2018
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Weekly thoughts: Ofo, Faraday Future and the joys of creative destruction

We should not be afraid to fail. Most new business ideas do fail and most ultimately successful entrepreneurs only "make it" after multiple attempts. At the very least, they have had to rethink their original concept - often quite radically and more than once.

It is a lesson that is easily forgotten at a time when the headlines (at least in the business sections of our news media) point so often to success: the rise of new technologies and entire new industries; the growing dominance of the giant networking companies; ever bigger M&A and private equity deals; more and more billionaires - China is now creating two new super-rich people every week, according to UBS.

But this is just the tip of the iceberg and beneath the water drift the many, many companies that did not make it or probably never will it. Here is a fairly random selection to make my point - united only by the fact that they have been in the news this week. Bike sharing is rapidly turning into a hugely oversupplied market that may be of benefit to consumers but threatens to destroy decent returns for the many start-ups that have jumped into this business. China's Ofo is quietly withdrawing from Japan while the fleet of shared bicycles in Singapore has halved in the past six months even though there are still six suppliers.

Meanwhile, the slow-motion car crash that is Faraday Future continues - and that is a deliberate pun. Once one of the most promising electric-car makers, Faraday has lost money, executives, key engineers and is now laying off most of its workers for at least the next two months. A big part of the trouble is a dispute with its leading shareholder, property group China Evergrande - also from the mainland and also highly indebted - over how much investment it owes Faraday. But more fundamentally, not every electric-car start-up and every e-bike supplier will succeed.

The same holds true for another emerging industry: space. As western governments reduce their budgets for space exploration, private companies are trying to fill the gap and nowhere more than in China, where the number of private aerospace companies is surging. However, a few days ago, LandSpace Technologies failed in its attempt to become the first private Chinese company to put a rocket into orbit. And a longer analysis concludes that China aviation industry has a steep hill to climb before it succeeds...and that there will be many failures along the way.

Is this something to regret? Not at all. I would argue that failure should be, if not celebrated, then at least openly acknowledged and learned from. That is something that Asia, the territory of scoutAsia, is perhaps not as good at as the United States. I am writing this from Japan, a country where going bankrupt is still a cause for deep personal shame, one reason why aversion to risk remains prevalent. That can hold back not only an individual but an entire nation. Former Fed chairman Alan Greenspan has just published Capitalism in America, a comprehensive economic history of the US. And the main factor he and his co-author identify for that country's superior growth and wealth creation over the past century is its embrace of creative destruction. It can be good to fail.

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