Entrepreneurs without money (XVI). El Salvador possible entrepreneurship journey with China. Industry and Technology contexts.
Yesterday we started to write about the different aspects, questions or issues we must address before establishing a relationship with a country. Since “El Salvador severed diplomatic relations with Taiwan on August 21st and established ties with China“, we decided to use the entrepreneurial contextual analysis applied to the decision of the Government of El Salvador to begin diplomatic and commercial relations with China. Again, we are doing this skim “question” analysis from the perspective of a corporate strategist. And we will cover the main contexts as follows:
- Temporal Context – √- done.
- Industry Context – √-today.
- Technology Context – √-today.
- Social Context
- Institutional Policy Context
- Organizational Context
- Geographic Context
- Spatial Context
- Cultural Context
- Political Context
- Environmental Context
- Ethical Context
- Financial Context
Please re-visit the theory about this analysis in my posts from 18th and 20th July-2018. Today it is the turn of the Industry and Technology Contexts.
2. Industry Context:
Let´s remember what is the term industry again. The industry term utilized in this blog is the standard definition used by the American Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. This implies everytime we write the term “industry”, it is beyond manufacturing. From my own perspective of a corporate strategist, an industry is a group of businesses that produce a product or provide a service.
Given the importance of China in the world economy, before planning ahead to start establishing commercial relations with this country, El Salvador has to ask the following questions: Why China? Why not Switzerland? Or the Nordic countries? Or Germany? or The Netherlands? Why not other advanced countries with similar values and culture to our Salvadoran country? Why not the country of my future husband Alejandro Guillermo Lozano Artolachipi? Think about it: We have the option to choose. Why do we wish to pursue a commercial agreement for the Salvadoran Industries with China? Do we have a classification of all our industries? Which are our priority industries? Which are the new industries we wish to pursue?. For each Salvadoran existing industry, do we have a competitive five forces analysis based on qualitative and quantitative reliable data? Are we aware of all the consequences of establishing ties with China for each of the Salvadoran Industries? Do we know how to protect our existing industries? How do we wish to evolve, with China or the USA? What will happen if we don´t protect those industries? Do we have a benchmark between the business strategy of Salvadoran Industries and the Chinese Industries? Does El Salvador have the determinants of each Salvadoran industry profit from demand and competition, suppliers, competitors, customers, substitutes, industry rivalry, etc? What do we expect to win with China for each of our new and existing industries? What does China wish to win from us, our Spanish language only? Does China wish to become a philanthropist benefactor for El Salvador, in which industries? At what cost? Is China interested to provide economic support for the development of key industries in El Salvador without asking anything in return? Why? Traditionally we have built a history of collaboration and support with the USA. Can we still keep USA support if we pursue an economic alliance with China? Why do we want to do it?
3. Technological Context:
Before starting to write about the technological context, bear in mind we have to tie the knot between technology and education. The following questions have to be addressed: What is the objective of the Salvadoran entrepreneurship roadmap with China in terms of technological learning and transfer? Do we need technology transfer from China to El Salvador, and in what levels? In what industries? Does El Salvador have an entrepreneur plan to develop new emerging technology industries (such as AI, gene therapy, digital tech start-ups, microchips, etc.) here or in China? Are we ready to speak Chinese and learn their culture first? How many Salvadorans know about Chinese language and culture? How many Chinese know about Salvadoran language and culture? Are we ready to start a journey that will take at least 30 to 40 years just to be at the same level of technical and tech knowledge than Chinese Scientists? Remember Technology itself has the potential to remake entire local industries and update our obsolete established strategies. But it takes a lot of time. Why? Because Salvadorans have to learn by educating themselves first. It takes years of formal education. In addition, if we don´t know what do we want from China in terms of technical and technological (educational) support, what are we going to negotiate? Are we visionary enough in what are we looking for, thinking at least in 4 generations ahead? Are we aware of the consequences of starting something when we are not ready yet? Are we protecting our own technology culture in this new possible “Chinese” roller-coaster?
Let me tell you about the meaning of technology education for the Chinese. When I was studying at Cornell, 20 years ago, there were at least 20% of the students from Asian countries (including China) studying STEM careers – Science, Technology, Engineering, and Math. And this was the same story in each Ivy League university. Last year more than 350,000 Chinese Students are currently studying in American Universities. For more information read Chinese Students in America: 300,000 and counting.
If you see the graphic below, the total amount of Chinese Students Abroad is around 530,000 (0.037% of the total Chinese population). And, 66% of the Chinese students overseas go to the USA to prepare themselves at American Universities. In addition, Chinese Local Education is positioned among the most ultracompetitive in the whole world. Eighty percent of Chinese studying overseas return to their home China after graduation. Chinese Authorities “also have tried to entice students back by establishing industrial parks aimed at incubating startups led by returnees. While in 2000, China was home to around 50 such parks, today there are more than 300 industrial parks, though returnees cite bureaucratic challenges in accessing such resources”. What does El Salvador wish to learn in relation to industrial and technological parks in China? Is it China the best place to learn about these topics, or can we ask President Trump to help us to learn in Silicon Valley?
If the Chinese go to study in the USA, we need to ask ourselves: why do we want to send Salvadorans to China, instead of sending our own students to the USA? What is the value added? The benefits and side-effects? Do Salvadorans want both options in parallel: China and the USA? On top of that, we sell the majority of our exports to America, and those exports cannot travel to China, at this point in time. Finally, more than 2.7 Million Salvadorans is already living in the USA, and we must keep, care and nurture our ties with the USA. From the point of view of university education: “The U.S. is still the greatest place for doing cutting-edge research”.
Please take into consideration that for each context, we need to ask ourselves many questions and answer them appropriately, the more questions the merrier. I have shared with you just some questions, which come into my mind today. On my next post, we will continue with the social and the institutional policy contexts.
To be continued… Thank you.
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