The sad death of Li Yuan has brought our industry into perspective

Paul GaleslootIn this guest posting, Paul Galesloot has a message for agency bosses in China: the people that work for you are not just production capital, they are human beings.

The sadness surrounding the death of our industry colleague Yuan Li from a heart attack last week has touched his family, colleagues and the industry in China as a whole. It has also reignited the question whether the work-life balance in 21st century China is right, and begs the question – are we working too hard?

There is no doubt that we are working hard for, (at least) two key reasons.

Firstly, growth rates in China remain high and it very much is the land of opportunity. The more you work, the more you win, so working hard can have a positive business result. That is addictive. The success leads to salary rises (very important in a country where the average annual income is still just US$6,000 a year) and the even more important inflation of titles and associated status.

The second reason seems paradoxical – profits are slim. Despite continued growth, few companies actually turn a profit in China. Wafer thin profits are due three key factors:

a) High competition – not only are all the big global brands here, but companies from all over the world are actively exploring China. And there are a myriad of local companies that copy any brand that does well. As a result, there are 140 brands of toothpaste available. Since shoppers don’t want that much choice, 80 per cent of these brands will probably disappear in the next five-10 years.

b) China’s sheer size. Not just in terms of population, but geography. This brings huge logistical issues, as well as quality control and management problems. A few weeks ago the Louis Vuitton store in Suzhou was closed after a customer complained that the US$4,000 products for sale were actually fakes, and not even worth $50 (the real ones were rumoured to be sold on the grey market by the company’s staff).

c) The sale price per unit remains low. In a convenience store in China, a can of Coke will cost US$50 cents – but the cost of producing that can of Coke is no different to in the West, where stores can charge a multiple of that amount. This was not seen as a major issue as the Chinese offices of global companies were seen as investments for the future. However the financial crisis has put a stop to that – Chinese offices must deliver a profit or risk being closed down. We have seen companies shut down factories, try to sell loss-making divisions and retreat from cities altogether.

There are three things that, as an industry, we can do to prevent this happening.

From a strategic point of view, we need to focus on core business with the same principles applied in the west. Many businesses have come here with grand ambitions and deep pockets, but have spread themselves too thinly and try to capture several markets by offering a wide range of products and services.

Secondly we need to show genuine leadership – and I am especially talking to those of us who are managers of people. The pressure on staff, as well as the hours worked by their bosses, has as big an impact on our industry as anything else. We need to be mindful of the people who work for us. They are not just production capital. They are human beings.

And finally, we need to keep a strong sense of perspective. We are not surgeons or generals. We do not save or protect lives. We are trying to build brands to deliver a profit. Of course this is important, but it is not match for the value of a human life.

I am not only talking about the tragic events that unfolded in the life of Li Yuan. But also the marriages that have broken up, the difficulties in parent-child relationships that have arisen because we prioritise business results over the people close to us.

Of course, the irony is that I am writing this at 11 o’clock at night in a hotel room in Wuhan after already working in Shanghai, Harbin, Taiyuan, Chengdu this week.

But business is not top of mind – nor should work be for anyone in this business in China, no matter how demanding our jobs are.

At this point, I’d like to say a special hello to Ada, one of my colleagues in our Shanghai office, who last week went to the doctor for a routine check up. She needs two operations on her throat in the next four weeks. For me and her colleagues in Shanghai and Beijing, this is our biggest worry.

Good luck Ada.

Paul Galesloot is the MD and strategy director at design agency Cowan China


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