China. At the local market things tend to be from local suppliers.”

One of the most puzzling economic trends in China is that as the economy grows, many “redundant” businesses sell the same items or services, he said. “Even the Chinese government has learned this lesson with difficulty,” Fishman said. “They keep pushing for industries to consolidate and instead they keep growing and growing.”

The CEO of a leading Chinese supermarket chain confirmed that 80 percent of his company’s 120,000 products come from local suppliers, Fishman said. However, the company is gradually identifying the best suppliers in China, he said.

“He predicted that in a market that looks very locally driven, a set of companies are emerging that will be very competitive globally, capable of supplying the most demanding customers around the world,” Fishman said. “They will be the Chinese brand names the rest of the world knows in the next five to 10 years.”

Chicago Asia Pacific Group invited Fishman to speak to introduce China to the U.S. and the GSB and to talk of entrepreneurship burgeoning in China, said first-year student Qiqi Zhang, co-chair of the student-led group. “Fishman is really a kind of China expert in the United States,” Zhang said. “He really understands China. He can give Americans a firsthand point of view of what China is.”

—Phil Rockrohr