Interview with TechNode’s Lu Gang

Dr. Lu Gang is the founder and chief editor of the indispensable TechNode.com, China’s leading tech website, with news on apps, startups, funding rounds, acquisitions, product releases, and much more. He has also founded his own startup kuukie.com and the tech awards ChinaBang. He took the time to talk to Business Tianjin about his passion for tech, industry ecosystems, and following his heart.

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What led you to study at the University of Sheffield? What did you think of the city and the UK as a whole?

We need three years to finish an MSc degree in a Chinese university, which I felt would take too long. So I quit university in China and went to the UK because an MSc requires only one year of study there. I did a BSc and an MSc in Electronic and Electrical Engineering, and a PhD in Computer Science specializing on wireless communications. The Electronic and Electrical Engineering department of Sheffield University used to be the best in the UK, so that’s why I chose to study there. I still miss the UK very much, especially the peaceful life there and the blue skies in summertime. But its pace of life is rather slow, better for retirement than for a career.

What inspired you to start Mobinode/Technode? What were your sources of information at the time?

My PhD research topic was wireless ad hoc networks in which every node (object) with an antenna is described as a Mobile Node. Therefore when I set up my blog, I called it MobiNode, to suggest “Mobile Node”. When I started, I had almost no direct sources. If I heard of any interesting startup/service, I would find its website and try to email any contact address listed on the sites asking for an interview.

What is/was kuukie.com, and what is the story behind it?

Kuukie was a customized online printing service. Users could just upload their own photo or image on the website, choose the product (business cards, postcards and so on) then place the order and have it delivered within three days. Kuukie’s idea was originally from a company in UK, where at that time lots of startups used it to print business cards. I found it quite interesting, so set up kuukie.com basically wanting to copy the model across to China.

How would you describe the Beijing tech startup scene and culture? What help is out there for founders? How does it compare to Shenzhen, for example?

Beijing is the number one tech startup city in China. It has the most mature startup ecosystem, I would say, with media, startups, venture capital and government support. Beijing’s startups are very diverse, but most other cities have their own focus, like Shenzhen is on hardware, Hangzhou on ecommerce, and so on.

Can you describe the role and influence of venture capital on start-ups? Which VCs and incubators have the best records?

They are no doubt one of the most important driving forces for innovation. In China, money is not a big issue because hot money is everywhere, but startups need smart money which can not only bring financial support but also the knowledge, experience and resource to help them grow fast. In China, there are good ones, like Sequoia China, IDG, Gobi, Matrix and more besides.

What do you think of the domestic and international media coverage of the Chinese tech sector? Has it changed in recent years as Alibaba and others have gained international prominence?

The Chinese tech market has been booming in recent years, so we’ve seen numerous new Chinese media outlets set up to cover the Chinese tech sector, which is good for the ecosystem. We see more and more Chinese startups aiming for the overseas market, but coverage of the Chinese tech sector in the international media is still quite limited. The media business in China is hard, you have lots of headache issues, such as copyright and fake news; and doing tech media is even harder, because reporting is one thing, but being engaged with the ecosystem is key to understanding the domestic market.

How did you get the ChinaBang awards started up? Who are some of the startups have you honored?

Back in 2012, I found there were no awards in the Chinese tech sector to pay tribute to the best startups of year. In fact there were many awards which were very dubious, basically you could simply pay for them. Startups don’t have that money but need a stage to be highlighted and encouraged to move forward. So we created the ChinaBang Awards to honor the best startups of the year, and we’ve been doing it for five years now. We are very proud that we have seen quite a few startups that used to be small now become unicorns (valued at over $1 billion). To give some examples, Momo only had 500,000 users in 2011 and it has now has an IPO, Didi had only 30,000 users in 2012 and is huge now, and even WeChat only had 20m in 2013 and now is the super-app for all of China.

What are best new tech startups you know of – who has a chance of being the next BAT (Baidu, Alibaba, Tencent)?

It’s almost impossible to beat BAT in China, but we may see some BAT-like companies in some vertical markets. One of our reporters has written a very interesting series of articles about the next BAT; they could definitely be out there. But only time will tell.

Can China’s tech scene rival Silicon Valley, do you think? What does it need to do so?

I hope so, but it will take a long while to reach that goal. China is taking the lead in some sectors, such as mobile payment, ecommerce, and drones, but we have to admit that Chinese market is still market-driven rather than technology-driven. We need to see more companies like Huawei and DJI.

You’ve moved from writing a blog to a being an authority on the whole tech scene. How have you managed to “scale up” in such a fashion?

By following my heart. I am doing this not because I want to be a figurehead or an authority on the field. For many years I’ve believed what I am doing will bring value to the industry and to the startups, and I love doing it. I know quite a few bloggers who started their blogs even before me, but now I might be the only one who is still writing. I am not the best writer; I just keep going with no fear.

Startups are notorious for long workweeks. How is your own work/life balance?

I am a proud father of one boy and one girl. But I feel sorry for them because I am always very busy and travel every week. So I try very hard to avoid travelling during the weekend and spend time with the family as much as I can, and even force myself not to use a phone or laptop when with them.

What are your hopes for TechNode?

I hope to make it more influential in the global stage and to be the number one tech gateway between China and the world.

Check out TechnNode.com

 

Published in Business Tianjin magazine

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Interview with Tom Miller

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Tom Miller is a senior analyst at Gavekal Research, managing editor of China Economic Quarterly, and the author of China’s Urban Billion: The Story Behind the Biggest Migration in Human History (2012). He explained more about his new book, China’s Asian Dream: Empire Building On The New Silk Road.

 

How long did it take to research the book? What was your approach?

Aside from a short trip to Myanmar in January 2013, I did all the on-the-ground research between March 2014 and September 2015—so 18 months in total. From my base in Beijing, I made research trips to Xinjiang, Kyrgyzstan, Kazakhstan, Yunnan, Myanmar, Laos, Cambodia, Singapore, Vietnam, Sri Lanka, India and Washington, DC.

I organized meetings with officials, government ministers, diplomats, journalists, academics, think-tankers, businesspeople and companies, usually in advance, but also relied on “walking and talking”. It’s amazing what you can find on the ground by hiring a taxi for the day, walking into offices, businesses and hotels, asking lots of questions, and generally being really pushy. I hitched rides on trucks, downed drinks with construction workers, accosted businessmen in departure lounges, questioned traders, and even chatted with monks and prostitutes. Back in the office I read hundreds of articles, reports and books, both in English and Chinese, and scoured investment data and corporate reports.

This research produced around 40 notes and articles for clients of Gavekal, which we published in 2014-15. In the spring of 2016 I filled in the holes in my research and turned these articles into a book. The whole process took the best part of two years.

You document how much China is investing in its neighbors, but is it working on the soft-power side?

China is always better at hardware than software. It is opening Confucius Institutes across Asia, but few people have much affection for China. State companies are beginning to learn that they need to pay more attention to social responsibility in order to avoid a backlash against Chinese investment on the ground. But Chinese firms and officials prefer to deal with elites rather than worry about winning over ordinary people. Chinese officials talk about “win-win” diplomacy and building a “community of common destiny”, but they rarely look beyond building hard infrastructure and delivering economic development.

Are Chinese companies learning from working abroad?

Some are. Take Myanmar, where a number of big investments were cancelled or put on hold after the political transition of 2011. Big state companies there have stepped up corporate social responsibility programs and are engaging public opinion. It is fair to say, though, that most Chinese enterprises pay less attention to how they are perceived than do firms from countries that have pernickety shareholders and international brand names to protect. Still, Chinese firms must do enough to ensure that projects stay on track, and the requirements are different in different countries. Chinese investors and construction companies are going through the same learning curve that European, US, Japanese and Korean firms went through before them. Some do a much better job than others.

What will success for China’s One Belt, One Road strategy look like, do you think?

“One Belt, One Road” is one part of a broader push to cement China’s position as the undisputed power of Asia. The aim is for China to sit at the heart of a trade and investment nexus and to develop a wide geopolitical sphere of influence. It wants to play a similar role in the East to that played by the US in the West. But the initiative is, in the first place, about domestic development and security. It is designed to create new markets for China’s capital goods exporters and construction firms, and bring prosperity to its own underdeveloped border regions. It is about creating strategic energy corridors and making multilateral institutions work better for China. And it is about drawing countries into China’s economic and geopolitical embrace. Essentially, Xi Jinping wants to “Make China Great Again”.

The Belt and Road cannot do all these things by itself. But if China can succeed in improving connectivity across Asia while boosting trade flows and simultaneously strengthening its geopolitical grip across the region—and if it can do that without writing off tens of billions of dollars of loans—I think we can call it a success.

You focus on China’s bilateral relations with its neighbors – but how important are multilateral institutions like ASEAN?

China prefers to deal with countries on a bilateral basis, where its economic heft gives it considerable leverage. But it also works with multilateral organization like ASEAN, partly because it has to and partly because multilateral bodies can help to deliver big trade deals. With the collapse of the Trans-Pacific Partnership, for example, China is pushing an alternative free-trade vision encompassing the 10 ASEAN countries and their six FTA partners: China, India, Japan, South Korea, Australia and New Zealand. It also knows that bilateralism has its limits, because small countries do not want to be reduced to Chinese vassals. Still, I am sure that China would prefer ASEAN to remain the loose and weak association of states it is today than for it to become a genuine economic and political power.

Finally, China approves of multilateralism wherever that means limiting the power of the US and its allies. With establishment of the Asian Infrastructure investment Bank, it has shown that it will create its own multilateral organizations to supplement what it perceives as the inequities of the current international architecture.

Published in Business Tianjin

Interview with Lijia Zhang

Via chinaspeakersbureau.info

Lijia Zhang is the author of Socialism Is Great!, a caustic memoir of her experience growing up in 1980s China. She has just published Lotus, a novel about a women from Sichuan who gets caught up in the sex trade in Shenzhen yet who has ambitions to make something more of herself. Inspired by the deathbed revelation that her grandmother had been sold into a brothel, Zhang aims to give a voice to the voiceless and the powerless. I spoke to her about researching the novel and the difficulties of relating a different culture in a foreign language.

 

Can you tell us the story of how you researched the novel?

I interviewed many sex workers in Shenzhen, Dongguan, Beihai, Beijing and Tianjin. When you don’t know them well, they don’t always tell you the whole story. I tried to make friends with them, but it was hard to maintain a friendship with them, as their lives were often transient as they moved from one city to another, from one parlour to another, they changed their mobile or they simply vanished. What really helped me to gain insight was my experience of working for a NGO for female sex workers in a northern city in China. Lotus is a purely work of fiction (not another memoir based on personal experience) but many details, Lotus’s first handjob, for example, are real, and learned from the girls I befriended.

The character Binbing is based on the real photographer Zhao Tielin, who photographed sex workers in Hainan. Did you meet Zhao in person?

Yes, I indeed met him, quite a few times. But I never really had in-depth conversations with him, which would have allow me to find out the deeper reasons why he would live among the working girls and photographed them obsessively, beyond the grand reason of giving a voice to people with no voice. I was hoping to do so after I got to know him better. But he fell ill and passed away. I did read all of his books.

The photographer character Hu Binbing in Lotus is inspired by Zhao. What’s Hu’s motivation? I hinted – perhaps too subtly – that photographing prostitutes serves Hu as a tool to achieve success, to prove to his ex-wife that she’s wrong about him, as well as to feed his own sexual fantasies.

Did you have any literary models or inspirations in writing the book?

No, I don’t really have any literary models when writing the book. Generally speaking, I love social realism. Back in my factory days, when I tried to teach myself English, I fell in love with Dickens who used realism to portray the harsh reality of his time. Tolstoy is my most favourite novelist of all time as his books have a richly detailed but panoramic view of Russian society. And indeed, I admire Nabokov for his creative use of language.

In preparing to write this novel, I carefully read novels such as The Poison Wood Bible, The Kite Runner, Balzac and The Little Chinese Seamstress, to learn how to tell a good story to an audience from a different culture.

What was the meaning of the reference to the novel Portrait of a Lady?

For me, the novel is also about the journey of a young woman finding herself. I very much appreciated the theme in Portrait of a Lady – a young woman confronting her destiny.

Lotus’ returns to Sichuan have a heart-rending quality to them. Have you had similar experiences?

Yes, I’ve had similar experiences. I’ve travelled quite far from where I came from – if I do say so myself. I am often irritated by my parents’ bad habits such as throwing rubbish anywhere and spitting.

I’ve followed working girls returning to their home villages. I noticed that they always put on their finest outfits; and like me, they often criticized their family members ‘peasant behaviours’ of spitting and littering: they feel they are entitled to do so because their financial help to their families elevated their positions at home.

Why did the novel take 12 years to write? Did it go through many drafts?

It did take 12 years to complete, during which time I did many other things. I had to make a living as I have children to support. I did indeed go through many drafts. In the early drafts, the writing was far too journalistic. I also experimented with the point of view. At one point, I wrote entire conversations in pigeon English, for example: “Where is the toilet” would be “Toilet is where?” But I decided it didn’t work and started another draft. Of course, bear in mind, English isn’t my native tongue, which means I write slowly, very slowly.

What is your typical writing day and what is your writing environment like?

I don’t really have a typical writing day. When I can, I try to write 300 words, even though I may chop out 250 the next day. I write mostly in my study. I live in a lovely house in the outskirts of Beijing, in an area populated by migrant workers, who use the similar sort of earthy language as my characters.

Did you have a didactic aim in writing Lotus, or were you trying to simply give a voice to women like your grandmother?

Yes, I do have a didactic aim and I do want to give a voice to the women like my grandma. Having spent plenty of time with the working girls, I’ve gained much empathy and sympathy for them. Most women, those from low-middle establishments in particularly, got into the trade due to circumstances such as poverty or some tragic personal events. Almost all support their families financially. Drug abuse is uncommon.

I like the combination of poetic prose and earthy dialogue. Is it hard to convey Chinese thinking and feeling in English this way? Is this an attempt to convey the two aspects of Lotus – her grimy day-to-day existence and her dream of a better life?

I try to borrow Chinese saying and expressions. But it is often hard to translate the sayings into English directly. For example, we have a saying “A man has his face just as a tree as its bark’, implying that a man has a sense of shame. But I am not sure it works in English.

Yes, to the second question, as symbolized by the name she gives herself – Lotus, from the Chinese saying: The Lotus springs from mud but yet not imbued.

You moved from memoir to a novel. Which did you find easier or more fun to write?

I found writing fiction so much harder. The freedom to create anything you like is both exhilarating but intimidating! I enjoy writing profile stories, which I still do from time to time. It’s good fun as I love people and appreciate the opportunity of really getting to know someone.

I am trying to write some short stories, some of which I made use from materials chopped off from the novel.

What are your literary projects for the future?

I’ve already started a narrative non-fiction on China’s left-behind children, featuring one village in Guizhou, in Southwest China. Using real life material, I can apply fiction techniques to make the book more enticing and readable. I think literary non-fiction is the way to go for me – for now anyway.

 

Lotus is published by Henry Holt & Company and is out now.

 

Interview published in Tianjin Plus

Interview with Patrick Chovanec

Image via Twitter
Image via Twitter

 

Patrick Chovanec is in much demand as an expert on the Chinese economy. Formerly a professor at Tsinghua University and a much-quoted blogger, he now works as a financial strategist, in between his media work. He spoke to Business Tianjin about Chinese growth, debt, and the reforms that could see the economy boom again.

 

What first brought you to China in 1986?

I first came in 1986 with my family, when 15 years-old. We saw China at a very interesting point when it was just beginning to open up. It looked very different to what it does today. I don’t think there was a single building in Shanghai that was taller than 20 storeys. Then I came back and travelled a great deal through China in the 1990s, as a backpacker. Then in 2000 I came with Institutional Investor Magazine to run their Asia Pacific Institute which was basically a group of financial executives throughout Asia. Eventually I went to London and did another thing with Institutional Investor but came back to work in private equity in China and did that for several years with a number of different firms. Then in 2008 the opportunity came up to teach at Tsinghua University and I taught in their business school for five years.

What China was like in that early 90s period?

For me the big change was between 1986 and 1992. That was where it changed from being a country that looked a lot like North Korea. When I went to North Korea in 2008 it really brought back a lot of memories of China in the 1980s. On the streets there was no advertising, no shops, everyone dressed in similar clothing, with similar haircuts.

When I got back in 1992 and travelled around China I actually first entered through Tibet. It looked sort of similar to the China that I remembered. Then I flew to Chengdu and it was completely different. Especially the clothing people wore, their hairstyles, and people selling things on the street. We saw a little bit of that in ’86 down in the south in Guangzhou. You saw street pedallers but by the 1990s it had really taken shape. They had just opened the stock market, you saw the beginnings of the first private company being established, it was really quite something.

How would you describe your relationship with your Tsinghua students?

I was teaching at Tsinghua University about doing business in America and American Business History. There was a lot of curiosity; it was a big challenge for a lot of companies in China to go global. The American business history was less directly related to the media challenges that my students were faced with. It was fascinating, I remember students coming up to me after I’d given a talk on the development of retail in the US over the course of many decades and them saying to me “That’s what’s happening in China right now!”. I would say “You’re right, exactly!” It was always very rewarding when they would see the similarities.

Now I work for Silvercrest Assest Management as their chief strategist. We manage money on behalf of wealthy families; it’s a publicly listed company in the US (we manage about 18billion dollars). My job is not China focussed, although China is always an important part of the equation. I’ve been doing a lot of travelling to a lot of different places outside of China. I’ve just got back from Chile, but I still seem to talk about the same kinds of things I did when I was in China. China is a big part of any outlook on the global economy.

Both you and Michael Pettis were writing about a slow-down in the Chinese economy years before it came about. What are your own predictions for GDP growth?

I’m not a fatalist when it comes to what China’s GDP growth has to be. I think what we are seeing is instead of real reform and things that would really unlock activity gains for the Chinese economy is China trying to squeeze more and more out of the existing growth model. We have seen a little bit of a bounce this year. We saw for almost two or three years the manufacturing survey in China has been below 50, suggesting contraction, but that bounced a little bit above 50 near the end of the year. What we’re clearly seeing is a continued slow down and strangulation of growth. The growth we do see is reliant on greater and greater debt levels, which have not slowed down. In a closed financial system, that doesn’t result in a sudden breakdown. You can socialise the losses, you can sweep them under the rug. A lot of people expect a Lehman moment, but we may not make ever get that. That’s part of the problem – there’s no correction. So I think outside of China people tend to be schizophrenic about it because they don’t have a narrative to explain why the slowdown is taking place.

Occasionally I get chided by people who call me a China bear and who say the economy is doing fine. We may not get the timing right, but you can point to a number of problems weighing down on Chinese growth which they will continue to do so for the foreseeable future. No, China didn’t collapse – but nobody serious said that would happen. I didn’t move to China because I thought it was a basket case. I went there because there was an economic miracle going on. But starting in 2008 a few of us began to recognise there were some serious imbalances too, and there was going to be a reckoning one way or another. Predicting how or when is very difficult, but people are recognising that the things that we talked about have become very serious issues.

The RMB has been steadily declining, but has seen some remarkable gyrations. Can you explain what’s happening?

The reason why most countries face downwards pressure on their currencies is because they’re running chronic trade deficits and for one reason or another can’t sustain them. China’s situation is the exact opposite – it runs chronic trade surpluses and needs to make an adjustment to less savings, less investment, less reliance on external demand, a more balanced reliance on consumption to drive growth. It’s failure to do that has caused investment returns in China to decline. It’s hard to measure because so many losses are socialised. But clearly many people are intent in taking at least some of their money out of China and putting it somewhere else. We’ve seen China go from importing currency through trade surpluses and being a net recipient of investment to exporting currency because all of the capital flowing out of the country. Its capital flows are the result of a failure to rebalance and that’s what has caused pressure on the RMB. That’s why I don’t think China needs depreciate its currency, because you can’t get ahead of what’s pushing the money out the country. If you have a weaker Chinese currency, all that does is it causes people to invest more, save more and consume less. So China needs to defend its currency, draw down on its reserves, and transform those savings into consumption. But the capital outflow problem has been worsened by China allowing a gradual depreciation, because that convinces everyone that it’s what’s going to happen and that they should get their money out before it does.

The US has not come with up with a clear message, and neither has the IMF or the G20, about what they want China to do, and how they’ll help China do it. What they need to do is to help China. There are a lot of things the G20 or the US or the world central banks could do to send a message that they are supportive of China holding the line on its currency. But that has to be connected with real reform, because at the end of the day, you’ve got to solve the real problem that capital wants to leave China because there are low returns because of the imbalances there. The answer to that is either that you have a big devaluation and you shore it up by providing external demand, from the rest of the world, but that’s not really a long-term answer, or you have a real adjustment in China’s economy. So far we have not seen China bite the bullet on that. This isn’t the US and everyone complaining that China’s can’t run surpluses, it’s unfair. This is what China itself needs to do.

What can the People’s Bank do?

The reality is that China has to decide to support the currency or not, whether that is a policy which pushes the Chinese economy in the right direction, what kind of resources they have to do it. It is much better to reach out to the rest of the world than it is to slap capital controls on. Capital controls are not really – like any kind of intervention, it pretends to solve the problem when it hasn’t. So slapping capital controls on and preventing money from moving abroad is really only the most temporary solution. What they have to do is the opposite – by making China more attractive for investment, for inflows. Capital controls don’t solve anything. China has to rebalance its economy, make it more attractive for domestic and foreign money to want to go to China and stay in China.

I don’t see much rebalancing taking place. If there is no reform, a lot of money that China has accumulated from real wealth creation and by producing more than it consumes will simply leave the country. It won’t be spread amongst the Chinese people; it will leave in the form of savings of wealthy individuals. What the world needs isn’t a lot of wealthy Chinese people buying property in Manhattan or Vancouver, it needs the average everyday Chinese person buying products from around the world to improve their lives. That could actually be a major driver of growth in the world. But if capital simply leaves China in the form of wealthy people’s savings, China suffers and while the money eventually translates to demand in the rest of the world, it’s not in the way that’s needed.

China’s ODI is growing at 50% year-on-year. What’s happening there?

Part of it is just the healthy development of Chinese economy, a number of companies have reached the size and scale that it makes sense to think of making investments abroad. Some of it also reflects the imbalances – when you run chronic trade surpluses you accumulate capital and you look for productive investments for it. To the extent (and this is less healthy) that the domestic market is looking less attractive, particularly for real estate companies, it’s because things are very volatile at home and they think they can make more money abroad. The money flows to where there are more positive returns (or where they think there are).

What’s your feel for what’s actually happening on the ground, in the provinces?

The authorities know the model has reached its sell-by-date, but the reality is it’s hard to walk away from. There are areas of potential real growth in the Chinese economy, but they can’t be tapped unless there are price signals that send resources in a different direction. In healthcare, in agriculture, in services, in logistics, there are a huge number of areas where China can realise real gains. If you go back to last debt crisis in China in 2000, it was serious. There were huge inefficiencies in state-owned enterprises, there was a big bad debt problem, but it didn’t translate into a collapse. Why? It wasn’t because these problems weren’t real; they were just eclipsed by other things that were happening. You had massive privatisations of small and medium SOEs, the creation of a private property market, which was a big growth driver. You had real reform of the banks. There was also China joining the WTO, and opening up huge chunks of its economy to competition. All of these things created real growth that overshadowed a lot of those problems.

The same has been true about this debt crisis. There are real reforms that could have and should have been done years ago, but there are lots of areas of the Chinese economy that could really take off and generate real gains. But that means letting things fail. And if you can’t let things fail, people never get the signal to send money in a different direction. The problem with bubbles is not just that prices go up and then they go down and people lose their shirt, it’s that they sucks the oxygen out from more productive activities. I’m not bearish on China in that I think growth has tapped out. If anything I’m frustrated because there’s so many areas where I think they could really grow. But it’s not happening because they’re locked into a pattern of growth that’s long since past its sell by date. It’s not willing to accept the process of creative destruction that would channel resources more productively.

Similarly, is the “Li Keqiang index” still a useful guide alongside GDP data, or has it too become distorted?

It’s an interesting exercise. It’s obviously focused more on the industrial economy in China and so it’ll tell you more about that. The Index tells you what it tells you – about energy use, about credit, and things like freight. But they’re not the real economy, and we need to recognise that. What the LQI did tell you over the past several years that what had been growth drivers were really hurting and were really contracting. But did it tell you about, say, Alibaba and the growth of ecommerce? No.

What’s your sense of how Trump will affect the world economy and particularly Sino-US trade?

Trump, like us, believes that the chronic US trade deficit is a problem, and that the imbalances that exist are not healthy. But we believe that the trade deficit is down to deep-seated imbalances in the US and Chinese economies, and the way to address that is to solve these imbalances. Trump believes it’s because of bad trade deals. He thinks the answer is to bang your fists on the table to get a better deal. There were $650 billion worth of trade between the US and China in 2015. More of that were imports to the US than exports, but Americans are consumers as well as producers. American consumers suddenly cut off from the supply chains that give them access to a whole range of goods could face a very serious price check.

If you go back the 1980s Trump has very consistently been critical on trade. He said the same things about Japan then and he still says them now. If you listened to his inaugural address, it was pretty hardline – saying that other countries have “ravaged” the US economy and that “America First” was going to be the guiding principle. This does not sound like a guy pivoting from campaign rhetoric to a more moderate form of governing. We’re going to have to see what specifically he does. I think China is taking a wait-and-see approach to what Trump does. Now he is president, he does things, or doesn’t do things, and that has consequences.

 

First published in Business Tianjin

Interview with Kaiser Kuo on social media

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What social media platforms are you on, and what are your handle(s) on them?

I use Twitter and Facebook primarily. I’m @KaiserKuo on Twitter, and just Kaiser Kuo on Facebook. I have a Sina Weibo account, @Kaiser, but it’s fallen into disuse, mainly because my written Chinese is shamefully inelegant and childish, and it takes so much longer for me both to read and to write in Chinese.

What do you get from each of these platforms? Which do you most heavily use?

I spend more time on Twitter than on Facebook. For me, Twitter is mainly a source of breaking news and of links to stories I’m interested in, and so I tend to follow news hounds and people who mainly link stories on subjects that interest me: chiefly current affairs in China and the US. I use Facebook mainly to keep up with what friends and family are up to, to post occasional musings and missives, and to promote things that I do like the Sinica Podcast and my band. Both Twitter and Facebook are also great for punctuating the day with a laugh.

Where do you get your news from?

I subscribe to a few email digests of China news- most importantly, the daily digest from Bill Bishop’s Sinocism blog, which is a real treasure with links to both important English and Chinese-language news stories – but for other news I still look at major media sites: the New York Times, the Wall Street Journal, the Economist and so forth. I also enjoy news podcasts during my morning commute, like Public Radio International’s “The World.” Twitter is another important source of news. During the course of the day I’ll glance at what stories are being tweeted by the people I follow, and through Twitter I find at least a half-dozen worthwhile reads a day that I might not otherwise have seen.

How much time would you say you spend on social media daily? Is it worth it?

I would say I spend no more than 90 minutes a day actively engaged with social media on a normal day. I tend to dip in for quick scans rather than hang out for extended stretches. On days when there’s breaking news in some area of real concern to me, either personally or professionally, I can spend far longer on it.

How do you organize everything? What software do you use?

I’m a big fan of Hootsuite, a social media client that lets you post to Twitter, Facebook, and other social networks. Posting pictures or shrinking links is also very convenient. You can set up columns specifically to show mentions of you, direct messages to you, your general Twitter feed, specific lists you follow, sent tweets, or even just tweets containing a specific hashtag (such as #beijingfloods) or search term. I lean pretty heavily on a list I created called “China Folks,” which has roughly 500 good people who tend to tweet on China-related subjects. I update the list pretty frequently, dropping and adding people as they come and go.

How would you compare weibo and Western social media?

Just comparing Sina Weibo (the only one of the Chinese microblogs with which I have experience) with Twitter, I’d say the Weibo is more feature-rich, more intuitive, more powerful, and far more stable. Chinese websites are designed and built for ridiculous amounts of traffic, and I have yet to see Weibo crash, as Twitter so often does. Twitter isn’t as harmonious, of course, and I’m one who likes a bit of dissonance.

Has being on social media been beneficial to your life or career in Beijing?

It’s been good, on balance, for both my life and career. It keeps me feeling connected to friends and professional contacts, however illusory that feeling may in fact be. It helps me stay atop the online buzz on my company – something very necessary in my line of work. That’s not to say social media isn’t without its downside: it can make me overreact to news events and get somewhat obsessive in watching things unfold with each refresh. It can make me seethe occasionally with an impotent indignation that’s surely no good for my health.

Which accounts do you most recommend people to follow?

In China, on Twitter, just off the top of my head and sticking with people who tweet in mostly in English, I’d suggest people like @niubi (Bill Bishop), @goldkorn (Jeremy Goldkorn), @gadyepstein, @imagethief (Will Moss), @granitestudio (Jeremiah Jenne), @bokane (Brendan O’Kane), @eosnos (Evan Osnos), @ChinaGeeks (Charlie Custer), @China-Hearsay (Stan Abrams), @cmphku (China Media Project), @siweiluozi (Joshua Rosenzweig), @tomlasseter, @malcolmmoore, @comradewong (Edward Wong), and @RelevantOrgans (some sidesplittingly funny tweets).

Will social media supplant journalism, take it someplace new or just be a supplement?

It won’t supplant journalism, I don’t think. Social media is already a clearly useful if not indispensable supplement to journalism, and as such is already taking it someplace new and – though it may make for rough going for media companies and even journalists in the near term – someplace better.

 

Published in Agenda magazine

Interview with Bill Bishop on social media

bill_bishop-2_0

As one of if not the foremost China watchers on the scene today, Bill Bishop (perhaps better known as @niubi) has been a vital part of the social media ecosystem for some time, through his blogs Sinocism and Digicha, his use of Twitter and Sina Weibo, and his daily email posting and analyzing China-related links and news. With his highly influential social media use, he not only shares the news but makes it too. He shared with Agenda how he handles it all.

What social media platforms are you on, and what are your handle(s) on them?

I am @niubi on Twitter and @billbishop on Sina Weibo. I was an early user of Twitter and had no expectation it would become so big, hence the “smartass” handle. Unfortunately all variants of Bill Bishop are now taken, as I would much  prefer to use my real name.

What do you get from each of these platforms?

Twitter is one of my primary sources for following news. Weibo has a similar function for me, and I find that the ongoing discussion on Sina Weibo tends to be more interesting and extended than on Twitter. I also use Sina Weibo to help promote my partner’s cake shop, @ccsweets 创意蛋糕. Weibo can be an incredibly effective marketing and communication tool.

Where do you get your news from?

I have used an RSS feed reader for probably close to a decade. Over those years I have built up a list of several hundred English and Chinese feeds that I think are interesting. I usually start my news browsing in the feed reader, then go onto Twitter and weibo, then browse a few websites. I also use filters and alerts, as there is too much information out there, but even with those I think I am still drowning in information overload.

How much time would you say you spend on social media daily? Is it worth it?

Much of my usage is on mobile devices, especially when stuck in traffic. I’d say I probably spend about 90 minutes on weibo and Twitter, though if something big is happening in China, weibo is the place to watch it. So for example I was up all night watching the escape to the Chengdu consulate unfold.

How do you organize everything? What software do you use?

Pinboard.in has been a lifesaver. I use it to save things I think are interesting, and it allows you to tag items as you see fit. I then use a WordPress plugin to automatically pull my tagged Pinboard items into the daily China Readings Post I publish at sinocism.com.

How would you compare Sina Weibo and Western social media?

Weibo has a much richer feature set that allows much deeper conversation and much broader dissemination of information than does Twitter. The way you can retweet and comment on individual weibos means that each one can become a node in a much bigger conversation, as opposed to the ephemeral, “miss it and it’s gone” nature of Twitter.

Weibo also exists in a much different political-information environment, one in which many people do not believe official sources and so are much more willing to believe what they see on weibo.

Has being on social media been beneficial to your life or career in Beijing?

I am not actually sure. It has certainly helped CCSweets, but it did not help my video game business, and so far all the blogging, tweeting and weiboing I do is gratis.

Which accounts do you most recommend people to follow?

Danwei.org just published their absolutely essential list of the best English language blogs and Twitters to follow. (Full disclosure: I was fortunate enough to be named in their “2012 Model Worker” list.)

Will social media supplant journalism, take it someplace new or just be a supplement?

It should supplement it and improve it. The old days of a handful of editors determining the news agenda, especially about China, are gone. That is a good thing, except perhaps for those editors and their bosses. But the challenge for consumers is to figure out who to trust, and I think a social network like Twitter can help with that as if you are an idiot the community will figure it out fairly quickly.

I have noticed that more and more of the China-based western journalists are using Twitter. Many seem to have resisted at first, but now they, and I think all journalists in general, realize that they need to build a personal brand beyond the news organization for which they report.

Published in Agenda magazine

Interview with Eswar Prasad

Image via Brookings Institution
Image via Brookings Institution

The rise in the international role of the yuan has been much discussed, though perhaps with more heat than light as the shackles have gradually come off and the RMB has developed a more international role. Eswar Prasad was formerly the head of the IMF’s China division and has now written what looks to be the set text on the internationalization of the yuan, Gaining Currency: The Rise of the Renminbi. Business Tianjin spoke to him about where the RMB is going and how it will get there.

 

You studied for a PhD at the University of Chicago – did its own heritage shape your own economic thinking? How would you classify your own intellectual background?

The most significant thing I learnt from my professors and fellow students at the University of Chicago is the importance of careful analysis of data and rigorous economic thinking. That training—to approach every piece of data, every argument, every issue—with a critical and balanced perspective is enormously valuable in one’s professional life, whether as an economist, academic, or other professional. While many professors at Chicago have strong views, of course, they teach their students to think and reach conclusions for themselves.

In my own work, I have learnt that that each school of thought has important and useful ideas that need to be taken seriously. And I also recognize that, while economic models and analysis are essential in designing economics policies, policymaking in the real world is a lot messier. It is important for economists to get outside their comfort zone and engage with policymakers and also the public to shift debates and policymaking in the right direction.

What led you to the position of the head of the IMF’s China division in 2002-2004? What were the main issues you handled whilst there?

I was fortunate to be asked to head the IMF’s China division at a time when China was opening up to the world and becoming one of the most interesting economies to follow. I was brought in mainly to increase the IMF’s research work on China – it was already clear that China did not need the IMF’s money but would benefit from research-based policy advice. China’s economy has made great progress and increased enormously in size since then, but many of the issues that we advised the government on at the time are still relevant today! These include the need to fix the financial system, reform state-owned enterprises, allow for more labor mobility, control local government borrowing, make the exchange rate more flexible, and improve the public tax and expenditure systems.

In your 2014 book The Dollar Trap, you argue that that was no foreseeable rival to the dollar in international finance. Was the aim of the book to seek the facts of the situation or to remove misapprehensions?

To be frank, when I started writing the book I had expected to write that the financial crisis had weakened the dollar’s role in global finance and that other currencies, such as the euro and perhaps even the renminbi, would soon be serious rivals. As I looked through the numbers and conducted my analysis, it became increasingly clear that the opposite was true. Paradoxically, the dollar’s role as the dominant global reserve currency has become stronger since the financial crisis. So then the book was my way of understanding how this came to be, and the analysis ended up looking at the structure of global finance, the inherent structural weaknesses of the international monetary system, and the reasons why the financial crisis resulted in the dollar tightening its grip on global finance.

In your new book Gaining Currency, you make a convincing argument that the RMB is some way off ever being a rival to the dollar, though one can see how the importance of the yuan is rising. What does the Chinese government see as the benefits of an international role for the yuan? Is it right to so think?

Making the RMB a major global currency would enhance China’s role in the world economy. There would also be some tangible benefits, such as lower currency risks for Chinese importers and exporters, if the RMB starts playing a more significant role in cross-border trade and financial transactions. However, there are also some costs—it would be harder to keep the value of the currency stable.

A more important point in my view is that the objective of making the RMB a truly global currency serves the Chinese leadership well in terms of domestic reforms. It provides a framework for pushing forward capital account opening, financial sector reforms, and exchange rate flexibility and blunting domestic opposition to those reforms. In the book, I describe this as a “Trojan horse” strategy. Whatever happens with the RMB’s prominence on the world stage, such reforms are good for the Chinese economy.

China’s acceptance into the IMF’s Special Drawing Rights was evidently something it worked hard for, and which authorities such as Christine Lagarde also largely desire. Was this another case of wanting to bind China into the international system? If so, how would you evaluate that policy?

The RMB’s inclusion in the IMF’s SDR basket could prove to be a good thing both for China and the IMF itself. When China decided it wanted to get the RMB into the IMF’s elite basket of currencies, it felt that this would be a great way of getting more prestige for its currency in one fell swoop. The IMF and China came together and decided on a checklist of things that China needed to accomplish over the next year. That checklist turned out to be very useful to the Chinese government, particularly for the PBOC, in pushing forward domestic reforms. Closer engagement with China also benefits the IMF, which in recent years has lost some of its relevance to emerging market economies. Some of these economies have come to see the IMF as being run largely by and for the interests of advanced economies, so this move counters that perception to some extent.

You several times demonstrate the strategic intelligence of the Chinese in their development of the role of the yuan. Yet when the PBOC moved the RMB to a more market determined rate in August 2015, it caused a near panic in the market. What happened there? What lessons would the PBC have learned?

China’s intervention to devalue the RMB while ostensibly loosening its control of the currency was intended to make progress on an important reform while deflecting domestic opposition. However, because of poor communication about actual policy intentions and the fact that it came at a time of great concern about the state of the Chinese economy, the move backfired as it was seen mainly as a panic-driven measure to prop up growth.

The after-effects of this misstep have persisted until now, with any downward move in the currency’s value interpreted as at least partially signaling the government’s desire to use currency depreciation as a tool to promote exports and growth. My view is that the PBOC has more honorable intentions—to let the currency float more freely—but is now caught in a trap somewhat of its own making.

You are justly critical of the PBOC’s communication ability. Do you think it can adapt to a more open and accountable mindset? Does it have the institutional strength to do so?

The PBOC has tried to aggressively push for financial sector and capital account liberalization and reforms. But it has to work within tight political and institutional constraints. Despite those limitations, the PBOC could have done better in the August 2015 episode. Since then, it seems to have learnt some of the right lessons.

For instance, the PBOC in principle now manages the RMB’s value relative to a basket of currencies rather than the U.S. dollar. This makes good economic sense. The PBOC is also doing a better job in terms of communicating its policy objectives to markets, with Governor Zhou Xiaochuan giving press interviews and speeches to lay these out. However, markets still perceive a lack of clarity in the PBOC’s intentions and markets have been kept guessing about the PBOC’s true goals and policies, which creates a risk of further volatility in currency markets.

We are seeing record outflows of capital, with an outflow of US$46 billion in October alone. Is this simply down to poor growth in China and seeking investments elsewhere, or what other reasons are there?

China has taken a risk in opening up the capital account and easing restrictions on both capital inflows and outflows before fixing its financial system. This can sometimes result in capital outflows that put excessive downward pressures on the currency. From a longer-term perspective, however, capital account opening can have many benefits for the Chinese economy. Some of the capital flows we have been seeing recently reflect portfolio diversification by investors, including households, corporations, and institutional investors. Such diversification is beneficial to investors and also creates competition for the domestic banking system, which could spur reform efforts. A more flexible exchange rate could also act as a shock absorber that could cause capital outflows to settle down.

The approach of tightly managing the currency’s value and allowing it to move only gradually in one direction can sometimes have the undesirable effect of perpetuating capital flows in a particular direction and exacerbating tensions in domestic policies.

In chapter eight, you discuss the weaknesses of the Chinese system, from shadow banking to capital flight. Does the government have sufficient tools to tackle them? Might institutional conflicts (such as the needs of local government and SOEs) hinder a genuine push to resolve them?

China’s government needs to fix the banking system, bring the shadow banking system under control, and develop a broader set of formal financial markets, especially corporate bond markets. While there has been limited progress on some of these financial sector reforms, such as the liberalization of bank deposit and lending interest rates, these reforms need to be supported by real-side and institutional reforms. These include restructuring of state-owned enterprises, as well as a broader set of reforms that are essential for the smooth functioning of markets—such as improvements in corporate governance standards, auditing and accounting standards for corporations, and corporate and government transparency.

Let’s look ahead say to 2030. What would success look like to the PBOC? What international role does the Chinese government want for the yuan? Do you think it will succeed?

While the trajectory of the RMB’s rise is remarkable, the hype about the currency’s inevitable rise to dominance and associated fears about the U.S. dollar’s decline are overblown. If China plays its cards right, with financial sector and other market-oriented reforms, the RMB might conceivably one day become a significant reserve currency, rivaling the Japanese yen and British pound sterling and perhaps even the euro. It could even partially erode the dollar’s prominence in global finance, particularly as a payment currency. But, in the absence of broader political, legal, and institutional reforms, the RMB poses no serious challenge to the dollar’s supremacy as the dominant global reserve currency.

Gaining Currency is out now.

 

Published in Business Tianjin

Interview with Alec Ash

Image via Picador.com
Image via Picador.com

Alec Ash is a young British writer and journalist in Beijing, who has been steadily making a name for himself after founding The Anthill (“a writers’ colony of stories from China”) and co-editing expat anthology While We’re Here. His book Wish Lanterns captures the lives and dreams of six young Chinese people and has received excellent reviews. I spoke to him about writing the book, expat literature and what it is to be young in China.

 

What made you choose Qinghai when you first came to China? Can you describe your time there?

This was the summer of 2007, a teaching exchange a month after I finished university. The other options were Beijing, Shanghai and Hong Kong – none of which I had been to either, although I visited them all on the same backpacking trip. Qinghai sounded like something different: far out in the west, barely mentioned in Lonely Planet, and a Tibetan mountain village that was my first real taste of China. Maybe it’s that desire from something different that brings us all out here, or makes us stay.

Can you describe about the blog you originally wrote about your friends and acquaintances there? What did you learn from doing it?

My first writing from China was all on this blog, called ‘Six’, that followed the lives of six people my age in and around Peking University, where I was learning Chinese from 2008. I was writing for free, of course, and no one really read it besides my family and a few watchers of the then China ‘blogosphere’. But I sharpened my writerly teeth on it, and it helped me process my thoughts as I learnt about China and young Chinese. The debt I owe to it is clear in that my book also follows six lives of the same generation, albeit different people and in a different mode.

When did you have the idea for Wish Lanterns, and was there anything that provoked it? Did you have any literary models or antecedents to draw upon?

The wealth of stories in China and the bookshelf of China literature inspired the idea, but my literary models were narrative nonfiction from all over the word. Katherine Boo’s wonderful book Behind the Beautiful Forevers was a direct model, in the literary style and her removal of herself from the story. Barbara Demick’s Nothing to Envy wove real stories together with all the narrative suspense of a novel, and also opened my eyes to the possibilities.

How did you choose the people you came to write about? Are they meant to be somehow representative of different experiences?

No individual in the book is representative of anything but themselves. That said, I hope that they capture a wide cross-section of the generation, coming from such different backgrounds and locations as they do, and with such various stories. The idea is that through those six individual stories, a reader can get an impression of what it means to be young in China today, as diverse as experience as that is.

What was the reaction of the people you wrote about to the finished text? Did anyone surprise you with how they felt? Did you have revise after you showed them the text, or was it an ongoing process of feedback and further writing/editing?

I was clear from the beginning with all of them that I was writing a book, and walked them all through the first draft to get their reaction. I’ve kept in touch with them all and so far there have been no nasty surprises, although as I expected I did get a few small facts wrong here and there, which I’ve corrected for the paperback and US edition (out in January and March respectively). And yes, I always revise based on feedback. Reactions can be an invaluable part of research, as well as flagging any mistakes or other things they find objectionable.

The book excels at showing rather than telling, and has many nice poetic phrases. Which writers have most influenced you and in what ways? Had you read much expat literature and do you think any particularly worthwhile?

Thanks! I’ve read a lot of expat literature, enjoyed much of it and not enjoyed some of it, but my influences were mostly the literary nonfiction I mention above.

What were the practicalities of researching the book? How long did you spend with each person, how far you could go with them in terms of their intimate memories?

I worked on the book for four years, beginning with a lot of background research and time spent with the people I write about, getting to know them without my notebook out, before I even began writing. The questions I asked were certainly intimate, but it was up to them how intimately they replied. In a sense that dictated the frame of their stories, and I think it’s important to respect that.

It seems like some of the characters like Lucifer have to create these own paths in life. There aren’t the traditional routes of progressing into the various careers we Westerners have. Do you see these people as trailblazers, or more as idiosyncrasies?

I made a promise when I began writing the book to avoid generalisations, or at least keep them down. Lucifer’s story is certainly one of an iconoclast and a trailblazer in terms of his life decisions, but for every devil there is an angel who is following the conventional path set out by society. I would venture that it’s easier to be a Lucifer in China today than it was even five years before his time, though.

The struggles of the educated young are like a metaphor for China – they have to develop so fast, and have a burden to put things right. They are very much its future. Do you see them driving any change?

Nicely put. I certainly think that the changes we’ll see in China in the next decades will be a result of how different young urban Chinese are to their parents and other generations before them. Social attitudes are one, from women’s rights and LGBT to the role of the individual in society. Work attitudes are another, with perhaps a less rick averse attitude to entrepreneurship and goals beyond the purely material. But now we’re generalising, so I’ve already broken my promise.

Did you have any purpose in writing the book, such as aiming to give a voice to young Chinese in English? Or is that sort of thing incidental?

There was no didactic purpose! If I have narrated these lives and showed their experiences in a way which is surprising and readable, funny and touching, following all of the twists and turns of the twenties, then I’m happy. Whatever any reader might learn about China in the process is a bonus.

What writing projects are up next for you?

That’s a surprise, for me as much as anyone else.

Published in Tianjin Plus

Wish Lanterns is available at the Beijing Bookworm and Garden Books in Shanghai. Find out more at alecash.net.

Amy Karam

Via Karam Consulting
Via Karam Consulting

Much of the discussion about China’s great economic rise seems to be at the macro level, considering the global impact and the political, financial, economic and social implications. But we should also consider the way in which individual Chinese businesses are forging ahead, and the new business models they are bringing to the table. Fortunately we have a guide to help us. Amy Karam is a speaker, consultant, author and corporate instructor drawing upon years of experience, particularly for Cisco Systems. Her book The China Factor: Leveraging Emerging Business Strategies to Compete, Grow and Win in the New Global Economy addresses these very strategies and suggests methods for businesses to compete in the battle for new markets.

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Can you describe your experience competing against Chinese companies and what led you to write The China Factor?

The book is based on my leading a competitive sales support program at Cisco for almost four years. My mandate was to be the corporate escalation point for challenging strategic deals when they were up against Chinese competitors; I advised them on sales strategy and brought the right resources and expertise to the table. The other major part of the job was to report back to executive management on what was happening with the sales teams in all the regions.

The trends and results were eye-opening. The Chinese consistently did business differently than we did and competed in ways that we were not accustomed to. So we had to change as an organization in order to succeed more often in emerging markets and when competing with emerging competitors.

Having gone through that, I wanted to share these learnings with more Western companies. I knew this was more than a blip. So the book is comprised of much more than just my experience: it includes a lot of research on many other companies, as well as interviews.

Do you lecture or consult in China, or is your practice about helping businesses take on the Asian business tigers (as it were)?

Yes, both – I have received many requests to lecture and consult for Chinese clients, in addition to Western-based companies. as well. The learning goes both ways. In fact, the Chinese are very good at learning from other nations on business practices and innovation methods. There are many delegations who come to Silicon Valley and Canada to learn new business and innovation practices.

In the book I also talk about ‘coopetition’ – the need for East and West to learn from each other, build upon each other’s strengths and allow cooperative competition i.e. market access in some cases. This is the new global paradigm. The world is getting smaller and larger at the same time. We need each other’s knowledge, business and innovation practices as well as access to new markets. This will take time.

You add Politics to the traditional 4 P’s of marketing – what are the benefits of Chinese government involvement with business?

Chinese government involvement with business has greatly assisted Chinese companies in international expansion because they serve as ambassadors in trade agreements and influence business decisions. The Chinese government incorporates specific deals into trade agreements at the very top levels. When the discussions are about billions of dollars and trade deals that help the development of a country or allow market access, a specific company deal worth millions of dollars is marginal to the bigger picture.

Naturally, when the Chinese government provides opportunities to Chinese companies in other countries, the benefits are significant. Financial backing by the government is a great accelerator in customer acquisition and global expansion. However these two areas of influence are not always well-received by other nations and competitors, given the boundaries they cross even by WTO standards – so there is a fine balance between benefits and broader repercussions on a global political scale.

Is there anything holding back Western governments from doing similarly?

There is a philosophy in the US government whereby American companies are all treated equally and do not receive favors. This, therefore, is less helpful to specific companies as they go abroad. The West also has a different approach in trade agreements, being less insistent on the acceptance of similarly specific elements, taking a more collaborative approach, which might have a greater win-win result than one side being more particularly successful than another.

You describe how Chinese companies are focused on the long-term, willing to forgo profits in the short-term to drive market share. But we also see many instances of short-term thinking, like using inferior materials for short-term profits. Can you reconcile the two?

I think short-termism results from an aggressive growth strategy and accelerated market penetration approach. Frankly, overconsumption in developed nations has fueled this situation, making it okay for the trade-off of cheaper production and purchasing prices.

Having said that, the next generation approach for the Chinese, if they want to become true global players, would be to start off with a more gradual growth strategy by not compromising on quality and inferior materials. I know China wants to create its own brands; this which will be more easily achieved if it starts businesses with high standards instead of treading backwards to build this after they have acquired market share.

Chinese tech companies like Huawei are now making great strides internationally, after years of trying. What have they been finally getting right?

Huawei and other tech companies used Western technology success to launch their endeavors and make a start; however, I believe that their turning points occurred when they applied their own ingenuity and unique market strategies. In the case of Huawei, they shifted their strategy to the consumer market and became strong in the handset business, acquiring a level of brand recognition and market share.

I also think that talent acquisition from the West has been a big part of success for Chinese tech companies. We saw this with Xiaomi recruiting the now VP of Global Hugo Barra from Google. This reinforces the premise that success occurs by using building blocks from other successes but then creating customized approaches.

What can Western economies do to manage the challenge from Asian companies which can significantly undercut them. How can Western countries and businesses compete, can there be a general strategy?

The advice to Western-based companies is to not get into the pricing game because no one wins in the end. While some discount matching is possible, it is important to stay true to the broader value that a company brings to a customer. Sales teams need to be trained on how to be strong in presenting this positioning. Elements to highlight to customers in these situations is the brand equity that a company brings to the table, the product quality, and some of the less obvious but still important elements like sustainability and reliability of a company. Also important is to position the value of expertise and the price or cost that this brings to the Western company’s offer.

What is your perspective on future relations between China and the USA?

Future relations between China and the USA must and will continue in a positive direction. There is no other option to ensure mutual growth and wellbeing for both nations and for the world. They are both so influential in the global economy that they must work together for the betterment of all.

In the book, I highlight that the Chinese actively pursue partnerships as a core part of their global expansion strategy. However, I might add that Chinese companies would do better if to they developed partnerships that allow the partner to win as well. Too often it appears that “win-win” means China wins twice, through selective enforcement of regulations. If you want to have friends, you have to treat them like you would want to be treated. This attitude will help accelerate a similar cross-border collaborative spirit as other nations will reciprocate.

What are the most important strategies and actions that Western companies must learn from Chinese corporations?

Western companies need to adopt a longer-term approach and commitment to their global expansion strategy, especially into emerging markets. They need to understand that business in and with emerging markets is no longer a novelty but a necessity. And Western companies need to understand that business is done differently there – oftentimes, customer relationships and local cultural knowledge are much more effective and important to customers than product superiority. The Chinese get this. They demonstrate longevity by assisting with socio-economic development goals, as we’ve seen particularly in Africa . Westerners need to get better at not just flying in for a few days of meetings and still expecting emerging markets customers to buy their product.

The cooperative interaction between China’s government and corporations is a significant contributor to accelerating growth, both at the micro and macro level. Some Western governments must could do better at government-private sector collaboration from a commercial perspective, to encourage and advance global expansion efforts.

Published in Business Tianjin

Learn more at http://www.karamconsulting.com/index.html#portfolio.

Wang Li of momo on connecting strangers

WangLi_1_Suiss

ON BACKGROUND I studied Business Adminstration in Beihang University (Beijing University of Aeronautics & Astronautics). After I graduated, I volunteered in Inner Mongolia and when I got back I worked in the administration and logistic department of NEC China for two years. After that, I worked for NetEase (163.com) then during the Beijing Olympics, I switched to a friend’s training company to work as a director in charge of administration, finance and logistics for two years. I then moved back to NetEase and worked there until I joined momotech.

ON PRODUCT We only have one product and that’s momo. momo is a mobile social networking app which can be used on both iPhone and Android phones. With a GPS function on smartphones, our product focuses on social networking and helping people connect with acquaintances and even strangers near their location for chatting and friend-making.

ON STAFFING It was hard for us to recruit when we first started the company last August because we were a small startup and not many people knew us. We used to recruit staff through our founders’ connections and friend referrals. As we grew and became more well-known, more and more people started to apply for jobs through our website and we needed to screen before interviews. We do have a long term development plan for the outstanding staff and our compensation is above average in the mobile tech industry. Many people think that our company is promising and there’s a lot of room for future growth; so they would prefer to work for us rather than for some big companies with less potential.

ON STRUCTURE We have five departments with around 60 people on aboard. We have an operations department in charge of promoting momo and its branding, customer service, marketing, and maybe sales in the future. Our product department is in charge of product development and its future planning. We also have a tech department doing the technical work, a design department responsible for product design, and an admin and HR department in charge of staffing, finance, and logistics.

ON MARKETING We prefer to use weibo and renren.com as marketing tools to promote our product because they’re very popular and we do think that at this moment, that is more effective than buying advertisements for publicity because people talk and the information spread out really fast. When people who don’t know much about momo go on our weibo, they get to see how the app works in different situations and how it helps them to connect people around them in reality. For instance, if you go to France for travel and you want to know if there’s Chinese in your area, you can use momo to find them easily.

ON CAPITAL We did have some financing when we first started. Our CEO used to be the editor-in-chief of NetEase and he invested his savings and found this company with the help of some other friends. The startup fund was less than two million RMB and then we got more financing as we grew.

ON IP When we started, we only registered copyright for the name of our product, and this caused problems with many other similar apps who copied our interface. However, even though they have similar layouts and skins, they are not able to compete with us because we update our product really quickly, and they’re not capable of challenging us in terms of technology stability and product quality and functionality. We are very confident about momo.

ON PHILOSOPHY Efficiency is all we ask for. Unlike big companies, our work is based on cross-department cooperation. All of our five departments work very closely together for our product, momo. Everyone is treated fairly and equally, the interdepartmental communication and coordination is very efficient and everyone enjoys the company environment.

ON THE OFFICE We have moved three times. When we first started we stayed in an office in Xiaoyun Centre which was an average office building with a space of 100 square meter for a few months. Then we moved to King’s Garden Villa where we worked in a three-floor villa for half a year, and a few months ago we moved to Vantone Centre.

ON AMBITION The core value of our company is our product, momo. We hope that there will be more than 100 million users over the next year or two. We will only focus on momo, and our expectation is that every smartphone user will know about momo and therefore it will become the best mobile social networking tool in the industry.

ON BUSINESS ENVIRONMENT To me, the entrepreneur environment here in Beijing is fully saturated but not in a very healthy way. In general, a lot of the companies are only after short term money and profit making. However, we are more focused on long term development. We want to make momo a great app for the next generation in which all networking needs can be fulfilled.