China: direct investment and saving face

09.08.2006
"Poverty is not socialism. To be rich is glorious."

-- Deng Xiaoping

Several years ago, I worked for the Asian branch of a U.S.-based news provider. During this rosy period, this company was buoyed exuberant by what's now known as the Internet Bubble. Our fledgling Hong Kong bureau was tasked with collating Asian tech news and pasting it online each night-using a bare-bones HTML editor.

One day, my boss tucked his laptop under his arm and headed for the airport. "Don't worry about the site," he said, "I'll update it from my hotel room in Beijing."

This offhand business-as-usual comment spoke volumes. Throughout the centuries, humans have been obsessed with predicting the future. Sporting-event outcomes, fashion trends, or impending cataclysms, we love to prognosticate. In the 1950s, crystal ball-gazers envisioned cities covered with transparent weatherproof domes, while business commuters fly to their offices in personal airplanes. The fifties were the decade of Hollywood's prime science-fiction films, and predictions spun wildly like glitzy flying saucers.

But 50 (or 20) years ago, the idea of an American citizen traveling to the capital of the People's Republic of China, with a computer the size of a textbook, plugging it into a telephone line and broadcasting text to the entire world, wasn't science fiction. It was pure lunacy. If you'd suggested it (or declared that Putonghua would be a good study choice as a future business language) you'd have been laughed out of any boardroom-and most universities-in the West.

Even in the 80s, during the "Japanese-are-buying-up-America" hysteria, people would have scoffed at notions of Chinese ascendancy. As recently as the 90s, geriatric senators who seem to have lumbered straight out of the McCarthy era would refer to the PRC as "Red China," snarling as though China was more pariah than nascent world power.

Western business leaders no longer scoff nor snarl. While the US chief executive has a well deserved reputation for misstatements bordering on the moronic, one-"More and more of our imports come from overseas"-is savvier than it sounds. During the 80s, massive factories on the Mexican side of the Mexico/US border (manufacturing plants known as "maquiladoras") leveraged cheap Mexican labor for cheap plastic products which were then moved over the land border to huge retail outlets throughout the USA. Nowadays, these products arrive via container-ship for retail in the USA...and retail in Mexico. Most are made-in-China products of factory towns built in the Pearl River Delta by businesspeople from Hong Kong and Taiwan.

China's ascendancy is no longer a new story, but the ways in which the Middle Kingdom evolves-and leverages IT-is an ongoing success story. Business processes in China may be staid and driven by personal networks, but the younger generation of entrepreneurs understands that their future will be led by tech-driven systems.

Every issue of Computerworld Hong Kong presents Chinawatch. But this month we delve a little deeper with stories on the corporate culture shock IT companies may encounter on the mainland, opinion pieces on "saving face" and problems for Hong Kong's CDC Corp., and news on foreign investment from Taiwan and the USA, plus a minimum-wage raise in Guangdong.