Cleaning Up China’s Failed Systems

Wednesday, September 28, 2011 2:58

One of the most common statements I hear from visitors to Shanghai is that “China is able to move so fast” or in something along the lines of “When the government wants to, it has a power to do so that other governments do not… and that is why China is getting things done”

When reading the Shanghai Daily’s write up of yesterdays accident on Line 10, I would say it is pretty clear that this “ability” is something that will be the focus of a number of discussions:

“The focus still lies on construction now,” said Luo. “The operation management lags behind.”

Luo said he began working with the city government on upgrading Metro safety system soon after the 2009 crash but said there had been “little progress so far.”

Problems from signal glitches to water leaks at many new Metro stations have frequently hit the headlines as more lines come into service.

The city’s top advisory body, the Shanghai People’s Political Consultative Conference, said previously that not enough professionals were being trained to ensure the safe operation of the Metro system.

It also said the speed of construction had not left enough time for testing.

The city’s political advisers said another 30,000 technical and management professionals, nearly twice current levels, would be needed by 2013.

Shentong Metro Group has recruited graduates in recent years, but the company said it was still concerned about a lack of experience in key positions. It said it would be strengthening staff training and holding exams to ensure the training is effective.

It is yet another example of where China’s systems are outstripping the controls that should be in place, and highlights one of the most pervasive issues that China faces.  China can build systems, but is still struggling to maintain them.

The problem, lurking behind that ability to act, is that at times that the speed of the system creates a dynamic in decision making that sets the system up for a failure (as we saw yesterday).  It is an issue that is easily seen within China’s food systems, its highway, railways, toy manufacturing, and in many other parts of the economy.

It is a problem of systems, while at the same time the people who are responsible for building and maintaining the systems, and in the case of this accident there more than a few firms, managers, and inspectors who failed to take the time to make the right decisions.

Which leads me to a prediction.

China is missing the capacity to manage the systems it is building, and there is going to be a HUGE market for providing that capacity.

China has moved fast to propell its economy into 2nd place,  but at some point there is going to decision that the speed by which decisions are made is reduced and a review of existing systems is reviewed to see where problems lie. IT will do this because the priorities and pressures will change from economic development at all costs to a more balance development that incorporates quality as well.

This will occur first (and has in fact begun) in areas where there is the potential for high numbers of consumer impacts exist (food, healthcare, education, finance, etc), and this move will provide huge opportunities for firms who are in a position to provide the solutions that remove the risk of failures.

So, if you have a firm (or are yourself an expert) who has a systems approach to fixing problems, start looking for your opportunities now.  There is a market for services, and as incidents like yesterdays occur, the value of those service providers will go up.

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4 Responses to “Cleaning Up China’s Failed Systems”

  1. George says:

    October 2nd, 2011 at 10:49 pm

    This short article nails it. China’s pace of growth over the last 2 decades has left most of the young workforce – and that includes the so-called managers – with a kind of collective ADHD. They can do everything well and quickly around construction, including ingenious problem solving, but when it comes to long term maintaining a standard, or even knowing how to watch and care about a standard, few have experience or can see any value. They have already moved on to the next build / grow / boom project. Companies over 2 years old in China know this problem: the workforce literally moves on, paradoxically not because there is not enough future in the job… but because there is too much future and stability… they go off searching for the next boom because maintenance is boring.

  2. Rich says:

    October 4th, 2011 at 12:12 am

    George.

    Thanks for the comment, and in general I would agree. there are of course exceptions to the rule, and I am happy that I can count a number of my employees as the exception… but I do have a large group of employees who are unable to do the same thing for more than 9 months…. and who get temperamental if I tell them they need to stay put for 18-24 months before a move to another part of the organization. They feel once they have learned, and done something right, then they are ready for the next step. Without realizing that they are being trained to do that one thing right for 18 months..

    R

  3. ian says:

    October 6th, 2011 at 10:51 pm

    My gut feeling is that the Chinese are right to rush it, and damn the consequences. With the economic outlook in the rich world so dire, and global competition for resources constantly intensifying, the kind of leeway they have for growth now may simply not exist in twenty years’ time. I am a great believer in getting things built and waiting for the crowds to come. It is surely better to have a substandard railway system that initially loses money and, yes, has a few fatal accidents, than have no railways at all, like the Philippines for example (where a 100 km road journey can easily take five hours). The problems can be ironed out later, at leisure, and the lessons learnt and personnel retrained as needed. Who cares if a tower block stands empty or a highway isn’t used for two years and the developer goes broke? Another developer will pay up and step in, and in a land of one billion hungry people the punters will come in the end. The key thing is to get it built in the first place.

  4. Rich says:

    October 7th, 2011 at 12:44 am

    Ian.

    Thanks for the comment, and it is one that I largely agree with (particularly with the build it first approach).

    A couple of issues though:
    1) The problems that China is facing of systems are really.. really minor. Training programs and installing (turning on) systems. It is not about the 5 year process of laying the tracks, but the 2 week mandatory (eyes open) training sessions, that are the problem.

    2) A couple of dead buildings, open freeways, are not a problem. Multiple dead cities.. a problem insofar as there are non-performing assets that are likely to be written of by a bank. But, in building those cities, the government was able to employ people and facilitate the sale of materials.

    R