Seminar, Plymouth Business School, 27 th April, 2012

1. Professor Richard Li-Hua Founder and current President of China Association for Management of Technology Director of International Centre for Research, Innovation, Sustainability and Entrepreneurship (RISE) Sunderland Business School University of Sunderland, UK • Seminar, Plymouth Business School, • 27th April, 2012 Integration of Western Management with Chinese Philosophy

2. Robert Morrison 5 January 1782 in Bullers Green, near Morpeth, Northumberland – 1 August 1834 in Guangzhou) was an Anglo -Scottish evangelist and the first Christian Protestantmissionary in China.

3. Sun Tzu, also known as Sun Tze or Sun Wu in other translations, was a historical figure whose authenticity is questioned by historians. Traditional accounts place him in the Spring and Autumn Period of China (722–481 BC) as a military general serving under King Helü of Wu, who lived c. 544–496 BC.

4. This presentation covers: • Sharp contrast • China’s innovation and innovation strategy • Ancient Chinese Philosophy • Art of War by Sun Tzu – Ancient Strategic Management CAMOT 2010, Shanghai, China

5. Section ONE: Sharp Contrast between West and China in the last 30 years CAMOT 2010, Shanghai, China

6. China has been regarded as “a learning society” while West has been a “talking society” - John Naisbitt, Author of China’s Megatrends CAMOT 2010, Shanghai, China

7. The political and economic consensus The New Right and economic liberation The watchwords – privatization, liberation and deregulation Minimizing the state activities Maximizing private sector activities The “irrational” sphere becomes stronger while the “rational” sphere become weaker “the flowed business model” In the West

8. 2012 is still eventful – after Libya issue now Syria issue Government incapability deepened Two party systems/three parties – difficult to have agreement on strategic decision Downgrade of credits rating, in US, some countries in Europe makes the economy even worse Debt crises in Europe threaten very future of Euro 99% against 1% and occupation of Wall Street Un-employment rate increase is a big issue In the West (continued)

9. After 30 years of “class struggle”, it has been a period of 30 years of “harmonious society” “It does not matter if the cat is black or white as long as it catches mice”. “Cross the river with a stone” No argument of socialism or capitalism – a contrast to “We would like to have socialist grass rather than capitalist crops” 30 years ago Integration of prescriptive and emergent strategic approach - Pragmatic approach In China:

10. Market economy with Chinese characteristics Unwavering government commitment “A political counter model” to “Western modern democracy” Central command economy Integration of western technology and Chinese soft capacity Learning anything better and more advanced from west for China’s technology capacity building “Market in exchange of technology” Technology transfer based innovation Indigenous/home grown innovation Innovation with Chinese characteristics In China (continued):

11. Section TWO: China’s innovation and innovation strategy CAMOT 2010, Shanghai, China

12. Chinese Premier, Wenjiabao Keynote speech at Cambridge “Two invisible hands” Adam Smith Moral Sentiments The Wealth of Nations China’s secret: Sharing Wisdom between West and East

13. China’s High-speed Train Innovation Leads to the Future

14. China’s Innovation Facts • In contrast to the financial bubbles, Chinese are innovating in a uniquely Chinese manner and a formidable challenge to western countries, i.e. high-speed train system and megliv rail-way • However, China has been seeking innovation framework and implementation strategy for sustaining and up-grading its economy • China took 12.3% of the world total R&D spending in 2010, second only to the US • China had 200,300 patent applications in 2008 alone, which ranks the 3rd next to US and Japan CAMOT 2010, Shanghai, China

15. China’s Ambition • China’s ambition is to become innovation-oriented society by 2020 • A science and technology power by 2050 • From 3I pattern of innovation strategy to indigenous innovation • Innovation with Chinese characteristics CAMOT 2010, Shanghai, China

16. Features of Chinese Innovation at Enterprise Level • Technology transfer based innovation • Innovation on site, not in the laboratory • Innovation with a focus on costs • Product features and function tailored to local requirement • “Haier’s washing-machine sold to Sichuan” • Rapid product innovation CAMOT 2010, Shanghai, China

17. The Challenges • China’s research environment is detrimental to individual creativity, too political charged • Science and technology policy-makers have been regarded as overbearing • Education system in China is based on rote learning, tend not to be critical thinkers and not to develop independent thinking • Chinese tradition of deferring to authority is not conducive to innovation CAMOT 2010, Shanghai, China

18. Strategic Steps • R&D has been increased substaintialy • 2005 – 1.3% of the GDP • 2010 – 2.0% of the GDP • 2020 – 2.5% of the GDP, which means the same level of several countries of Organization of Economic Cooperation and Development (OECD) CAMOT 2010, Shanghai, China

19. Major Concerns from West • Interview with “Nature” from US • China’s pro-active acquisition strategy and technology purchasing • From green technology to renewable technology in the US • From air bus technology to manufacturing technology in Europe • Fear of loosing competitive advantages CAMOT 2010, Shanghai, China

20. Section THREE: Ancient Chinese Philosophy CAMOT 2010, Shanghai, China

21. Management is an activity with well established theories and practice in the history in the mankind 21st Century problems vs 20th Century methods Modern theories of management were developed in 19th and 20th centuries in the west 1st MBA was awarded 100 year ago at Pennsylvania University Plymouth EMBA Technology Strategy - Featured MBA The Arts of War by Sun Tze has a significant conceptual influence to modern management Western Management vs Chinese Philosophy Perspective of 21st Century

22. American style is embedded in the process of self-actualization Self-achievement Management by objectives and driven by result Chinese philosophy is embedded in harmonious Environment Discipline yourself first and then manage others American Management vs Chinese Philosophy

23. Chinese and West Value Comparison

24. Not a single homogeneous work It draws wisdom from many philosophers, some even contradictory The classical period of Chinese philosophy extends from earliest time through Confucius to the end of Qin Dynasty It was the period of great originality and creativity in China Chinese Philosophy – Hundred Schools

25. Chinese management concentrates Personal and governmental morality Correctness of the social relationship Justice and sincerity Chinese philosophy is not a homogeneous work but draws wisdom from many philosophers, some even contradictory “Hundred Schools” “Hundred flowers in bloom” and “numerous philosophers” Leading Schools and Strategic Value of Ancient Chinese Philosophy

26. Confucius is one of the most influencing figures in ancient Chinese philosophy Self-disciplinary first and then manage people Qiji, anren, zhiguo, pingtianxia Focus on educating people rather than managing people Great impact on behavior of Chinese people Analects of Confucius (or the Analects), the deeds and speeches of Confucius with only 20,000 words, has been a shining gem in Chinese culture and civilization It has become mottos Confucius Philosophy

27. He developed his philosophical idea of personal development by following nature He recommended its application to politics Dao Te Ching – 81 chapters (37+44), explaining his theory of natural thinking, natural laws, social phenomena and Wu Wei philosophy Wu Wei – Action without Action “Being soft can conquer the hard” “Resigning before achieving the top of a successful career”; “Seek for opening to stick in a pin”, “To be the second best”, “Stop at the right time”. Wu Wei Philosophy by Lao Tzu

28. Yin and yang is used to describe how polar opposites or seemingly contrary forces are interconnected and interdependent in the natural world and how they give rise to each other Everything has both yin and yang aspects There is a perception in the West that yin and yang correspond to evil and good Yin and yang way of thinking resembles the holistic view The Value of the Yin-yang Philosophy

29. Section FOUR: The Arts of War by Sun Tzu – Ancient Strategic Management

30. To design a strategy of a war, we need to examine the belligerent parties and compare them in terms of the five fundamental factors: The first is the “way” (dao); the second, “haven” (tian); the third, “earth”; (di) the fourth, “command” (jiang); and the fifth, “rules and regulations” (fa). “Let’s Win without Fighting” “Art of War” First Chapter: Designing a Strategy

31. I mean the moral influence, or that causes the people to think in line with their sovereign so that they will follow him through every vicissitude, whether to live or to die, without fear of mortal peril To compare with strategic management, this may mean the vision, and/or mission statement By the way (dao)

32. I mean the effects of night and day, of good and bad weather, of winter’s cold and summer’s heat; in short, the conduct of military operations in accordance with the changes of natural forces. To compare with strategic management, this may mean external environment, PEST-EL, 5 forces analyses, the diamond theory. By haven (tian)

33. I mean distance, whether it is great or small; the terrain, whether it is treacherous or secure; the land, whether it is open or constricted; and the place, whether is portends life or death. To compare with strategic management, this may mean internal environment, SWOT and/or RBV By earth (di)

34. I mean the wisdom, trustworthiness, benevolence, courage and firmness of the commander. To compare with strategic management, this may mean leadership, commitment of senior management team, core competence By command (jiang)

35. I mean the wisdom, trustworthiness, benevolence, courage and firmness of the commander. To compare with strategic management, this may mean leadership, commitment of senior management team, core competence By command (jiang)

36. I mean the principles guiding the organizations of arm units, the appointment and administration of officers and the management of military supplies and expenditures. To compare with strategic management, this may mean Rules and regulations, ethics, culture and history, Technology, HR, finance, Corporate governance, CSR By rule and regulations (fa)

37. There is no general/CEO who has not heard of these 5 factors. Yet it is he who masters them that wins and he who does not that loses. Therefore, when assessing the outcome of a war/business in a global environment, compare the two sides/compete against your rivals in terms of the above factors and appraise the situation accordingly. Win over your enemy/ Compete against your rivals

38. Find out which sovereign/firm possesses more moral influence/a clear vision, which general/CEO is more capable, which side/firm has the advantages of heaven/external environment and earth/internal environment, which army/department is better disciplined, whose troops/teams are better armed and trained, which command/manager is more is more impartial in meting out rewards and punishments and I will be able to forecast which side will be victorious. Compete against your rivals

39. Western management and Chinese management are equally important Western management will not be replaced by Chinese management Integration of Western management and Chinese philosophy Those who neglect these two factors will be lame ducks Winner in the 21st Century

40. The Carpenter and the Oak Tree

42. Integration of West Management with Chinese Philosophy

43. Integration of Western Management and Chinese Philosophy in the Current Economic Recession Keynote Speech delivered at Cambridge University Asia Law and Business Annual Conference on 28th February, 2009 • Dr Richard Li-Hua • Salford Business School • Salford University @2009 CUALA RLH