Tag Archives: CES

CES Update: Google Expands in China

photo credit: iStock.com/tomch


Author Gary Moreau, aka Avam Hale in fiction

On January 11, 2018, I posted “Consumer Electronics Show”, in which I gave some dimension to China’s importance to American tech and offered my assessment that China, for the reasons stated in the post, would be a major player in the future global tech industry. And, yes, this prognosis was very different from the one I provided in 2015, when I wrote Understanding China: There is Reason for the Difference. And, of course, I provided the reason for the change of heart.

Five days after I released that post, Google announced it was opening an office in Shenzhen, China, the center of the hardware manufacturing universe, just across the river from Hong Kong. And a few days after that Google announced a broad patent sharing agreement with Chinese tech giant Tencent, the $500 billion parent of China’s top social media and payment app, WeChat.

This, of course, all comes on the heels of Google’s previous announcement of a new AI research center in Beijing, where the software side of China’s tech business is growing rapidly, in part due to the presence of many of China’s top universities there. And, of course, the symbolism of Google’s CEO Sundar Pichai speaking at a conference in China, back in December, hosted by the Cyberspace Administration of China, which overseas Internet censorship in China, where Google’s search engine, as I write this, remains blocked.

In addition to providing some support for my prognosis, these announcements have triggered some additional thoughts that only reinforce my conviction in that previous prediction.

It is difficult for Westerners, and Americans in particular, to appreciate the role of the Chinese government in the economy. If your company does not maintain good relations with the government, you simply won’t succeed there. And it’s not enough to simply do what they ask you to do. If you want to succeed, you must be pro-active, and you must convince the government that you are a good partner. That means you have empathy for the job it faces and you share its goals for model corporate citizenship.

As my faithful readers know by now, I believe the universe is ultimately defined by dualities. For every pro there is a con, for every cloud there is a silver lining, for every yin there is a yang. Reality, as a result, is not so much defined by the dimensions of the two sides of that duality as it is by the degree to which equilibrium is established between them.

American business people look at the role of the government in the Chinese economy and immediately think oppressive regulation, bureaucracy, long delays, and, of course, bribery. And, of course, all of these things can exist. That is not to say, however, that they must exist, and, in fact, my nine-year experience there convinced me that while these concerns are realistic, they do not define the current reality. I found the government facilitated my business more than it hindered it and not once did my company pay a bribe, nor was one ever solicited.

And, yes, I am experienced enough to know that a government official looking for a little grease is not going to ask me, a foreigner, directly. If an official is corrupt it doesn’t mean he or she is stupid. Which is why every quarter I personally reviewed each and every cash disbursement made by my company, from the payment of invoices to the reimbursement of travel expenses, to the replenishment of the petty cash fund. If you are looking for fraud, that’s where you will find it. And I found none.

In the case of Google and the tech industry you have to look at the positive side of the government duality issue. In the fast moving tech industry, a government alliance is not a strategy for risk avoidance; it’s a strategy for gaining competitive advantage in the global tech industry.

That is because, unlike the US, China, like many developed countries, including Germany, has a very well defined national industrial strategy. The policy defines those industries where it sees the most positive growth potential, in fitting with the country’s social and political agendas, of course, which serves as a blueprint for both corporate leaders and government regulators. It’s totally transparent and insures that everyone is singing from the same song sheet.

The US, by contrast, leaves its national industrial policy up to the “free markets.” The US, in other words, lets the corporations decide, based on the theory that they will be guided by Adam Smith’s invisible hand of profits to do what, in the end, is in the best interest of the country and its citizens.

Like a lot of our political and economic theory today, unfortunately, that’s not the way things really work. The US has an industrial policy; it’s just not transparent. It is defined by politicans, corporate lobbyists, and special interests behind closed doors. This is one of the main reasons that the rich continue to get richer in the US. They are the only ones with access to real political power because they are the ones with the money that politicians need to remain in power. We don’t call it bribery, so that we can claim the moral high ground, but it is bribery of the worst kind—both distortive and clandestine. (I was a CEO and board member in the US as well as China, so this is not conjecture.)

Google has apparently seen the light. (Microsoft saw the light years ago but it learned some very hard lessons before it did.) They recognize that China is the world’s second largest economy, with 1.4 billion citizens who are the earliest of early-adopters, and which, if you have good government relations, is going to be the fastest moving playing field on the planet. As I noted last time this is because, if you make the national priority list, which tech sits atop of, your regulatory and legal problems will largely disappear. The government will clear the runway in the way that only a government can. In the meantime, the young bucks of Silicon Valley will be trudging through the quagmire of preventing “fake news” and fighting it out in court over who owns what intellectual property rights.

When it comes to China, Americans have been trained to see the glass, particularly when the government is involved, as half full. In reality, the opposite is true. A partnership with the Chinese government will not only set up your company to succeed in China, it will set you up to dominate the global market for tech or any other favored industry.

The world has changed. It is smaller and more crowded. But more importantly, technology has been a game-changer. And one of the things it has changed most dramatically is the integration and complexity of the political, economic, and social systems we use to govern the country. We can no longer think of them in discrete, independent terms.

Environmental scientists used to think of our environment as a collection of discrete ecosystems. We had a prairie here, a polar ice cap there, and a rain forest a long way away. They now recognize, however, that these are not discrete. They are all part of a single global ecosystem that is intricately interconnected. Yes, climate change can lead to huge snowstorms and record-breaking cold temperatures along the US eastern coastline. That doesn’t mean the climate isn’t changing. It just means that the global environment is more inter-connected than we ever imagined.

Other areas of science have discovered the same thing. The various branches of hard and soft science (e.g., biology and economics) were once studied and researched as discrete subjects. Today, however, the real science is being done in areas like evolutionary biology and behavioral economics. The knowledge of how the world works is found not within the functionally discrete pockets of science, but in the overlaps that pull them all together into one inter-connected reality.

I’ve actually written a book about it. It’s called We, Ourselves, and Us: Creating a More Just and Prosperous American and it will soon be available on Amazon in print and Kindle versions. It is not a book about China. It is a book about how to leverage our individual liberties and opportunities into a new model of political economy that emphasizes our collective advancement as a country and a just, inclusive society.

Here’s the text from the back cover:

The phrase “We the people” is the start of one of the most famous documents in American history, yet few have paused to consider what it truly means. In his new political guide, Gary Moreau ponders this expression and the change it could represent for our society. America has long perpetuated an idea of rugged individuality and exceptionalism. The “we” in society has been replaced with “me.”

Moreau explains why this notion is simply untenable for America. America has gone through some growing pains in the past two hundred years, and Moreau believes that society’s refusal to cast off some of its original, ineffective methods is a pressing issue. Instead, they should be replaced with a model focused on providing for the collective good.

The world is changing, and for America to continue to be the land of happiness and prosperity, it needs to change with it.

The release date is February 15, 2018, but that is subject to change as the design process wraps up. In the meantime I am offering 25 free copies of the book in either paperback or Kindle formats. Just send your name and address to gary@gmoreau.com with the subject line “Free Book” and I’ll send it out as soon as it is available. First come, first served. For print versions, US addresses only, please, and for the Kindle version you must have a US e-mail address and access to Amazon US. (I don’t need your physical address if you are requesting a free Kindle copy, and I promise not to sell any of your contact info or use it for any other purpose.)

 

You may contact the author at gary@gmoreau.com
Visit my personal blog at www.gmoreau.com

Follow on Twitter @gmoreaubooks

Consumer Electronics Show


Author Gary Moreau, aka Avam Hale in fiction

The annual Consumer Electronics Show (CES) kicked off this past Tuesday in Las Vegas. Media coverage is dominating the business, tech, and lifestyle news cycle in virtually every format.

The Chinese have a big presence there, as they have for the last decade or more. There are about 1,500 Chinese tech companies in Vegas, collectively accounting for about one-third of all of the booths at the show.

Industry giants like Baidu and Alibaba, the parent of e-tailing giant, Taobao, which did $25 billion in retail volume during one 24-hour period this past November 11, are there, of course, along with numerous Chinese startups that you’ve never heard of. One Chinese company, Iflytek, which specializes in AI translation, introduced a real-time translator that works as well as the most proficient human translators.

Driverless car technology, as expected, is everywhere. Royole, a Shenzhen-based company with engineering teams in 16 countries, and a leader in human-machine interface technologies that introduced the world’s first curved car dashboard in 2016, unveiled the completion of a $1.7 billion production campus for its flexible display technology in China.

The big Chinese star this year, however, is Byton, an electric car unveiled at CES that is expected to sell for $45,000 and be the Chinese equivalent of Tesla. Suning, a Chinese electronics retail giant, also opened the first fully automated retail store in the US. The new store, in Las Vegas, is a further rollout of the five it already operates in China.

Tech, of course, continues to further dominate the way we live, work, and learn in ways that none of us could have imagined even a short time ago. While I have historically been a late-adopter of all things technical I actually ended up with an Echo device over the holidays because I bought one for each of my daughters and Amazon, marketing geniuses that they are, was running a promotion on a pack of three. So far I’ve only used it about ten times more than I thought I would, and I have yet to spend any time learning how to apply it. It even responds to my wife, who speaks with a heavy Chinese accent but can use Alexa for audible translation into English.

And where does China fit in? Of course, China makes virtually all of the hardware, but that’s not where the real money is. Or the influence. Silicon Valley is still the center of that universe, for now.


A Kirkus Reviews Book of the Year for 2017.

When I wrote Understanding China: There is Reason for the Difference, I honestly had my doubts as to China’s ability to lead the tech charge. And since the machines will ultimate build themselves, being the tech factory to the world didn’t seem all that alluring.

That reservation was built on the observation that as a result of their inductive worldview and the rote nature of their education system, the Chinese I encountered did not exhibit the same level of raw curiosity that I had witnessed in the best-run American companies, and I thought that might hold them back.

But I’ve changed my mind. Completely, in fact. And my reasoning has more to do with a better understanding of what drives tech than anything else. I now believe that the Chinese are ideally situated to dominate the tech universe of the 21st Century. It will take time for the Chinese to develop the brand confidence that is so essential at the early-adopter stage, which we’re still in, but they will get there, just as the Japanese got there in automobiles following a pretty weak start in the 1960s, when their car brands were synonymous with poor quality.

One obvious advantage the Chinese have is that the education system, which is changing, but still largely rote-oriented, puts a big emphasis on the STEM subjects. Chinese culture puts a big emphasis on education, moreover, and the Chinese university system is putting out roughly 8 million graduates per year, each of whom has gained nothing quite so much as they have learned discipline and hard work. Chinese students in general, and university students in particular, must survive a daunting school schedule that leaves little time for much else, but prepares them well for the grind of the modern workplace.

And, of course, there are roughly 300,000 Chinese students currently attending American universities, and an equal number, or more, attending universities in Canada, the UK, and Australia, as well as virtually every country in Europe. Some of those will stay overseas when they graduate but many will return to China and join their classmates who stayed home to go to school to form a truly internationally-trained workforce.

Anyone who has ever worked or lived in China also knows that there is such a thing as “China time”, a greatly accelerated time line that is impossible to comprehend until you witness it. They accomplish in days what other countries struggle years to achieve. Part of that is a function of the work ethic, but Americans work hard, too. American companies, however, reflecting the deductive worldview of Western culture, are consumed with process, which helps to insure consistency and sustainability, but at the expense of bureaucracy and rigidity. The inductive Chinese, by contrast, are laser-focused on results, and far less infatuated with the process employed to get there.

Tech, of course, works to an accelerated clock that is only going to accelerate faster and faster as machines get better and better at learning and one breakthrough is quickly leveraged into a dozen more in the blink of an eye. The Chinese will be very comfortable working at warp speed and juggling many balls in the air at one time. American business will continue to excel once they get their processes developed and in place, but when the landscape is changing that rapidly, speed will be the ultimate competitive weapon.

Chinese companies will also benefit from a much more business-friendly regulatory environment in China. Unlike the US, China has a very clear national industrial policy and tech is at the head of their list of priorities. That alone will remove a lot of regulatory hurdles and delays. When Chinese tech companies are ready to test new technologies in real-world environments, they will face far fewer regulatory delays and will be able to be in live tests in a matter of days.

China, as well, is far less legalistic, of course, and while that may hinder development in some arenas, it will be a big advantage as new technologies totally redefine the legal boundaries of ownership and property rights. American companies, by comparison, are sure to get bogged down in the courts as obligations and rights are resorted through the new paradigm of technology, where ideas dominate, and where one begins and another ends is often a matter of perspective.

I actually believe, however, that China’s big advantage in tech will be one that will surely surprise you and that I, frankly, hadn’t even considered until recently. That advantage—hold your hat—is the Communist Party of China, or, more specifically, the collectivist environment in which the Chinese tech pioneers of today have been raised.

America is the home of rugged individualism, and that perspective has served it well. To date, the US has clearly been the center of the tech universe, largely on the back of young, independent entrepreneurs like Mark Zuckerberg, Dustin Moskovitz, Rishi Shah, and the once younger Bill Gates, Steve Jobs, Larry Page, and Sergey Brin.

By definition, tech is built on collaboration and a collective perspective to personal rights and ownership. There is a duality to everything—or a yin and a yang, as the Chinese would put it. American business has benefited from a strong legal system and its protection of intellectual property in the past. The idea economy, however, is sure to blur the historically clean lines of IP ownership and protection and the courts are sure to become a quagmire of commercial suits and counter-suits as the tech giants and bankers battle it out. The Chinese will face no such burden.

I recently saw an interview with 26 year-old Dai Wei, the founder of bike sharing company Ofo Inc. The company has already raised $1.3 billion in startup capital and was expected to have 20 million of its yellow bikes on the streets by the end of 2017. Dai Wei is typical of the Chinese young tech entrepreneurs, and in many ways could not be more different than his Silicon Valley counter-parts.

Dai Wei attended Peking University, the Harvard of China, where he surely got a world-class education and probably paid virtually nothing thanks to government largesse. After graduating, however, he joined a government teaching program sponsored by the Central Committee of the Communist Youth League of China and went to Dongxia township in rural Qinghai Province to teach math to poor middle school and high school students. He cycled 17 kilometers from his dormitory to work each day along dirt mountain paths, the only way in and out of the village. He would later return to Beijing to earn his masters degree and start his ride sharing company.

When the interviewer asked Dai Wei who actually owned the bicycles that the company leases for 1 yuan (about $.15) per ride, he seemed perplexed by the question. “No one owns them,” he finally answered. “They don’t belong to anyone, but all of us may use them.” It’s hard to imagine many Silicon Valley entrepreneurs, in the their mad scramble to become the next youngest tech billionaire, or the venture capitalists lining up to cash in on them, would share such a perspective, either in terms of career path or the ownership of bicycles.

There are some in the tech world who do share a collectivist utopian vision of the tech future. But that does not appear to be the direction the country is heading. Progressives, conservatives, and libertarians alike all see the world through a decidedly individual prism. They come at the issues from different directions, but they all end up at ME. Whether it’s the individual’s right to be free of the government, or the individual’s right to the government’s protection and support, their worldviews are not collective.

Eventually, I believe, the US will have to adopt more of a we-centric socio-economic-political system if we want to maintain the American Dream and make it available to all Americans regardless of race, country of birth, gender, or sexual identity. I am, in fact, writing a new book about it.

In the meantime, enjoy the coverage of CES and the fancy new gadgets being unveiled there. This will be the Year of the Dog in China, an auspicious sign not far below the dragon or the horse in the cosmic pecking order.

The year is already off to an interesting start.

You may contact the author at gary@gmoreau.com
Visit my personal blog at www.gmoreau.com

header photo credit: iStock.com/beer5020

Follow on Twitter @gmoreaubooks


Here’s what legendary Kirkus Reviews has to say about the author’s new book: “More than a guidebook for managers, this is a manifesto for an intellectually deeper – and happier – world of business.” Kirkus Reviews (starred review)
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The latest in the Understanding Series is now available.
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