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On our bus ride back from Chengdu we came across a non-business example of an infrastructure gap. About two-thirds of the way home, we encountered a traffic jam on the winding roads that snake their way through the mountains of Sichuan. Just ahead, at the top of the mountain, a truck had stalled in the middle of the road while trying to pass another vehicle and was blocking the way in both directions. Chaos ensued as a two-lane mountain highway was suddenly expanded into four lanes of trucks, cars, buses, and motorcycles simultaneously announcing their displeasure with horns and jockeying for position as the mass slowly inched its way past the stalled truck. From our perspective as outsiders, this seemed like a jumbled, dangerous mess.
As we have pondered over the issues we’ve identified here in Anyue, they have seemed at times like a stalled truck on a busy mountain highway. Access to capital has shown its self to us as a significant barrier for local organizations to make the changes necessary to be able to access new markets. There are significant voids in the soft infrastructure here to support better lending, such as no method of establishing creditworthiness. Just as in the case of the stalled truck on mountain, local organizations have come up with an immediate solution. As outsiders we see four chaotic lanes of family, friends, reputation, and guangxi. But for many smaller organizations this is the only way for them to guarantee that they have the capital that they need.
In order to fix the problem on the mountain highway we would love to close the road to new vehicles, clear the traffic jam, remove the stalled truck, and send out a construction crew to expand the highway to four lanes so that the path is smoother for travelers in the future. As outsiders this seems like an obvious solution. But we don’t have the capacity to affect that kind of change. We also do not live here and do not depend on the traffic of this road for our livelihood. For the million-plus people of Anyue county, closing the road would be disastrous.
Likewise, we also cannot clear the complicated capital system that small businesses must use, because there are so many vested interests and so many people who currently depend on that system. Instead, we are working hard to develop solutions that will function within the current system without placing too much more stress on the financial system. We need to be aware of all the other vehicles and how we fit as we slowly inch our way around these obstructions.
Thankfully for the people of Anyue, there is a hard infrastructure solution in the works for their road. Next year, a larger highway from Chengdu to Chongqing will pass through the county. Building hard infrastructure is a relatively simple solution. Soft infrastructure is another story entirely. Especially when the changes required are cultural, and will require time to change customs and behaviors. For our project, for now, we must inch our way through the mountain pass, figuring out how to improve how the industry operates within the current system. Business does not wait for the highway to be completed.
April 8th, 2012 at 11:17 am
Hans is a true friend of China, and your insight is great, If I have the political power, I would name you the mayor of Anyue for changing that, the thing is the the local govermental organizations do have enough capital to do that(central government allocate heavily every year for changing infrastructure) but the execution ability is not always satisfactory and also too much money wasted on corruption and red tape, and there is also no transparancy about the budget as U.S does, which makes less supervision and more indifference by people ..