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What lies before Chinese enterprises is not towering mountains or boundless seas, but the trivialities of daily business operations that must be dealt with. After 10 years of observation and accumulation, I have found that the challenges that have hindered and delayed the progress of Chinese enterprises over the past 30 years have barely changed. Moreover, since 2013, these challenges have become increasingly prominent, almost becoming a fatal syndrome for Chinese enterprises competing in the international market.

If you are a senior executive of a Chinese enterprise, you might compare these ten challenges with your daily operations; if you are a founder, you might reflect on the major and minor issues that give you headaches. Do not fantasize about Chinese enterprises upgrading and innovating; they cannot even overcome the most basic early development stages. Thus, Lenovo Group, after more than 20 years of development, is "still in the process of continuous entrepreneurship..." If a person has lived to 10 years old and still needs diaper changes, should they be happy or sad? If a 22-year-old lacks basic self-care skills and proudly claims to be still growing and learning, is that a joy or a sorrow?

Challenge 1: Orders are easy, execution is hard. Even though the book Execution sold over 800,000 copies in China, setting a record for Chinese management books, it still hasn't solved the execution problem in Chinese enterprises. Some companies simplify all work into simple actions like in the military, then enforce iron discipline, turning employees into machines that mechanically follow orders. When market changes occur, such companies are completely eliminated, with no room for maneuver or flexibility.

In the early competitive stage, execution can rely on simple division of labor, breaking complex tasks into standard steps and using simple labor. However, intellectual activities such as product design, website design, and marketing planning cannot be accomplished this way, and companies should not use simple mechanical methods to strengthen execution.

The core issue of execution difficulty lies in analyzing the nature of each position's work, involving intellectual factors and competency models. Execution performance indicators should be adjusted accordingly, not only assessing efficiency but also controlling and managing energy consumption during task completion; effectiveness indicators should also be included as an assessment factor.

Challenge 2: Coasting is easy, doing work is hard. This challenge is specifically aimed at large and medium-sized enterprises. New graduates feel it most deeply, while those who have worked for over a decade are accustomed to it; all their sharpness has been worn away. People who coast are not truly committed to the company's development or to accomplishing tasks; they aim to avoid offending others and avoid punishment. Their motivation to avoid punishment far outweighs their motivation to use innovative methods for performance.

There are three main reasons for coasting: 1. Individual effort and innovation have little visible impact on performance; 2. The number of people supervising and assessing internal rules exceeds 5% of total employees; 3. The incentive for innovation is smaller than the punishment for failure.

Currently, Chinese enterprise owners, especially private ones, want to change this phenomenon, using three main methods: 1. Corporate culture reengineering—changing traditional Chinese cultural consciousness that suppresses innovation to reduce coasting. 2. Increasing reward amounts—raising total bonuses to show top management's determination to encourage action. 3. Increasing employee turnover—actively replacing staff and hiring new people to maintain vitality.

Unfortunately, these three methods are ineffective: the first falls into deception, effective early but leading to more sophisticated coasting after two years; the second results in the same coasting for those who rarely receive rewards, losing the true meaning of rewards; the third results in new employees having passion but lacking real competitiveness because the company hasn't accumulated capabilities.

Challenge 3: Starting a business is easy, maintaining it is hard. This challenge is not unique to Chinese entrepreneurs. The average survival period for small and medium-sized enterprises in the U.S. is 6-7 years, in the UK 5-6 years, and in China 2-3 years. It's not that entrepreneurs fail; they often reopen under a new company name. The difficulty of maintaining a business is due to the laws of enterprise development.

Enterprise development has five stages: First, the pioneering stage—performance-oriented, where whoever gets orders is the hero. Founders have their own accumulation and technology, making early survival easier. Second, the growth stage—personnel, investment, and departments increase; orders can sustain for a while, gradually becoming standardized with assessment systems. Third, the maturity stage—operations shift from order-centric to a large system based on rules and regulations, with specific job content becoming blurred. Coasting people appear from the growth stage and increase. Fourth, the decline stage—performance drops, the "heroes" of the pioneering stage have left, leaving mostly coasters, accelerating the ship's sinking. Fifth, the transformation stage—the ultimate fate is selling, acquisition, or restructuring; large-scale layoffs are a signal.

Chinese enterprises dream of becoming big companies in the pioneering stage and quickly adopt large-company processes and rules, leading to death in the startup phase. Each stage should focus on its specific characteristics, not take all panaceas indiscriminately. The success factors of one stage often become obstacles in the next.

Challenge 4: Technology is easy, market is hard. "Learn math, physics, and chemistry well, and you can travel the world without fear." This saying has been popular in Chinese society for years, creating a large number of technical talents focused on these subjects. As a result, top technical talents use Tsinghua University as a springboard to go to the U.S. to leverage their technical strengths; average technical talents stay in government and enterprises, engaging in so-called technological innovation (copying). Enterprises place their utmost importance on R&D, scientific research, and patents, believing this is the eternal weapon for competition.

Challenge 5: Passion is easy, capability is hard. Internal company meetings often feature leaders speaking passionately, employees getting excited, and slogans shouted loudly. External training also leads employees to chant slogans. Passion campaigns come wave after wave.

Is it that Chinese management only knows how to stir up passion? Passion is short-lived; what truly supports continuous competitiveness is employee capability, not passion. Passion can mask many capability deficiencies. Capable employees don't need to shout slogans to show determination; they rely on real strength to realize their value.

Chinese enterprises should recognize that employee capability is the essential factor driving progress and competitiveness. "Capability = knowledge + skills + experience." Enterprises should equip every employee with knowledge, translate it into behavioral skills, and continuously organize excellent employees to share experiences, turning them into shared assets. This is the true path to capability.

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Challenge 6: Diligence is easy, wisdom is hard. The Chinese nation is a diligent one, and we are proud of it, but diligence does not necessarily lead to wisdom. Throughout Chinese history, there have been many scholars and scientists, but when the whole nation emphasizes unity, the voice advocating wisdom is weakened.

In [year], a survey involving 7,889 U.S. enterprise CEOs was conducted. Among them, about 3% had high school education, about 15% graduated from vocational schools (equivalent to Chinese secondary or junior college), about 58% had bachelor's degrees, about 23% had master's degrees, and about 2% had doctorates. American enterprises use science to guide management. I haven't found similar data for Chinese entrepreneurs, so I won't guess.

Using science to guide business operations emphasizes data, quantification, laws, and rationality, not simply relying on overtime and sacrificing sleep to complete work that could be done without overtime. In an era where "forgetting food and sleep" is still a commendatory term, wisdom and scientific spirit will not emerge.

It is wisdom that drove the invention of the washing machine, the automobile, and the airplane. Diligence can be used to block the flooding of the Yellow River, to turn mountains into terraces, and to exhaust blood and sweat. Chinese entrepreneurs, what do you really want?

Challenge 7: Cutting prices is easy, raising prices is hard. When "good quality and low price" becomes the main demand of Chinese consumers, Chinese enterprises cannot improve their products or achieve upgrades. The logic of the business world is that good quality cannot be cheap; cheap goods are not good. It is easy for companies to make price cuts, requiring little deliberation, and they can quickly decide and implement. But once prices drop, they can never rise again. Nokia captured a large market share in China with low prices but thereby destroyed its brand's future.

Raising prices is difficult and faces obstacles: fear of competitors seizing market share, fear of consumer complaints. When decisions are constrained by non-logical factors, a company's competitive strength weakens. Chinese enterprises lack scientific understanding of product pricing, price mix effects, positive impacts of price fluctuations on consumers, and the inevitable logic of pricing in economics. Learning some pricing science might help overcome this challenge.

Challenge 8: Poaching talent is easy, cultivating talent is hard. "Headhunting" has become a mature industry in China, due to the hiring habits of Chinese enterprises. Companies don't know how to cultivate talent or how to utilize them after cultivation, exacerbating talent mobility. The turnover frequency of mid-to-senior talent in China is six times that of Europe and the U.S.

Because of corporate demand, headhunting businesses thrive. Poaching is everywhere and has become legitimate business competition. Managers at director level and above boast about how many times they've been contacted by headhunters in a month and which firms. If this continues, talent costs will skyrocket. The real HR strategy is to cultivate one's own talent pipeline, not rely on external hiring or poaching; build your own team.

Challenge 9: Offering opinions is easy, offering suggestions is hard. Colleagues chat about company matters: "The company no longer provides coffee, and tea is scarce..." "The products are terrible, the advertising is a waste, and the boss only talks big principles at meetings..." Complaints are everywhere. We hear employees' opinions but get no suggestions on how to improve. Companies lack proper channels for employee voice; even if there are suggestion boxes, most employees think they are just for show, with no one processing or responding.

Without an effective system for managing opinions, collecting feedback, and responding, employees will just "muddle through," and corporate vitality will disappear.

Challenge 10: Deciding to save money is easy, deciding to spend money is hard. Every March and April, the most common phrase in Chinese enterprises is "the company has cut the budget." I've found that the easiest decision is to cut budgets, and the hardest is to spend money to improve effectiveness and efficiency. The finance department becomes the key department for saving money, no longer spending for performance improvement but stopping reimbursements for two weeks over a minor calculation error. When a company spends more time thinking about how to save money than how to spend money (to gain more), it will no longer develop; it can only defend and decline at current performance levels.

These ten challenges are stubborn habits in daily operations. How many have you encountered in your enterprise?

The above ten challenges are not profound theories, abstract cultures, or government regulations, but stubborn habits that exist in daily operations. Chronic diseases can weaken a person's body and destroy willpower; similarly, corporate chronic diseases can keep enterprises at the primary stage of competitiveness. Just as the body can be improved through exercise, corporate competitiveness can be improved by identifying these fatal challenges, self-awareness, and self-adjustment. Only through real change can Chinese enterprises upgrade. With ten chronic diseases, it's hard to upgrade and rebuild.

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