May You Travel in Interesting Times

Travelling the Silicon RoadBEIJING — Being Americans, we sure picked an interesting time to send me to China. And I’m not just talking about what is happening in the semiconductor industry here.

Over the past nine months as I prepared off and on for this trip, one of my most frequently visited Websites has been China Daily’s English site. Naturally, I’ve been keeping tabs on what’s going on here in China beyond what I can see with my own eyes via China Daily online (we in the vanguard of the brave new world of online publishing have to support one another).

Let’s look at some of the top headlines today: China Cautions Yuan Moves, Urges U.S. Export More (that was the site’s lead story, as of this writing). U.S.-China Textile Talks Fail – U.S. Negotiator. U.S. Hails China’s 2nd Manned Space Mission. China Rejects U.S. Rights Report as Meddling. Arkansas Mother Gives Birth to 16th Child.

OK, that last one is apropos of absolutely nothing. But you see the common thread here, don’t you? The day before, those headlines would have included: Snow ‘Astonished’ by Changes in Shanghai (for those of you not up on current events, Snow refers to U.S. Treasury Secretary John Snow, here in China with a U.S. delegation to push for more reforms of China’s capital markets, the revaluation of the yuan, etc.,).

There’s so much to write about in terms of this blog, that I hardly know where to begin. I could post three or four long entries per day and still not touch on all there is to say.

In speaking with the secretary general of China’s Semiconductor Industry Association this morning, he discussed how he had just come back from a business trip to Japan. We talked a lot about how the United States and Japan — at least certain elements within our respective governments — view China as an emerging threat either economically or politically.

But Mr. Xu pointed out that a study conducted in Japan that concluded, based on a number of economic and social factors, that China’s economy is about where Japan’s was in the 1960s. The first thing that flashed through my mind was the launch of China’s Shenzhou VI spacecraft yesterday; it was in the 1960s that the Soviet Union first launched men into orbit, followed closely by the United States; we eventually overtook the U.S.S.R. in the race for the moon.

Then, later in the conversation, Xu cited the launch of the Shenzhou spacecraft as an example of what China can accomplish when it sets its collective mind to the task. He likened China’s resolve to reach space to its resolve to bring its semiconductor industry into the 21st century. Again, I thought of the United States space program in the 1960s; we were hopelessly behind the Russians when President Kennedy pushed us into the space race.

And yet look what we were able to accomplish. I think China can accomplish great things too, both in space, and with its chip industry. But as everyone has made clear to me here — government officials, entrepreneurs, executives, students and people on the street — China recognizes that it needs help to get there and actively wants that help. And unlike the United States and its former rival, its people don’t seem to have an interest in dominating the world, they just want what’s best for China, managing a country of 1.3 billion people and growing, as it emerges from the shadow of the Cultural Revolution and transitions to a market-based economy.

Engaging in Dinner Diplomacy

It occurred to me today that as a stranger in a strange land (not all that strange, really) I’m on a diplomatic mission of sorts, whether I realized it or not — the Chinese are just as curious about Americans, as we are about them, and they want to know what’s going on over there, as much as we want to know what’s going on over here.

And just as my preconceived notions are breaking down, I’ve done my share of American myth busting. Like for example today, I had to explain to my interpreter, Tony (that’s his Western name, his real name is Zhike), that no, not every American owns a gun, and we don’t run around shooting each other all the time at the drop of a hat.

I had to tell him that I did not own a gun — never have even fired one, in fact. Furthermore, I told him that no one I know owns a handgun, and if you factor out the people that hunt deer and such (do know a few of those), gun ownership on the whole is uncommon in most parts of the country.

He seemed quite surprised by this; I suggested that he not believe everything he sees or reads in the media (and no, the irony is not lost on me). I also pointed out that I think everyone everywhere has preconceived notions about foreign lands to which they have never been.

But then apparently there is more to knowing a country and a people than just visiting, or even living there. I had dinner last night with one of my colleagues from Electronic Business China, Wang Xiao Dan (Alma to us laowai), and her fiancé Dong Ming.

Ming had studied abroad for several years at the University of Maryland before coming back to China to be an urban planner, a job which keeps him busy with all the growth here in his native land. We were talking about myths and preconceived notions that Westerners have about China and its people, and how the Chinese are nothing if not pragmatic, and that communism as the Chinese practice it really had nothing to do with ideology and never did. He relayed a story about once meeting an editor from the Wall Street Journal that had lived in China 10 years, and an argument that they had about Mao Zedong.

Electronic News Travels to ChinaThen he told me that he had the impression that I understood China better, having just been here a few days, than this guy had after living here a decade. I was flattered, shocked even, and wasn’t sure what to say. I had to point out that while I pride myself on an open mind, and the fact that I’m a reasonably good observer of the human creature, I had my own preconceived notions about China.

So as my first week in China draws to a close, and I sit in a train rattling through the night from Beijing to Shenyang, I hope that I can continue to live up to Ming’s estimation in the weeks ahead.

Original Comments

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.

at 10/13/2005 2:59:12 PM, Jim Schuessler said:

I appreciate your transparency Jeff. Your experience brings to mind very similar first impressions from my initial visit just one year ago. The enthusiasm and directness of the Chinese I met on the street contrasted sharply with my preconceived notion of how Asian cultures behaved. These people had passion for life I could relate to!

You mentioned the increasing income disparities the Government is concerned about — one image that sticks in my mind is a BMW 7-series slowly passing a horse drawn cart on a new Shanghai boulevard. You need pictures on this blog! I hope you have a good camera. The pictures I took are a terrific memory jogger. (If you post your email address, I would like to send you the link.)

Kudos to the editors of Electronic News for funding your trip — it is the most engaging fare I’ve ever seen in it’s “pages”.

at 10/14/2005 8:14:36 AM, nelson hoffman said:

with the enthusiasm of the people and government policies tosupport that enthusiasm, is there any chance Americans can produce electronic products considering China’s tremendous cost advantage?

China Is Worried About China

Editor’s Note: As explained at length elsewhere on this site, this is a news story written by me that originally appeared on the now-defunct Electronic News’ website, which is long gone. It’s former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge). You can still see a copy of this story at EDN.

Travelling the Silicon RoadBEIJING — There is no end of conjecture in the semiconductor industry as to what the rise of China means to the industry as a global whole. It ranges from dire predictions of tremendous overcapacity that will take years to absorb, to ridiculously bullish forecasts of domestic chip demand.

The conjecture isn’t just limited to the chip industry, but involves all sorts of industries, such as agriculture to automobiles, not to mention the economic and political concerns of those in the U.S. and other western governments.

But Chinese officials say that China is not really concerned so much with dominating the semiconductor industry, or anything else, for that matter, as it is with addressing its own internal issues. And one of the ways it sees to address those issues is the continued development of the domestic chip industry.

“It’s a live or die industry,” said Yang Xue Ming, an analyst with the Institute of Chinese Electronic Industry Development, part of the central government’s Ministry of Information Industry. Information technology is a modern engine for China’s economy, just as it is elsewhere in Asia and in the West, he explained, and the IC is in turn the foundation of IT – “without the chips, information technology is just a slogan.”

One of the key ways Yang suggests China will continue to build its domestic chip industry is cooperation, as opposed to domination.

“Cooperation is based on mutual understanding,” said Yang. “The deeper the understanding,” he added, “the more successful the cooperation will be.” And he sees many opportunities for Sino-U.S. cooperation.

Yang, who spent some 20 years as an engineer in China’s chip industry before getting involved in management and government, is quick to point out this is his own opinion, and not necessarily a reflection of the official position of the Chinese government. And yet, he notes that the Chinese government has paid special attention to the chip industry, and how it is connected to China’s macroeconomic environment.

Domestic Demand Outstripping Growth

Yang doesn’t see China alone being able to build so many fabs in the next few years that it causes a global capacity glut. Currently China’s fab lines produce approximately $2.2 billion (18 billion yuan), but it wants to triple that capacity by 2008. Factoring in die size shrinks, the transition from smaller wafer sizes to 200mm and 300mm wafers and the process capabilities of domestic chipmakers, this translates into 10 to 15 additional fabs to be built in China over the next three years, according to Yang.

Even with this aggressive expansion, China will still need to import an estimated 70 percent of the chips it will consume. According to Chinese government estimates, the domestic market demand for semiconductors will reach $61.8 billion (500 billion yuan) in 2008, but only $21 billion (170 billion yuan) of those will be produced in domestic fabs; the remainder will come from outside China.

Against that backdrop, he observed that the rise of Japan’s chip industry in the 1980s is completely different from China’s ascension in the semiconductor world. China recognizes that it can’t come close to fulfilling its domestic demand; even so, it recognizes the need to foster a domestic industry, said Yang. Thus, China doesn’t have the ambition to be a leading chip producer in the world, rather it just wants to put a dent in that trade imbalance and fulfill its own needs, or at least part of it.

This has been one of the major drivers behind China’s opening up to foreign investment and privatizing state owned businesses, and its joining the World Trade Organization, he said – the country realizes that if it is going to make strides toward self reliance in the chip industry, it is going to need foreign investment to do so. The chip industry is a global one; no one country can realistically go it alone, and China recognizes that the benefits of global cooperation and participation in the WTO outweigh the deterrents, according to Yang.

In China, prior to 2000, the domestic chip industry was totally supported by the state. But then, the government shifted its stance, determining that it would continue to support domestic R&D efforts, but would encourage private industry, recognizing that it was only through outside investment that China would gain the ability to participate in the global chip industry in a significant way, said Yang.

In short, China recognized that it needed to create an environment via federal policy that attracted both local and foreign capital that would fund China’s development and growing economy, creating local jobs in the process. And it learned this from a nearby neighbor.

“This lesson has been taught by the Taiwanese,” Yang said. “The Taiwanese are very good at this strategy.”

There’s a Reason Its the Capitol

China also realizes that to support its own domestic need for technology, it not only has to take further steps to protect the intellectual property (IP) of foreign companies investing in China, but that it has to begin to develop its own IP as well. And while it looks outside of China to investors and companies to help it foster that IP, those looking in might not be seeing the whole picture, suggested Liang Sheng. In fact, some executives may be downright shortsighted.

Liang is the section chief of the Department of Information Industry of the Beijing Municipal Government. When most people in the West think of the chip industry in China, the first word to come to mind is Shanghai. And if cheap labor costs and manufacturing are all that a company is looking for in China, then Shanghai is the place to be, Liang acknowledged.

But if companies want to get in on the ground floor, they need to be plugged into China’s traditional capital: Beijing.

“Here in Beijing, we have the IP,” said Liang, observing that China’s Semiconductor Manufacturing International Corp. (SMIC), while having its principal production fabs in Shanghai, has its headquarters and is building its 300mm fab in Beijing.

Of the 400 design houses in China, 85 are in Beijing; out of the 16 design houses that achieve more than $100 million in annual revenue, nine are in Beijing, Liang noted. And China’s only EDA company, CEC Huada, also resides in Beijing. The bulk of China’s technical universities are also here.

Electronic News Travels to China“The Chinese market is so big, it grows so quickly, it is impossible to depend on imports – we need our own technology, our own standards,” he said. Which is why he wants foreign investors and foreign chipmakers to be aware of Beijing, and what it has to offer in terms of local IP opportunity, as opposed to just cheap manufacturing.

“If you want to do something in this area, you have to cooperate with Beijing,” Liang said.

Not Quite What I Expected

Travelling the Silicon RoadBEIJING — Just a few days into this trip, I’ve met with two government officials here, and I have to admit, they were not what I was expecting. And I was a little surprised at what they had to say.

This is probably as much, if not more of a reflection on me and my culture than on them and theirs. What was the title of the previous blog post? This Isn’t Your Father’s Communism? Indeed.

Being 36 years old, I’m old enough to remember the Cold War between the U.S. and the former Soviet Union. It seemed like when I was a kid, there were headlines every other week in the newspapers about nuclear missiles and tensions between the God-fearing, democratic West and the godless, oppressive totalitarian communists of the Soviet Union.

I remember the headlines spawned by the SALT missile treaty talks, and asking my parents to explain what was going on, and coming away with the impression that nuclear Armageddon was imminent. I don’t remember the Korean War, but I remember Vietnam, and my father trying to explain the domino theory to me.

We were the good guys, communists were the bad guys. There was a reason James Bond was always tangling with Soviet agents back then. Ah, the simplicity of youth and propaganda.

Of course, while the Soviet Union was the No. 1 U.S. bogeyman in our collective consciousness back in the day, Red China was certainly No. 2. And even though the world has changed a lot since I was kid, and me along with it, I suppose I still carried some of those preconceived notions with me here to China.

Probably like many Americans my age and older, I have a certain view of what a communist country should look like. And it is true that Beijing does have its fair share of sprawling, gloomy, non-descript tenement buildings that seem to be a hallmark of institutionalized communism. And yet, Beijing is so much more than that. Perhaps it fit the stereotype I have in my mind once upon a time, but if it ever did, that was obviously a long time ago, judging from what I’ve seen in just a few days.

And I also carried preconceived notions of what government officials would be like. I’m not sure what I was expecting, to be honest; I suppose I expected stiff and formal government automatons and bureaucrats spouting the party line. Well, to be frank, that notion got shot to hell in short order here in Beijing this week.

Now bear in mind, I’ve only spoken with two officials, one of them in the municipal government here in Beijing, and one a long-time official involved in the Ministry of Information (MII). I’ve also met two private businessmen and entrepreneurs (!) who once worked in the forerunner government organizations that were merged to create the MII.

Hardly a representative sample, to be sure, and I’m sure those mindless, doctrine-spouting officials exist somewhere in China; after all, we have more — much more — than our fair share of those in the U.S. But as I started out saying, the government officials I’ve met so far were not what I expected at all.

Far from the grim party members I think I had expected, these men were passionate and eager to talk openly. In fact, Liang Sheng, a city official, made it clear that he wanted to skip — and I quote, albeit through an interpreter — the “blah blah blah” of government officials and have a frank discussion. Liang is the section chief of the Department of Information Industry of the Beijing Municipal Government, as well as the deputy director of the Beijing Semiconductor Industry Association.

Nope, no not quite what I had expected. In fact, both Liang and Yang Xue Ming, an analyst with the Institute of Chinese Electronic Industry Development, both reminded me much more of senior executives in Silicon Valley — they’ve glimpsed a bright future and they see a way to get there, and they are determined to follow that path.

But the one common thread between my discussions with both Liang and Yang was that China right now is interested in helping China — it doesn’t really care about becoming a super power, at least in the chip industry, nearly so much as it is concerned with managing its growth in the coming years.

China has such a huge, vast domestic market, that it needs to be able to help itself, and yet it realizes that it is going to need private — and foreign — investment to do that. It can’t go it alone, and that is what is behind the changes in China in recent years, and the motivation to a more market-based economy.

There is other evidence, too, that this isn’t the communist nation of our parents’ generation. The Chinese government recently approved its next economic five-year plan, and in it he government acknowledged that one of their goals was to improve the gap between rich and poor. If there is one negative thing I’ve seen here so far, it is that gap — in fact, it seems as wide, perhaps wider, than it is back home in the States.

And on a personal note, while walking down a famous boulevard here in Beijing yesterday — streaming with natives on their way home from work, and foreign tourists perusing the shops and the ubiquitous street vendors hawking watches, DVDs and the like — I was talking with a native of Beijing. She was asking me why some people in the West view China as a threat. She genuinely didn’t seem to understand why; Chinese people are peace loving, she said; they just want to help themselves. That seems to be a common theme on my trip so far.

Electronic News Travels to ChinaOur conversation swung around to Mao Zedong. My friend suggested that Mao was great leader in many respects; a simple farmer who happened to be a brilliant tactician when it came to guerrilla warfare and inspiring his people. But that when it came to economics and social engineering, “he was not so good.”

Nope, this is not what I expected. And I’m beginning to think that China isn’t what most people in the United States would expect.

Jeff

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

at 10/12/2005 1:39:57 PM, Kay said:

Absolutely agree…..

at 10/12/2005 2:40:33 PM, Bob said:

These people are indeed hard-working and when they do get out from under opression by the regime their sheer productivity and innovation will likely easily surpass that of the U.S.. Thus this is what we may now have to fear about the “communists” of old. They have not yet been spoiled to expect everything to be given to them on a platter like some of those “poor” folks in the West and the rest around the world that our tax dollars keep rising to support.

at 10/12/2005 2:55:40 PM, unbelievable said:

Yet another useful idiot referring to a communist (Mao)responsible for the death of millions (via terror famine) as an agrarian reformer. And you say THEY’RE not spouting the party line. You are spouting the party line! When the Chinese recognize Taiwan as an independent state, hold free elections WITH party opposition, and no longer shoot demonstrators in Tienemen square, then I’ll believe their not same China.

at 10/12/2005 3:29:28 PM, jeff said:

JEFF, GOOD LUCK ON TRIP AND KEEP WRITING. It is clear your horizons are getting broadened every day. As we found out on a recent trip, those Capitalistic Communists in China get a big kick out making money.

at 10/12/2005 4:24:57 PM, Clayton Werner said:

Jeff, Its good to see the blinkers coming off. Sure there’s lots to be scared about – the whole of the future. But if we can recognise our common humanity with the Chinese, the Africans, the middle easterners and all – we’ll all be a lot better off. Tis a well learnt lesson from Dawkins “The Selfish Gene”, its the genes that can cooperate with other genes that share a slice of the future! Regards Clayton

at 10/12/2005 4:41:55 PM, G. S. Soriano said:

Well said, Jeff. I’ve been to China (Beijing) myself and worked for two weeks in MII building with other Chinese telecom vendors for Interoperability testing of our equipments. My first time in China was a real surprise. What I long thought, read, seen on TV news, documentary, and so on about China were not really that accurate. I’ve so far travelled to the big cities in China in 6 occassions and never had issues with the locals – day and night. I just came back from a 2 week trip from Venezuela where a co-worker and I got mugged – by the police. The way I saw it, China will be on top pretty soon if they keep doing what they do. I am talking about the Government and its people.

at 10/12/2005 5:30:50 PM, DrASK said:

Your remarks about “sprawling, gloomy, non-descript tenement buildings that seem to be a hallmark of institutionalized communism” made me think of the train ride into Tokyo that passes hundreds of these buildings, or driving on the highway towards Manhatten past the Bronx and seeing the very same sructures, all the same, indistiguishable save for the big numbers on the side. I always remarked to friends that these were examples of “gulag housing”. Remember it’s not just China, they’re everywhere.

at 10/13/2005 1:25:26 AM, Wmay said:

I have to say that the writer has got a sharp sight. It is really not easy to find some stuff like this, which is sth. true, instead of out of mere imagination or prejudice. I just hope more western people come and have a look at today’s China with their own eyes, before making any comments on China.

at 10/13/2005 8:01:23 AM, Jeff Chappell said:

Dear Unbelievable … I’m not going to get in a flame war with you, but yes, the officials I talked to did not spout the party line. And nowhere did I say or claim that China’s government did not have a miserable record when it comes to human rights … let me ask you this: would you judge 1 billion people on the actions of their government? I know I don’t want to be judged on the actions of my government right now … and I may be an idiot, but at least I’m not afraid to put his name above what he writes. If you’re going to flame people, at least don’t be a coward and hide behind anonymity.

at 10/13/2005 9:49:06 AM, Jeff in China said:

Glad your trip has been an eye-opening experience so far. Having lived on the mainland for over a year now, it’s always interesting for me to hear about the first impressions people have about China. However, what I have also found is that China tends to be so far from many Westerners’ expectations, as it is developing so quickly, that they latch on to that and ignore the ways it hasn’t changed.

Might I point you, for example, to the recent Newsweek article, Guilt By Association. Usually though, it’s more subtle than that. The somewhat recent resurgence in tensions between the Chinese and the Japanese is fueled by the government. On September 18th of this year, for example, I awoke to screeching air raid sirens that sounded for a full ten minutes in celebration of the 60th anniversary of end of the War Against Japanese Aggression (you might know this war as WWII).

Let ‘s just say that blaring sirens make it hard to forget the Japanese. And this is just one topic of many where you will find the majority of people touting the party line. Perhaps when it comes to business endeavors, things are different. One final note, if there is one thing I’ve learned about China from my experiences here, it’s that its obsessed with facade. A building might look nice and new, but upon closer examination you’ll notice that there is no indoor heating, no hot water, no caulking anywhere, big gaps in the door frame, etc.

People are the same way’if you ask someone in Shanghai for directions, they might point you in a direction, but that doesn’t necessarily mean they have any idea how to get there. They just don’t want to lose face. My suggestion, then, is to always look closer, and try not to get carried away with the momentum of quick development.

at 10/13/2005 12:56:56 PM, You’re really killing me! said:

I am sorry! Jeff I am sorry too (two)! I am sorry three! Jeff What are you sorry for (four)? I am sorry five!

at 10/14/2005 4:53:58 AM, buck hyre said:

Most American’s ideas about China are based on what we see, hear and read in the media. I envy you being there and getting to know the real China, it’s people, culture and government. I spent the early Seventies in England and came away with a much different opinion of the English than I had going there. It also made me appreciate more growing up in the U.S.. More Americans should go abroad for extended periods of time to see what really is going on in the world instead of believing the evening news on tv. Thank you.

at 10/14/2005 6:23:12 AM, Walter Duranty said:

While I think much of the market reforms underway in China are good things, I do understand Unbelievable’s concerns. It is a dictatorship, after all. Some survivors in this world are more than a little touchy about correspondents who, perhaps having harbored cartoonish delusions about the behavior of thugs, become seduced by schmoozers who smile and extend a warm welcome to them.

Maybe it is time to Google on “Walter Duranty,” (if the Chinese Government hasn’t blocked searches) who when accepting his Pulitzer prize in the 1930’s stated: “Despite present imperfections,” he continued, he had come to realize there was something very good about the Soviets’ “planned system of economy.” And there was something more: Duranty had learned, he said, “to respect the Soviet leaders, especially Stalin, who [had grown] into a really great statesman.”

I’m not equating you with Duranty, just trying to explain the raised eyebrows. To this reader your blog projected a kind of naive honesty as in “Jeepers, I met some folks who worked for Mr. Capone and they seemed really friendly and generous –not at all like those gangsters I see in the movies. Heck they just want what’s best for their kids…” Of course there are millions of fine folks in China — as there were in 20th century Russia and Germany.

Let me ask you this: would soft-peddling Stalin as an Agrarian Reformer so as to not be seen as ‘judging 1 million people on the actions of their government” have been the right thing to do? Certainly, the discovery that there were millions of good hearted, decent Russians would not have been an argument for promoting the policies of Stalin. I think that was Unbelievable’s point. I read his post several times and did not see any negative “judgments” of the Chinese people.

It struck me that, very likely , he is one of them. Before you start calling people cowards you might understand that , if he is a citizen of China, he may be wise to remain anonymous when criticizing his government. -Walter P.S . FYI, I believe the term “Useful Idiot” was a term coined by Lenin when asked about the value of American Socialists who argued that the Communists weren’t so bad. It’s about naiveté, Jeff.

at 10/14/2005 5:45:19 PM, Jeff Chappell said:

Dear “Walter Duranty:” Hmmm … why do people always insist on reading what they want to see in something, rather than just taking what it says at face value? Nowhere in this blog or my stories have I defended the Chinese government or its policies, nor did I suggest for one second that just because the officials I met seemed warm and sincere, that this justifies the policies of the Chinese government.

I didn’t, and it doesn’t. And is it naiveté, “Walter,” or is it an open mind? Have you traveled to China? Have you met the people that I have met?

As for “Unbelievable” being Chinese, or yourself, for that matter, that would be the only excuse I would accept for hiding behind anonymity. Otherwise, if you are going to post insults accusing me of being an idiot, naiveté and — this is my favorite, imply that I’m a pawn of the Chinese government, unwitting or otherwise — have the courage to stand by what you have to say and put your name to it. I do it every day, after all. Aside from fear of becoming a political prisoner, which is still a real, valid concern here in China, there is no excuse.

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 Sina.com 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.

Of Bicycles, Beijing Duck and Pedicab Social Philosophy

Travelling the Silicon Road
BEIJING — As I write this it is the evening of Sunday, Oct. 9th; today was my first full day in China. I’m still pretty jet-lagged, so this is going to be a pretty short entry.

Briefly, my first impressions: the Chinese, at least here in Beijing, are a warm and friendly people, on the whole. Unlike some other countries in Asia, they don’t hesitate to smile at and talk with a foreigner, even if they realize he has no clue what they are saying. Perhaps it is because for so long it was closed off culturally from the rest of the world, but they are a curious people when it comes to foreigners – laowai. But it is a friendly, genuine curiosity.

And Beijing is an amazing, sprawling city. While there seems to be construction everywhere, and all the requisite problems that come with a large city anywhere in the world, East or West — smog, traffic jams, old tenement buildings and so forth — it is a very vibrant, bustling city with the East’s fascinating blend of old and new. It’s not uncommon to see trendily dressed teenagers walking around with cell phones glued to their ears, or professionally dressed men and women with briefcases in one hand sending text messages on their phones.

But in this country with a newly-rising middle class, “rising” is the key word. There are still many people of very modest means here, even in bustling Beijing. After my meeting with a start-up company this afternoon, my interpreter and I hired a pedicab driver who wheeled us around the outskirts of the Forbidden City and the surrounding hutong: narrow, charming neighborhood alleyways that are traditional residential architecture in this ancient city — neighborhoods that unfortunately are being swept aside in the name of modern progress.

Our driver was quite the chatterbox, pointing out historical buildings both ancient and relatively modern, such as the residence of the imperial court’s eunuchs of centuries past, as well as that of Deng Xiaoping and modern day Communist Party officials. He wryly noted that a large, sprawling house on the edge of a hutong that had barbed wire along its walls could only be the house of a party official, not a common Beijing resident, like most of those found in the interior of the crowded hutong.

Then our driver observed that unlike in China, in the U.S. anyone was free to amass wealth and power and buy a house like that, and that was what made my country great. I had to laugh at that: the Horatio Alger story of American myth is alive and well and living in Beijing.

I tried to point out that it wasn’t quite as simple as that, and it occurred to me that we have the exact opposite system in the West. In China, political power seemingly is what brings you wealth — at least according to our pedicab driver — whereas in the U.S. — according to me — wealth brings you political power. Anyone is free to run for political office, true, but you need money, or access to it, at least, in order to do it.

But, between the language barrier and my tourist rubber-necking, it really wasn’t the time or place for a comparison of the political and social ideologies of East and West.

But in any event, I would recommend that everyone visiting Beijing from abroad hire a pedicab. Be prepared to be cajoled for a little extra beyond the agreed upon price at the end of the trip, but if your driver deposits you at a great local restaurant like ours did, it is well worth it — and still cheap by American standards.

In fact, the bicycle is so ubiquitous here, it seems only natural to see it on the back of my pedicab — and it also illustrates the rising nature of the Chinese middle class in Beijing. As my student interpreter Che Zhike — Tony Che to us Westerners — observed, after asking me what I do in my free time: I ride my bicycles for enjoyment and exercise, whereas he rides a bicycle as his primary means of transportation — as it is for many, if not most residents of Beijing.

Wherever you go here, bicycles are omnipresent. And while I realize that it is an economic necessity for cyclists here, unlike myself and other avid cyclists back home in the States, it nevertheless endeared Beijing to me right away.  Any place with so many people on bikes, and large bike and pedestrian lanes throughout the city, is OK in my book.

I just hope that as China’s economy grows and they deal more and more with problems like pollution and energy availability, that they don’t forsake their bicycles for cars. They would do well not to imitate our history in that regard, and to learn from what I would consider to be one of our mistakes. The U.S. is deeply dependent on the private automobile, and we’re paying for that dependence right now, in more ways than one.

Electronic News Travels to ChinaWell, jet lag is fast catching up with me — so much for the short entry — but one more note on the food. Food and it’s consumption is very important to Chinese culture, as I’ve read, been told, and am now experiencing first hand. One phrase of greeting translates into English literally as “have you eaten?”

I’ve only scratched the surface, but so far the cuisine has been so, so good — after only two meals in China, my mouth waters at the prospect of another month here. Have I eaten, indeed.

Until next time,

Jeff

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.