Is Mao China's greatest business strategist?

If there was a global competition for the anti-capitalist villain of the 20th century, Mao Zedong, the founder of the People’s Republic of China would certainly be one of the most serious contenders for the position.

He tried to build a communist utopia in China, eliminating all form of private capital. Mao probably holds the world record for killing the largest number of capitalists and landowners. One of the most heinous crimes in Mao’s China was to be a “capitalist roader”, someone who sympathises with the class enemies.

However, in a strange twist of fate, Mao still enjoys semi-deified status amongst some of the most unlikely people in modern materialist China -- the country’s richest and most powerful corporate tycoons. Just to clarify, I am not talking about senior executives of state-owned enterprises, but self-made billionaires.

These include Liu Chuanzhi, chairman and founder of Lenovo, the world’s largest computer maker, Ren Zhengfei, founder of Huawei Technologies, a world-class telecommunication company, and Zong Qinghou, who has a personal fortune of $11.6 billion and was the richest man in China in 2012.

Wu Xiaobo, one of the country’s most respected business writers, says there is a “Maoist business gang” in China, which includes not only the corporate titans mentioned above, but also many other high-profile billionaires. Jack Ma, the arch-hero of the new capitalist China and a darling of Wall Street, is also an admirer of Maoist strategy, according to an interview with Esquire in 2013.

Ren, the founder of Huawei, is arguably one of the best known admirers of Mao and his strategic thinking. The founder of the world’s largest telecommunication equipment maker has studied the collected volumes of Mao repeatedly, seeking inspiration from a man who defeated a much larger and better equipped nationalist army during the civil war.

How Huawei rose from its humble origins to become a serious challenger to established Western rivals is a perfect case study of Maoist military strategy. When the company first started, it was excluded from China’s lucrative coastal cities. Ren put to practice the lessons he learnt as a PLA officer -- using the countryside to encircle and finally capture the cities.

He deployed salesmen and engineers to capture markets deemed too small for multinationals like Cisco. Huawei used a similar strategy internationally, targeting developing markets in Africa and Latin America. Huawei engineers soldiered on through civil wars and natural disasters and successfully undercut Ericsson and Nokia, according to The Economist.

Ren also runs Huawei like a military organisation and tries to imbue the organisation with an aggressive military culture. In 2002, when the company was trying to crack the overseas market, Ren wrote to his employees, saying “It is essential to maintain organisational integrity and coherence at the critical moment”, referring to a crucial civil war battle in the 1940s.

Ren is not alone in adopting Maoist strategy to conquer the Chinese market. Zong Qinghou, the founder of China’s largest beverage company and one of the richest men in the country, also used a similar strategy of going after the country’s vast countryside before taking on the affluent cities.

He openly admitted his admiration for Mao in an interview with the Southern Weekend, one of the country’s most liberal newspapers with a thinly-disguised distaste for Maoism. He runs his company, which has 150 subsidiaries and 30,000 employees, like an autocrat. He combines the office of the chairman with that of chief executive, and all managers report to him directly.

Jack Ma, founder of the world’s largest e-commerce bazaar and arguably the most popular and well-known Chinese entrepreneur in the West, is also an admirer of Mao, but he is more far circumspect in his respect for the Chairman.

In the eyes of Jack Ma, there are two Maos: the great strategist before 1949 and the psychopath after 1949. In 2013, he told the Chinese edition of Esquire that people must examine Mao’s legacy critically, acknowledging his many military and political achievements in the first part of his career.

“Before Mao founded the People’s Republic, there were many things we could learn from his military and political thoughts. We cannot dismiss him because of what he did during the Cultural Revolution. I have spent a lot of time thinking about the decisions and policies Mao made before 1949,” he told Esquire.

“I think people of my generation, who were born in the 1960s, have all studied him.”

Wu Xiaobo explains the allure of Mao to the country’s home-grown billionaires. Many of Mao’s admirers come from humble backgrounds just like him; they are leaders who have managed to grow up against enormous adversity. They admire Mao’s tenacity and his ability to turn weakness into strength.

Two dominant forces in China today are state capitalism and multinationals. Chinese private capital is like a weed growing between hard rocks; business leaders are drawn to Mao’s ability to challenge authority and his revolutionary romanticism, Wu explains.

It is fascinating to see how China’s most entrepreneurial business people are turning to Mao’s tactics and strategy to expand their business empires. It is also ironic to see Chinese millionaires in their flashy s-class Mercedes laying wreaths at Mao’s memorials in Beijing.

Maybe it is the time for business schools to think about a course on strategy according to Mao. After all, the Art of War by Sun Tzu is already required readings for managers and military officers alike.