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2014/11/13

Alibaba lost the forty thieves


It is ironic that on November 11, the day the West looked backwards and remembered World War I, China looked forward and was open for business. Wide open. November 11, a day carved from the calendar by Alibaba to kickoff the largest shopping season of the year, has not just become the world’s biggest online commerce event of the year but now tops the business done on both Black Friday and Cyber Monday in the United States.

The November 11 shopping frenzy is a reminder of the astonishing progress of huge chunks of China’s technology industry. In one generation many segments of China’s technology industry have achieved what took a century in Silicon Valley.

Western xenophobes will protest that this is due to the Chinese theft of intellectual property and protective regulation – an attitude sadly captured by Vice President Biden in a recent speech when he said to his audience, “I challenge you, name me one innovative project, one innovative change, one innovative product that has come out of China.” If the Vice President had spent more time in China he would realize the country teems with creative entrepreneurs and can also justly lay claim to housing not one, but four, Silicon Valleys.

The best Chinese entrepreneurs – Jack Ma, Pony Ma, Hongyi Zhou, Robin Li, Richard Liu, Lei Jun, Eric Shen and Charles Cao (to name but a handful) - demonstrate the same flair for combining innovation, opportunism and intuition as the bold names of the Western technology universe. However, they, and their companies, are much better positioned for the next twenty-five years than their Western counterparts even though many in China still harbor an absurd inferiority complex for developments in the United States.

Western technology leaders who take the time to travel to China to learn will be richly rewarded and will return with a basketful of ideas for new products, business models and management techniques. Many in Silicon Valley – despite the conclusive evidence and deafening hoopla of Alibaba’s IPO - still have a hopelessly outdated view of China. They are in for a shock.

Chinese companies will do far better outside their borders than the U.S. counterparts will do in China. This has much less to do with regulations than it does with culture and attitude. Most of today’s Chinese entrepreneurs – particularly those raised in the large cities - had ten years of English instruction at school and eagerly devoured Hollywood movies. Not too many American entrepreneurs can pretend to possess the same familiarity with China and what should be an opportunity appears hopelessly intimidating and mysterious. It is just very hard for foreign entrepreneurs, no matter how talented, to design software and systems that demand intimate knowledge of local customs and habits.

Today’s Chinese have other huge strengths. Any entrepreneur who can survive, let alone prosper, in the most competitive business environment in the world, is in great shape to take on even the best-trained, foreign contender. Add to this the memories of privation and dark times that still loom large in the psyche of the current generation of Chinese entrepreneurs and there is an inexhaustible quest for work. Name one sizeable Silicon Valley company that operates 12/7 – the Chinese shorthand for twelve hours a day, seven days a week.

This year, Beijing’s celebration of November 11 was particularly striking. Not only were retail sales larger than ever, but the gathering of world leaders for the APEC meeting prompted a characteristic Chinese orchestration of events. Factories have been closed, many government workers have been given a six-day holiday and stiff driving limits are being enforced. The result: temporarily clear skies that allow, anyone who cares to look, a sharper view of many of the world’s best technology companies.

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