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The essence of business

19 November 2013

The essence of business is (1) to make profit, and (2) to make a lot of profit, and (3) to keep making a lot a lot and a lot of profit.

How to achieve that?

Here is a formula: Profit equals revenue minus costs.

How to bring up the revenue?

The first is to expand the market, and the second is to eliminate the competition. Thus it is only natural for business to promote free market and it is also natural for business to seek monopoly and domination of the market which will naturally make the market not so free for their competitors.

How to bring down the costs?

Well, that comes to the most interesting part of the business practice. Apart from demanding more from but paying less to your workers (provided it does not negatively affect their job performance), and apart from purchasing cheapest raw materials possible and decreasing the expenses necessary in producing the products while generating the highest profit margin permitted by the market situation and the government regulation, one important, and very, very and very important aspect is to deal with your customers in a smart way.

You may heard some business people say "the customer is god" or "the customer is always right". Don't believe their bullshit. They either don't know what they are talking about, or they are hypocrites, 'cause if they put their theory into practice, they'll fail their business miserably.

Any business development consultant worth his salt would advice you not to treat all your customers with equal curtsey but apply The Pareto Principle, commonly known as "the 80-20 rule", by dividing your customers into two categories according to their provability to your business. In principle, business should seek whatever excuse to deny service to the 80% less profitable customers in order to free the resource to better serve the 20% rich fellows who can bring handsome profits to you.

When business consultants spell out this business success formula at open seminar or radio program, they are often questioned by some naive audience: Are people supposedly born equal thus shall have equal rights?

Then the honest consultants would explain it away patiently: Yes, people are born equal and have equal rights in our society, but customers are not equal to your business - some have a lot of money and will spend a lot on your products while others have little money but a lot of troubles - therefore you should not treat them equally, because that's your private investment and you have right to decide who you want to do business with.

By then most audience would have been enlightened and started to contemplate how to divide people according to their material worthiness, which often leads to the next question: Some customers may don't have much money to spend on your product, but he may have a millionaire friend. If you deny his service, you may also lose a potentially very profitable customer.

To which consultants would always reply with ultra confidence: This won't happen, trust me, 'cause the poors are normally associated with the poors, which is why they keep being poor, and the riches usually only befriend with the riches, which is why they become richer. Listen to me, just send poor customers packing, unless you want to run charity instead of business.

So we've learned the essence of business, that is to allocate your resource smartly, which means: (a) let market and profit decide who should be served and who must be ignored, i.e. dare to be snobbish; (b) never misidentify your business as a charity organisation, i.e. do not waste your resource on those who can not help you make money; and (c) when you have to pretend to be charitable, always remember your purpose is to make profit from your charitable activities.

Therefore when former Chinese premier Wen Jiabao urged Chinese business people to show morality in their blood, it disclosed that this guy has no idea how to run a successful business. No wonder under his directive, China's solid economy has been transformed into a giant bubble. For one thing, the business people in his own family exhibit no morality in their blood, whether it is his wife, his brother, his son or his daughter.

The New York Time's reported on Wen Jiabao family's immoral private business built by stealing public resource:

Wen Jiabao's family business empire - a syndicate of thieves:

Therefore when current Chinese premier Li Keqiang advocates to invite private business to do part of government jobs, it exposed that this guy lacks practical knowledge on economic management and business operation. No wonder under his administration, China's economic bubble is about to burst. For one thing, it speaks volumns as he takes mentorship from Li Yining, the old sucker who promoted to further increase the gap between the rich and the poor and to sacrifice an entire generation of old workers and peasants for the great leap forward of private business development in China.

Therefore when current Chinese president Xi Jinping expects the private business to help improve public service, it revealed that this guy knows nothing about business and governance, apart from power plays. No wonder the public lost confidence in his leadership in less than a year. For one thing, when the officials in his government paid by the public to manage the national affairs only care about their own family interest, on what legal capacity and moral ground he should request private business people to put the public interest first?

Do the folks occupying the top positions in the nation have slightest idea that public office and private business have very different objectives, regardless of social system? The former is to manage all public affairs in the nation and serve all people in the country whether they bring profit or not, while the latter is solely focused on making money. That is why government can demand tax from people. Can any private business collect tax like government does? Then why should government be given a right to serve only the most profitable group while private businesses are urged to look after everyone in the community? And as the private business would not and need not to treat all customers as equal for the sake of profit, how can you expect them to provide the public with the services in a way the government is obliged to?

For another thing, since by now Xi Jinping has grabbed all the power in his own hand - be it politics, military, economy or media - if he makes no progress in those areas like what were the cases when he governed Fujian, Zhejiang and Shanghai, and worse, if any scandalous event or explosive situation should emerge like what was the case with Lan Xingchang criminal syndicate when he was in Fujian, Xi Jinping will have no one else to help him shoulder the blame like what has been the case so far. He will have to face up to the consequences himself.

On the other hand, Bo Xilai, the common political enemy of the three men above, has already demonstrated to the world through his achievement in Dalian and his experiment in Chongqing that he is the man capable of bringing out the best aspects from market force and private business while keeping them under control in a socialist system that is designed to benefit everyone, especially the working people.

He was able to accomplish such tasks because he sincerely cares about his people, and because he genuinely understands Chairman Mao's theory and practice on mass democracy in politics, economics, education and culture, and because he has comprehensively identified the systimatic problems with capitalism, and because through his decades of deep thinking and hard working he has developed a Chongqing Model that is based on China's cultural tradition, Karl Marx' proposition, Chairman Mao's Thought, contemporary social-economic conditions in China and broad political-economic reality in today's world.

Bo Xilai

Free Market Vs Economic Democracy

China's No.1 political prisoner Bo Xilai once said: Market force alone cannot help achieving the goal of common wealth. Europe and America have been on the market economy for centuries, yet still haven't been able to resolve the problem of the huge rich-poor gap derived from the system of free market that has an innate tendency of concentrating wealth in the hand of rich few at the expenses of the majority poor.

In Germany, 70% of the population possess mere 9% of total assets; in Britain, 10% of families hold 44% of private material goods; in the United States, 20% of people seize 50% of nation's fortune, with the top rich Americans, that count only for one in a thousand percent of the US population, control more than 10% of America's wealth. When you read these figures, will you still keep a blind faith in market force and its ability to bring economic democracy to all citizens in the country?

A Chinese weibo user noted: Bo Xilai's words scare the rich and powerful to death, no wonder they would do anything to get him behind the bars for life.

The Trial of Bo Xilai, the Replay of A Royal Yue Fei
Chinese People Need Bo Xilai


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