Wednesday, September 30, 2009

Win in China - Interview With Robert A. Compton

I reviewed the documentary Win in China yesterday. Today, I'm going to post a transcript of the discussion I had with the producer of the film, Robert A. Compton.

Compton is a businessman with lots of experience in entrepreneurship and venture capitalism. In recent years, he's had a lot of interaction with both China and India.

In addition to business dealings, he has also produced two films. His first was Two Million Minutes, which is about the state of high schools in the US, China, and India. Encouraged by the huge success of 2mm, he's continued to make films. His second is Win in China.

Last week, I had a very insightful discussion with Mr. Compton about his film and China in general. Here is what he had to say:

Mark's China Blog (MCB): How did you find out about the reality show "赢在中国?" What about the show drew you in and made you want to make a film about it?

Robert A. Compton (RAC): I heard about the show from a Chinese interpreter of mine. He knew someone who was working on the show. He told me the premise and it sounded like a great way to get in tune with China's huge growth in entrepreneurship.

China is the most entrepreneurially active country in the world. But the thing is that they keep things close to the vest. Americans, by and large, don't know what is going on there. Many Americans still have this view that China is exclusively an agrarian society. We don't understand the massive government investment in business infrastructure that is going on over there.

MCB: The simple fact that the show 赢在中国 happened shows just how comfortable China's leadership is with promoting capitalism. Tell me more about the investment in businesses and entrepreneurs that the Chinese government is making.

RAC: With the mass migration from the countryside to the cities, China needs to absorb twenty million jobs every year just to break even. China doesn't want entrepreneurs, it needs entrepreneurs.

The show, 赢在中国, was one way of encouraging more people to get involved in the process of creating businesses. But the investment runs much deeper than mere encouragement. Every university in China has a strong entrepreneurship department. Most have at least ten professors on faculty.

Developing entrepreneurship is part of a broad plan. The Chinese are very serious about developing a nation of risk-takers and business owners. As a filmmaker, this is something I want the rest of the world to know about.

MCB: The theme of China's change from collectivism to individualism is featured throughout "Win in China." How do you understand this change from "Mao to the market" took place? How far into the transition do you think the country is?

RAC: The real trigger was Deng Xiaoping. It was a series of baby steps, really. Deng pushed it along. His endorsement of the private sector was a green light for the entire country to begin making money.

The turn of the millenium saw another important step. That's when the government came in and stepped up its investment in education and entrepreneurship. Ten years ago, most people couldn't send their kids to a university. Now, Chinese universities are open to a much larger segment of the population. And in addition to simply making higher education more affordable, the government has also made it a priority to make sure that those universities, which more people are going to, are developing a new generation of business leaders.

There are over 120 million Chinese people involved in entrepreneurial activity. That's nearly the size of the entire US workforce. Patent filings are on the rise. Students at Qinghua University are switching majors from engineering to business in droves. China has made remarkable strides in accepting capitalism in a very short period of time.

MCB: I found the training aspects of the show very interesting. Jack Ma and other industry leaders came in to teach the contestants about IPOs, "start-up capital," and other financial concepts. Education of the audience was a key part of the show. What does the average 老百姓 (common man) know about entrepreneurship and/or business. What did they learn from the program 赢在中国?

RAC: Despite being repressed a few decades ago, the Chinese people have a long history of business and entrepreneurship. It's hard for me to say how much the average person knows. What exactly does the average American know about these things? I think that, despite China's recent history of repression and state-run industries, their knowledge of business and finance is about the same as an American's.

赢在中国 was wildly popular. Millions upon millions of people tuned into the show. It had to have had a big impact on those viewing. It's astounding to think that the sentiment in China has changed to the point where watching people compete for millions of dollars on CCTV is acceptable. The mere fact that the government signed off on the show is a huge endorsement of capitalism. Add on top of that that the show was a runaway success and it shows that the average Chinese person is hungry for the opportunity to get rich.

Throughout the show, CEOs and business leaders were called "heroes." Chinese people aspire to do the same things in business that these people have done. Jack Ma is a rock star in China.

MCB: One of the judges/creators of the show was quoted in the film saying, "In today's China, anyone can win." Zhou Yu (the Wolf) was the personification of this. His character is the most memorable from the television show and your movie. His name is "the Wolf" because of his cut-throat approach. Throughout the show he implemented questionable business ethics and bent the rules for his advantage. Later in the show on the finale, one of the judges said he "represents the Chinese spirit" and he also won the popular vote of the viewers.

Why was "the Wolf" so popular? Do you think he represents the ethos of the Chinese entrepreneur?

RAC: I believe the Wolf does personify China's entrepreneurship ideals. Watching the Wolf, seeing his aggressiveness, it really did make people uncomfortable. Yet he captures the spirit of today's Chinese business people.

The Wolf probably didn't finish high school. He would never say exactly what his education level was. This appealed to the common Chinese person watching the show. He truly pulled himself up by his bootstraps. The Wolf helped everyone, even those who haven't yet been lifted by China's booming economy, feel as though they have a chance to get rich and have a better life.

If I had been a judge on the show, I would've chosen the Wolf to win the competition. Great entrepreneurs are strong willed. Now, I'm not sure how well he'd do in a Board of Directors meeting. But I do know that since the show completed in 2007, his business is absolutely booming whereas the other finalist on the show is struggling.

MCB: Talk about China's growth and what it means for America.

RAC: We've never faced an entrepreneurial competitor that's four times as large as us. There's an old Red Army saying, "Quantity has a quality all its own." There are over two hundred venture capital firms in Beijing. Now, we have to look at competition coming from Asia where in the past, we only had to worry about domestic firms.

China is already killing us on battery technology and electric cars. Warren Buffet invested $250 million in BYD last year. Now that investment is worth $9 billion. BYD electric cars are all getting between one hundred and one hundred and forth miles a charge and cost $10,000. GM just announced that its Volt will be released soon. It's going to get about forty miles a charge and will cost $40,000.

The Chinese economy is here to stay. We need to be prepared to meet its challenge.

MCB: What do you think about China and America's responses to the financial crisis?

RAC: With its stimulus, China is currently doubling the size of its ports, expanding its rail lines, and rebuilding its energy grid. Compare that to America. We're pouring billions of dollars on failed twentieth century businesses and industries. Their package is building while ours is bailing.

Which country do you think is preparing better for tomorrow?

There are a lot of problems with China's leadership and I certainly don't endorse one-party rule. But there is something to be said for what they're doing. The top leaders in China are all engineers. How many engineers are in our Congress? I know we have a lot of lawyers, but I'm pretty sure there aren't many engineers. Engineers approach economics and growth very methodically. Chinese leadership is proving to be very analytical. Their planning can be seen in the fact that the economic crisis for them means only 8% growth.

MCB: Do you think that these stimulus projects, not being driven by markets but instead by government, could be fueling mis-allocation?

RAC: I'm not sensing over-heating. I feel like China will be able to grow into over-capacity it is creating. But I'm not an economist and I don't study macro-economic numbers. I'm speaking from what I'm seeing in the business community.

MCB: What will China look like in 25 years?

RAC: China's economy will pass the United States' in about twenty five or thirty years. That seems to be the consensus from economists. Another 400 million people will be brought out of poverty. They will join the 400 million who have already been brought out of poverty in the past couple decades.

China is going to dominate battery technology and electric cars. They're doing great in green technology across the board right now.

Once Chinese become consumers, China will be the largest market. This will present a challenge to US companies. Business in China is a very subtle and complex proposition.

MCB: Thanks a lot for your time, Mr. Compton. It's been a pleasure speaking with you.

RAC: Thank you.

I'd like to thank Mr. Compton for sharing his time with me. I really enjoyed hearing his take on what is going on in China right now. Again, you can find out more about his film here.


Anonymous said...

I think this conversation between you and Compton is a perfect capsulation of where China and America are heading and provides a look behind the curtain into modern Chinese ideology that most Americans are clueless about.

As we have discussed here before Mark, one of the main themes at MCB is where both China and America are headed at these crossroads. I think your interview was consistent with that and again I have to give you quick kudos for the excellent questions and focus for the interview. I particularly liked the question and response to the idea that China's public funding may not be an efficient allocation of resource. I think the answer shows exactly why the U.S. better stop patting itself on the back for its success the last century and wake up.

The more I think about what is going to happen, the more it gives me a tad sense of dread. Superpowers have come and gone through the centuries and I am sure most were never aware of their imminent collapse. Warren Buffet used to invest in Coca Cola, now its BYD. The writing is on the walls.

I am happy to see countries like China and India pull themselves out of poverty, I think its good for the world, but I also fear what lies ahead for America. Also, America benefitted from the entreprenurial spirit of immigrants from all countries, is China's spirit going to be open or reserved only for the Han? While MCB and its readers have a much better understanding of China than the average American, it still remains a mystery. Does China want to rise up as a world leader and promote symbiosis with the other countries of the world? Or does it see itself as a sleeping dragon, about to awaken and claims its destiny and breathe fire? I wish I knew.

Mark said...

Thanks, Hopfrog. This really was an interesting interview with Mr. Compton. He's an incredibly knowledgeable person. I'm grateful to have had the chance to talk with him. Check out what he's done on the link I put for his name in the post. He's one of the most forward-thinking investors in the entire United States. His thoughts on China need to be listened to.

I hear what you mean on the fear aspect of what's going on abroad. It is intimidating.

I'm going to have a review of the book - Superfusion: How China and America Became One Economy and Why the World's Prosperity Depends on It by Zachary Karabel - in the next couple weeks.

I'm only half way through it right now, but I strongly suggest that you pick it up when you can, Hopfrog. It addresses all of the concerns that you're bringing up. It's blowing my mind so far.

Anonymous said...

Superfusion releases in a few weeks, you get an advance copy? Anyways, if its having that profound an effect I will definitely pick it up.

Mr. Compton is very prolific and experienced, I wish I had that kind of drive. Have you seen 2mm? As an educator (or at least as one in your China life) its seems it might be up your alley. I am fascinated by the concept and will probably end up ordering it as well, but I will wait and see how Win in China stacks up first.

Mark said...

I did get an advanced copy of the book. I'm really enjoying getting the chance to review books and films and such and hope that I continue to get these kinds of chances.

These opportunities are a nice reward for all of the hard work I've put in on this blog over the past several months, I suppose.

You can wait to read what I write about the book to see if you think it sounds interesting. I'm learning a lot from it so far.

I haven't seen 2mm. I'd like to. Especially since, from my experiences, I don't particularly like the Chinese high school system. When you talk with kids in China, all they can tell you about is homework, homework, and more homework. They're worked to death and have no chance for any sort of extra-curricular activities. I don't think that such a system is very good.

Saying that, I would like to see 2mm's take on it.

Anonymous said...

Wow, so many comments (as usual) after watching this show.

First off I may be teaching English in China and I will absolutely hold on to this DVD because I think there is a great motivator for learning English in this DVD. I think in one of my first classes I would play this and ask what does everyone notice about all the successful CEO's that are judges? They are giving their interviews in almost perfect English.

Secondly, I notice Compton has done a wide range of things in his life. I truly believe he has found his niche and I cannot wait to view 2mm. This was an excellent documentary that should be shown on American cable. So educational for those Americans that still think the Chinese walk around with little red books.

I'm really a big fan of Jack Ma and his wise insights. I love how he openly points out that 10 years ago such a documentary by a westerner would not be possible, but now, hey no problem. It says a lot about modern China.

As I was watching the documentary I kept saying, hey this is how we used to talk in America, this all used to be possible here too. And of course one of the commentators says the exact same thing about this being like America in the 20's or 50's. I thought his summation nailed it.

I found it humurous that the recommendation to one of the contests was to "go to Wharton". So much of the terminology and philosophy throughout the show seemed right out of an American university.

I still wonder why Mao's photo is the one hanging outside of Tianmen. Seems to me that nowadays it should be Peng's. Oh thats right, there are still those who make fortunes off an ideology. At least they are giving some other people a chance now.

As for the Wolf. The only thing I had a problem with was his outright lying to the graphics artists, other than that, I felt he thought outside the box. Then again I didn't see the whole series, but honestly, it seems he should have been there. I also thought the guy who won, should have won, from the brief clips I saw.

I do have one criticism. The last line states "China is a nation, it seems, where anyone can win.". Hmmm.... Lets ask the Tibetans and Uighurs about that one. Or how about a westerner. Do you think a westerner could go over to China and start a business without facing insurmountable roadblocks? I really don't know. Thats one thing I take issue with and at this point I don't know if its valid yet. In America a Chinese immigrant could come here, start a business, and prosper. How open is Chinese Capitalism? Could you or I do the same thing, go over to China and start a business on a level playing ground? I'm not being rhetorical, I'm gray in this area, what do you think Mark?

Mark said...

On my notes I wrote that nearly every Chinese person spoke perfect English. I'd believe that Jack Ma is a Chinese American based on how well he speaks.

To answer your last question, Hopfrog, I think that westerners in China have to have strong partnerships with local Chinese people to be successful. There are just too many factors for a foreigner to expect to be successful "going it alone." Westerners, as well as Chinese, can certainly be wildly successful. That's for sure.

I do, at least, question the quote from the movie, "In today's China, anyone can win." I don't suspect that migrants or farmers feel that way (as I posited in the post on Thursday). I asked Compton about the poor in China and he answered that he simply doesn't have too much experience with them and couldn't say for sure.

And about the Wolf, Mr. Compton said his business is booming where as Sun Ming's is struggling. The Wolf definitely knows what he is doing.