China’s New Aircraft Carrier

Slowly and incrementally China is unfolding it’s strategy to becoming a dominant player in the global economy, perhaps to becoming the economic superpower; its certainly fascinating to watch and it’s latest acquisition is an endorsement to that strategy. I don’t want to comment upon China per se, there are far better and more knowledgeable commentators than I am; I wanted to comment upon how they are going about their strategy because strategy is firmly on their agenda.

China bought a carrier from the collapsed Soviet Union where it was lying unfinished in the Ukraine; now it is busy refitting and refurbishing it and it is believed to be the first of a planned five or six. Some thousand kilometres inland from Dalian where the Carrier is being fitted out, a replica Carrier has been built, complete with mock up helicopters and aircraft. The intention is to compile and build the systems used to operate the seagoing carriers and then presumably to train the naval operators.

One could say- “so what? – that’s the obvious thing to do” and there’s no argument there but what I find interesting is that they are actually doing it, contrast that against the many businesses that I come across that have no organised strategy, no formal plan in place as to either the route to market or even where the business will be in three or five years time. The reasons cited are “too busy” “it moves too fast around here” “it’s all done here (pause for patting one’s belly)” and of course the old chestnut ……”it takes too long to do and it’s a meaningless exercise anyway”

I’ll comment later in another blog upon my thoughts on business plans but for the moment lets stay with China.

Dismantle the situation and I see a really cohesive, structured plan being rolled out.

By the 2020s China wants a military that will be deployable globally. So they’ve bought a second hand/unused ship at the knock down price of $2om (contrast that with £3.9b signed by the UK in 2008 for the Queen Elizabeth Carrier!) invested further in the latest weaponry and alongside it have built a £1m training ship.

This approach mirrors what China has done with several traunches of its industry. MG-Rover factory was dismantled by Nanjing, shipped to China and re-assembled. Pilot builds were Rowe (SAIC) cars based on the old Rover 75 whilst at Longbridge, MGTF were trickled down the line whilst their engineers learnt from Ricardo et al.; today the new MG6, although designed in England is actually manufactured in China and the parts shipped across here for assembly at Longbridge.

Mmnnn…Isn’t that how the Nissan Motor Co started? Austin of Longbridge shipped the Austin 7 out to Japan for re-assembly by Nissan. (Datsun)

Now that may be a sweeping generalisation about what happened at MG but in essence it’s there. Witness the same strategy in action across in the States where the Chinese appetite for buying bankrupt manufacturing plants is unabated and American companies are scrabbling to enter into high tech partnership agreements with China.

And the results? – The entry cost into its desired strategy is clearly considerably lower, along with, one assumes lower gearing, the learning curve is accelerated, the plan is free from legacy in whatever form you define, the overall risk is reduced, both financially and from timing and the result is impressively achieved.

Has this relevance to UK business? I would suggest very much so and if we’re not already paying attention then we need to wake up pretty quickly and then be taking some serious action because there are some huge, fundamental changes happening in China that will affect almost every person in the UK of that there is no doubt.

Last month Lord Green, our Trade & Industry Minister, said in an interview that we must accept that the UK is no longer a price setting economy; instead it is being driven by Asia. What will that mean to your business? – actually lets ask a different question- where will your business be in five years time and what will it look like?

I challenge you -“What is your strategy?” … reflect for a minute and then reconsider it- would China consider your strategy meaningful? Do you think it’s as thought through as their plans would be if they were in your business sector?

I leave you with something else – spend a few worthwhile moments with Google to explore documentaries and articles about the emerging Chinese strategy- its eye opening to say the least. Maybe strategy should be on your agenda as well…

About Michael Carr

Specialising in Strategy, Systems and Organisational Design I've had a varied and rewarding career and been fortunate to work for some superb companies such as Courtaulds, Unipart International, Akzo Nobel and more recently Jaguar Landrover, all luminaries of a solid, disciplined and a conservative, though never lacking in innovation, approach to business management and development. Augmenting my career with studying for my MBA at Warwick in the early 90's has given me a balanced and I believe rich resource set to draw upon in my Consultancy Practice. My Clients have been good to me, tolerating my idiosyncrasies, giving me enough rope to go along the journey that I was taking them and hopefully in return I've been able to repay them by raising the bar and their business performance, giving them the results and achievements they were looking for. I really enjoy my work and love the challenge - isn't that what it's all about?
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