The China Business Conundrum: One Bed, Two Dreams w/ Ken Wilcox, former CEO, SVB - EP259

Economics Explored

Ken Wilcox, former CEO of Silicon Valley Bank, discusses his book "The China Business Conundrum" and the challenges of doing business in China. He explains the concept of "one bed, two dreams," highlighting the disparity in goals between western and Chinese joint venture partners. Wilcox details his bank's entry into China, emphasizing the strategic invitations and control exerted by the Chinese Communist Party. He recounts the extensive regulations and control mechanisms, including a three-year restriction on using Chinese currency. Despite the challenges, Wilcox values the experience, noting the complex interdependence between the U.S. and China.

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About this episode’s guest: Ken Wilcox

Ken Wilcox was the CEO of Silicon Valley Bank (SVB) from 2001 to 2011, then the CEO of SVB's joint venture with Shanghai Pudong Development Bank (SPDB-SVB) in Shanghai until 2015, followed by four years as its Vice Chairman. He currently serves on the boards of the Asia

Society of Northern California, the Asian Art Museum, and UC San Diego's 21st Century China Center, as well as Columbia Lake Partners, a European venture-debt fund. He is on the Board of Advisors of the Fudan University School of Management in Shanghai and an Adjunct Professor at U.C. Berkeley.

Ken holds a PhD in German from Ohio State University and an MBA from Harvard Business School. He has given numerous speeches in both English and Chinese, published a variety of articles in the banking press, and recently wrote the management book Leading Through Culture: How Real Leaders Create Cultures That Motivate People to Achieve Great Things (Waterside Productions, 2020) and its accompanying workbook, How About You? (Waterside Productions, 2023). His account of establishing an innovation bank in China, The China Business Conundrum: Ensure that Win-Win Doesn’t Mean Western Companies Lose Twice, is forthcoming from Wiley.

To connect with Ken, please visit: www.linkedin.com/in/kenwilcoxsvb/

Timestamps for EP259

• Introduction and Overview of the Podcast (0:00)
• Ken Wilcox's Journey into China (4:40)
• Challenges and Strategic Invitations in China (8:10)
• Guanxi and Corruption in Business Relationships (14:13)
• State Control and Joint Venture Challenges (20:42)
• Impact of SVB's Collapse and Final Reflections (40:02)

Takeaways

1. Joint ventures in China often suffer from differing goals between Western companies and their Chinese partners, a phenomenon Ken Wilcox refers to as "One Bed, Two Dreams."
2. The Chinese Communist Party (CCP) holds significant control over both private and state-owned companies, making it difficult for foreign businesses to operate independently.
3. Guanxi, a system of mutual obligation and trust, plays a critical role in business relationships in China, but it often involves navigating corruption and complex social expectations.
4. Foreign companies entering China are often targeted for their intellectual property, and the CCP uses strategic partnerships to gain technological insights.
5. Ken Wilcox’s experience with Silicon Valley Bank in China illustrates the frustrations foreign firms face due to slow regulatory processes and overwhelming state control.

Links relevant to the conversation

Ken’s book “The China Business Conundrum”:

https://www.amazon.com.au/China-Business-Conundrum-Win-Win-Companies/dp/1394294166

Previous Economics Explored episodes on China:

China’s Economic Future Under Xi & the Australia-China Relationship w/ Emmanuel Daniel – EP253

https://economicsexplored.com/2024/09/17/chinas-economic-future-under-xi-the-australia-china-relationship-w-emmanuel-daniel-ep253/

Enterprise China: what western businesses need to know w/ Prof. Allen Morrison – EP171

https://economicsexplored.com/2022/12/26/enterprise-china-what-western-businesses-need-to-know-w-prof-allen-morrison-ep171/

Why we’re in the Decisive Decade with China & what the West should do w/ Dr Jonathan D. T. Ward – EP182

https://economicsexplored.com/2023/04/09/why-were-in-the-decisive-decade-with-china-what-the-west-should-do-w-dr-jonathan-d-t-ward-ep182/

China, Taiwan & the Indo-Pacific w/ Dr Greta Nabbs-Keller – EP146

https://economicsexplored.com/2022/07/04/china-taiwan-the-indo-pacific-w-dr-greta-nabbs-keller-ep146/

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