Chairman Mao: An Unlikely Business Guru

by Louisa Lim

April 24, 2008

China's Chairman Mao Zedong (shown here in 1966) has become an unlikely role model for the country's business community, which he once condemned.

Chinese currency with Mao on it
Frederic J. Brown/AFP/Getty Images

Mao's likeness appears on the Chinese currency, known as the renminbi or yuan.

China's former leader Chairman Mao Zedong has had various incarnations: guerrilla fighter, political leader, mass murderer and pop-art icon. Now, 32 years after his death, in perhaps the most unexpected transformation, he is being reinvented as a business guru.

Almost six decades after the founding of the People's Republic in 1949, Mao's legacy is still felt strongly, even by those he once condemned as "capitalist running dogs." A recent study published in the Harvard Business Review found that 14 out of 15 Chinese CEOs said they turned to Mao for inspiration.

Mao's Principles Still at Play

Looking to Mao may seem hypocritical. But some argue that grappling with such contradictions is key to understanding China.

Sheila Melvin, who spent seven years at the United States-China Business Council, notes that Mao argued that "the unity of opposites or contradictions was the fundamental law of the universe."

Melvin has written The Little Red Book of Business, a somewhat unlikely primer on doing business in China, based on some of Mao's core principles.

"It does seem rather bizarre," she says. "I believe foreigners can learn a lot from studying Chairman Mao's worldview and philosophy, which still have great influence in China on government and government leaders."

She applies Mao's aphorisms to the world of business. Take, for instance, "Make foreign things serve China."

"That was Mao's basic idea," Melvin says. "Everything he did was in the service of China."

That basic philosophy still exists in China, she says.

"Foreign companies should understand that if they're coming here, they're being used," Melvin says. "This seems kind of bad in the beginning. But if you accept the fact that you're being used, you can be ... quite successful."

Lessons from Guerrilla Warfare, the Cultural Revolution

Melvin says many companies draw upon Mao's strategic prowess, including his guerrilla warfare techniques.

One example is of Wahaha, a Chinese soft-drink maker that at first declined to take on Coca-Cola in the cities. Instead, it decided to surround the American behemoth from the countryside, just as Mao surrounded Chiang Kai-shek's Nationalists during the Chinese civil war.

The company "started in third-tier cities, then went to second-tier, then it went to attack [coke] on its own ground in the cities," she says.

Some Chinese executives even take inspiration from Mao's darker years, including those during the chaos of the Cultural Revolution that swept China in the late 1960s and early '70s.

At appliance maker Hai'er, for example, employees are made to detail their own failings at self-criticism sessions, similar to those during the Cultural Revolution. The head of the telecommunications company Huawei also reportedly uses Mao's theories of criticism during staff meetings.

Dearth of Alternative Models for Chinese Entrepreneurs

Xiao Zhixing, a professor at China Europe International Business School, says that in the early 1990s most Chinese businessmen modeled themselves on Mao.

"It was almost ubiquitous [then]," Xiao says. Even today the influence of the Great Helmsman resonates among older executives, he says, especially those in state-run industries and in China's interior.

"They just don't have other possible models to learn from," he says. For instance, many entrepreneurs emulate Mao's mass-movement measures during the Cultural Revolution period in their own efforts to launch corporate culture at their companies.

Some Chinese businessmen also are learning from Mao's darker management techniques. He was famous for repeatedly deposing his chosen successors, being secretive with information, using a divide-and-rule strategy to set factions against each other, and being autocratic and bypassing formal decision-making processes.

Patrick Moreton, who manages an executive MBA program in Shanghai for Washington University and Fudan University, says Mao's example has limitations.

Effective management requires "candor and direct conversations on what needs to get done," a "straightforwardness and trust," and other qualities that are not a part of Mao's style, Moreton says.

Mao Leaves Lessons in What Not to Do

Mao's spirit of rebellion ultimately caused economic mismanagement, chaos and millions of deaths. So Melvin, the author, says she thinks Mao also serves as a good teacher in terms of what not to do.

Xiao, the professor, says that in the long term, using Maoist strategy tends to be counterproductive in business. He quotes the example of the founder of the Wahaha soft drink company, Zong Qinghou, who credits Mao with his management style — and who is reportedly under investigation for tax evasion.

"Deep down inside, this kind of Maoist manager tends to disregard rules and regulations," says Xiao. "They tend to disregard the value of respect for the individual, respect for the rules of the game."

As the popularity of executive MBA courses flourishes, China's future business elite is now learning more standard business management techniques. But it's a quirk of fate — or perhaps an example of the unity of opposites — that the man who abhorred private business is inspiring the successors of those he once persecuted.