The Economic Value of Trust

economic value of trustWhile hard to pin the value, the economic value of trust is critical to any company and can really make a difference in your China enterprise.  Let’s first look at what the Atlantic wrote in a very good article on this topic.

Trust is to capitalism what alcohol is to wedding receptions: a social lubricant. In low-trust societies (Russia, southern Italy), economic growth is constrained. People who don’t trust other people think twice before investing in, collaborating with, or hiring someone who isn’t a family member (or a member of their criminal gang).

The concept may sound squishy, but the effect isn’t. The economists Paul Zak and Stephen Knack found, in a study published in 1998, that a 15 percent bump in a nation’s belief that “most people can be trusted” adds a full percentage point to economic growth each year. That means that if, for the past 20 years, Americans had trusted one another like Ukrainians did, our annual GDP per capita would be $11,000 lower; if we had trusted like New Zealanders did, it’d be $16,000 higher. “If trust is sufficiently low,” they wrote, “economic growth is unachievable.”

Shocking impact, but let me bring that closer to our China work,

The Economic Value of Trust in China

In 1997 I was the start up General Manager for a Motorola supplier in Tianjin China.  I had no factory experience, and one concern. The concern was that Chinese people tend to say yes and mean no. I imagined 70 people all saying yes and meaning no and how much complexity and even chaos that would cause. So then, I thought and thought, and realized I know one Chinese man whose yes meant yes. Right then, I reached out, brought him in, and made him the VGM.

He then helped open my eyes. He helped me see that China had these kinds of people who were finance people, quality people, production managers, and purchasing. As he helped me find trustworthy people all around, the work surged forward.  We sent qualified pagers lamps to Motorola on 4 continents 90 days after I started. This was twice as fast as they had expected us to get in production.

As we examined what happened to make us so successful, we saw, that it was not just because I had good reason to trust them, it was that they could also trust each other.  This start up was really a remarkable experience that none of us would ever forget just because of the trust in a not too trusting culture that existed among us. I just kept working to do that better at every position I had from then on. See also Should We Trust in China?

Wrap Up On Trust

So the Atlantic article got my attention and a big nod.  They noted one thing we should delve into. We can divide trust into two parts. I can trust you to tell the truth, and I can trust you to get the job done. We need both.

Our process guarantees you both as I would have it no other way given my personal leadership experiences in China and even in the US.

Along this line you may also like Trust and Check.


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Posted in: China Recruitment - Getting Good People

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