Faculty & Research


When the “Back Wave” video that celebrated China’s youths went viral in May, many older Chinese,or the “front wave” generations,viewed it as an effort to motivate young people to be brave and ambitious. Meanwhile, those neither too young or too old jumped in and asserted: “don’t forget about us, the middle wave.”

Comparing the three waves of generations in the Chinese society to businesses emerging in different times, Lu Jiangyong,professor with the Department of Organization and Strategic Management of Peking University’s Guanghua School of Management, argues that we are entering an post-dividend era where crises and opportunities coexist and offers tips on how to manage and prosper.


In order to get a full picture of China’s “middle wave” generation, one should first know a little about “the superimposition of triple waves,” a phrase coined by Zeng Ming, Alibaba’s former chief strategy officer. According to Zeng, traditional retailers belong to the front wave, large retail chains like Gome and Suning are described as 2.0, or the middle wave,while e-commerce businesses like Taobao are 3.0, the back wave. In Zeng’s theory, the three, distinguished not only by age but also by different positions in the business environment, form a relation of co-existence and reciprocity. The different business models represented by the three engage in complex, non-linear interactions that induce huge waves.

Whose life is the hardest among the three? Maybe each has its own difficulties,but the answer should be the middle wave. Traditional retailers cannot be easily replaced due to the conveniences they offer to customers, and e-commerce wins in efficiency. Squeezed in the middle, retail chains have to switch online to confront Taobao and others.

Not unlike the superimposition of triple waves, Chinese leaders stressed efforts to simultaneously deal with the slowdown in economic growth, make difficult structural adjustments, and absorb the effects of previous economic stimulus policies. However, switching gears might cause jolting, side effects might exist long into the future, and benefits might not be fully enjoyed. The current situation: the front wave generation already have houses to their names, the back wave are still looking, and the middle wave are putting their down payment.

The front wave were able to have properties thanks to dividends brought by the time. Mostly born in the 1960s and 1970s, they easily reaped the benefits from globalization, reform, system and population in the 1980s and 1990s following the reform and opening-up.

The middle wave can afford down payments thanks to dividends of their own time — Born in the 1980s and 1990s, they enjoyed the benefits of education, self-employment and innovation. This wave was faster,higher and stronger. However, there are worries that this wave will fade out fast following a series of unfortunate events in 2020.

We might have to count on the back wave — generation of the post-dividend era. Born in and after 2000, these youngsters are enjoying the benefits brought by the previous generations and are staring risks in the face as they go into the society.


Look closely at two types of waves, and one can better understand dividends and crises. a normal wave and an extraordinarily huge wave differ in height and shape. The former, lower in height, also appears much more consistent than the latter.

Now imagine a boat. Among normal waves, it is unlikely to suffer a drop from a great height and get capsized. Meanwhile, there are reportedly 22 incidents of aircraft carriers suffering similar dangers among specially huge waves in the later half of the 20th century. The main danger posed by huge waves lies in a sudden drop from a great height rather than its force.

Scientists tried to generate huge waves by combining smaller waves flowing in the same direction, but they failed because these waves collapsed long before reaching the expected height. Then they tried by arranging smaller waves moving at a certain angle between them to join force. This time, they succeeded. Dividends are like smaller waves. When they come one wave after another, we will not get a bumper crop of dividends but the benefits are smooth and steady. However,coming at a certain angle at the same time, these dividends can combine and generate huge waves.

In times of dividends, people aiming to reach the ultimate height tend to make a fast start and accelerate fiercely from 1x to 10x. It makes sense, and many entrepreneurs did succeed by doing that — seizing opportunities and making fast money. Meanwhile, others like Ren Zhengfei (Huawei), Zhang Ruimin (Haier), and Wang Shi (Vanke) resisted the temptation and made long-term, focused efforts to manage their businesses.

Why didn’t they ride the waves? The answer lies in a film in which a boat gets through a storm.

In Cast Away (2000), Tom Hanks is stranded on an uninhabited island after a plane crash. In the end, he sails in an improvised raft in an attempt to break through a storm. Before reaching the peak of those huge waves, he opens the sail and his raft rushes through the middle section of the waves and gets out of the storm.

Firms like Huawei, Haier and Vanke didn’t ride the waves of making fast money because they didn’t like to fall from great heights and perish. That is why firms say “through the cycle” but not “over the cycle.” It is about traversing through one wave after another, instead of rushing towards the peak of the waves and expecting to hop from one peak to another.


Now that the front wave has successfully reached the shore, what can the middle wave and the back wave learn from it?

First, stop obsessing about elbowing old-timers out of the game. In the scientists’ experiment, huge waves only occur in the central area of waters. If one focuses on squeezing the front wave, it itself will get too close to the shore. Those reaching the shore tend to be small, or, tsunami that wreaks havoc. Neither are ideal.

Second, learn the nature of waves from the older generations. Water is the ground for waves, and in life, knowledge is water; waves lead to injuries, and in life, hardships hasten growth; huge waves require strong, complicated forces, and in life, resilience is crucial for success; one falls harder from greater heights, and in life, self-control is key.

These four principles are better illustrated in the uncertainty and inconsistency of huge waves. It is difficult to predict when a huge wave will occur, and on the calm surface of water, a wave’appearance is inconsistent.

On one hand, the direction of a wave is uncertain. On the other, its flow might be inconsistent because where and when it will stop depends on the terrains ahead.

Starting from a smooth and flat surface, water flows smoothly and consistently first. When encountering obstacles, it diverts and generate ripples. When meeting other flows from different directions, the uncertainty increases and turbulence ensues, causing huge waves in a non-linear mechanism. Then they continue to flow in different directions and finally into the ocean.

It is crucial to know the nature of waves in order to traverse through them because in the post-dividend era, those tried-and-tested methods from the times of dividends will simply not work. Times have changed.

First, in the times of dividends, speed is everything. In a post-dividend era, slow is the new fast. The flows of water used by scientists to generate huge waves were not fast because, otherwise, they tended to collapse upon crashing into each other. What they used were small ripples flowing at an angle of 120 degrees. That is why huge ocean waves tend to come suddenly from nowhere.

Second, in the times of dividends, things are hard and fast. In a post-dividend era, businesses tend to be disrupted and entangled, and this might be an effective way to reach longevity.

Third, it was hero or zero in the past, but now the entire cake is up for grabs and the competition can be messy.

Fourth, changes were only for the sake of development in the past, but now everything is changing.


The year 2020 will inevitably enter human history as the time when thousands of millions of people around the globe slowed down their pace and entered the post-dividend era.

In this era, crises and opportunities coexist and can switch places. There were crises in the times of dividends, but they tended to be non-systemic, and once you seized the dividends you got to enjoy opportunities provided by the system. However, in the post-dividend era, one has to first consider potential crises before seizing an opportunity since crises, systemic and non-systemic alike, tend to come together with opportunities. Put another way, nowadays opportunities are more likely to come from crises, and there are better wealth in dangers.

The coexistence of crises and opportunities requires us to live and evolve side by side with crises. Our natural, social, economic and political environments are experiencing profound changes in this post-dividend era, and one part’s change will, in turn, lead to changes to others. Therefore, we need to learn to become familiar with and even well-versed in both crises and opportunities, and evolve with the environment accordingly. It’s survival of the fittest.

© 2019 Guanghua School of Management Peking University