Small is the new big in China too.
I borrowed that phrase from Seth Godin, from whom I often borrow. Godin is one of the best and certainly one of the most entertaining of all marketers. To grossly summarize his marketing thesis, it is that companies must find a story that connects them to their clients, truly believe in that story, and the rest will follow. I often quote Godin to the young lawyers in my office.
Godin is a big believer in small. A couple years ago he wrote an article/post entitled “Small is the New Big.” Godin also gave this same title to one of his recent books, which is essentially a collection of blog posts from his absolutely first rate blog. Like his other books, including Purple Cow, All Marketers Are Liars (which I read and loved), and Free Prize Inside, the Small is The New Big book has received virtually nothing but positive reviews.
I almost hate summarizing the article because it is such a delightful and insightful read, but it essentially says that in most businesses, big is out and small is where it’s at:
Big used to matter. Big meant economies of scale. (You never hear about “economies of tiny” do you?) People, usually guys, often ex-Marines, wanted to be CEO of a big company. The Fortune 500 is where people went to make a fortune.
There was a good reason for this. Value was added in ways that big organizations were good at. Value was added with efficient manufacturing, widespread distribution and very large R&D staffs. Value came from hundreds of operators standing by and from nine-figure TV ad budgets. Value came from a huge sales force.
Of course, it’s not just big organizations that added value. Big planes were better than small ones, because they were faster and more efficient. Big buildings were better than small ones because they facilitated communications and used downtown land quite efficiently. Bigger computers could handle more simultaneous users, as well.
Get Big Fast was the motto for startups, because big companies can go public and get more access to capital and use that capital to get even bigger. Big accounting firms were the place to go to get audited if you were a big company, because a big accounting firm could be trusted. Big law firms were the place to find the right lawyer, because big law firms were a one-stop shop.
And then small happened.
Enron (big) got audited by Andersen (big) and failed (big.) The World Trade Center was a target. TV advertising is collapsing so fast you can hear it. American Airlines (big) is getting creamed by Jet Blue (think small). BoingBoing (four people) has a readership growing a hundred times faster than the New Yorker (hundreds of people).
Big computers are silly. They use lots of power and are not nearly as efficient as properly networked Dell boxes (at least that’s the way it works at Yahoo and Google). Big boom boxes are replaced by tiny ipod shuffles. (Yeah, I know big-screen tvs are the big thing. Can’t be right all the time).
Godin then extols the virtues of smallness, the following of which (for somewhat obvious reasons), I am particularly fond:
- Small means the founder makes a far greater percentage of the customer interactions. Small means the founder is close to the decisions that matter and can make them, quickly.
- Small means you can tell the truth on your blog.
- A small law firm or accounting firm or ad agency is succeeding because they’re good, not because they’re big. So smart small companies are happy to hire them.
My international law firm’s mantra is the “international law firm for small business,” but I have always been a little wary of using it outside the West because small in Asia (and Russia too) does not have such positive connotations. I have been told that if you say “small business” in China, most people think of something along the lines of selling food at a roadside stand.
But the concept of small in China may be changing.
Small businesses are booming in China, and just as in the West, they are oftentimes more dynamic, more nimble, more flexible, and faster growing than the large. If you want to do business with an ossified Chinese company, do it with a large state owned entity, or SOE. Not all of these companies are dinosaurs, but many are. Certainly, my firm has seen more than its fair share of small and medium sized U.S. based companies that have thrived in doing business in China.
China Daily just ran an article, entitled “SMEs an Important Engine of Foreign Trade Growth,“ touting the role of China SMEs (Small and medium-sized enterprises) in China’s increasing foreign trade. The numbers (not unusual for China), are staggering:
More than 40 million small and medium-sized businesses make up about 99.6 percent of China’s enterprises, and they accounted for 70 percent of the country’s total foreign trade worth 1,422.12 billion US dollars last year, according to the China Small and Medium Enterprise Index of Economic Development released by Nankai University.
The index shows that nearly 60 percent of China’s gross domestic product was generated by small and medium-sized enterprises last year. SMEs account for more than 48.2 percent of the country’s taxation revenue and 60 percent of the total sales volume.
Seventy-five percent of urban-based employees work for SMEs, said the index.
Small is big.
What do you think?
