Page 22 - How China Is Winning the Tech Race

China is leapfrogging past a legacy of outdated formats that stymie
Western firms. Because of the size and stature of China’s markets, such inno-
vations could set world standards for technology. In turn, Western companies
will have to adapt or outperform to compete. Look what happened to Detroit
back in the 1970s when Japanese
compact cars arrived.
It’s a transformation of histori-
“The Net for China is like the steam engine
for Europe and the automobile for the United cal proportions, comparable to the
States.” Industrial Revolution. For years
global economists have been pre-
Edward Tian, dicting that China soon will be the
founder and chairman,
Broadband Capital Partners world’s largest economy and a
superpower. Ohio State University
professor and China expert Oded
Shenkar concludes that the United
16
States is vulnerable to the Mainland’s ascent as China infuses modern tech-
nology and market economics into a nondemocratic, communist-controlled
system.
“In China, the role model was Chairman Mao, and now it’s Jack Ma,”
says Edward Tian, a venture capitalist at Broadband Capital Partners and vice
chairman of formerly state-owned China Netcom. He’s referring to the
charismatic leader of the e-commerce start-up Alibaba.com, which recently
went public in a record-breaking initial public offering. Alibaba.com received
a $1 billion investment from Yahoo! in 2005 and then took over the
operation of Yahoo! China. “China missed the last Industrial Revolution, but
we won’t miss this one,” promises Tian, who founded AsiaInfo, the first
Chinese tech firm to go public on Nasdaq. “The Net for China is like the
steam engine for Europe and the automobile for the United States.”

China’ s ills

China still faces enormous challenges: income inequality, horrendous air and
water pollution, bloated state-owned enterprises, bad bank loans, and social
instability. The long list of hurdles includes illiquid domestic stock exchanges,
a nonconvertible currency, lack of financial transparency, abrupt shifts in reg-
ulatory policy, complex requirements for foreign investors, and lack of

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