This Isn’t Your Father’s Communism

Travelling the Silicon RoadBEIJING — Imagine a high-tech startup company run out of an apartment. A company that has offices scattered around the country, and yet still only has 10 employees and will likely see revenues of about $6 million this year, if all goes well.

Competition is so tough among low-end telecomm applications in which it started out that profit margins are exceedingly small, and the company’s founder realizes that the future of the company lies in new technology — technology that no one else has. It is a company that has to change as quickly as the technological and business culture in China changes.

Imagine a startup founded by an entrepreneur in a country of entrepreneurs, one that doesn’t like politics and cronyism, but one that follows his own economic muse. One who lives and dies by his company; one that observes: “I can’t do bad. If I do bad, I go hungry.” One that would offer this advice to someone fresh out of college with an idea and the urge to start their own company: “Work hard. That’s what I did. I did everything myself. I slept three or four hours a day.” And yet, one that realizes that if his company continues to grow, in the future it may be necessary to bring in someone that is more business savvy; someone who understands more about economics than technology.

It’s almost mythical sounding, isn’t it? It could be a story from Silicon Valley from the early days of the chip industry, or again from the mid to late 1990s during the dotcom boom. But it is a story from Beijing circa 2005.

Dakeli Technology Co. Ltd. isn’t a name that comes to mind when you think of high tech companies in China; most readers, unless they happen to be in the telecomm business in China, have likely never heard of Dakeli. It certainly isn’t a or a CEC or a Lenovo, to be sure. But it and the many companies like it that have sprung up in China in recent years are surely the new face of business in China as surely as those large, familiar names.

Dakeli started out in 1997 as a distributor of telecomm equipment, primarily test equipment; its founder is a former member of the Ministry of Post and Telecommunications (MPT), one of the forerunners to China’s current Ministry of Information Industries (MII). He decided to go into business for himself, after founding two technology import companies, the first in Singapore, the next in Japan, on behalf of the MPT. In each case, he was given the equivalent of three months worth of expenses to start the businesses.

“I adjusted to business with no financial backing,” recalls Zhong Jian, manager and founder of Dakeli. “Why not start my own business?” It is a sense of entrepreneurship that seemingly keeps him going. “I like freedom; I don’t like politics,” Zhong says. “That’s why I left the ministry to start my own business.”

Competition from other companies, however, has forced Dakeli to branch out into other areas, getting involved in the design of chipsets for PHS mobile phones with a Japanese company, for example, and even consulting with other foreign companies. You’ll be reading more about Dakeli shortly here on E-News’ Silicon Road site. But I wanted to mention the company here first, as my first interview at the point of embarkation on the Silicon Road yesterday (Sunday, Oct. 9), It was not quite what I had expected.

When my colleagues from Electronic Business China — Alma Wang, executive editor, and Darcy Liu, who have been helping me set appointments while in Beijing — walked me into a residential apartment complex for the Dakeli appointment to meet Zhong, who was dressed in khakis and a short-sleeved shirt, I was a little nonplussed. But as we walked into the apartment, and I saw several people in front of PCs working away on a Sunday afternoon, with binders full of technical specs and stacks of marketing materials and product manuals stacked everywhere, in between empty coffee cups and coke bottles — the accumulated detritus of a small but obviously busy business — I quickly realized that here was an interesting story.

Electronic News Travels to ChinaHere was the flip-side of the Chinese tech industry; the foil to the gleaming skyscraper office buildings and the sprawling fabs and a rising middle class with disposable income that everyone speaks of with awe and excitement back in the United States. Here was surely an analogue to a U.S. entrepreneur and the mythical Silicon Valley startup.

China may still be a communist nation, but this isn’t the communism of our parents’ generation, to be sure.

Editor’s Note: As explained at length elsewhere on this site, this is a blog entry of mine that originally appeared on the now-defunct Electronic News’ website, which is long gone. While its former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge), as far as I know, this blog content isn’t hosted anywhere else on the Internet, hence my reproduction here.

Original Comments:

Argh! With 20 comments, this was the second-most commented blog post I made during this project. Unfortunately, when I captured the microsite with Adobe Acrobat, it grabbed more than 1,000 pages – but not the comments from this post, of course. D’oh. I guess that’s a reminder that I shouldn’t have waited until five years later to do this conversion.

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