Shenzhen General Chamber of Commerce
China Shenzhen Entrepreneurs Convention
20 December 2016
How the Shenzhen spirit can counter the dangers posed by international mistrust
I want to thank the Shenzhen General Chamber of Commerce for inviting me to speak at this spectacular event. I feel honoured to be in the company of so many people that embody the spirit of Shenzhen and who have contributed so much to this city’s success.
I am British, but I spent many years in the United States, including three years in Chicago, known as “The City of Broad Shoulders”, implying a toughness and a willingness to get things done. In my 20 or so visits here, I have always felt the same way about Shenzhen. Last night I looked again at the list of the ten superlatives of Shenzhen. I won’t list them all, but four jumped from the page:
- China’s most open and inclusive city
- China’s most web-savvy city
- China’s liveliest city
- China’s most efficient city
I am often struck by the exceptional speed with which China has modernised its infrastructure. Shenzhen epitomises this. As an example, that I like to tell my friends in Europe, it took Paris 116 years to build 214 Km of subway lines while Shenzhen built 286 Km in just 12 years! Amazing.
I speak to you today as a British citizen, a European citizen, and as a teacher of negotiation, but also of business ethics and risk management.
I’d like to say a bit about the big event in Britain that poses risks for my country in many ways. That was the vote on 23 June to leave the European Union. The Brexit decision plunged our country into great uncertainty immediately after the vote but, over the past six months many people have become complacent about the economic consequences. They should not be. We haven’t yet left. The impact will be felt after we have actually left. More than two years from now.
I believe our government’s negotiation challenge is to minimise the harm by retaining as many of the valuable benefits of EU membership, while trading away those that are less important. It will not be easy, especially as opinion is widely divided in Britain and we are negotiating not only with Brussels, but with 27 other governments, 11 of which will have elections over the next two years so their positions may change radically.
Immediately following the referendum, leaders in Brussels and in several individual EU capitals staked out seemingly inflexible positions. However, it is important to look beyond these statements, which can be seen as opening bargaining ploys, to the underlying interests of all the parties, where more flexibility will almost certainly eventually be found. In many cases the political self-interest of all these parties on the other side of the negotiating table may outweigh their commitment to what Brussels likes to call the “European Project.” Positions of all the players will inevitably keep shifting as they respond to a range of domestic and other pressures.
A major consideration for the United Kingdom is getting pushed into exclusive negotiations over the single market, with its so-called “four freedoms” (free movement of goods, services, capital, and people). Although trade and migration issues are high on the agenda, it would be a mistake for them to be negotiated within a single market silo. It may be that an issue to be negotiated in an unrelated area, such as health, consumer protection, or rules for the digital economy, could help provide an opportunity to create a deal on a difficult single market issue.
It is too early to gauge the impact of Brexit on the much publicised “Golden Era” for UK China relations. My personal view is that the UK is a more attractive country with which to do business, when integrated with the European Union, especially in areas like customs, tax, and financial services. However, what I also believe is that both British business people and our government see continuing and growing opportunities with China and will work very hard to minimise the effect of Brexit.
2016 has certainly proved to be a year in which trust and predictability were turned upside down. I’d like to talk about why we need to be wary of some worrisome new trends.
At the heart of good business relationships to which all of us in this hall aspire, is trust and predictability. So why is it that mistrust and unpredictability got out of control in 2016? There are many causes, but let me focus on one strand that led to the two big upsets of Brexit, to which I already referred, and the election of Donald Trump in the United States. The role that social media played in these two political upsets should give us cause for concern.
Let me step back for a moment and reflect on some of the great benefits of the innovative technology that facilitates social media and discuss how we have seen the benefits abused over the past year.
We owe a debt of gratitude to Chinese entrepreneurs, many of whom are here in Shenzhen, for harnessing the power of the Internet to both revolutionise the retail industry and to provide endless opportunities for ordinary people to communicate more effectively via their ubiquitous smartphones.
Whether in China or anywhere else in the world, our ability to talk and send messages to almost anyone is a great asset. This ability makes it more difficult for people in power, including business leaders, to get away with unacceptable or criminal behaviour because thousands of people can instantly find out about their misdeeds through social media.
But there is a darker side to the growth of these new means of mass communication.
It is estimated that in the United States about 60 percent of the public obtain their news from blogs and other online media rather than from traditional newspapers, whether printed on paper or online.
Think about it for a moment. Traditional newspapers and magazines employ hundreds of professionals to research articles, interview newsmakers, determine whether press releases are telling the truth, check all facts for accuracy, edit articles to make them clearer and more readable, and, generally, make it clear whether you are reading a straight news story or an opinion article. True there is often bias shown by these formal news organisations, but we get to know which newspapers we can trust and what their biases are.
Compare this with online blogs and other social media news sources. These generally lack the discipline and adherence to professional standards of conventional news media.
In the past year, we have seen how demagogues and polemicists have used social media to their advantage. Whether through direct communication to their followers on Twitter or through online blogs and web publications. Donald Trump made many untrue statements which fact-checkers quickly branded as lies, but the damage was done as sympathetic online groups re-posted the lies and soon they became accepted as facts.
The art of the lie has been carried to extremes by people creating totally fake news. In fact, there is a small town in Macedonia in Ex-Yugoslavia where the main industry is making up fake news stories for distribution in the United States. Like money-laundering, the authors of these fake news stories are very good at covering their tracks and disguising the true origin of these stories.
We saw lies being unashamedly told in my country when the advocates who favoured the UK leaving the European Union made up lots of stories and provided phoney data to achieve the result that they wanted. It was depressing to hear Britain’s former education minister, one of the leaders of the Brexit campaign, disparaging the data from the IMF, the OECD, and the Bank of England, by stating that the public should not trust what they are told by experts.
Why does this matter and what does it have to do with “The Spirit of Shenzhen”?
I think it matters in the commercial and financial world because, if political leaders like Donald Trump and the Brexiteers get what they want by telling lies, it may be contagious and business leaders may do the same. We saw serious dishonesty several years ago when banks in the US encouraged people with poor credit ratings to take out mortgages, which eventually helped to spark the financial crisis that started in 2008. Several years later several banks colluded to manipulate the LIBOR rate at levels which favoured the Banks, based on incorrect data. In September this year, the US bank, Wells Fargo disclosed that it had fired 5,300 employees over the last few years for actions related to opening fake accounts in the name of customers without their knowledge
The prevalence of lying in the political and business world could lead to a “race to the bottom” with ordinary people accepting as normal what has been called the “Post-Truth” world.
I teach people to negotiate at Oxford University and at Sun Yat-sen (Zhongshan) University in Guangzhou, as well as to corporate, government, and other clients throughout the world. I always urge students and executives not to lie for two reasons. The first is that lying in ethically and morally wrong. The second is that it destroys the ability to make reciprocal trades, based on the true interests of both sides. The 17th Century French diplomat, Francois de Callieres, wrote that “a lie always leaves a drop of poison behind, and even the most dazzling diplomatic success gained by dishonesty stands on an insecure foundation, for it awakes in the defeated party a sense of aggravation, a desire for vengeance, and a hatred which must always be a menace to his foe…….”
The spirit of Shenzhen is one of innovation, entrepreneurship, embracing the outside world, and mutual trust. In my many visits to this great city, I have been struck by the openness of the people I have met and the genuine desire on the part of business associates here to foster a harmonious spirit.
I thought about this three nights ago when I heard a beautiful classical concert by a string sextet from Hong Kong. The six musicians were from three different countries and they played five different instruments. At one point as they played, I saw the Israeli viola player looking for guidance to the Chinese principal violinist. The whole group knew that they all needed to work together in perfect harmony and the result was beautiful music.
I see these musicians as a metaphor for business where mutual trust and support is also needed.
My message today is that I hope the companies represented here will continue to trust those with whom they do business internationally, but be cautious of the growing post-truth environment. But also, I hope that because both good and bad business behaviour is reciprocal, they can export the spirit of Shenzhen – of innovation, trust, and clean business behaviour and influence others with whom they deal so that what a recent Economist magazine cover described as “the art of the lie” does not become the norm.
I look forward to continuing to benefit from the great relationships I have developed in Shenzhen and I will continue to spread the word both in Britain and all the countries to which I travel that this is the city in China where people should come to meet entrepreneurs and pragmatic business leaders and find success.