The more you know
The more you dare
— HEC UNIVERSITY PARIS (Motto)

Guo Bai is the author of “China’s Development: Capitalism and Empire”, an intriguing book on China’s past, present and future. She’s a researcher in Paris and an entrepreneur in China, working to develop the Chinese Kickstarter for equity. I’m not going to write a long introduction because you can find all the information in the interview.

With 70% of the world’s megacities being located in Asia by 2025, and with the majority being in China, this could be one of the most interesting interviews in the entire book.

The Interview

Good morning Guo, and welcome. Or I should say good evening, since you are probably in China, right?

Yes, I’m in China right now.

 

Would you like to introduce yourself to the readers?

Okay. My name is Guo Bai. I’m Chinese, and I’m a researcher at HEC Paris (A/N one of the most prestigious business schools in Europe). I’m a firm believer that, in the future, the boundary of organizations and industries is going to blur. That means that with digital technology and the importance of big data rising, the way people work together will be changed.

So right now I’m working on understanding the organizational form and structure, and how people coordinate their work and actions for complex projects such as smart cities, and that’s what I’m doing right now. Before that, I have mainly been a macro-economist and I’ve been working on the book: China’s Development: Capitalism and Empire, which tries to explain the real logic of China’s reforms.

 

And what are you doing in China, besides your research?

Actually I’m working on two things at the same time. On one hand, there’s my research, so I’m checking massive projects in China, trying to visit their sites and talk with their managers to try to understand how they were managed.

Secondly I’m also working as an entrepreneur. I’m working on a platform to do equity crowdfunding for projects that are more related to creative design and art and promote a more innovative, creative and beautiful lifestyle.

It’s kind of like Kickstarter but not completely, because Kickstarter focuses more on the product side of things. And us, we’ll be more focused on the startups themselves so it’s more on the equity instead of the product.

 

May I say “the Chinese Seedrs for lifestyle startups?

Right. We have a very specific focus. Like, instead of rushing to show everyone early technologies and digital stuff, we want to really focus on how we use these things to change our lives. And also, we want to spread this idea of crowdfunding to help people who are interested in other aspects of life such as art, design, food, and drink. And also, we do not only focus on Beijing and Shanghai and those very large metropolitan cities, but we spread this idea to local cities such as the second, third, or fourth tier cities in China.

 

Equity crowdfunding based on communities could work very well. I’ve done quite a few crowdfunding projects myself—both reward and equity based—and having a community is probably the most powerful tool for a campaign.

So I guess, if you only accept projects that are going to improve their local communities, on one hand they can launch faster, because they are local, and on the other hand the entrepreneur may be already well known and trusted. This definitely helps.

That’s exactly what I’m trying to do because nowadays equity crowdfunding is a very hot topic in China. Very hot business, but mostly people are still doing what traditional VC funds were doing. They were focused on very specific industries and they’re looking for really high-return projects in the short term. But I think it’s a very powerful tool, as you just mentioned, to really mobilize communities. And that’s the beauty of the Internet and that’s the beauty of crowdfunding, and we want to realize that aspect of it.

 

Indeed targeting a single community is probably under estimated by entrepreneurs. When I work with someone on a crowdfunding project, they all want to be published in the Financial Times or TechCrunch, and sometimes they don’t realize that an article on the home page of TechCrunch stays there probably only for a couple of minutes because there are so many other articles. While an article on an average sized blog in their product’s niche could generate many more sales and loyal supporters.

Yeah, bingo. Great minds think alike then. I totally share your view. Eventually if this platform really attracts a lot of attention it could make the front page of the Financial Times, but that’s not our purpose. Our purpose is really to mobilize the local communities and to really, not only attract people’s attention, but to do things that really can help people’s lives. Directly. That’s exactly why our platform is very different from other platforms.

 

This focus on people is the reason why I call our area “future cities” and not “smart cities”. I’m interested in anything that can improve our lives in the future, not just buildings and infrastructure. In other words, if we focus on the cities, we may end up with buildings full of gadgets and still have a poor quality of life.

On the contrary, if we focus on people, quality of life comes first. Sometimes we don’t need expensive technology to improve those lives, maybe we just need to use existing technology in another way.

In China, we have a similar trend. We have already hundreds of programs actively applied to the Ministry of Housing. I guess there are around 300 of them already. And there are, I guess, thousands of unofficial ones but also carrying the name “smart cities”.

But most projects are mainly related to infrastructure and not enough of them are paying attention to the human side of things.

Also many of these projects want to achieve ground-breaking changes, and it requires a long period of time. But really, sometimes integrating what we already have under the same umbrella is already very helpful and it may provide faster results.

China Bullet Train - Future Cities the Book
China Bullet Train at Honqiao Railway Station

 

I would like to talk about your book and what’s happening in China. Together with Michael Aglietta you wrote a book called “China’s Development: Capitalism and Empire”.

Besides the questionable high price chosen by publisher, this book is a must read. Cities and megacities are moving East, in particular to China and India. So understanding what works and what doesn’t work in China, is a key to understanding our future even in the West. The book is not just about cities, but about every aspect of your country.

What is the hottest topic right now in China?

Okay. Well, the book actually has three parts and only the third part deals with the future. But I think the three parts are closely related to each other. You can see that the first part of the book really deals with China’s history. The reason we go so far back into the past is because we believe that China has a very specific state formation process.

We are a country that has been united for thousands of years, relatively without foreign invasion. So the whole country, both its political logic and people’s mentalities, is quite inward-looking. We have long realized the importance of administration and we really want to keep the country united, and offer access to the basics to the whole population.

And that leads to the real logic of Chinese reform, which is really not a result of any kind of doctrine, such as a planning economy or Marxism or the Soviet model. But a process of adjustments to keep this country united and keep providing the people with some basic welfare – that also is the basis actually for the political legitimacy of the regime.

With this kind of very specific state formation process and history, we have a country that is very rich in community culture. I should say, the country has been, for thousands of years, self-organized at a local level. So all these communities, actually they carry a lot of the functions that used to be carried outside China by other institutions such as the state or companies.

That, nowadays, is very interesting because if we talk about smart cities and smart neighborhoods, they are based on a new form of community that encourages a lot of civic participation from everyone. Such kind of participation actually has a very long history in China, and it’s very popular and strong.

So this book is not particularly a book about cities, but about China’s reform logic and what is going to happen in China in a macroeconomic and a politico-economic sense. But it is related to cities in this way. Chinese people are very used to self-organization, are very used to a community way of thinking, and are very used to, and are good at, a community lifestyle.

So our Chines culture is not only very beneficial and interesting for developing local communities, but also for developing a new form of political regime that is a new type of democracy which is more participative, more based on a civic society, instead of a representative way of choosing who is going to have the final political power.

So this, I think, is something that directly relates my book to the idea of cities, especially smart cities.

 

So your idea is that, if you add technology to Chinese culture, that is already open to self-organization, then this technology may be way more effective there than outside China. In other words, the impact of tech could grow exponentially if implanted in the right culture.

If your idea is proven correct I see an important consequence. China will become the global beta tester for smart cities. Tech will be tested in China and then exported to the world, inverting the actual trend where tech is developed in Silicon Valley and in the West and then exported to Asia.

Right. I totally agree with you and that’s exactly what I’ve been observing. In fact, I just spent last several months in Boston and in other cities in the United States, and we can already observe China’s role.

Of course, nowadays, you (A/N the West) still have a lot of good ideas, good concepts, good technology. But if you’re talking about the application of these technologies, we can see that execution in China is nothing less remarkable than anywhere else in this world. For instance apps like WeChat or WeBlog are remarkable.

They have already, I won’t say replaced, but really have significantly challenged the traditional way of doing media, advertising, how people self-organize; all these aspects. So I totally agree with you. This cultural heritage and modern technology, the combination of these two will transform this country completely and will make China a leader in future centuries. I’m not saying in a general sense, but more in the application of these products, and also in the way of organization.

 

I see a glimpse of the Chinese optimist here. I’ve been working with China since 1996, and you have always been incredible optimistic about your future even when China was not yet recognized as an important player by the West. I remember backpacking China for a couple of months in 2000, and many of my colleagues were asking “If you are interested in business, why you don’t go the United States or Germany?”

So at the time, many in the West didn’t think of China as a major player in the international community, but all my friends in Hong Kong, Shanghai, Beijing had no doubt about the upcoming importance of their country.

And this trend is so clear nowadays. I’m not going to use the term “superpower” because this has too many geopolitical connotations, but I’m really seeing this country jump forward, that’s for sure. We are not just going to be followers or learners anymore. There are going to be aspects in all areas in which we are going to be the innovators, or the pioneers instead of just the followers trying to catch up.

 

So Guo, you are a researcher but also an entrepreneur. If you had 10 million to invest in a startup, and it cannot be your startup, what area of future cities tech would you pick?

I would still pick business concerning smart neighborhoods. By smart neighborhood, I mean how to change the relationship among people. For example, ideas related to a shared economy would be interesting.

Nowadays in China, you have very interesting apps for hiring a cook; whether a professional or not, who will come to your family and help you cook, either for yourself or for a group of friends. I feel these kinds of applications really change the relationship among people, really change the scope of the people you have contact with.

And they also change the way you socialize, network and the way you live. So I think these kinds of things, related directly with the management of the neighborhood directly with human relationships, would be the project that would be interested in the most.

 

I like this answer for a specific reason. Smart cities tech can be very slow. Dealing with bureaucracy can be a very long sales process. So if you develop a new transport system or a new energy system that is revolutionary, it can take years before it’s implemented and you change the life of the citizens.

On the contrary, if you start providing a service at a neighborhood level, at the bottom, the execution could be very fast. There is no bureaucracy at the bottom.

Exactly. And also, providing services at the bottom is not only economically viable but also I feel it can put pressure directly on the top, for instance on the mayor, to change other systems.

Because when peoples’ way of life is already changing, then they demand different means of transportation, buildings, and energy. And that’s actually a very good place to dig into the issue and force the government, force the officials, to re-think about what they are doing. And then help them and force them to also change the way they manage energy, transportation and other aspects of urban life.

 

Also these apps, because they focus on a Chinese neighborhood, they can be tailored to a specific lifestyle. I’ll give you an example. There is a sort of Uber in China that empowers the customer to call a taxi.

Nothing special about that but what I found amusing with this app, was that when someone else has booked a taxi, you can offer a tip and “steal” the driver from another customer. Basically if you are in a rush or it’s raining, you could outbid another customer.

Such a feature is never going to work well with customers in the United States, I think, but it could work very well in Mumbai or in Rome.

I have another anecdote about Uber in China, which is very funny. Also somewhat of a Chinese characteristic is that they think Uber is a direct competitor of social media platforms like Facebook or WeChat, because it’s actually an excellent way for people to meet each other.

So a lot of the Uber drivers I have met in China spend only a few hours driving, because it’s not their real job. Their primary goal is to meet new people and make more friends, or even potentially girlfriends or boyfriends. I found this idea very, very funny and very Chinese. It also shows how people are very used to this idea of socializing, meeting people: community.

You definitely know this; you’ve been to China so many times and have known China for such a long time. If you go to China’s parks you can see all these old people. They have self-organized these singing groups, dancing groups, whatever. All these are signs of that demonstrate how this country loves self-organization. And with technology, it just brings it to another level.

 

I found this story about Uber as a dating app so fascinating that I want to know more. So what you mean is that, some people in China who already have a job and make the same amount of money of a Uber driver, or a bit more, at some point in the day, they stop their full time job, to go out and be a Uber driver so they can meet new people and maybe the love of their life.

Indeed. For example, there is one Uber driver I met. He’s the client relationship manager of a big company, and he needs to get out of the office often to meet their clients. Between these meetings he has some free time. So instead of sitting in the office, he prefers to use this time to drive around, and meet more people. And that’s why he became an Uber driver.

I’m not sure if other people are sacrificing their time, but are more like using the gaps of the time they have to get out and to be more human-oriented instead of sitting in the office and handling the paperwork. And that’s what I observed.

 

So we have to tell Uber that they can become a dating app in China.

It already is [laugh].

 

Do you know how many Uber drivers found their girlfriend or wife driving people around?

I don’t know the statistics on that, but there are many rumors and people are talking about how huge a threat Uber actually is to dating websites [laugh].

Smart Cities Shanghai 2 - Future Cities the Book
A crowded Pudong, Shanghai

 

When I interview someone about Future Cities I often ask if they think that technology will improve or reduce the gap between poorer and richer countries. You have already replied to this question. China is not a poor country but because of the size of its territory and population, it’s hard to provide a high quality of life to everybody. Based on your information, tech is reducing the gap between China and the West.

Well, I guess it’s very difficult to give a general answer saying that the gap is for sure going to enlarge or to shrink. Because it really depends on whether the country, for instance, a developing country such as China, has the proper infrastructure and institutional background that allows this catching up. But that’s just a general comment.

I do believe that tech can be expensive, but what tech really does nowadays is to bring expensive things down to a more affordable price. So there’s definitely a chance. I can’t guarantee that it will, for sure, shrink the gap between the developed and developing countries, but there is a chance. There is also the chance it will achieve that. And that’s exactly what we have learned in China – we are catching up. Inequalities among different localities are also shrinking, thanks to these technologies.

What I see is that, with those technologies, information spreads much faster than ever. I’ll give a very concrete example. Let’s take education, for example. It’s not just about whether you have a good teacher or not. It’s not just about educational resources. Sometimes it’s about information. We all know that good universities have scholarships to help poor families, poor kids. But so many poor families and poor kids do not even know that those scholarships exist. And with technology, they can capture this information much easier.

Also, they can go on free courses online and have a better chance of self-education. So all these are really, I think, are very positive improvements and I can see that they are going to be tools to help close the gap between the poor and the rich. And that’s my comment.

 

And one of those tools is going to be your crowdfunding platform.

I hope so.

 

What suggestions would you give to someone that wants to do something with China, not necessarily business? Especially someone who is not a top manager.

Well, in my mind, I think they don’t need to do anything special. What I mean is, it’s that China is not this purist country anymore. So basically they just need to be really good at what they are doing and bring this expertise to China.

Buy a plane ticket, do not hesitate, do not heed all the stories they have heard about in China in their own country. Buy a plane ticket to come, learn the language, and then just deal with this world and their business as normal, in the same way they would, or should, do in their own country. And that’s how you should do business with China nowadays.

In the ’80s or ’90s it was different. If you came at that time, you would see a country that was completely lagging behind. You brought to China whatever advanced product or service you had in your country, you traded, and then you were successful.

That age has already passed. So really they have to understand this and really try to build up their own expertise. Try to think about what they can really offer to this market, and then learn the language, be friends with the locals, with the Chinese. And that’s the way they should do it.

 

Would you suggest a specific place to start? Because your options are not limited anymore to a few cities like Shanghai or Hong Kong.

There are many cities that come to mind. I would suggest cities in the center of China such as Wuhan, or in Sichuan province like Chengdu, or anywhere actually. It depends on their Chinese level of course, but if they really want to learn the language and learn the culture then they should consider those cities that are more towards the interior of China instead of Beijing and Shanghai where they tend to hang out with their friends from the same country.

Really they should take a backpack, like you did several years ago, and travel the country. They should just look and listen and experience and feel by themselves, and then they would decide because China is so broad and so diverse. I guess everyone has different tastes. So taste it and then decide.

 

Indeed something that foreigners don’t realize until they go to China is that the north of China is more northerly than Denmark, and the south of China is more southerly to Dubai.

So they tend to think of China as a country like others, but it’s almost a subcontinent in a way. And the cuisine so different, and the people can be very different, although they all have a something important in common. So I agree with you, for someone that wants to do something in China it would be extremely helpful, and enjoyable, to spend a few months traveling around and then eventually picking a place that they like, or a place where they meet people that they like.

In my case, I was extremely, extremely well-treated in Nanjing (A/N the old capital and a university city). Although I didn’t plan to stay there for a long time because there are probably cities that are more suitable in which to do business.

But there is more in Nanjing than business. It’s funny because I have a friend who has just opened a very good French restaurant in Nanjing. The business has been hugely successful, and I just visited Nanjing last week and it was fantastic to see. People there are still very nice. And the city, as you said, maybe does not have too many special features but altogether is very agreeable; a very lovely city to live in.

 

Actually my train reached Nanjing late in the evening, I had no hotel booked, there were no smartphones at the time, but I was invited to sleep in an apartment belonging to the military college by students I met in the street.

And also what you have just mentioned, to be invited by strangers you met on the street to their home, it actually could happen everywhere in China. Because Chinese people are quite curious and they are very natural with close human relationships.

That’s for example, the reason for the dating feature of Uber in China, and also why we think community, and especially smart communities apps, have very good potential in China. It’s because of this natural closeness with human relationships, I believe.

And what you have just described, I also have experienced with my foreign friends in China in different areas actually. There was one in Beijing, one in Sichuan; they all had very interesting experiences.

People who have just met you and are so happy to meet you and invite you to their family, remain friends, keeping contact for years after. This is just another piece of evidence that shows that China is a country with very long traditions of community and Guanxi in a general sense.

 

It’s probably easier in a university city like Nanjing and in big cities because so many of the students speak an okay level of English, with some being very fluent. While when you backpack the interior of China, people can still be very friendly but it’s difficult to communicate because at least at the time, it was very hard to find English speakers.

Do you want to add something to close this little chat, or we call it a day?

Well, maybe a general message. I’m really a firm believer that all this technology, Internet, big data, these things are not just for business. And these things are not just technology. They are going to change profoundly the way we organize our activities, the way people relate to each other, and they are going to significantly change what we can do as a group, as a race altogether. We’re in this work for this work. So, well, fasten your seatbelt.

Links

  1. China’s Development: Capitalism and Empire
    (Rethinking Globalizations)
    by Michel Aglietta and Guo Bai
    http://amzn.to/1HSRgT5
  2. HEC Paris – Business School
    http://www.hec.edu

Images by Yuya Sekiguchi, Drew Bates and Gags9999.


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