“Winter is coming.” It’s as if citizens of Winterfell are describing the state of Chinese E-commerce. Even the best and brightest of the bunch cannot escape doubt. 360Buy has to make repeated denials of the rumor that the company is short of 5 billion Yuan.This comes right after Li Guoqing, the CEO of 360buy’s competitor DangDang， claimed in public that 360Buy will run out of money sometime in 2012.
360Buy is not far from the only victim. Rumors are also haunting companies such as VANCL. In addition, the group buying’s stunning fall from grace is also well documented. The CEO of Gaopeng quitting abruptly after only five months on the job further cemented the speculation that only three to five group buying sites will survive the year.
So what went wrong? I already dealt with the topic in The Gold Mentality, but that’s only part of the story. In search of quick bucks, most of the Chinese entrepreneurs lack the capacity for deep thinking.
I witnessed this problem first hand. A year ago, a friend of mine wanted to do a website. He had a vision, but was afraid he doesn’t know enough about the Internet and technology. So naturally, he contacted a friend of his, who has worked in the industry for years.
After hearing his vision, the industry insider rejected my friend’s ideas as being “too simple, sometimes naïve”. And when being asked about his opinion, the insider proposed that the two of them do something related to E-commerce, because that’s what’s hot right then.
I was astonished by his decision then, and I am still astonished by his decision now. Anyone who was breathing from 1995 to 2000 should recognize the similarities between that bubble and what was happening in Chinese E-commerce in 2011.
This apparent parallel didn’t stop the two of them from teaming up, however, and the rest is history. Their failure has bothered me ever since: why would smart people do stupid things?
After much deliberation, I believe the primary reason is my friend’s lack in critical thinking skills. Unlike America, this skill is not emphasized, and sometimes it’s not even taught in China. That’s why once they see something good, they want to copy it, and they do it without thinking.
It’s this kind of thinking that got my friend into trouble. He blindly believed in the ability of a so called professional, not knowing that he may not know more about where they are heading to, but may be simply better at observing what’s happening now. To an outsider, observation could be mistaken for insight, and knowledge could be taken as wisdom.
As Duncan Watts so neatly described in the title of his book last year: Everything Is Obvious: *Once You Know the Answer. As we’ve learned from 1929, when the shoeshine boys talk stocks, it was a great sell signal. Like many other Chinese entrepreneurs, my friend was late to the party, and they should’ve known it, but they didn’t. The result is that they took everyone down with them by overcrowding the market.
Chinese entrepreneurs like my friend read Walter Isaacson’s book on Steve Jobs, but like in their business ventures, they are doing so without thinking. They only see Apple’s success, but fail to analyze what makes it the world’s most valuable company. That’s why even when they want to emulate Jobs, they do it wrong.
Malcolm Gladwell pointed out that Jobs’ real genius lies in the fact that he could see the genius of other people’s inventions and then make it better. To do this, Jobs not only has to be a visionary, intuitively understand future trends and people’s needs, but he also has the ability to understand the inventions themselves thoroughly, so he could make the necessary changes.
This also is where people like my friend fall short. They also copy, but they are late, and they do it without thinking. And in the end, the center cannot hold, things fall apart.