*{The World Class Enterprise Where East Meets West [http://www.weforum.org/site/knowledgenavigator.nsf/Content/The%20World%20Class%20Enterprise%20Where%20East%20Meets%20West?open&topic_id=300250000&theme_id=300]

            17.04.2000

            China Business Summit 2000}

            The concept of counterbalance is critical to defining a world-class enterprise in today's global business community, said Ming-Jer Chen, Director of the Global Chinese Business Initiative at the University of Pennsylvania's Wharton School of Business. In the past, world-class enterprises have been defined simply in terms of size and geographic scope, when in fact a more holistic notion is appropriate for a global economy that is rapidly becoming more integrated. This integration is spurred in part by advances in telecommunications and transportation, which have allowed people to gain a new sense of life in different parts of the world. The result is that we have reached a critical juncture: a moment in which we can seek to integrate the valuable business practices of both East and West (for purposes of simplicity, Chen used China to represent the East and the United States to represent the West).

            "We need a language that recognizes institutional and cultural differences around the world," said Chen. "This can help us foster mutual understanding." He emphasized that China cannot simply adopt wholesale the traditional American system, which tends to be primarily economic-driven. Such a system is less compatible in a society where businesses have traditionally played greater social roles - like Chinese state-owned enterprises (SOEs), which for decades have provided a safety net for most urban residents. Another major contrast, at least as perceived by many people, is that Western companies tend to rely on a fixed system of doing business, while Eastern companies generally depend more on a flexible network of human relationships.

            While there are clear differences between American and Chinese definitions of business roles, Chen stressed that this does not necessarily mean they are in conflict. Responding to the common question of whether China's socialist market economy is a contradiction in terms, Chen noted that capitalism still involves planning, while socialism still relies on markets. Likewise a good business is at once systematic and flexible, depending on both well-tested principles and close human relationships. Integrating different ideas in this manner is critical to a new concept of world-class enterprises, which Chen described as redefining itself from a "profit maximizer" to a "resource converter." This redefinition involves considering the interests of all resource providers, including customers, employees and the community. The key is balance - no single group should dominate.

            Along with this sense of balance, Chen emphasized that the new definition of world-class enterprises should not be obsessed with size. In many parts of the world, companies that fit his world-class definition might be typically seen as middle-tier, but in fact they are both the cornerstones of local economies and in excellent position to become global players in the future. Using Ikea and Gillette as examples, Chen described these world-class enterprises as independent and flexible, with a clearly focused niche and purpose.

            A participant from the audience pointed out the common concern that a more holistic approach to business might fail against aggressive competition. "You have to set your own rules, rather than let your competition set the rules for you," said Chen, stressing that competition should not prevent a broadening of the concept of world-class enterprise. Mostly, China should avoid becoming obsessed with developing a small number of massive companies simply for the sake of competition. "I think what China needs most isn't three companies in the Fortune 500," said Chen, "but 30 world-class companies as I define them. Three companies can only satisfy national pride, but 30 can help build the world economy."                  

                  *{Contributors:       Chen Ming-Jer       Mathur Colette
                  Wang Guoduan}