HYSTA (Hua Yuan Science and Technology Association) and its 3,000 members aim to be a bridge between China and the Silicon Valley. Its annual conference in Santa Clara in early May examined the theme of China and globabilization.
“American companies no longer go to China only to find cheap labor,” said Jack Xu, VP of engineering and research at eBay and VP of HYSTA, to set the stage. “They go to find talent and to better compete in the global market.” Because globalization is not a one-way street, two of the conference’s panels were examining the two sides of the coin: Chinese companies going global and multinational companies going into China. China going global Ying Wu is the president of UTStarcom, a provider of IP-based networking and telecommunications solutions. The company’s growth compelled it to look outside of its native China and to acquire companies in Korea and Canada. “In 2006, we made two thirds of our revenues outside China, but we barely made money,” he explained as a warning that going global can be a challenge. David Chen was more enthusiastic. Worksoft Creative Software Technology is a Chinese IT outsourcing company. “We were global from the beginning. We use talented engineers in China to compete with India. 85% of our revenues come from the US and the rest from Europe,” Chen said. In a reverse trend, Worksoft is now looking at the maturing Chinese market as its next growth opportunity. Going into China “This is a new phase. You don’t just put manufacturing or engineering in China. You create a whole corporation there,” said David DeWalt, the brand new CEO of McAfee who was formerly president of EMC. “At EMC, we embraced China and we were able to market that it was a local company. Through partnerships and acquisitions, we made a local product for the local market.” Brian Derksen, deputy CEO of Deloitte & Touche USA, confessed that his company did not have a strategy to go into China ten years ago, but was led there because its existing clients expected support in that country. “We have over 6,000 people there now and it will be more than 10,000 soon. The Chinese professional services market is expected to grow to 16 billion dollars rapidly. We recruit locally and bring in specialists or leadership from outside in the early stages. But we believe a practice needs to be led by locals,” Derksen explained. All the panellists stressed that a company wanting to go into China needed to understand the cultural subtleties and the local markets. The advice applies to returnees who have lived in the U.S. for a long time. “First, work in a Chinese company before starting our own company,” advised Ying Wu of UTStarcom. Lawyers are sorely needed in China. “There is a boundless opportunity because the law is essential to China realizing its promise,” said Ralph Baxter, CEO of Orrick, Herrington & Sutcliffe. In the audience, Weiguo Chen agreed. He is a lawyer with Finnegan Henderson, an intellectual property law firm, and was educated both in the U.S. and in China. “The U.S. has 200 years of intellectual property culture, China has only 20 years. Chinese companies are starting to file patents in the U.S. now.” Jack Gao, VP of News Corp. and former CEO of Autodesk and Microsoft in China, complained that the Chinese heads of global companies often have a hard time getting the ear of their CEO back at headquarters. However, a good idea can sometime make its way back to the mother ship. Answers, a popular feature on Yahoo which combines search and social media, first came out in Korea. It was later adopted on the American and European sites, explained Jerry Yang, Yahoo’s co-founder. There is one success HYSTA is particularly proud of. Two years ago at CEO Summit, an exclusive HYSTA event bringing together Chinese and American CEO, Yahoo met Alibaba, a Chinese auction and commerce site which now runs Yahoo China. “Our move to partner with them was the right strategy. The report card is good in some ways, not so good in others. Two years is still early,” said Jerry Yang of Yahoo. At all levels and across industries (this year’s conference saw the addition of a panel on clean energies), HYSTA hopes to continue to be a networking tool between Chinese and American entrepreneurs. A sign of the association’s clout was the calibre of its keynote speaker. Nobel Peace Prize nominee and Academy Award winner Al Gore brought its message about the global warming crisis to a receptive crowd. Isabelle Boucq for Atelier