Pacific News Service, George Koo, Posted: Jan 03, 2003
Editor's Note: The roundabout flights from Shanghai to Taipei are just the beginning of Taiwan's convoluted logic when it comes to China, writes PNS contributor George Koo. Missing a golden opportunity last year to improve relations with its giant neighbor, Taiwan must take steps in 2003 to stop job loss and brain drain across the Taiwan Strait.
For the first time ever, thousands of Taiwanese living in Mainland China will fly from Shanghai, uh, somewhat directly to Taipei to celebrate the Chinese New Year, coming Feb. 1, at home. Specially chartered planes will take off from inside China and touch down in Hong Kong or Macao before proceeding to Taipei.
But instead of a short, one-hour hop from Shanghai to Taipei, the planes will fly two long legs of a triangle, roughly quadrupling the flight time, just to be politically acceptable to Taipei. The planes will be empty of passengers on the return part of the trip. Why? Because there is no formal recognition between governments across the Taiwan Strait, Taipei reasons that the planes cannot behave as if they were bona fide commercial flights.
The passengers will have ample time to ponder the absurdity of it all. Their flight path is comparable to flying from Boston to New York via St. Louis.
Taiwan's business community has been clamoring for direct links to the mainland. Some $600 million is spent annually on unnecessary airfare, to say nothing of wasted time in transit.
Since he came to power in 2000, many of President Chen Shui Bian's backers have urged him to move boldly toward full independence from Beijing. The end result is like the charter flights, a compromise that pleases no one and solves nothing.
Last year, the Chinese Year of the Horse, could have been a breakthrough year in cross-strait relations. Both sides just entered WTO and needed to begin bilateral discussion to work out the details. Instead, the horse never left the post. Taipei so artfully stalled that only now have they agreed to meet and begin discussions.
Meanwhile, it has become increasingly obvious that benefits of cross-strait relations are all going in one direction: to China. Taiwan capital, people, production equipment, ideas and products are going to China. By some estimates, as much as $100 billion -- more than one-fifth of the total foreign investment in China -- originates from Taiwan.
What about investment in the other direction, from China to Taiwan? None, because in contrast to Beijing's open door, Taipei's policies restrict visitors from the mainland, rendering such investments impractical.
Advocates of Taiwan independence, particularly those residing comfortably in the United States, like to point out that one cannot live by bread alone, but must have the personal freedom of choice. Sadly, Taiwan's economy has been rolling steadily downhill, and unemployment is at an all-time high. Political choice is hardly on the agenda of folks without bread.
Some of the best and brightest are choosing with their feet. They now live and work in China, most conspicuously in the greater Shanghai area. They are putting roots down in China, bringing their families and buying homes.
One Taipei study estimates that those leaving for the mainland represent 25 percent of Taiwan's economic elite. Their absence ripples throughout Taiwan's economy.
Taiwan's housing market is depressed because more are selling than buying. Instead of seeing their favorite customers every week, popular restaurants now see them every two to three months -- on their periodic return from China.
Even Taiwan's Lions Club feels the economic shift. In the first six months of last year, its membership dropped from 35,000 to 31,000. At its peak, club membership included more than 40,000 professionals. At every meeting, someone else is missing, having left for the mainland.
Taiwan is becoming a depressing place, especially so because the government seems so unaware of the economic consequences of its politics.
Two out of three Taiwan tourists go to the mainland for vacation. Only 1 out of 10,000 tourists from the mainland is able to visit Taiwan. In just 10 months last year, 12 million tourists went globetrotting from China. The Taipei government could see immediate economic benefits merely by welcoming an annual projected stream of 300,000 visitors from across the strait.
President Chen dares not open Taiwan to the mainland for fear of losing his political support and for reasons rooted in paranoia. During the debate about direct flights from the mainland, someone in his administration actually opposed them on the grounds that an unfriendly plane could make a Sept. 11-like beeline for the presidential palace in Taipei.
Chen's approval rating is at an all-time low, as is Taiwan's economy. Everyone is watching to see if he will take decisive action in 2003 to turn things around. If not, his re-election in 2004 is not assured. He came to power with less than 40 percent of the popular vote. He may have to do considerably better next time and not count on a divided opposition to again put him in power.
Friday, January 3, 2003
Wednesday, November 27, 2002
Role of Venture Capital in the Development of High Technology in Silicon Valley
Text of a speech given in China, November 2002
In less than 2 decades, “Silicon Valley” became the name of a real place, a place that won worldwide recognition as ground zero where commercial breakthroughs in high technology occurred regularly. Silicon Valley, located south of San Francisco became the birthplace of such high tech giants as Intel, Sun Microsystems, Cisco Systems, Oracle, Applied Materials and Genentech—all leaders in their field. The proliferation of semiconductor start-ups that grew into major companies and equipment and material suppliers that grew by supporting this industry led to the coining of the term, “Silicon Valley.”
The emergence of Silicon Valley as the world’s high tech capital would not have been possible without the use of venture capital. Indeed, venture capitalism, i.e., risky investments in emerging young companies for the purpose of earning high returns, also became a widely recognized professional discipline. This recognition came after its spectacular investments in such companies as Apple Computer, Cisco, and Yahoo returned thousands of times original invested amount. No other place in the world has been more successful in the use of venture capital than Silicon Valley. In recent years, Silicon Valley with only about 2% of the U.S. population has attracted as much as 40% of all the venture capital invested in the U.S. During the height reached in 2000, over $60 billion were invested in the U.S. in privately held young companies.
Therefore, no place is better suited to study the relationship of venture capital to development of high technology companies than Silicon Valley. Understanding Silicon Valley is essential to understanding how venture capital can be utilized elsewhere to achieve comparable outcome.
How does venture capital work?
The idea of making early investments in privately held companies for a chance to earn high rate of return did not originate in California but in the traditional east coast financial centers such as New York and Boston. The success of their early investments in Apple, Intel and some others led to decisions to establish branch offices in the San Francisco area which in turn led to the formation of new venture capital partnerships as others follow and as some of original partners split off to form new firms. Success breeds success and as venture capital firms boast of average annual returns of 25 to 35%, more funds become available to make these investments and more groups are formed to manage the invested capital and funds. It is not unusual today for established venture capital firms to manage one billion dollars or more.
Venture capital is invested in early stage, privately held companies in hopes of gaining a windfall profit when such company becomes publicly listed or is merged with another company whereby the acquiring company pays handsomely for their equity stake. It is very important to keep in mind that venture capital investments depend on clear-cut route to being able to liquidate their investments. Most high tech start-ups, as many as 4 out of 5, fail and the investment is written off. However, a successful venture capitalist will manage to make at least one investment that brings a return to more than make up for the losses. Because of the risky nature of these investments, venture capitalists rarely make investments in profitable but slow growing businesses. Such businesses take a long time to go public and do not offer a big enough potential return. Rather, venture capitalists look for companies with the potential of outstanding return on investment. In Silicon Valley, this potential is often referred to as having an anticipated revenue stream of a hockey stick. Companies engaged in developing high tech breakthroughs are more likely to experience the hockey stick phenomenon than say a chain of fast food restaurants. This is why venture capital goes to where high tech breakthroughs are being made.
While the need to make huge return on investments explains the attraction of venture capital to the high tech industries, it does not explain why Silicon Valley can attract such a disproportionate share of the venture capital. To understand that, it is necessary to examine the culture and other characteristics of Silicon Valley.
The Silicon Valley culture and infrastructure
In many ways, Silicon Valley is unique even within the U.S. No other place is as diverse as Silicon Valley. Silicon Valley has room for people from all over the world and they all come, attracted by the pleasant weather and the diversity of people. Diversity is crucial in high technology because diversity automatically ensures many different ways of thinking and looking at problems leading to a host of solutions. Only in this manner can the best solution be synthesized out of contending ideas and emerge as the commercial winner. In a way, high tech innovation is similar to Darwinian survival of the species. Namely, endangered species bordering on extinction suffer from narrow gene pools while healthy species enjoy wide and diverse gene pools. In Silicon Valley today, as one indication of its inclusive diversity, over 30% of the companies are founded or managed by immigrants from China, Taiwan and India.
The best and brightest are attracted to Silicon Valley not only because of the inclusive nature of this place--certainly overt discrimination because of someone’s skin color and other differentiation has largely disappeared. The other reason is that entrepreneurs in Silicon Valley can readily find others of like mind to band together and approach venture capital investors with business plans and proposals. In Silicon Valley, venture capitalists do not refuse to invest on someone just because the particular entrepreneur comes from a failed venture. Since most ventures do fail, the investor gives the entrepreneur credit for having gained valuable experience even if the previous venture failed. This tolerance for failure is crucial in encouraging entrepreneurs to take risks and start companies. The importance cannot be over emphasized. In Silicon Valley, “it is OK to fail.” No other place has quite the same open-minded attitude.
With the success of high tech industries and the growth of venture capital in Silicon Valley, the economic infrastructure also expanded and became part of the environment. Infrastructure needed to support high tech companies include law firms and accounting firms to help them form proper legal structure and organized to meet Securities Exchange regulations with proper stock ownership incentive programs for not just the founders but also for employees joining the high tech enterprise. The legal and accounting firms also help the venture capital firms structure their investments and keep track of their gains and losses. Other parts of the total infrastructure include public relations and advertising firms that serve the marketing and communication needs of high tech companies. Investment banks help the companies with initial public offering and follow-on secondary offerings in the equity market and propose mergers. Specialized commercial banks and leasing firms were established just to serve the high tech companies that more traditional banks dare not touch because the latter did not understand the nature of high tech companies and were frightened by its high mortality rate.
An entire profession emerged that called themselves “free lance technical writers.” These writers contract their services to high tech companies to help them write user’s manuals, technical brochures and a host of documents to help the companies convey what they have developed to the public. Human capital firms helped high tech companies set employee hiring policies and help locate and recruit people with the needed skill sets. Successful entrepreneurs often retired from active management and became consultants and advisors to venture capital firms and to other start-ups. Arguably the trend to outsourcing gained impetus from Silicon Valley because young start-ups have limited resources and most in need of outside assistance. Most models of Macintosh from Apple Computer, for instance, were designed by independent product design services and made by contract manufacturers.
Frequently overlooked but a vital part of the Silicon Valley infrastructure is the widespread presence of professional associations. These associations organized along industries or common interests meet regularly. Ostensibly, these meetings feature speakers and topics of general interest to its membership. Equally important, these gatherings offer opportunities for professionals to meet regularly with each other and form friendships, to network and exchange ideas and resumes and to assess the potential of each as a future co-founder of the next new start-up enterprise. The Churchill Club meets frequently hosting panel discussions on high tech development and regularly draws an audience of 4-500. AAMA, the oldest Asian American organization in Silicon Valley, draws 1-200 in their monthly dinner meeting. AAMA used to be known as Asian American Manufacturers Association but since not much was being made in Silicon Valley nowadays, the name was recently changed to Asian American Multi-Technology Association. Younger organizations such as Hua Yuan Science & Technology Association and China Information Networks Association tend to organize their events on weekends and can draw over 1000 young Chinese professional to their events. The Indus Entrepreneurs was organized as network for immigrant professionals from South Asia and widely recognized for not just their conferences but as a breeding ground for many successful high tech enterprises founded by Indians and Pakistanis. There are many other networking organizations and associations in Silicon Valley that space do not permit listing here. The important point is that the success of Silicon Valley is dependent on an environment where people can mingle and ideas cross-pollinate.
In summary, the success of Silicon Valley begins with its open environment where all comers with the skills and drive to succeed are welcome. Venture capital then followed to invest in this concentration of entrepreneurial energy. The spectacular returns from these investments in turn spawned a host of supporting professions that made Silicon Valley the high tech capital that it is today. A frequently asked question from foreign visitors is: “What should the government do to encourage the birth of other Silicon Valleys?” The flippant retort from most denizens of Silicon Valley is: “As little as possible.”
Government’s role in Silicon Valley
Most Silicon Valley entrepreneurs regard the government as more of a hindrance than help. For example currently a heated debate is going on between the venture capitalists and entrepreneurs on the one side and the Security Exchange Commission on the other. The SEC wants to force all companies to account stock options as a real expense. Silicon Valley companies argue that stock options are vital incentives for people working in young companies and cannot be accurately valued when the success of the company is still in doubt. If companies are forced to expense stock options, the worry is that then stock options would cease to be a preferred method to motivate the employees. At present, engineers and others join young companies for the excitement of starting something new and toil long hours at below market wages because they are motivated to see their company succeed and their wealth realized through stock options.
Silicon Valley companies also resent the export control policies of their federal government. They regard such policies as unreasonable and arbitrary and directly impact their competitive position. As a spokesperson from Semiconductor Manufacturing International Corporation recently pointed out, SMIC can buy equipment from European supplier and expect delivery in two weeks, from Japan in two months and from the U.S. the delivery is uncertain and may take 6 months or more, most of that time spent getting necessary government clearances.
However, the U. S. federal government also plays a vital role in at least two major respects to ensure the continued development of high tech industries. The most important is in promulgating clear and transparent regulations that govern the equity market. Other than making sure that the rules and regulations apply to all companies equally, the government stays out of the way. Whether a company is ready for a public listing in the stock market is controlled only by the market conditions. When the market is strong and many investors are participating, even some of the inferior companies can go public because of high public demand for new issues. When the market is weak, even the best companies have difficulty getting a listing.
Letting the market decide when and if their investee companies can become publicly listed is extremely important to the venture capitalist. When they make an investment, they hope to liquidate in three to five years. Best way to liquidate is to list their portfolio company in the stock market. The venture capitalist watches the stock market with care, constantly comparing the reception of the stock market to how their portfolio company might be worth. They are in regular conversation with the investment bankers to determine when to best offer a portfolio company to the initial public offering (IPO) process.
The federal government also plays a vital role as the provider of funds for research and development work that no venture capitalist would contemplate underwriting. These R&D work tend to be fundamental in nature with no certainty of outcome and no practical applications in sight. Best examples that come to mind would be research grants from National Institute of Health to various university research labs that led to breakthroughs in genetic engineering. Then a host of companies were funded by venture capital and other private capital sources to convert the laboratory discoveries with additional downstream development into commercial successes. The discoveries from the labs at the medical schools of Stanford and University of California at San Francisco led directly to the formation of Genentech and Chiron and the San Francisco bay area now hosts the largest cluster of biotech firms in the U.S. Advances in modern medicine and therapy would not have been possible without government support. Government funding in military defense and space exploration also led to commercial successes in the private sector. The Internet and many advances in electronics and materials can be directly attributed to original funding by the federal government.
Thus the role of the government can be simply summarized. The primary responsibility of creating a fair, open and regulated environment for the equity market is vital to maintaining the confidence of the investor public and ensuring a clear path of liquidity to the venture capitalist. No professional venture capitalist can operate in an environment where he cannot see a path to liquidating the investment. Secondly, government funding is essential to generating basic technological advances. Only the central government can assume such risks and technological advances drive innovations with commercial implications.
The venture investing process
In Silicon Valley the venture investing process has more or less evolved into a standard procedure. Some firms specialize in investing in the first round of funding where the risk is highest but the potential return is also highest since the amount invested can be relatively small for the equity stake comparable to later rounds of investment at higher cost. Other firms prefer later rounds of financing; some even invest only in the round just prior to the company going public. By and large, venture capitalists never consider themselves as passive investors but claim to help their investments succeed by being active investors. They add value by serving on the board of the investee companies, by acting as advisors to the management team, by helping to recruit needed executives, by introducing the investee company to other companies for the purpose of forming alliances and by introducing the company to the financial community (Wall Street). Not all venture capital firms are accorded with the same regard. Entrepreneurs pursue blue ribbon firms that consistently enjoy above industry average returns not just for their money and their connections. Having such famous venture capital firms as investors imply endorsement and validation of the company and its business objectives.
It should not be surprising that venture capitalists place highest importance in the character of the people they are investing in. The venture capitalist needs to know if the team of entrepreneurs has integrity, can get along with each other and can work with the investor. Their worst nightmare is to invest in a dishonest team who will stop communicating with the investor after funding and run the company without input from the venture investor. In Silicon Valley the due diligence process is rigorous. Usually the venture capitalist after extensive analysis and deciding that interest exists in investing in the company will offer a term sheet outlining the boundaries of the deal. Such term sheets are always subject to verification of representations made by the entrepreneurs in the due diligence process. There are even professional service firms to perform the due diligence investigations. A typical claim by many venture capitalists is that out of every 100 business proposals and plans they review, only about 10 are invited to face to face meetings resulting in 2-3 term sheets and only about half or less of those conclude in actual investments.
Despite the emphasis on technology, Silicon Valley venture capitalists are rarely dazzled by just the technology. They do not invest in “solutions looking for problems to solve.” They look for and ascertain that there will be markets for the products being proposed by the entrepreneur. In other words the business potential is more important than the novelty of the invention. They are fond of saying if they must have an “A” and a “B,” then they would rather have an A team for marketing and a B team for R&D than the other way around.
While venture capital has played a vital role in transforming Silicon Valley into a high tech capital, only about 25% of the Silicon Valley start-ups receive professional venture capital funding. Others start by their own bootstrap, or funds from family and friends. I have not seen a comparison of the survival rates of the two kinds start-ups but not all professionally funded companies survive and non-professionally funded enterprises can also grow into major companies. The most famous example of the latter was Hewlett-Packard, which was started by the two founders long before there was a Silicon Valley and venture capital. Cisco was founded by a husband and wife team and grew for a long time without venture capital.
Conclusion
In the final analysis, high technology development depends on having skilled and motivated people in an open environment where ideas can be freely tested. Entrepreneurs with the best ideas are more likely to attract professional investments. The best managed companies and sometimes the luckiest companies are most likely to reach the critical mass and become an attractive investment for the investing public or as a target for acquisition. Venture capitalists with the best record of making successful investments will have the least problem of raising new funds to invest in new companies. As they become successful, they become better known and are likely to be introduced to superior ideas from more proven entrepreneurs. The quality of their deal flow improves and thus increases the probability of their making more profitable investments. Such accelerating cycle applies to both the proven entrepreneur and the successful venture capitalist. The market forces determine the fate of their efforts.
Another question sometimes asked is: “How to attract premier venture capital firms from Silicon Valley to operate in places like China?” The answer is: “With a great deal of difficulty.” Venture capitalists are hands-on investors. They need to be near their investee companies and they need to be able to help their portfolio companies succeed. To most venture capitalists, with selected exceptions, China is far away and is a place they do not understand and can offer little added value. The exceptions are those individuals that are familiar with both sides of the Pacific, knowledgeable in both environments and can help their investee companies bridge the gap and gain an advantage by establishing cross border alliances. They can make astute investments on both sides and gain leverage by introducing companies from one side to work with the other.
The future is bright for China to develop high tech industries because China has plenty of human talent and entrepreneurial energy. As soon as the path to liquidity can be clearly defined, more and more professional venture investors will come to China with funds to invest. Let the snowball roll down the mountain!
In less than 2 decades, “Silicon Valley” became the name of a real place, a place that won worldwide recognition as ground zero where commercial breakthroughs in high technology occurred regularly. Silicon Valley, located south of San Francisco became the birthplace of such high tech giants as Intel, Sun Microsystems, Cisco Systems, Oracle, Applied Materials and Genentech—all leaders in their field. The proliferation of semiconductor start-ups that grew into major companies and equipment and material suppliers that grew by supporting this industry led to the coining of the term, “Silicon Valley.”
The emergence of Silicon Valley as the world’s high tech capital would not have been possible without the use of venture capital. Indeed, venture capitalism, i.e., risky investments in emerging young companies for the purpose of earning high returns, also became a widely recognized professional discipline. This recognition came after its spectacular investments in such companies as Apple Computer, Cisco, and Yahoo returned thousands of times original invested amount. No other place in the world has been more successful in the use of venture capital than Silicon Valley. In recent years, Silicon Valley with only about 2% of the U.S. population has attracted as much as 40% of all the venture capital invested in the U.S. During the height reached in 2000, over $60 billion were invested in the U.S. in privately held young companies.
Therefore, no place is better suited to study the relationship of venture capital to development of high technology companies than Silicon Valley. Understanding Silicon Valley is essential to understanding how venture capital can be utilized elsewhere to achieve comparable outcome.
How does venture capital work?
The idea of making early investments in privately held companies for a chance to earn high rate of return did not originate in California but in the traditional east coast financial centers such as New York and Boston. The success of their early investments in Apple, Intel and some others led to decisions to establish branch offices in the San Francisco area which in turn led to the formation of new venture capital partnerships as others follow and as some of original partners split off to form new firms. Success breeds success and as venture capital firms boast of average annual returns of 25 to 35%, more funds become available to make these investments and more groups are formed to manage the invested capital and funds. It is not unusual today for established venture capital firms to manage one billion dollars or more.
Venture capital is invested in early stage, privately held companies in hopes of gaining a windfall profit when such company becomes publicly listed or is merged with another company whereby the acquiring company pays handsomely for their equity stake. It is very important to keep in mind that venture capital investments depend on clear-cut route to being able to liquidate their investments. Most high tech start-ups, as many as 4 out of 5, fail and the investment is written off. However, a successful venture capitalist will manage to make at least one investment that brings a return to more than make up for the losses. Because of the risky nature of these investments, venture capitalists rarely make investments in profitable but slow growing businesses. Such businesses take a long time to go public and do not offer a big enough potential return. Rather, venture capitalists look for companies with the potential of outstanding return on investment. In Silicon Valley, this potential is often referred to as having an anticipated revenue stream of a hockey stick. Companies engaged in developing high tech breakthroughs are more likely to experience the hockey stick phenomenon than say a chain of fast food restaurants. This is why venture capital goes to where high tech breakthroughs are being made.
While the need to make huge return on investments explains the attraction of venture capital to the high tech industries, it does not explain why Silicon Valley can attract such a disproportionate share of the venture capital. To understand that, it is necessary to examine the culture and other characteristics of Silicon Valley.
The Silicon Valley culture and infrastructure
In many ways, Silicon Valley is unique even within the U.S. No other place is as diverse as Silicon Valley. Silicon Valley has room for people from all over the world and they all come, attracted by the pleasant weather and the diversity of people. Diversity is crucial in high technology because diversity automatically ensures many different ways of thinking and looking at problems leading to a host of solutions. Only in this manner can the best solution be synthesized out of contending ideas and emerge as the commercial winner. In a way, high tech innovation is similar to Darwinian survival of the species. Namely, endangered species bordering on extinction suffer from narrow gene pools while healthy species enjoy wide and diverse gene pools. In Silicon Valley today, as one indication of its inclusive diversity, over 30% of the companies are founded or managed by immigrants from China, Taiwan and India.
The best and brightest are attracted to Silicon Valley not only because of the inclusive nature of this place--certainly overt discrimination because of someone’s skin color and other differentiation has largely disappeared. The other reason is that entrepreneurs in Silicon Valley can readily find others of like mind to band together and approach venture capital investors with business plans and proposals. In Silicon Valley, venture capitalists do not refuse to invest on someone just because the particular entrepreneur comes from a failed venture. Since most ventures do fail, the investor gives the entrepreneur credit for having gained valuable experience even if the previous venture failed. This tolerance for failure is crucial in encouraging entrepreneurs to take risks and start companies. The importance cannot be over emphasized. In Silicon Valley, “it is OK to fail.” No other place has quite the same open-minded attitude.
With the success of high tech industries and the growth of venture capital in Silicon Valley, the economic infrastructure also expanded and became part of the environment. Infrastructure needed to support high tech companies include law firms and accounting firms to help them form proper legal structure and organized to meet Securities Exchange regulations with proper stock ownership incentive programs for not just the founders but also for employees joining the high tech enterprise. The legal and accounting firms also help the venture capital firms structure their investments and keep track of their gains and losses. Other parts of the total infrastructure include public relations and advertising firms that serve the marketing and communication needs of high tech companies. Investment banks help the companies with initial public offering and follow-on secondary offerings in the equity market and propose mergers. Specialized commercial banks and leasing firms were established just to serve the high tech companies that more traditional banks dare not touch because the latter did not understand the nature of high tech companies and were frightened by its high mortality rate.
An entire profession emerged that called themselves “free lance technical writers.” These writers contract their services to high tech companies to help them write user’s manuals, technical brochures and a host of documents to help the companies convey what they have developed to the public. Human capital firms helped high tech companies set employee hiring policies and help locate and recruit people with the needed skill sets. Successful entrepreneurs often retired from active management and became consultants and advisors to venture capital firms and to other start-ups. Arguably the trend to outsourcing gained impetus from Silicon Valley because young start-ups have limited resources and most in need of outside assistance. Most models of Macintosh from Apple Computer, for instance, were designed by independent product design services and made by contract manufacturers.
Frequently overlooked but a vital part of the Silicon Valley infrastructure is the widespread presence of professional associations. These associations organized along industries or common interests meet regularly. Ostensibly, these meetings feature speakers and topics of general interest to its membership. Equally important, these gatherings offer opportunities for professionals to meet regularly with each other and form friendships, to network and exchange ideas and resumes and to assess the potential of each as a future co-founder of the next new start-up enterprise. The Churchill Club meets frequently hosting panel discussions on high tech development and regularly draws an audience of 4-500. AAMA, the oldest Asian American organization in Silicon Valley, draws 1-200 in their monthly dinner meeting. AAMA used to be known as Asian American Manufacturers Association but since not much was being made in Silicon Valley nowadays, the name was recently changed to Asian American Multi-Technology Association. Younger organizations such as Hua Yuan Science & Technology Association and China Information Networks Association tend to organize their events on weekends and can draw over 1000 young Chinese professional to their events. The Indus Entrepreneurs was organized as network for immigrant professionals from South Asia and widely recognized for not just their conferences but as a breeding ground for many successful high tech enterprises founded by Indians and Pakistanis. There are many other networking organizations and associations in Silicon Valley that space do not permit listing here. The important point is that the success of Silicon Valley is dependent on an environment where people can mingle and ideas cross-pollinate.
In summary, the success of Silicon Valley begins with its open environment where all comers with the skills and drive to succeed are welcome. Venture capital then followed to invest in this concentration of entrepreneurial energy. The spectacular returns from these investments in turn spawned a host of supporting professions that made Silicon Valley the high tech capital that it is today. A frequently asked question from foreign visitors is: “What should the government do to encourage the birth of other Silicon Valleys?” The flippant retort from most denizens of Silicon Valley is: “As little as possible.”
Government’s role in Silicon Valley
Most Silicon Valley entrepreneurs regard the government as more of a hindrance than help. For example currently a heated debate is going on between the venture capitalists and entrepreneurs on the one side and the Security Exchange Commission on the other. The SEC wants to force all companies to account stock options as a real expense. Silicon Valley companies argue that stock options are vital incentives for people working in young companies and cannot be accurately valued when the success of the company is still in doubt. If companies are forced to expense stock options, the worry is that then stock options would cease to be a preferred method to motivate the employees. At present, engineers and others join young companies for the excitement of starting something new and toil long hours at below market wages because they are motivated to see their company succeed and their wealth realized through stock options.
Silicon Valley companies also resent the export control policies of their federal government. They regard such policies as unreasonable and arbitrary and directly impact their competitive position. As a spokesperson from Semiconductor Manufacturing International Corporation recently pointed out, SMIC can buy equipment from European supplier and expect delivery in two weeks, from Japan in two months and from the U.S. the delivery is uncertain and may take 6 months or more, most of that time spent getting necessary government clearances.
However, the U. S. federal government also plays a vital role in at least two major respects to ensure the continued development of high tech industries. The most important is in promulgating clear and transparent regulations that govern the equity market. Other than making sure that the rules and regulations apply to all companies equally, the government stays out of the way. Whether a company is ready for a public listing in the stock market is controlled only by the market conditions. When the market is strong and many investors are participating, even some of the inferior companies can go public because of high public demand for new issues. When the market is weak, even the best companies have difficulty getting a listing.
Letting the market decide when and if their investee companies can become publicly listed is extremely important to the venture capitalist. When they make an investment, they hope to liquidate in three to five years. Best way to liquidate is to list their portfolio company in the stock market. The venture capitalist watches the stock market with care, constantly comparing the reception of the stock market to how their portfolio company might be worth. They are in regular conversation with the investment bankers to determine when to best offer a portfolio company to the initial public offering (IPO) process.
The federal government also plays a vital role as the provider of funds for research and development work that no venture capitalist would contemplate underwriting. These R&D work tend to be fundamental in nature with no certainty of outcome and no practical applications in sight. Best examples that come to mind would be research grants from National Institute of Health to various university research labs that led to breakthroughs in genetic engineering. Then a host of companies were funded by venture capital and other private capital sources to convert the laboratory discoveries with additional downstream development into commercial successes. The discoveries from the labs at the medical schools of Stanford and University of California at San Francisco led directly to the formation of Genentech and Chiron and the San Francisco bay area now hosts the largest cluster of biotech firms in the U.S. Advances in modern medicine and therapy would not have been possible without government support. Government funding in military defense and space exploration also led to commercial successes in the private sector. The Internet and many advances in electronics and materials can be directly attributed to original funding by the federal government.
Thus the role of the government can be simply summarized. The primary responsibility of creating a fair, open and regulated environment for the equity market is vital to maintaining the confidence of the investor public and ensuring a clear path of liquidity to the venture capitalist. No professional venture capitalist can operate in an environment where he cannot see a path to liquidating the investment. Secondly, government funding is essential to generating basic technological advances. Only the central government can assume such risks and technological advances drive innovations with commercial implications.
The venture investing process
In Silicon Valley the venture investing process has more or less evolved into a standard procedure. Some firms specialize in investing in the first round of funding where the risk is highest but the potential return is also highest since the amount invested can be relatively small for the equity stake comparable to later rounds of investment at higher cost. Other firms prefer later rounds of financing; some even invest only in the round just prior to the company going public. By and large, venture capitalists never consider themselves as passive investors but claim to help their investments succeed by being active investors. They add value by serving on the board of the investee companies, by acting as advisors to the management team, by helping to recruit needed executives, by introducing the investee company to other companies for the purpose of forming alliances and by introducing the company to the financial community (Wall Street). Not all venture capital firms are accorded with the same regard. Entrepreneurs pursue blue ribbon firms that consistently enjoy above industry average returns not just for their money and their connections. Having such famous venture capital firms as investors imply endorsement and validation of the company and its business objectives.
It should not be surprising that venture capitalists place highest importance in the character of the people they are investing in. The venture capitalist needs to know if the team of entrepreneurs has integrity, can get along with each other and can work with the investor. Their worst nightmare is to invest in a dishonest team who will stop communicating with the investor after funding and run the company without input from the venture investor. In Silicon Valley the due diligence process is rigorous. Usually the venture capitalist after extensive analysis and deciding that interest exists in investing in the company will offer a term sheet outlining the boundaries of the deal. Such term sheets are always subject to verification of representations made by the entrepreneurs in the due diligence process. There are even professional service firms to perform the due diligence investigations. A typical claim by many venture capitalists is that out of every 100 business proposals and plans they review, only about 10 are invited to face to face meetings resulting in 2-3 term sheets and only about half or less of those conclude in actual investments.
Despite the emphasis on technology, Silicon Valley venture capitalists are rarely dazzled by just the technology. They do not invest in “solutions looking for problems to solve.” They look for and ascertain that there will be markets for the products being proposed by the entrepreneur. In other words the business potential is more important than the novelty of the invention. They are fond of saying if they must have an “A” and a “B,” then they would rather have an A team for marketing and a B team for R&D than the other way around.
While venture capital has played a vital role in transforming Silicon Valley into a high tech capital, only about 25% of the Silicon Valley start-ups receive professional venture capital funding. Others start by their own bootstrap, or funds from family and friends. I have not seen a comparison of the survival rates of the two kinds start-ups but not all professionally funded companies survive and non-professionally funded enterprises can also grow into major companies. The most famous example of the latter was Hewlett-Packard, which was started by the two founders long before there was a Silicon Valley and venture capital. Cisco was founded by a husband and wife team and grew for a long time without venture capital.
Conclusion
In the final analysis, high technology development depends on having skilled and motivated people in an open environment where ideas can be freely tested. Entrepreneurs with the best ideas are more likely to attract professional investments. The best managed companies and sometimes the luckiest companies are most likely to reach the critical mass and become an attractive investment for the investing public or as a target for acquisition. Venture capitalists with the best record of making successful investments will have the least problem of raising new funds to invest in new companies. As they become successful, they become better known and are likely to be introduced to superior ideas from more proven entrepreneurs. The quality of their deal flow improves and thus increases the probability of their making more profitable investments. Such accelerating cycle applies to both the proven entrepreneur and the successful venture capitalist. The market forces determine the fate of their efforts.
Another question sometimes asked is: “How to attract premier venture capital firms from Silicon Valley to operate in places like China?” The answer is: “With a great deal of difficulty.” Venture capitalists are hands-on investors. They need to be near their investee companies and they need to be able to help their portfolio companies succeed. To most venture capitalists, with selected exceptions, China is far away and is a place they do not understand and can offer little added value. The exceptions are those individuals that are familiar with both sides of the Pacific, knowledgeable in both environments and can help their investee companies bridge the gap and gain an advantage by establishing cross border alliances. They can make astute investments on both sides and gain leverage by introducing companies from one side to work with the other.
The future is bright for China to develop high tech industries because China has plenty of human talent and entrepreneurial energy. As soon as the path to liquidity can be clearly defined, more and more professional venture investors will come to China with funds to invest. Let the snowball roll down the mountain!
Monday, September 2, 2002
Latest Olive Branch to Taiwan
Beijing’s Tang Shubei came to San Francisco area to deliver the keynote speech at the second annual banquet of Chinese for Peaceful Unification over the Labor Day weekend. Not surprisingly, his views contrasted sharply from the recent rhetoric from Taiwan president Chen Shui-bian and his administration.
About a decade ago Tang was the second most senior person to represent Beijing in the cross strait negotiations. Since Chen’s predecessor, Taiwan president Lee Tenghui halted the discussion in early 1990’s, Tang became head of the Cross Strait Relations Research Institute in Beijing.
Lately, Chen has been testing how far he can go promoting Taiwan independence and not arouse precipitous reaction from Beijing. Instead of lobbing test missiles over Taiwan, Beijing’s response was to send Tang.
While Tang’s remarks delivered before a crowd of 400 was clearly for Chen’s benefit, he presented a perspective unfamiliar to most Americans and policy makers in Washington.
First of all he pointed out that people on both sides of the strait consider people of Taiwan as ethnic Chinese and Taiwan as part of China. Taiwan’s current constitution still recognizes that Taiwan and the mainland are part of one China. “This remains so,” Tang said, “Despite the constitution having undergone six revisions under Lee Tenghui’s administration.”
Even today, less than 20% of the people on Taiwan are in favor of independence. “We can accept the 60 to 70% of the people in favor of status quo,” he said. “We are not interested in forced integration. Let us work to earn the trust and prove that reunification is better than being separate.”
Some of the benefits are already quite evident. Mainland needs Taiwan’s capital and expertise. Taiwan needs the mainland’s low cost base, huge labor supply and market. Approximately 70% of China’s electronic exports come from Taiwan investments, he said.
Every year, more than 3 million people visit across the strait. Without direct linkage, this has meant an extra expenditure of $600 million in travel costs detouring via Hong Kong or Macao that could be used far more productively.
Tang went on to point out that as a major country, it is natural that China should invest in order to modernize its national defense. Such expenditure is totally unjustified, and unnecessary, for Taiwan with only 23 million people to maintain nearly the same defense budget. Such expenditure can only harm Taiwan’s smaller economy.
The solution, Tang suggests, is for both sides to de-emphasize the political differences, i.e., the difference between Republic of China and People’s Republic of China. Emphasize instead that all are Chinese.
Mainland needs to continue to grow economically so that people of Taiwan will be persuaded of the benefits of being part of China. “In the meantime, if Taiwan will foreswear declaring independence, mainland will foreswear use of force. End of problem,” he said.
Taiwan has expressed concern about recognition and participation in world organizations. This concern can be discussed and negotiated, Tang said. He can envision a subgroup carrying the Taiwan banner under the overall China heading, much like at the Olympics.
As for possible distrust and doubt of Beijing’s intentions, Tang pointed out that even after negotiation is concluded, Taiwan will keep its military and the mainland will not be sending any of its own forces to the island.
Will Chen listen to Tang’s overtures? He certainly should. Recent developments suggest Taiwan is becoming increasingly dependent on the mainland and resisting this trend is not in the interest of its people.
A recent poll revealed that 70% of the recent college graduates on Taiwan have yet to find a job. Last year, for the first time, over 1000 students went to the mainland for education. More are looking to join around a million already living and working on the mainland from Taiwan. Imagine the flood of applicants if the students are able to take the mainland college entrance examination in Taiwan.
Of course the flow of people and funds does not have to be unidirectional. Tsingtao Brewery with 7.5% of Taiwan’s market share has recently announced plans to build a plant near Kaohsiung in southern part of Taiwan.
However, to truly capture the comparative advantages on both sides of the strait, there has to be open travel and exchange of ideas, money and people.
The northern California chapter of Chinese for Peaceful Unification is only two years old and hosted a gathering of 400. In February, over 800 overseas Chinese from over 70 countries convened in Sydney to discuss peaceful unification and rejected the notion of Taiwan independence. No other issue can unite the emotions of all Chinese more than the eventual return of Taiwan to China.
About a decade ago Tang was the second most senior person to represent Beijing in the cross strait negotiations. Since Chen’s predecessor, Taiwan president Lee Tenghui halted the discussion in early 1990’s, Tang became head of the Cross Strait Relations Research Institute in Beijing.
Lately, Chen has been testing how far he can go promoting Taiwan independence and not arouse precipitous reaction from Beijing. Instead of lobbing test missiles over Taiwan, Beijing’s response was to send Tang.
While Tang’s remarks delivered before a crowd of 400 was clearly for Chen’s benefit, he presented a perspective unfamiliar to most Americans and policy makers in Washington.
First of all he pointed out that people on both sides of the strait consider people of Taiwan as ethnic Chinese and Taiwan as part of China. Taiwan’s current constitution still recognizes that Taiwan and the mainland are part of one China. “This remains so,” Tang said, “Despite the constitution having undergone six revisions under Lee Tenghui’s administration.”
Even today, less than 20% of the people on Taiwan are in favor of independence. “We can accept the 60 to 70% of the people in favor of status quo,” he said. “We are not interested in forced integration. Let us work to earn the trust and prove that reunification is better than being separate.”
Some of the benefits are already quite evident. Mainland needs Taiwan’s capital and expertise. Taiwan needs the mainland’s low cost base, huge labor supply and market. Approximately 70% of China’s electronic exports come from Taiwan investments, he said.
Every year, more than 3 million people visit across the strait. Without direct linkage, this has meant an extra expenditure of $600 million in travel costs detouring via Hong Kong or Macao that could be used far more productively.
Tang went on to point out that as a major country, it is natural that China should invest in order to modernize its national defense. Such expenditure is totally unjustified, and unnecessary, for Taiwan with only 23 million people to maintain nearly the same defense budget. Such expenditure can only harm Taiwan’s smaller economy.
The solution, Tang suggests, is for both sides to de-emphasize the political differences, i.e., the difference between Republic of China and People’s Republic of China. Emphasize instead that all are Chinese.
Mainland needs to continue to grow economically so that people of Taiwan will be persuaded of the benefits of being part of China. “In the meantime, if Taiwan will foreswear declaring independence, mainland will foreswear use of force. End of problem,” he said.
Taiwan has expressed concern about recognition and participation in world organizations. This concern can be discussed and negotiated, Tang said. He can envision a subgroup carrying the Taiwan banner under the overall China heading, much like at the Olympics.
As for possible distrust and doubt of Beijing’s intentions, Tang pointed out that even after negotiation is concluded, Taiwan will keep its military and the mainland will not be sending any of its own forces to the island.
Will Chen listen to Tang’s overtures? He certainly should. Recent developments suggest Taiwan is becoming increasingly dependent on the mainland and resisting this trend is not in the interest of its people.
A recent poll revealed that 70% of the recent college graduates on Taiwan have yet to find a job. Last year, for the first time, over 1000 students went to the mainland for education. More are looking to join around a million already living and working on the mainland from Taiwan. Imagine the flood of applicants if the students are able to take the mainland college entrance examination in Taiwan.
Of course the flow of people and funds does not have to be unidirectional. Tsingtao Brewery with 7.5% of Taiwan’s market share has recently announced plans to build a plant near Kaohsiung in southern part of Taiwan.
However, to truly capture the comparative advantages on both sides of the strait, there has to be open travel and exchange of ideas, money and people.
The northern California chapter of Chinese for Peaceful Unification is only two years old and hosted a gathering of 400. In February, over 800 overseas Chinese from over 70 countries convened in Sydney to discuss peaceful unification and rejected the notion of Taiwan independence. No other issue can unite the emotions of all Chinese more than the eventual return of Taiwan to China.
Monday, August 5, 2002
Chinese Americans Contributing to Silicon Valley
Current economic malaise notwithstanding, Silicon Valley has earned universal recognition as the Mecca of high technology. After all, Silicon Valley was where semiconductors were reduced to commercial practice, leading to the development of integrated circuits and microprocessors, which in turn created the personal computer revolution and followed by the proliferation of the use of Internet. Many of the leaders of the high tech industry call Silicon Valley home including such household names as Hewlett Packard, Intel, Apple Computer, Cisco, Netscape, 3Com, Oracle, and Sun Microsystems to name a few. Much of the biotechnology revolution also took place in and around Silicon Valley with such industry leaders as Genentech, Chiron and numerous others. Government and business leaders from all over the world wishing to replicate the success of Silicon Valley have made the obligatory trek to Silicon Valley to see and observe and hopefully capture some of the magic to take home.
The one magic ingredient that is surely unique to Silicon Valley is the diversity of the people living and working there. Nowhere else epitomizes America, a place that has room for everybody, better than Silicon Valley. The one distinction between the America as symbolized by the Statue of Liberty and Silicon Valley is that Silicon Valley attracted very few of the downtrodden but many of the best and brightest from Taiwan, China, Hong Kong, Singapore, Malaysia, India, Pakistan, Iran, Russia, Israel, Palestine, Slovenia, Hungary, Czech Republic and not a few from developed economies such as France, Germany, UK and Canada.
Today of all the people working and living in Silicon Valley, one out of four is an Asian and nearly one third of those are ethnic Chinese, and more than one sixth is a South Asian from India or Pakistan. If all the ethnic Asians were to suddenly disappear from Silicon Valley, most of the high tech companies would implode and the economic shock wave would be felt worldwide.
Annalee Saxenian, a UC Berkeley professor, whose research interests include the contribution of immigrants on America’s technology concludes that in Silicon Valley, IC stands not for integrated circuits but for Indians and Chinese. Indeed her study showed that by 1998, the last year of her study, one out of five high tech start-ups in Silicon Valley were led by Chinese Americans. My guess is that today, 5 years later, the number of companies started by Chinese Americans would make up an even higher ratio. I don’t have hard numbers but my reasoning is based on the following considerations:
(1) There are more Chinese Americans in Silicon Valley now than ever. It is not unusual for any of the many professional associations formed by Chinese Americans to hold a conference on a Saturday and get a room full of people, anywhere from 500 to over 1000 in attendance. I don’t have an exact count, but my guess is that in Silicon Valley there are at least 2 to 3 dozen Chinese American organizations according to professional interests each with at least 100 members. By the way, even though mainstream associations such as the American Electronics Association have many more members, they would be hard pressed to routinely turn out 500 for a conference on a Saturday.
(2) There are also many more venture investors willing to invest in start-up companies headed by Chinese Americans now than ever before. Taiwan capitalists have found lucrative deal flows by investing in Silicon Valley and more than 100 of these venture capital firms have set up branch offices in Silicon Valley. Mainstream venture capitalists that used to not look at deals with Chinese American CEOs now realize that they are missing out. They even have Chinese American partners in their firms and now they do not hesitate to invest in start-ups headed by Asians.
The Silicon Valley today is far different from the San Francisco Bay Area I moved to in 1971. In the old days, Santa Clara valley south of San Francisco was a valley of vanishing fruit orchards waiting for the high tech revolution to be recognized and for someone to coin the term, Silicon Valley. Today, every town and city in the bay area tries to lay claim to being part of the mythical Silicon Valley. Then we planned our Sundays for a trek to San Francisco Chinatown to enjoy a dim sum lunch and a load of Chinese groceries to cart home. Today we don’t go to San Francisco for food anymore, just about every city in the greater bay area has at least one shopping mall, developed and owned by Chinese Americans, full of Chinese restaurants and one major grocery store that carries goods from greater China. Thirty years ago, venture capital was just getting started as an investment vehicle and venture capitalist recognized as a profession. Today, anywhere between $20 to 60 billion of venture capital are invested annually in the U.S. and 35 to 40% of all that risk capital have been invested in the San Francisco bay area, an area representing less than 2% of the total U.S. population. For some time now, Silicon Valley has been soaking up more than ten times their fair share of risk capital.
The status of Chinese Americans in Silicon Valley has also changed dramatically over this period of three decades. At Deloitte & Touche, every year we conduct a survey of 50 fastest growing companies in Silicon Valley. In one recent year, 5 of the 8 fastest growing companies had Chinese American as the CEO except for Yahoo, whose Jerry Yang was a founder but not a CEO. If I remember correctly, his title then was “chief proselytizer.” In the old days, Chinese Americans were automatically presumed to be excellent scientists and engineers but incapable of being a manager much less a senior executive. Today not only do we have Chinese CEOs in small to medium size companies, but we have senior executives in major multinationals such as Applied Material, Hewlett Packard, Intel and others. John Chen has a graduate degree from Caltech so you would expect him to be smart and head some R&D lab. But he is the Chairman and CEO of Sybase, a major software company he is credited with pulling it out of a death spiral and restoring to strong financial health.
Silicon Valley today is about as level a playing field irrespective of race or national origin as one can find anywhere. It rightly should be considered a model for the rest of America to emulate. But, it was not always this way and it didn’t change overnight. John Chen and other young successful executives owe a debt to those that blaze the trail for them. I am fortunate to be living in Silicon Valley during this time and privileged to being an eyewitness as some of the Chinese American pioneers made history and changed basic attitudes toward Asian immigrants.
Without a doubt, the first pioneer to come to mind is David S. Lee. David started his first company in 1969 called Diablo Systems, a company that made daisywheel printers. He sold the company to Xerox in 1972 for $28 million. One of the first things Xerox did was to replace David as the executive in charge, so David resigned and started Qume the following year. Qume continued to make refinements in the daisywheel printer and the company was sold to ITT in 1978 for $165 million. This sale returned 93 times original investment for the investors. David made his first million in 1972 when he was 34 and his sale of Qume was the first Silicon Valley company to be sold for over $100 million.
When David was raising venture funding for Qume, despite his track record with Diablo Systems, the investors insisted on the right to put in a CEO over David as a condition for their investment. When ITT bought the company, they made David the number one executive and then later made him a corporate vice president in charge of three divisions. At that time, ITT was in the top ten of Fortune 500 companies and David was undoubtedly the highest ranking Chinese American executive in Corporate America from Silicon Valley. He repaid ITT for their confidence in his management ability by staying with ITT until his division was sold to Alcatel, the French telecomm equipment company.
By the time David left ITT in 1984 he was already a legend in Silicon Valley. While he continued to acquire and run high tech businesses, he also began to think about –as he put it—working for future generations. He became politically active as a fundraiser. Being a Republican he supported most Republican candidates at all levels but he also supported Asian American candidates regardless of political affiliation. He encouraged Asian Americans that were Democrats to be active and support their candidates. To David, participating in the political process and having a place at the table was more important than the political affiliation. When Bill Bradley ran for the Democratic nomination for president, he was a visiting scholar at Stanford. David was among the first to host a dinner party for the senator so that some of the notable Chinese Americans in Silicon Valley can meet him.
David has served on presidential commissions for three successive presidents from George Bush Sr. to Bill Clinton to George W. He has been on the board of regent for the University of California system since 1995. He is very aware of his responsibility as the only Chinese American regent to serve in a system where Asian American students represent 40% of the enrollment. He has been president of Chinese American associations, visible supporter of many Asian American causes and a tireless speaker at functions to encourage others. He makes a difference by example.
Pauline Lo Alker was born in China and grew up in Hong Kong. She came from a “traditional” Chinese family where she was told that her mission in life was to support her brothers. Her parents enter her to school a year early so that she could keep an eye on her older brother. Her dream was to attend Northwestern University, but her parents kept the acceptance letter and scholarship notification from her. In the end she and her brother left Hong Kong to attend Arizona State where Pauline took on double major of music and mathematics. During her senior year she was introduced to the computer, which she took on with total enthusiasm. After graduation in 1964, to her chagrin the only job open to her was to be a bookkeeper at Sears & Roebuck.
Pauline’s first break came a year after graduation when she met someone in the computer department of General Electric who offered her a job as a manuscript typist. Not the plum job but at least it was in the right department. She rented an IBM Selectric, learned to type on it and took the job. A month a half later, a programming job opened and she applied and was selected over four others. Her high tech career was finally launched. By 1972, Pauline had moved to Silicon Valley to become the 37th employee of Amdahl Corporation, then a start-up computer company. She then moved on to mid-level management positions at Four Phase Systems and Intel.
Pauline came to prominence in 1980 when she joined Convergent Technologies, a computer workstation company, as their vice president of marketing. In four years she oversaw sales of half a billion dollars worth of workstations. Convergent was an early high flyer and she was the frequent spokesperson for the company. In 1984, Pauline started Counterpoint Computers, a builder of high performance computers, which was sold to Acer of Taiwan in 1987. She stayed on to run the U.S. business for Acer for a while. In 1990, she was recruited to run and turn around a small company, Network Peripherals, which she did turn around and got it ready for public offering in 1994. The company won the recognition as the most successful IPO from Silicon Valley in 1994. Since 1998 Pauline has been the CEO of Amplify.net, a privately held company in Silicon Valley.
In recent fifteen years or so, Pauline received many honors and awards. She wasn’t just the most visible Asian American women in Silicon Valley but was one of few pioneering women executives who have established their credentials in a mostly male high-tech industry. She was a popular and widely admired role model and she relished her position and took her responsibility seriously. She became the first woman to become the president of AAMA, then standing for Asian American Manufacturers Association. AAMA was and continues to be one of the best-known professional organizations for Asian Americans in Silicon Valley. When it was first formed, it was to serve as a networking and mutual aid organization for Asian Americans. Today, the organization is known in China, Hong Kong and Taiwan as the bridge to Silicon Valley. When Pauline stepped in to lead this organization, the energy level of the entire organization went up, there were more programs put together by more volunteers and attended by more people. Pauline called herself the “self-appointed champion of the young.” She organized and led workshops to teach young engineers about leadership and communication skills and other attributes necessary in order to become successful managers and executives. It was invariably the most popular and best-attended event.
David and Pauline were among the first wave of Chinese Americans that not only helped built Silicon Valley but made the statement that Chinese Americans were not just good technicians but can also be successful entrepreneurs and business executives. Others during the early days of Silicon Valley included David Lam, Lester Lee, Stanley Wang and Ken Fong. David Lam was working at H-P when the white engineer he was training suddenly became his boss. He left to form Lam Research, which became one of the major equipment companies for the semiconductor industry. Subsequently, he went on to lead and/or founded a series of high tech companies. David also served as president of AAMA and on a presidential commission during the Bush Sr. administration.
Lester Lee started a company based on his magnetic media expertise which later evolved to become a supplier of ruggedized industrial PC’s, a profitable and not hotly competitive niche market so that he can devote his energy to social activism. He was involved in the founding of several professional Asian American organizations including AAMA. His opinions and letters to editors are particularly noticeable in the ethnic Chinese newspapers. He and David Lee and Stanley Wang were active Republicans behind many fundraisers in Silicon Valley. In fact he was the first Chinese American to be appointed to the University of California board of regent and he was also the first to serve for a year and then did not get confirmation to serve out the term. He was a victim of political battle between a Democratic legislature and a Republican governor. This failed confirmation was so extraordinary and raised such a stink from the Chinese American community that when David Lee’s nomination came up for confirmation, no one thought to use him as a political football.
Stanley Wang along with his brother started Pantronix, a small company providing the service of assembling and packaging integrated circuits with emphasis on serving companies that supply devices to the military and space agencies. This company has been growing steadily over nearly 30 years and now has plants in Philippines and Kunshan, China as well as Silicon Valley. At Stanley’s company conference room on prominent display are photos of him with every U.S. president from Reagan to the current one. Stanley serves on the board of trustee of the California State University system. The UC system has more glamour and prestige but the state university system serves more students. Stanley has personally made a number of $1 million dollar contributions to the state universities to encourage the improvement in the quality of higher education.
Ken Fong founded Clontech, a biotech company, which he sold to Becton Dickenson in 1999 for undisclosed hundreds of millions. Ken and his wife Pam are known for their generosity to philanthropic causes including endowed chairs and scholarships and for their unfailing support to Asian American political candidates and Asian American issues in need to financial support. Ken has opened a venture investment firm and travels frequently to China to look at developments of biotechnology there.
David Lee, Pauline Lo Alker, David Lam, Lester Lee, Stanley Wang, and Ken Fong are arguably the most prominent of the first wave to grow and prosper and contribute to Silicon Valley becoming a modern legend. At the same time other Chinese Americans also made in roads in Corporate America. Bob Lee was an executive vice president at PacBell, Albert Yu a Sr. VP who led the microprocessor development at Intel and Lee Ting a corporate VP of global logistics for H-P. This group paved the way for others to follow by being role models, community leaders and by giving back to society.
When the Committee of 100 decided to hold the conference in Silicon Valley this year, we felt that it was important to talk about giving back. We wanted to correct any impression that Chinese Americans only take and not give back and we also wanted to stress to our young people the importance of giving back. At the conference, we organized panels to discuss giving back via philanthropy, via not-for-profits and via public service. At our gala banquet, we asked Charles Wang, Chairman and CEO of Computer Associates to talk about his personal approach to giving. Charles is a member of C100 but Computer Associates is based on Long Island in New York and not from Silicon Valley, an easy concession to the recognition that Silicon Valley has no monopoly on giving back.
Charles Wang talked about “The Circle of Giving.” He believes in giving back not only for himself but to involve those around him. To encourage the employees of his company to give, his company matches $2 to every $1 dollar the employees donate to a worthy cause. He personally supports the National Center for Missing and Exploited Children. The Center uses the software provided by Computer Associates to track and quickly retrieves files of missing children and software to help predict facial changes of a missing child, as the child remains missing over years. Charles funds the Smile Train that operates on children with cleft mouths so that they can smile and take on a normal life. The train operates on 25,000 kids per year and has helped 40,000 children in China in just the last 3 years.
On the one hand, we Chinese Americans need to be vigilant over situations where we are being treated as foreigners and where our citizen’s rights are withheld from us. On the other, we need to show that we belong and that we are as American as the next. Americans are famous for their big heart and generosity of spirit; the Chinese Americans can do no less.
I would like to conclude my presentation with a little story about Su Dongpo, arguably one of the best known and best loved poets of China. I did a little research in preparation for the C100 conference and found out that this Song Dynasty poet/government official also started a charity for the specific purpose of helping peasant parents bond with newborn girl babies to reduce infanticide in the countryside. This showed that the Chinese cultural bias favoring male heirs ran deep and hard to overcome. More importantly, I found out that giving back has always been a part of the Chinese culture for those that enjoyed privileged lives.
____________________________________
Based on the keynote address given at the 20th anniversary banquet of Chinese American Forum, 8/3/02, in St. Louis, Mo. Dr. Koo is Director of Chinese Services Group, Deloitte & Touche, a member of Committee of 100 and a board member of Chinese American Forum.
The one magic ingredient that is surely unique to Silicon Valley is the diversity of the people living and working there. Nowhere else epitomizes America, a place that has room for everybody, better than Silicon Valley. The one distinction between the America as symbolized by the Statue of Liberty and Silicon Valley is that Silicon Valley attracted very few of the downtrodden but many of the best and brightest from Taiwan, China, Hong Kong, Singapore, Malaysia, India, Pakistan, Iran, Russia, Israel, Palestine, Slovenia, Hungary, Czech Republic and not a few from developed economies such as France, Germany, UK and Canada.
Today of all the people working and living in Silicon Valley, one out of four is an Asian and nearly one third of those are ethnic Chinese, and more than one sixth is a South Asian from India or Pakistan. If all the ethnic Asians were to suddenly disappear from Silicon Valley, most of the high tech companies would implode and the economic shock wave would be felt worldwide.
Annalee Saxenian, a UC Berkeley professor, whose research interests include the contribution of immigrants on America’s technology concludes that in Silicon Valley, IC stands not for integrated circuits but for Indians and Chinese. Indeed her study showed that by 1998, the last year of her study, one out of five high tech start-ups in Silicon Valley were led by Chinese Americans. My guess is that today, 5 years later, the number of companies started by Chinese Americans would make up an even higher ratio. I don’t have hard numbers but my reasoning is based on the following considerations:
(1) There are more Chinese Americans in Silicon Valley now than ever. It is not unusual for any of the many professional associations formed by Chinese Americans to hold a conference on a Saturday and get a room full of people, anywhere from 500 to over 1000 in attendance. I don’t have an exact count, but my guess is that in Silicon Valley there are at least 2 to 3 dozen Chinese American organizations according to professional interests each with at least 100 members. By the way, even though mainstream associations such as the American Electronics Association have many more members, they would be hard pressed to routinely turn out 500 for a conference on a Saturday.
(2) There are also many more venture investors willing to invest in start-up companies headed by Chinese Americans now than ever before. Taiwan capitalists have found lucrative deal flows by investing in Silicon Valley and more than 100 of these venture capital firms have set up branch offices in Silicon Valley. Mainstream venture capitalists that used to not look at deals with Chinese American CEOs now realize that they are missing out. They even have Chinese American partners in their firms and now they do not hesitate to invest in start-ups headed by Asians.
The Silicon Valley today is far different from the San Francisco Bay Area I moved to in 1971. In the old days, Santa Clara valley south of San Francisco was a valley of vanishing fruit orchards waiting for the high tech revolution to be recognized and for someone to coin the term, Silicon Valley. Today, every town and city in the bay area tries to lay claim to being part of the mythical Silicon Valley. Then we planned our Sundays for a trek to San Francisco Chinatown to enjoy a dim sum lunch and a load of Chinese groceries to cart home. Today we don’t go to San Francisco for food anymore, just about every city in the greater bay area has at least one shopping mall, developed and owned by Chinese Americans, full of Chinese restaurants and one major grocery store that carries goods from greater China. Thirty years ago, venture capital was just getting started as an investment vehicle and venture capitalist recognized as a profession. Today, anywhere between $20 to 60 billion of venture capital are invested annually in the U.S. and 35 to 40% of all that risk capital have been invested in the San Francisco bay area, an area representing less than 2% of the total U.S. population. For some time now, Silicon Valley has been soaking up more than ten times their fair share of risk capital.
The status of Chinese Americans in Silicon Valley has also changed dramatically over this period of three decades. At Deloitte & Touche, every year we conduct a survey of 50 fastest growing companies in Silicon Valley. In one recent year, 5 of the 8 fastest growing companies had Chinese American as the CEO except for Yahoo, whose Jerry Yang was a founder but not a CEO. If I remember correctly, his title then was “chief proselytizer.” In the old days, Chinese Americans were automatically presumed to be excellent scientists and engineers but incapable of being a manager much less a senior executive. Today not only do we have Chinese CEOs in small to medium size companies, but we have senior executives in major multinationals such as Applied Material, Hewlett Packard, Intel and others. John Chen has a graduate degree from Caltech so you would expect him to be smart and head some R&D lab. But he is the Chairman and CEO of Sybase, a major software company he is credited with pulling it out of a death spiral and restoring to strong financial health.
Silicon Valley today is about as level a playing field irrespective of race or national origin as one can find anywhere. It rightly should be considered a model for the rest of America to emulate. But, it was not always this way and it didn’t change overnight. John Chen and other young successful executives owe a debt to those that blaze the trail for them. I am fortunate to be living in Silicon Valley during this time and privileged to being an eyewitness as some of the Chinese American pioneers made history and changed basic attitudes toward Asian immigrants.
Without a doubt, the first pioneer to come to mind is David S. Lee. David started his first company in 1969 called Diablo Systems, a company that made daisywheel printers. He sold the company to Xerox in 1972 for $28 million. One of the first things Xerox did was to replace David as the executive in charge, so David resigned and started Qume the following year. Qume continued to make refinements in the daisywheel printer and the company was sold to ITT in 1978 for $165 million. This sale returned 93 times original investment for the investors. David made his first million in 1972 when he was 34 and his sale of Qume was the first Silicon Valley company to be sold for over $100 million.
When David was raising venture funding for Qume, despite his track record with Diablo Systems, the investors insisted on the right to put in a CEO over David as a condition for their investment. When ITT bought the company, they made David the number one executive and then later made him a corporate vice president in charge of three divisions. At that time, ITT was in the top ten of Fortune 500 companies and David was undoubtedly the highest ranking Chinese American executive in Corporate America from Silicon Valley. He repaid ITT for their confidence in his management ability by staying with ITT until his division was sold to Alcatel, the French telecomm equipment company.
By the time David left ITT in 1984 he was already a legend in Silicon Valley. While he continued to acquire and run high tech businesses, he also began to think about –as he put it—working for future generations. He became politically active as a fundraiser. Being a Republican he supported most Republican candidates at all levels but he also supported Asian American candidates regardless of political affiliation. He encouraged Asian Americans that were Democrats to be active and support their candidates. To David, participating in the political process and having a place at the table was more important than the political affiliation. When Bill Bradley ran for the Democratic nomination for president, he was a visiting scholar at Stanford. David was among the first to host a dinner party for the senator so that some of the notable Chinese Americans in Silicon Valley can meet him.
David has served on presidential commissions for three successive presidents from George Bush Sr. to Bill Clinton to George W. He has been on the board of regent for the University of California system since 1995. He is very aware of his responsibility as the only Chinese American regent to serve in a system where Asian American students represent 40% of the enrollment. He has been president of Chinese American associations, visible supporter of many Asian American causes and a tireless speaker at functions to encourage others. He makes a difference by example.
Pauline Lo Alker was born in China and grew up in Hong Kong. She came from a “traditional” Chinese family where she was told that her mission in life was to support her brothers. Her parents enter her to school a year early so that she could keep an eye on her older brother. Her dream was to attend Northwestern University, but her parents kept the acceptance letter and scholarship notification from her. In the end she and her brother left Hong Kong to attend Arizona State where Pauline took on double major of music and mathematics. During her senior year she was introduced to the computer, which she took on with total enthusiasm. After graduation in 1964, to her chagrin the only job open to her was to be a bookkeeper at Sears & Roebuck.
Pauline’s first break came a year after graduation when she met someone in the computer department of General Electric who offered her a job as a manuscript typist. Not the plum job but at least it was in the right department. She rented an IBM Selectric, learned to type on it and took the job. A month a half later, a programming job opened and she applied and was selected over four others. Her high tech career was finally launched. By 1972, Pauline had moved to Silicon Valley to become the 37th employee of Amdahl Corporation, then a start-up computer company. She then moved on to mid-level management positions at Four Phase Systems and Intel.
Pauline came to prominence in 1980 when she joined Convergent Technologies, a computer workstation company, as their vice president of marketing. In four years she oversaw sales of half a billion dollars worth of workstations. Convergent was an early high flyer and she was the frequent spokesperson for the company. In 1984, Pauline started Counterpoint Computers, a builder of high performance computers, which was sold to Acer of Taiwan in 1987. She stayed on to run the U.S. business for Acer for a while. In 1990, she was recruited to run and turn around a small company, Network Peripherals, which she did turn around and got it ready for public offering in 1994. The company won the recognition as the most successful IPO from Silicon Valley in 1994. Since 1998 Pauline has been the CEO of Amplify.net, a privately held company in Silicon Valley.
In recent fifteen years or so, Pauline received many honors and awards. She wasn’t just the most visible Asian American women in Silicon Valley but was one of few pioneering women executives who have established their credentials in a mostly male high-tech industry. She was a popular and widely admired role model and she relished her position and took her responsibility seriously. She became the first woman to become the president of AAMA, then standing for Asian American Manufacturers Association. AAMA was and continues to be one of the best-known professional organizations for Asian Americans in Silicon Valley. When it was first formed, it was to serve as a networking and mutual aid organization for Asian Americans. Today, the organization is known in China, Hong Kong and Taiwan as the bridge to Silicon Valley. When Pauline stepped in to lead this organization, the energy level of the entire organization went up, there were more programs put together by more volunteers and attended by more people. Pauline called herself the “self-appointed champion of the young.” She organized and led workshops to teach young engineers about leadership and communication skills and other attributes necessary in order to become successful managers and executives. It was invariably the most popular and best-attended event.
David and Pauline were among the first wave of Chinese Americans that not only helped built Silicon Valley but made the statement that Chinese Americans were not just good technicians but can also be successful entrepreneurs and business executives. Others during the early days of Silicon Valley included David Lam, Lester Lee, Stanley Wang and Ken Fong. David Lam was working at H-P when the white engineer he was training suddenly became his boss. He left to form Lam Research, which became one of the major equipment companies for the semiconductor industry. Subsequently, he went on to lead and/or founded a series of high tech companies. David also served as president of AAMA and on a presidential commission during the Bush Sr. administration.
Lester Lee started a company based on his magnetic media expertise which later evolved to become a supplier of ruggedized industrial PC’s, a profitable and not hotly competitive niche market so that he can devote his energy to social activism. He was involved in the founding of several professional Asian American organizations including AAMA. His opinions and letters to editors are particularly noticeable in the ethnic Chinese newspapers. He and David Lee and Stanley Wang were active Republicans behind many fundraisers in Silicon Valley. In fact he was the first Chinese American to be appointed to the University of California board of regent and he was also the first to serve for a year and then did not get confirmation to serve out the term. He was a victim of political battle between a Democratic legislature and a Republican governor. This failed confirmation was so extraordinary and raised such a stink from the Chinese American community that when David Lee’s nomination came up for confirmation, no one thought to use him as a political football.
Stanley Wang along with his brother started Pantronix, a small company providing the service of assembling and packaging integrated circuits with emphasis on serving companies that supply devices to the military and space agencies. This company has been growing steadily over nearly 30 years and now has plants in Philippines and Kunshan, China as well as Silicon Valley. At Stanley’s company conference room on prominent display are photos of him with every U.S. president from Reagan to the current one. Stanley serves on the board of trustee of the California State University system. The UC system has more glamour and prestige but the state university system serves more students. Stanley has personally made a number of $1 million dollar contributions to the state universities to encourage the improvement in the quality of higher education.
Ken Fong founded Clontech, a biotech company, which he sold to Becton Dickenson in 1999 for undisclosed hundreds of millions. Ken and his wife Pam are known for their generosity to philanthropic causes including endowed chairs and scholarships and for their unfailing support to Asian American political candidates and Asian American issues in need to financial support. Ken has opened a venture investment firm and travels frequently to China to look at developments of biotechnology there.
David Lee, Pauline Lo Alker, David Lam, Lester Lee, Stanley Wang, and Ken Fong are arguably the most prominent of the first wave to grow and prosper and contribute to Silicon Valley becoming a modern legend. At the same time other Chinese Americans also made in roads in Corporate America. Bob Lee was an executive vice president at PacBell, Albert Yu a Sr. VP who led the microprocessor development at Intel and Lee Ting a corporate VP of global logistics for H-P. This group paved the way for others to follow by being role models, community leaders and by giving back to society.
When the Committee of 100 decided to hold the conference in Silicon Valley this year, we felt that it was important to talk about giving back. We wanted to correct any impression that Chinese Americans only take and not give back and we also wanted to stress to our young people the importance of giving back. At the conference, we organized panels to discuss giving back via philanthropy, via not-for-profits and via public service. At our gala banquet, we asked Charles Wang, Chairman and CEO of Computer Associates to talk about his personal approach to giving. Charles is a member of C100 but Computer Associates is based on Long Island in New York and not from Silicon Valley, an easy concession to the recognition that Silicon Valley has no monopoly on giving back.
Charles Wang talked about “The Circle of Giving.” He believes in giving back not only for himself but to involve those around him. To encourage the employees of his company to give, his company matches $2 to every $1 dollar the employees donate to a worthy cause. He personally supports the National Center for Missing and Exploited Children. The Center uses the software provided by Computer Associates to track and quickly retrieves files of missing children and software to help predict facial changes of a missing child, as the child remains missing over years. Charles funds the Smile Train that operates on children with cleft mouths so that they can smile and take on a normal life. The train operates on 25,000 kids per year and has helped 40,000 children in China in just the last 3 years.
On the one hand, we Chinese Americans need to be vigilant over situations where we are being treated as foreigners and where our citizen’s rights are withheld from us. On the other, we need to show that we belong and that we are as American as the next. Americans are famous for their big heart and generosity of spirit; the Chinese Americans can do no less.
I would like to conclude my presentation with a little story about Su Dongpo, arguably one of the best known and best loved poets of China. I did a little research in preparation for the C100 conference and found out that this Song Dynasty poet/government official also started a charity for the specific purpose of helping peasant parents bond with newborn girl babies to reduce infanticide in the countryside. This showed that the Chinese cultural bias favoring male heirs ran deep and hard to overcome. More importantly, I found out that giving back has always been a part of the Chinese culture for those that enjoyed privileged lives.
____________________________________
Based on the keynote address given at the 20th anniversary banquet of Chinese American Forum, 8/3/02, in St. Louis, Mo. Dr. Koo is Director of Chinese Services Group, Deloitte & Touche, a member of Committee of 100 and a board member of Chinese American Forum.
Sunday, July 21, 2002
China Bashing - Back in Style?
Pacific News Service, George Koo, Posted: Jul 21, 2002
Editor's Note:Two recently released reports suggest that U.S. policy toward China could take a turn for the worse.
Two recently released reports on China -- one from the Defense Department and the other from a congressional commission -- suggest that China bashing is back in vogue.
On July 12, the U.S. Defense Department submitted to Congress its annual report on military power in China, as required by law. The report is clearly schizophrenic.
On the one hand, the report recognizes that China has placed military modernization behind priorities to develop agriculture, industry, science and technology. Consequently, while China has the world's largest army, it "lacks the technology and logistical support to project and sustain conventional forces much beyond its borders." These and many other statements support the view that China hardly warrants consideration as a serious threat to the United States.
Yet, the department's report details the cozy relationship between China and Russia, from which China buys arms. In Cold War fashion, it painstakingly details China's relationship to every other state of the former Soviet Union, though most do not sell arms to China.
Dealings with the former "Evil Empire" take up an entire section, but not one word can be found on Israel's transfer of military technology to China.
The authors of the report blow up China's military spending from China's publicly reported $20 billion to $65 billion, even while admitting they cannot prove such a high figure. In this way, China is labeled second-largest defense spender in the world behind the United States. The report fails to mention that the United States outspends China by close to tenfold even at the inflated figure.
The Pentagon clearly believes that China is modernizing its military to develop the option of attacking Taiwan. China's modernization is presented as justification for the United States to supply Taiwan with more arms, even though the report's own analysis shows that the mainland does not have the logistics infrastructure to successfully invade the island for many years to come.
China, of course, can threaten Taiwan with a missile attack, and the Pentagon report paves the way for the sale of a U.S.-made theater missile defense system to the island. Skeptics in Taiwan consider such a defense system as needlessly provocative and not affordable.
Also unmentioned are the economic and social integration occurring across the straits, and how such integration can act as deterrence to military conflict.
The authors of this report seem unaware of the paper recently released by Andrew Scobell, a professor of the U.S. Army War College. Scobell wrote a painstaking analysis of China's history and came to the conclusion that China has never been the aggressor nation, a behavior counter to its culture.
In contrast to the Pentagon report, the report released July 15 from the U.S.-China Security Review Commission on "The National Security Implications of the Economic Relationship between the U.S. and China" bears closer resemblance to the infamous Cox Committee report on China. Released on the heels of the Monica Lewinsky affair, the Cox report sought to embarrass the Clinton administration by alleging that China had stolen missile designs from the United States and that the spy worked in Los Alamos.
Both Congressional reports set out to demonize China. The Cox Committee hearings were held behind closed doors; giving the public few ways of knowing how the committee's half-truths and inflammatory inaccuracies were fabricated.
Fortunately, the workings of the Security Review Commission are more transparent.
The commission was created by Congress to monitor how bilateral trade with China might impact national security. The commission conducted a series of public hearings where more than 100 witnesses testified. Prominent China experts from government, academia, think tanks and the private sector took the stand.
Unfortunately, while many of the written and oral testimonies were fair and thoughtful, the panel of commissioners was not. They were appointed to the commission by congressional leaders of both houses with an axe to grind. They virtually ignored the thousands of pages of testimony, except when they suited their purpose.
Half of the dozen commissioners appear to be lawyers with no prior experience on China. The one academic with China credentials is Arthur Waldron, a professor of history known for his hawkish anti-China bias. At the hearing on China entering the World Trade Organization, an exasperated William Lash, III, assistant secretary of the Commerce Department, had to ask Waldron to stop putting words into his mouth. He "thanked" Waldron for a history lecture, but asked him to try to understand the economic significance of China as a member of the WTO.
Apparently the report had to undergo revisions before 11 of the 12 commissioners agreed to sign it. The final language must not have been strong enough for Waldron, however, for he provided additional comments that showed his hostility toward China.
The lone dissenting view of the commission came from William A. Reinsch, former undersecretary of commerce in the Clinton administration. Reinsch criticized the report for failing to be fair and objective. The report "chooses simplistically to blame China for too many of our problems and misses the opportunity to focus constructively on how this relationship can be improved," Reinsch wrote.
It would be a shame if U.S. policy toward China followed the sentiments of these two latest reports. America has real enemies to battle and need not gratuitously create others.
Editor's Note:Two recently released reports suggest that U.S. policy toward China could take a turn for the worse.
Two recently released reports on China -- one from the Defense Department and the other from a congressional commission -- suggest that China bashing is back in vogue.
On July 12, the U.S. Defense Department submitted to Congress its annual report on military power in China, as required by law. The report is clearly schizophrenic.
On the one hand, the report recognizes that China has placed military modernization behind priorities to develop agriculture, industry, science and technology. Consequently, while China has the world's largest army, it "lacks the technology and logistical support to project and sustain conventional forces much beyond its borders." These and many other statements support the view that China hardly warrants consideration as a serious threat to the United States.
Yet, the department's report details the cozy relationship between China and Russia, from which China buys arms. In Cold War fashion, it painstakingly details China's relationship to every other state of the former Soviet Union, though most do not sell arms to China.
Dealings with the former "Evil Empire" take up an entire section, but not one word can be found on Israel's transfer of military technology to China.
The authors of the report blow up China's military spending from China's publicly reported $20 billion to $65 billion, even while admitting they cannot prove such a high figure. In this way, China is labeled second-largest defense spender in the world behind the United States. The report fails to mention that the United States outspends China by close to tenfold even at the inflated figure.
The Pentagon clearly believes that China is modernizing its military to develop the option of attacking Taiwan. China's modernization is presented as justification for the United States to supply Taiwan with more arms, even though the report's own analysis shows that the mainland does not have the logistics infrastructure to successfully invade the island for many years to come.
China, of course, can threaten Taiwan with a missile attack, and the Pentagon report paves the way for the sale of a U.S.-made theater missile defense system to the island. Skeptics in Taiwan consider such a defense system as needlessly provocative and not affordable.
Also unmentioned are the economic and social integration occurring across the straits, and how such integration can act as deterrence to military conflict.
The authors of this report seem unaware of the paper recently released by Andrew Scobell, a professor of the U.S. Army War College. Scobell wrote a painstaking analysis of China's history and came to the conclusion that China has never been the aggressor nation, a behavior counter to its culture.
In contrast to the Pentagon report, the report released July 15 from the U.S.-China Security Review Commission on "The National Security Implications of the Economic Relationship between the U.S. and China" bears closer resemblance to the infamous Cox Committee report on China. Released on the heels of the Monica Lewinsky affair, the Cox report sought to embarrass the Clinton administration by alleging that China had stolen missile designs from the United States and that the spy worked in Los Alamos.
Both Congressional reports set out to demonize China. The Cox Committee hearings were held behind closed doors; giving the public few ways of knowing how the committee's half-truths and inflammatory inaccuracies were fabricated.
Fortunately, the workings of the Security Review Commission are more transparent.
The commission was created by Congress to monitor how bilateral trade with China might impact national security. The commission conducted a series of public hearings where more than 100 witnesses testified. Prominent China experts from government, academia, think tanks and the private sector took the stand.
Unfortunately, while many of the written and oral testimonies were fair and thoughtful, the panel of commissioners was not. They were appointed to the commission by congressional leaders of both houses with an axe to grind. They virtually ignored the thousands of pages of testimony, except when they suited their purpose.
Half of the dozen commissioners appear to be lawyers with no prior experience on China. The one academic with China credentials is Arthur Waldron, a professor of history known for his hawkish anti-China bias. At the hearing on China entering the World Trade Organization, an exasperated William Lash, III, assistant secretary of the Commerce Department, had to ask Waldron to stop putting words into his mouth. He "thanked" Waldron for a history lecture, but asked him to try to understand the economic significance of China as a member of the WTO.
Apparently the report had to undergo revisions before 11 of the 12 commissioners agreed to sign it. The final language must not have been strong enough for Waldron, however, for he provided additional comments that showed his hostility toward China.
The lone dissenting view of the commission came from William A. Reinsch, former undersecretary of commerce in the Clinton administration. Reinsch criticized the report for failing to be fair and objective. The report "chooses simplistically to blame China for too many of our problems and misses the opportunity to focus constructively on how this relationship can be improved," Reinsch wrote.
It would be a shame if U.S. policy toward China followed the sentiments of these two latest reports. America has real enemies to battle and need not gratuitously create others.
Wednesday, February 6, 2002
The Wen Ho Lee Saga
Wen Ho Lee on his book tour repeatedly confesses to his audience that he does not know why his own government targets him as the spy for China. Indeed his book, My Country vs. Me, confirms that he does not have a clue.
What his book does reveal is the ghastly unprincipled behavior of our government, especially the Federal Bureau of Investigations. When they conclude they need a suspect, they will even lie to the presiding judge to make sure that Lee does not get bail.
While incarcerated, Lee was not allowed any reading material, deprived of radio or TV, kept in solitary confinement with a light on around the clock, kept in chain and shackles for the one hour of daily exercise or when he saw his family for one hour each week and fed food that he could not eat. Even convicted murderers were treated more humanely and Lee was not even tried in court as yet, much less convicted of anything.
To justify treating Lee as something less than human, the government went to great lengths to build up Lee’s capability to do harm to the U.S. With great deal of imagination, they convinced the judge that the lives of 270 million Americans were at risk if Lee was loose. FBI agent Robert Messemer drawing on his Chinese language expertise suggested that even a remark like “Uncle Wen says hello” could represent a signal to trigger unimaginably dastardly deeds from the enemy.
In a way, Lee was the ideal suspect/victim. He never voted. He did not read the newspapers nor watch the evening news. He was living the American dream with the full faith that his adopted country would take care of him. He did not know his rights and did not know that no citizen should have to undergo the cruel and unusual punishment that he suffered. The meaning of due process was foreign to him.
Had Mark Holscher, a young lawyer of admirable conscience not come to his rescue just before the showdown at high noon, Lee surely would have been railroaded to the penitentiary to rot and forgotten by now.
While Lee’s book might explain his selection because he was perceived to be an easy mark, a second book released about the same time goes a long way to explaining how this debacle came about. Written by journalists Dan Stober and Ian Hoffman, A Convenient Spy, Wen Ho Lee and the Politics of Nuclear Espionage is a content-rich companion to Lee’s own story.
The second book is almost as much about Notra Trulock as about Lee. Trulock dreamt of the one big case that would catapult him from being director of intelligence and counterintelligence in the Department of Energy to the exalted directorship of the Central Intelligence Agency.
Until the House Select Committee headed by Congressman Christopher Cox came along, Trulock was a lonely voice inside the beltway. Trulock decided that China stole the design of the W88 missile from Los Alamos and the spy must be a Chinese American scientist. Nobody agreed with him and nobody listened. Until the Cox Committee hearing, that is.
Prior to Trulock’s appearances before the Cox Committee, the committee did not find much relating to China to embarrass the Clinton administration. After Trulock’s testimony, the Committee was energized. Every bit of Trulock’s unsubstantiated and uncorroborated assertions became bombshells in the Cox Report to be leaked to the media, one delicious bit by bit.
The leaks worked beautifully when New York Times bought them as facts. March 6, 1999 marked the beginning of the most disgraceful human rights violation perpetrated by the U.S. government since the unlawful incarceration of Americans of Japanese descent during World War II.
Energy Secretary Bill Richardson fired Wen Ho Lee on March 8 in response to the firestorm created by the New York Times and Lee’s name was leaked to the press. The world arrived and camped on to Lee’s front yard. Everywhere Lee and his family went, a caravan of FBI agents followed. The authors pointed out that what Lee earned in a year, about $80,000, the FBI spent in a day tailgating the family.
The circus affected Lee most directly but all Asian Americans felt the sting. The Cox Report in alleging China’s practice of “grains of sand” espionage effectively accused all Chinese Americans of being potential spies for China, solely based on their ethnicity. “In the Cox lexicon,” the authors wrote, “Possibilities became probabilities and qualified speculation became hard fact.”
The most vocal proponent of the mosaic technique of spying was Paul Moore, since retired from FBI. Moore carpooled with Robert Hanssen for years and had no inkling that his friend was a double agent, but seeing a couple of Chinese standing around at a cocktail party would set Moore off speculating as spies passing secrets.
Unfortunately Stober and Hoffman did not question Moore as to why China persisted in using the mosaic technique when it was terribly ineffective, as Moore himself pointed out. They could have simply asked Moore if he knew the difference between the legitimate collection of publicly available information and spying.
There was an even bigger obvious question the authors did not answer. Well before Lee was arrested in December 1999, Trulock’s thesis was already shot full of holes. There was no evidence that China possessed secrets of the W88 or made use of them. The secrets of the W88 design could have leaked from a number of places and not just from Los Alamos. Lastly, Lee had no access to the secrets of the bomb design and could not have been the source in any case.
If Richardson’s preemptive firing was in response to perceived pressure from Cox and other Congressional colleagues from the right—as many obervers claimed--why did Richardson insist on prosecuting Lee after the dubious nature of Trulock’s assertions came to light?
Initially Richardson gave Trulock a $10,000 cash award. Months later, Trulock unhappily resigned. Why?
Lee was brutalized under conditions euphemistically called “special administrative measures.” These measures had to be approved personally by Attorney General Janet Reno and Bill Richardson. What were the grounds for their approval?
None of the individuals mentioned above, Cox, Moore, Reno, Richardson or Trulock, would publicly condone racial profiling or admit to racist inclinations. And, they are ambitious but honorable politicians and bureaucrats. The Chinese might describe the entire episode as wuliao, for which there is no English equivalent. Closest is to define wuliao as a state of being asinine, nonsensical, silly, vapid and ridiculous.
Historian Haynes Johnson commenting on the recent decade said, “Instead of seizing the moment, addressing the kinds of questions that are in our interests, we allowed ourselves to be caught up in a wave of self-indulgence, scandal, illusion and entertainment.”
Perhaps September 11 is the wake-up call we need. Perhaps we can once again look at the world in real terms. When we arrest someone because the person fits a terrorist profile, we better ask the question: Is it that or is it ethnicity?
What his book does reveal is the ghastly unprincipled behavior of our government, especially the Federal Bureau of Investigations. When they conclude they need a suspect, they will even lie to the presiding judge to make sure that Lee does not get bail.
While incarcerated, Lee was not allowed any reading material, deprived of radio or TV, kept in solitary confinement with a light on around the clock, kept in chain and shackles for the one hour of daily exercise or when he saw his family for one hour each week and fed food that he could not eat. Even convicted murderers were treated more humanely and Lee was not even tried in court as yet, much less convicted of anything.
To justify treating Lee as something less than human, the government went to great lengths to build up Lee’s capability to do harm to the U.S. With great deal of imagination, they convinced the judge that the lives of 270 million Americans were at risk if Lee was loose. FBI agent Robert Messemer drawing on his Chinese language expertise suggested that even a remark like “Uncle Wen says hello” could represent a signal to trigger unimaginably dastardly deeds from the enemy.
In a way, Lee was the ideal suspect/victim. He never voted. He did not read the newspapers nor watch the evening news. He was living the American dream with the full faith that his adopted country would take care of him. He did not know his rights and did not know that no citizen should have to undergo the cruel and unusual punishment that he suffered. The meaning of due process was foreign to him.
Had Mark Holscher, a young lawyer of admirable conscience not come to his rescue just before the showdown at high noon, Lee surely would have been railroaded to the penitentiary to rot and forgotten by now.
While Lee’s book might explain his selection because he was perceived to be an easy mark, a second book released about the same time goes a long way to explaining how this debacle came about. Written by journalists Dan Stober and Ian Hoffman, A Convenient Spy, Wen Ho Lee and the Politics of Nuclear Espionage is a content-rich companion to Lee’s own story.
The second book is almost as much about Notra Trulock as about Lee. Trulock dreamt of the one big case that would catapult him from being director of intelligence and counterintelligence in the Department of Energy to the exalted directorship of the Central Intelligence Agency.
Until the House Select Committee headed by Congressman Christopher Cox came along, Trulock was a lonely voice inside the beltway. Trulock decided that China stole the design of the W88 missile from Los Alamos and the spy must be a Chinese American scientist. Nobody agreed with him and nobody listened. Until the Cox Committee hearing, that is.
Prior to Trulock’s appearances before the Cox Committee, the committee did not find much relating to China to embarrass the Clinton administration. After Trulock’s testimony, the Committee was energized. Every bit of Trulock’s unsubstantiated and uncorroborated assertions became bombshells in the Cox Report to be leaked to the media, one delicious bit by bit.
The leaks worked beautifully when New York Times bought them as facts. March 6, 1999 marked the beginning of the most disgraceful human rights violation perpetrated by the U.S. government since the unlawful incarceration of Americans of Japanese descent during World War II.
Energy Secretary Bill Richardson fired Wen Ho Lee on March 8 in response to the firestorm created by the New York Times and Lee’s name was leaked to the press. The world arrived and camped on to Lee’s front yard. Everywhere Lee and his family went, a caravan of FBI agents followed. The authors pointed out that what Lee earned in a year, about $80,000, the FBI spent in a day tailgating the family.
The circus affected Lee most directly but all Asian Americans felt the sting. The Cox Report in alleging China’s practice of “grains of sand” espionage effectively accused all Chinese Americans of being potential spies for China, solely based on their ethnicity. “In the Cox lexicon,” the authors wrote, “Possibilities became probabilities and qualified speculation became hard fact.”
The most vocal proponent of the mosaic technique of spying was Paul Moore, since retired from FBI. Moore carpooled with Robert Hanssen for years and had no inkling that his friend was a double agent, but seeing a couple of Chinese standing around at a cocktail party would set Moore off speculating as spies passing secrets.
Unfortunately Stober and Hoffman did not question Moore as to why China persisted in using the mosaic technique when it was terribly ineffective, as Moore himself pointed out. They could have simply asked Moore if he knew the difference between the legitimate collection of publicly available information and spying.
There was an even bigger obvious question the authors did not answer. Well before Lee was arrested in December 1999, Trulock’s thesis was already shot full of holes. There was no evidence that China possessed secrets of the W88 or made use of them. The secrets of the W88 design could have leaked from a number of places and not just from Los Alamos. Lastly, Lee had no access to the secrets of the bomb design and could not have been the source in any case.
If Richardson’s preemptive firing was in response to perceived pressure from Cox and other Congressional colleagues from the right—as many obervers claimed--why did Richardson insist on prosecuting Lee after the dubious nature of Trulock’s assertions came to light?
Initially Richardson gave Trulock a $10,000 cash award. Months later, Trulock unhappily resigned. Why?
Lee was brutalized under conditions euphemistically called “special administrative measures.” These measures had to be approved personally by Attorney General Janet Reno and Bill Richardson. What were the grounds for their approval?
None of the individuals mentioned above, Cox, Moore, Reno, Richardson or Trulock, would publicly condone racial profiling or admit to racist inclinations. And, they are ambitious but honorable politicians and bureaucrats. The Chinese might describe the entire episode as wuliao, for which there is no English equivalent. Closest is to define wuliao as a state of being asinine, nonsensical, silly, vapid and ridiculous.
Historian Haynes Johnson commenting on the recent decade said, “Instead of seizing the moment, addressing the kinds of questions that are in our interests, we allowed ourselves to be caught up in a wave of self-indulgence, scandal, illusion and entertainment.”
Perhaps September 11 is the wake-up call we need. Perhaps we can once again look at the world in real terms. When we arrest someone because the person fits a terrorist profile, we better ask the question: Is it that or is it ethnicity?
Monday, January 28, 2002
Possible Breakthrough in Tense China-Taiwan Relations
Pacific News Service, George Koo, Posted: Jan 28, 2002
Editor's Note: In the past, pro-independence moves by Taiwan led China to hold military exercises in the Taiwan Strait. But economic and political realities and recent conciliatory moves by politicians on both sides suggest a breakthrough in cross-strait relations may be imminent.
Recent developments suggest a breakthrough in tense China-Taiwan relations is imminent.
Last December, a delegation from the Committee of 100, a national organization of prominent Chinese Americans, met with leaders on both sides of the Taiwan Strait, among them, Qian Qichen in Beijing and Wang Daohan in Shanghai. Qian is a vice premier and former minister of foreign affairs and Wang is a senior statesman formerly in charge of cross-strait negotiations on behalf of Beijing.
Both indicate that so long as both sides accept "one China" as the underlying principle, what constitutes one China is open for discussion and both parties might come to the table as equals.
Indeed, Taiwan's President Chen Shui-bian and his political rivals James Soong and Lien Chan in their meetings with the Committee all admitted that economically and socially, Taiwan and the mainland are already integrated. To Chen, the question is how to continue the integration while retaining the right of Taiwan's people to choose their own form of government.
Ma Ying-jeou, the mayor of Taipei, lamented to the visitors that the flow of young people and capital (upwards of $100 billion) has been all one way, from Taiwan to the mainland. Taiwan's young people today favor universities on the mainland over those in Taiwan. They envision launching their careers in greater Shanghai.
As mayor, Ma is anxious to visit the mainland to promote investments in the reverse direction. "Time is not on our side," he said to the group. He does not view separateness as favorable to Taiwan.
The sands of time are beginning to flow for President Chen as well. The recently concluded parliamentary election finally gave him a workable plurality in the legislature. This means he can no longer blame obstruction of the opposition parties as the cause for Taiwan's current economic contraction.
Chen will have to deliver on turning the economy around, and he can't improve the economy without Beijing's cooperation. To suffer another year of negative growth could jeopardize his prospects for re-election two years from now.
Lastly, a rogue factor that bedeviled the cross-strait relations in the past has been reduced to a bit player. Mr. Iwasato Masao, nee Lee Teng-hui, former president of Taiwan, is now off the stage.
China and Taiwan had actually reached a common understanding in 1992 that led to a formal document signed by both sides in Singapore in April 1993. Lee halted that momentum when he publicly denied Taiwan was part of China, in essence tearing up the "one China" doctrine.
In the evolving relations across the Taiwan Strait, private words do not always match public deeds. A month after Chen's private meeting with the Committee, he has seemingly recanted his position, ordering the word "Taiwan" added to the cover of all passports previously marked only with "Republic of China," a move widely regarded as a sop to placate pro-independence factions within his party.
Beijing regards this latest act as a pro-independence provocation, and inconsistent with Chen's alleged private desire. Spokespersons from Beijing loudly condemned Chen for the move.
But time is not necessarily on the mainland side either. Chen's party, the Democratic Progressive Party, has 86 out of a total of 225 seats in the legislature. The DPP will have to form a coalition to attain a working majority. Lee's splinter group, Taiwan Solidarity Union, captured 13 seats in the election and represents a wildcard in the cross-strait relations. Beijing may want to isolate Lee rather than push Chen into the same camp.
Taiwan and China have both just entered the World Trade Organization. In doing so, they will need to meet and discuss various issues relating to compliance with terms and conditions of the WTO. They will have ample opportunity to quietly explore how to reach peaceful, mutual accommodation. The only way a breakthrough in cross-strait relations can begin may be out of the limelight.
The affairs of Chinese Americans in America are directly impacted by the state of U.S.-China relations. Positive relations require no more Wen Ho Lee cases. U.S.-China relations are also affected by the cross-strait relationship. A breakthrough leading to a peaceful Taiwan Strait would be good news for all Americans, especially those of Chinese ancestry.
Editor's Note: In the past, pro-independence moves by Taiwan led China to hold military exercises in the Taiwan Strait. But economic and political realities and recent conciliatory moves by politicians on both sides suggest a breakthrough in cross-strait relations may be imminent.
Recent developments suggest a breakthrough in tense China-Taiwan relations is imminent.
Last December, a delegation from the Committee of 100, a national organization of prominent Chinese Americans, met with leaders on both sides of the Taiwan Strait, among them, Qian Qichen in Beijing and Wang Daohan in Shanghai. Qian is a vice premier and former minister of foreign affairs and Wang is a senior statesman formerly in charge of cross-strait negotiations on behalf of Beijing.
Both indicate that so long as both sides accept "one China" as the underlying principle, what constitutes one China is open for discussion and both parties might come to the table as equals.
Indeed, Taiwan's President Chen Shui-bian and his political rivals James Soong and Lien Chan in their meetings with the Committee all admitted that economically and socially, Taiwan and the mainland are already integrated. To Chen, the question is how to continue the integration while retaining the right of Taiwan's people to choose their own form of government.
Ma Ying-jeou, the mayor of Taipei, lamented to the visitors that the flow of young people and capital (upwards of $100 billion) has been all one way, from Taiwan to the mainland. Taiwan's young people today favor universities on the mainland over those in Taiwan. They envision launching their careers in greater Shanghai.
As mayor, Ma is anxious to visit the mainland to promote investments in the reverse direction. "Time is not on our side," he said to the group. He does not view separateness as favorable to Taiwan.
The sands of time are beginning to flow for President Chen as well. The recently concluded parliamentary election finally gave him a workable plurality in the legislature. This means he can no longer blame obstruction of the opposition parties as the cause for Taiwan's current economic contraction.
Chen will have to deliver on turning the economy around, and he can't improve the economy without Beijing's cooperation. To suffer another year of negative growth could jeopardize his prospects for re-election two years from now.
Lastly, a rogue factor that bedeviled the cross-strait relations in the past has been reduced to a bit player. Mr. Iwasato Masao, nee Lee Teng-hui, former president of Taiwan, is now off the stage.
China and Taiwan had actually reached a common understanding in 1992 that led to a formal document signed by both sides in Singapore in April 1993. Lee halted that momentum when he publicly denied Taiwan was part of China, in essence tearing up the "one China" doctrine.
In the evolving relations across the Taiwan Strait, private words do not always match public deeds. A month after Chen's private meeting with the Committee, he has seemingly recanted his position, ordering the word "Taiwan" added to the cover of all passports previously marked only with "Republic of China," a move widely regarded as a sop to placate pro-independence factions within his party.
Beijing regards this latest act as a pro-independence provocation, and inconsistent with Chen's alleged private desire. Spokespersons from Beijing loudly condemned Chen for the move.
But time is not necessarily on the mainland side either. Chen's party, the Democratic Progressive Party, has 86 out of a total of 225 seats in the legislature. The DPP will have to form a coalition to attain a working majority. Lee's splinter group, Taiwan Solidarity Union, captured 13 seats in the election and represents a wildcard in the cross-strait relations. Beijing may want to isolate Lee rather than push Chen into the same camp.
Taiwan and China have both just entered the World Trade Organization. In doing so, they will need to meet and discuss various issues relating to compliance with terms and conditions of the WTO. They will have ample opportunity to quietly explore how to reach peaceful, mutual accommodation. The only way a breakthrough in cross-strait relations can begin may be out of the limelight.
The affairs of Chinese Americans in America are directly impacted by the state of U.S.-China relations. Positive relations require no more Wen Ho Lee cases. U.S.-China relations are also affected by the cross-strait relationship. A breakthrough leading to a peaceful Taiwan Strait would be good news for all Americans, especially those of Chinese ancestry.
Wednesday, October 10, 2001
A bicultural professional--divided loyalty or best of both worlds?
Speech: Silicon Valley Chinese Engineers Association Annual Conferenc, October 6, 2001
Despite recent tragic events, we are lucky to be living in America. This is a country of generosity, in space and in spirit. This is a country that has room for everyone and anyone. Anyone with the desire and the drive has the opportunity to succeed here in America. As previous speakers have already recounted, nowhere exemplifies this fact more than here in Silicon Valley.
According to latest U.S. census figures, more than one out of four persons living in Santa Clara County is an Asian American and one out of every fourteen is a Chinese American. Walk through any high tech company in Silicon Valley, and one would meet engineers, managers and executives from all over the world. If America is the land of opportunity, then Silicon Valley the source where opportunities originate.
Silicon Valley is the living proof that diversity is the strength of America. All of us that live and work in Silicon Valley have become to varying degrees multicultural professionals. We have to develop multicultural sensitivities in order to communicate with each other, to work as effective teams and therefore to be successful. Tragically, it is the lack of diversity and cultural sensitivity that kept our intelligence gathering agencies from detecting and preventing the recent acts of terrorism but that’s a topic of discussion for another day.
Today however, I would like to talk about the merit of being a bicultural professional rather than multicultural. More specifically, I would like to talk about being a professional person that takes advantage of being a Chinese and at the same time being an American.
In 1978, more than twenty years ago, I joined Chase Manhattan Bank to help American corporations do business in China, thus making use of my Chinese background as well as my consulting experience and my technical education. At that time, China was just opening its doors to the west and I took the job with Chase Bank with a sense of adventure and it did not occur to me that being bicultural could serve as a basis for a professional career. In fact, many people I met in China and not a few in the U.S. had trouble understanding what a person with a doctorate degree in polymer science was doing in an intermediary role of uncertain calling.
Today is very different. China has become the sixth largest economy in the world, the only major trillion-dollar economy expected to double within ten years, and has become a major trading partner of the U.S. and of California. Today opportunities abound for those who can move comfortably and get things done on both sides of the Pacific and who can function as a bridge between the east and west.
For the twenty some odd years that I have been going back and forth to China, I find certain practices and ways of doing of things essential to a successful career. One is that I take careful notes. Basically it is never a good idea to rely solely on one’s memory on important matters, such as your wedding anniversary, but it is even more important when you know you are jet lagged. When you are jet-lagged, it is amazing as to how easy it is to get order of events, people seen, nature of discussion and decisions made all mixed up just a few weeks after it all took place.
Another important characteristic is careful and active listening, or listening with empathy. This means listening in such a way that the speaker feels assured that he/she is being understood, not feeling the pressure from a listener who is anxious to interrupt and get a word in. An active listener is learning from the conversation and meeting, absorbing and digesting and understanding. Most of us leave a lot on the table because we have never paid enough attention to becoming a good listener. Active listening is a part of effective communication.
To be an effective listener in a cross cultural situation is even more challenging because it requires the person to be constantly switching the contextual background. A Chinese may be saying certain things that have certain significance while an American might be saying similar things but mean quite something different. A bicultural person has to have the ability to put the remarks in context and be able to explain one side to the other.
There are many occasions when I have been called upon to assist with the interpreting between Chinese officials and American business executives. My command of the Chinese language is never good enough for me to be a professional interpreter. But ironically, because I cannot be a word for word interpreter, I concentrate on making sure that the meaning and intent is accurately conveyed. For this, I get expressions of appreciation from both sides of the conversation.
To be a truly bicultural person is someone who can explain what one side is saying in the context such that the other person from the other culture can understand it. To be honest, I think I am pretty good at this and I do it naturally and do not really think about what I am doing. In that environment, my brain is constantly switching back and forth from the Chinese context to the American context, to the point that I am not even aware of what I am doing.
While I take a great deal of satisfaction in being able to help bridge the cultural gap between the Chinese attitude and the American one, sometimes the line seems blurred between explaining a position and taking a position. Sometimes one has to be able to distinguish between explaining China’s policy versus defending China’s policy. As an American citizen, I have an interest in helping Americans understand China’s policy, but I am not sure that I should be in any way defending China’s policy and be labeled an apologist for China.
For example, China has been criticized for their one child policy and their sometimes rather draconian ways of enforcing such a policy. I would point to the alternative, namely without the policy there would be 300 million more Chinese today than there already are. Certainly, I would not defend or even try to explain the extreme lengths some officials in the countryside have gone to enforce the one-child policy.
On the matter of protection of intellectual property, I would explain to my American client that this is a big headache and needs serious attention. I might indicate that lack of respect for software is part of Asian culture endemic throughout Asia, that solution will take a long time and require not only enforcement and prosecution but a great deal of education to promote understanding and respect. Again I would not defend or even condone piracy. In fact every chance I get when I am in China I would point out that protection of IP is in China’s self interest and is crucial to China developing a serious software industry.
China, of course, has been severely castigated over their so-called human rights record. Usually, this matter does not come up in my business assignments but does come up when the overall bilateral relationship is the issue. Again, I do not feel that it is my duty to defend China’s practices, especially since I have no way of gaining enough expertise to say anything authoritative about many of the practices. What I can say and have said to my American clients and political leaders is that human right condition in China is better now than ever in recent history. I have on occasion while in China with my clients and as we stroll along the Shanghai Bund to quietly ask first time visitors if the China they see is what they expected. Did China seem like a police state to them as portrayed by the American media? Of course, I have no respect for those individuals who go the other extreme, i.e., those who fabricate and distort the situation in China to increase bilateral tension in order to make a living from it.
In explaining China, it’s important to avoid using the party line from China for the simple reason that words from China tend to be doctrinaire and sounds more like slogans than are persuasive. For example, I think it is less persuasive to label the Falun Gong a dangerous evil cult, than it is to describe some of the teachings of their founder. Such concepts as levitation, power of spinning wheel to ward off bodily harm, and sickness as punishment for sins that cannot be cured by medication do a lot more to show the cult aspects of this movement than all the name calling.
As a member of the Committee of 100, I am very proud to be part of the team who has been engaged in preparing and updating a position paper on the U.S. China relations, entitled “Seeking common grounds while respecting differences.” We’ve been issuing this paper about every two years and the intended audience for this paper is The White House and Congress. In this paper we claim the advantage of bicultural perspective in pointing out that China is different from the U.S. in many ways. We encourage frequent interactions between government leaders to promote understanding and mutual respect. We argued that hectoring and lecturing and making highly public demands of China to modify their behavior to suit our American standard is not productive and not useful. Every year, we organize a conference and part of the program is to promote greater understanding between our land of origin and our adopted country. [Next year this conference will be held in San Jose and I look forward to seeing you there.]
As a bicultural person, I also devote efforts the other way, that is helping China better understand America. In the days of late 70s and early 80s, my efforts were mainly trying to convince people in China that the streets of America are not paved with gold and that everybody works hard for the admittedly high standard of living. That the image of a matronly woman in fur walking down 5th Avenue of New York with a poodle wearing a cute cashmere sweater and dainty booties does not typify America.
Today, I don’t have to do that anymore. China has largely caught up and in general understands the U.S. better than the other way around. Now, we talk about high tech development and ways of attracting foreign investments. Everybody is interested in the secrets of Silicon Valley’s success. Every chance I get, I explained that Silicon Valley’s success is in the people. When they ask what should the government do to create another Silicon Valley. My answer is that the government should do nothing other than creating an open environment. How to create a venture capital industry to breed successful high tech start-ups? I say first get the stock market up to international standards, let the market conditions, rather the government, decide on who should go public and who should not and do not limit how much windfall profit a venture capital firm can make on a successful investment. Of course to really attract foreign capital and venture capitalists the Renminbi needs to be freely convertible.
Of course, we Americans love to think that democracy is the best form of government and the right one for everybody. I happen to think a democratic government is one that I would prefer to live under but I do not presume to think that it necessarily is the only form of government nor necessarily the best one under all circumstances. In any case, I do not believe unsolicited lectures on the superiority of democracy is a very effective way to convincing anyone. One the other hand, when appropriate I wouldn’t mind explaining to my friends from China about the concept of democracy by using actual real life situations.
Let me give you an example. A few years ago, I was driving some visitors from China along route 280. Suddenly, I had an idea and pull into a rest area that featured a real ugly sculpture of Father Junipero Serra. “See this garden and flowers in this rest area,” I said to my visitors, “That’s the work of a homeless priest.” I then told them the story of this priest who was homeless and spent his time beautifying the rest area and sleeping there. The authorities found out about it and wanted to evict him. The public found out about what the authorities planned to do and raised uproar in sympathy with the homeless priest. In face of the public pressure, the authorities relented and allowed the priest to stay. Somebody, I don’t know who, even provided the priest with a small camper trailer so that he did not have to sleep in a tent anymore. Today if you go by this rest area you will see even more elaborate garden as well as the camper in the back. End of a beautiful story.
Why did I tell the story? Because of its human interest and because it is a good illustration of the benefits of a democracy where public opinion counts. In my view, telling the story is a way of making some points without being obnoxious about it.
Hopefully I have demonstrated and convince you that in acting as a bridge between China and America, in speaking about China to help Americe better understand China, you do not have to defend China. For sure, you should not feel any sense of divided loyalty. As a citizen of this country, you owe your allegiance to the United States. Period. This is not negotiable. As we know well from the recent experiences of Wen Ho Lee, there will be plenty of people that will suspect you of divided loyalty anyway. You must not give them cause and you must fight back when they discriminate and practice racial profiling.
As I alluded to at the beginning of my presentation, to be a bicultural person is to have the best of both worlds. As China grows in preeminence on the world stage, there will be a growing need for people that can communicate, facilitate and motivate on both sides of the Pacific. But the opportunities are even broader than just those that can go back and forth.
China is now actively recruiting those that have been trained and working in the U.S. to go back to China, much like Taiwan did about 10-15 years ago. Why? Because these people have the kind of training, experience, skill set and mindset and network of contacts of value to China. When China completes their reform of the securities market and open up the venture capital market and make the Renminbi convertible, the trickle of people returning to China to live and work there would become a torrent.
Opportunities in Silicon Valley are also growing for the bicultural person as well. For every new ethnic shopping center that opens means more jobs from chefs and waiters to clerks and shop owners to managers and small business operators.
The venture capital industry used to be virtually an all white business. Thanks to more and more high tech companies successfully started up by Chinese American and other Asian American entrepreneurs, the VC firms now realized that they are the ones missing out on deal flow if they do not have some partners who can interact with the Asian American founders.
Same with us here at Deloitte & Touche. We recognize the opportunity to serve increasing number of companies founded by Chinese American entrepreneurs as well as companies coming to Silicon Valley from China, Hong Kong and Taiwan. Thus we have formed Chinese Services Group with bi-lingual and bi-cultural members to provide an array of services.
My friends, we are facing tough tough times right now. When it’s the gloomiest, it’s most difficult to see the light at the end of the tunnel. But inevitably the economy will turn the corner. The long-term future for Silicon Valley, for China and for those of us that can live and work in both environments is bright and exciting. I wish all of you the best for the coming era, an era where multiculturalism and multilateralism will triumph.
Despite recent tragic events, we are lucky to be living in America. This is a country of generosity, in space and in spirit. This is a country that has room for everyone and anyone. Anyone with the desire and the drive has the opportunity to succeed here in America. As previous speakers have already recounted, nowhere exemplifies this fact more than here in Silicon Valley.
According to latest U.S. census figures, more than one out of four persons living in Santa Clara County is an Asian American and one out of every fourteen is a Chinese American. Walk through any high tech company in Silicon Valley, and one would meet engineers, managers and executives from all over the world. If America is the land of opportunity, then Silicon Valley the source where opportunities originate.
Silicon Valley is the living proof that diversity is the strength of America. All of us that live and work in Silicon Valley have become to varying degrees multicultural professionals. We have to develop multicultural sensitivities in order to communicate with each other, to work as effective teams and therefore to be successful. Tragically, it is the lack of diversity and cultural sensitivity that kept our intelligence gathering agencies from detecting and preventing the recent acts of terrorism but that’s a topic of discussion for another day.
Today however, I would like to talk about the merit of being a bicultural professional rather than multicultural. More specifically, I would like to talk about being a professional person that takes advantage of being a Chinese and at the same time being an American.
In 1978, more than twenty years ago, I joined Chase Manhattan Bank to help American corporations do business in China, thus making use of my Chinese background as well as my consulting experience and my technical education. At that time, China was just opening its doors to the west and I took the job with Chase Bank with a sense of adventure and it did not occur to me that being bicultural could serve as a basis for a professional career. In fact, many people I met in China and not a few in the U.S. had trouble understanding what a person with a doctorate degree in polymer science was doing in an intermediary role of uncertain calling.
Today is very different. China has become the sixth largest economy in the world, the only major trillion-dollar economy expected to double within ten years, and has become a major trading partner of the U.S. and of California. Today opportunities abound for those who can move comfortably and get things done on both sides of the Pacific and who can function as a bridge between the east and west.
For the twenty some odd years that I have been going back and forth to China, I find certain practices and ways of doing of things essential to a successful career. One is that I take careful notes. Basically it is never a good idea to rely solely on one’s memory on important matters, such as your wedding anniversary, but it is even more important when you know you are jet lagged. When you are jet-lagged, it is amazing as to how easy it is to get order of events, people seen, nature of discussion and decisions made all mixed up just a few weeks after it all took place.
Another important characteristic is careful and active listening, or listening with empathy. This means listening in such a way that the speaker feels assured that he/she is being understood, not feeling the pressure from a listener who is anxious to interrupt and get a word in. An active listener is learning from the conversation and meeting, absorbing and digesting and understanding. Most of us leave a lot on the table because we have never paid enough attention to becoming a good listener. Active listening is a part of effective communication.
To be an effective listener in a cross cultural situation is even more challenging because it requires the person to be constantly switching the contextual background. A Chinese may be saying certain things that have certain significance while an American might be saying similar things but mean quite something different. A bicultural person has to have the ability to put the remarks in context and be able to explain one side to the other.
There are many occasions when I have been called upon to assist with the interpreting between Chinese officials and American business executives. My command of the Chinese language is never good enough for me to be a professional interpreter. But ironically, because I cannot be a word for word interpreter, I concentrate on making sure that the meaning and intent is accurately conveyed. For this, I get expressions of appreciation from both sides of the conversation.
To be a truly bicultural person is someone who can explain what one side is saying in the context such that the other person from the other culture can understand it. To be honest, I think I am pretty good at this and I do it naturally and do not really think about what I am doing. In that environment, my brain is constantly switching back and forth from the Chinese context to the American context, to the point that I am not even aware of what I am doing.
While I take a great deal of satisfaction in being able to help bridge the cultural gap between the Chinese attitude and the American one, sometimes the line seems blurred between explaining a position and taking a position. Sometimes one has to be able to distinguish between explaining China’s policy versus defending China’s policy. As an American citizen, I have an interest in helping Americans understand China’s policy, but I am not sure that I should be in any way defending China’s policy and be labeled an apologist for China.
For example, China has been criticized for their one child policy and their sometimes rather draconian ways of enforcing such a policy. I would point to the alternative, namely without the policy there would be 300 million more Chinese today than there already are. Certainly, I would not defend or even try to explain the extreme lengths some officials in the countryside have gone to enforce the one-child policy.
On the matter of protection of intellectual property, I would explain to my American client that this is a big headache and needs serious attention. I might indicate that lack of respect for software is part of Asian culture endemic throughout Asia, that solution will take a long time and require not only enforcement and prosecution but a great deal of education to promote understanding and respect. Again I would not defend or even condone piracy. In fact every chance I get when I am in China I would point out that protection of IP is in China’s self interest and is crucial to China developing a serious software industry.
China, of course, has been severely castigated over their so-called human rights record. Usually, this matter does not come up in my business assignments but does come up when the overall bilateral relationship is the issue. Again, I do not feel that it is my duty to defend China’s practices, especially since I have no way of gaining enough expertise to say anything authoritative about many of the practices. What I can say and have said to my American clients and political leaders is that human right condition in China is better now than ever in recent history. I have on occasion while in China with my clients and as we stroll along the Shanghai Bund to quietly ask first time visitors if the China they see is what they expected. Did China seem like a police state to them as portrayed by the American media? Of course, I have no respect for those individuals who go the other extreme, i.e., those who fabricate and distort the situation in China to increase bilateral tension in order to make a living from it.
In explaining China, it’s important to avoid using the party line from China for the simple reason that words from China tend to be doctrinaire and sounds more like slogans than are persuasive. For example, I think it is less persuasive to label the Falun Gong a dangerous evil cult, than it is to describe some of the teachings of their founder. Such concepts as levitation, power of spinning wheel to ward off bodily harm, and sickness as punishment for sins that cannot be cured by medication do a lot more to show the cult aspects of this movement than all the name calling.
As a member of the Committee of 100, I am very proud to be part of the team who has been engaged in preparing and updating a position paper on the U.S. China relations, entitled “Seeking common grounds while respecting differences.” We’ve been issuing this paper about every two years and the intended audience for this paper is The White House and Congress. In this paper we claim the advantage of bicultural perspective in pointing out that China is different from the U.S. in many ways. We encourage frequent interactions between government leaders to promote understanding and mutual respect. We argued that hectoring and lecturing and making highly public demands of China to modify their behavior to suit our American standard is not productive and not useful. Every year, we organize a conference and part of the program is to promote greater understanding between our land of origin and our adopted country. [Next year this conference will be held in San Jose and I look forward to seeing you there.]
As a bicultural person, I also devote efforts the other way, that is helping China better understand America. In the days of late 70s and early 80s, my efforts were mainly trying to convince people in China that the streets of America are not paved with gold and that everybody works hard for the admittedly high standard of living. That the image of a matronly woman in fur walking down 5th Avenue of New York with a poodle wearing a cute cashmere sweater and dainty booties does not typify America.
Today, I don’t have to do that anymore. China has largely caught up and in general understands the U.S. better than the other way around. Now, we talk about high tech development and ways of attracting foreign investments. Everybody is interested in the secrets of Silicon Valley’s success. Every chance I get, I explained that Silicon Valley’s success is in the people. When they ask what should the government do to create another Silicon Valley. My answer is that the government should do nothing other than creating an open environment. How to create a venture capital industry to breed successful high tech start-ups? I say first get the stock market up to international standards, let the market conditions, rather the government, decide on who should go public and who should not and do not limit how much windfall profit a venture capital firm can make on a successful investment. Of course to really attract foreign capital and venture capitalists the Renminbi needs to be freely convertible.
Of course, we Americans love to think that democracy is the best form of government and the right one for everybody. I happen to think a democratic government is one that I would prefer to live under but I do not presume to think that it necessarily is the only form of government nor necessarily the best one under all circumstances. In any case, I do not believe unsolicited lectures on the superiority of democracy is a very effective way to convincing anyone. One the other hand, when appropriate I wouldn’t mind explaining to my friends from China about the concept of democracy by using actual real life situations.
Let me give you an example. A few years ago, I was driving some visitors from China along route 280. Suddenly, I had an idea and pull into a rest area that featured a real ugly sculpture of Father Junipero Serra. “See this garden and flowers in this rest area,” I said to my visitors, “That’s the work of a homeless priest.” I then told them the story of this priest who was homeless and spent his time beautifying the rest area and sleeping there. The authorities found out about it and wanted to evict him. The public found out about what the authorities planned to do and raised uproar in sympathy with the homeless priest. In face of the public pressure, the authorities relented and allowed the priest to stay. Somebody, I don’t know who, even provided the priest with a small camper trailer so that he did not have to sleep in a tent anymore. Today if you go by this rest area you will see even more elaborate garden as well as the camper in the back. End of a beautiful story.
Why did I tell the story? Because of its human interest and because it is a good illustration of the benefits of a democracy where public opinion counts. In my view, telling the story is a way of making some points without being obnoxious about it.
Hopefully I have demonstrated and convince you that in acting as a bridge between China and America, in speaking about China to help Americe better understand China, you do not have to defend China. For sure, you should not feel any sense of divided loyalty. As a citizen of this country, you owe your allegiance to the United States. Period. This is not negotiable. As we know well from the recent experiences of Wen Ho Lee, there will be plenty of people that will suspect you of divided loyalty anyway. You must not give them cause and you must fight back when they discriminate and practice racial profiling.
As I alluded to at the beginning of my presentation, to be a bicultural person is to have the best of both worlds. As China grows in preeminence on the world stage, there will be a growing need for people that can communicate, facilitate and motivate on both sides of the Pacific. But the opportunities are even broader than just those that can go back and forth.
China is now actively recruiting those that have been trained and working in the U.S. to go back to China, much like Taiwan did about 10-15 years ago. Why? Because these people have the kind of training, experience, skill set and mindset and network of contacts of value to China. When China completes their reform of the securities market and open up the venture capital market and make the Renminbi convertible, the trickle of people returning to China to live and work there would become a torrent.
Opportunities in Silicon Valley are also growing for the bicultural person as well. For every new ethnic shopping center that opens means more jobs from chefs and waiters to clerks and shop owners to managers and small business operators.
The venture capital industry used to be virtually an all white business. Thanks to more and more high tech companies successfully started up by Chinese American and other Asian American entrepreneurs, the VC firms now realized that they are the ones missing out on deal flow if they do not have some partners who can interact with the Asian American founders.
Same with us here at Deloitte & Touche. We recognize the opportunity to serve increasing number of companies founded by Chinese American entrepreneurs as well as companies coming to Silicon Valley from China, Hong Kong and Taiwan. Thus we have formed Chinese Services Group with bi-lingual and bi-cultural members to provide an array of services.
My friends, we are facing tough tough times right now. When it’s the gloomiest, it’s most difficult to see the light at the end of the tunnel. But inevitably the economy will turn the corner. The long-term future for Silicon Valley, for China and for those of us that can live and work in both environments is bright and exciting. I wish all of you the best for the coming era, an era where multiculturalism and multilateralism will triumph.
Thursday, September 20, 2001
Dichotomy in Perceptions of the U.S.-China Relations
Based on a speech given at the Commonwealth Club, San Francisco, on September 13, 2001.
When I was first asked to speak at the Commonwealth Club, the spy plane incident was still fresh on my mind and I had been pondering for a long while over the toughening of stances the U.S. and China were each showing to the other side. How much was substance and how much was due to differences in style, I wondered. Since that time, both sides have found ways to soften their positions. Secretary Colin Powell’s visit to Beijing, which took place just shortly before Congressman Mike Honda and his delegation went to China, was widely regarded by the Chinese leaders to be hugely successful—more favorably regarded, I would venture to guess, than his trip might be regarded in Washington.
The theme of my talk is to differentiate and contrast the views of China as proposed by its critics in America’s mainstream and mine, a Chinese American. I hope to at least point out that some of the criticisms suffer from ignorance and lack of knowledge of China’s culture and attitudes.
The spy plane incident
The mid-air collision between an U.S. surveillance plane and a Chinese jet took place on April 1, certainly a cruel April Fool’s hoax if there ever was one, and the initial response from the Bush Administration was to demand the immediate return of the plane and the personnel and China’s reply was to demand an official apology from the U.S. It took days before Secretary Powell and President Bush expressed concern and regret over the possible loss of the life of the Chinese pilot. The crew and rest of the surveillance team came back to the U.S. to a heroes welcome some 11 days after the accident. Eleven days do not seem like too big a deal now in retrospect, but at the time every daily delay was a bid deal in the media and with the folks in Washington.
The spy plane incident is just one example of how the perspective can be so different between that of the Bush Administration and me, a Chinese American. The initial tone of the Bush Administration was strictly a legalistic one, a position based on international law. To wit, we were over international waters, we did no wrong, we are entitled to fly over there and we are entitled to have our plane and crew back. My reaction was hey wait a minute how about some words of regret over the loss of a life? I had the opportunity to go on CNN on the following Saturday, a week later, and I tried to offer some “shoe-on-the-other-foot” perspective. What if the plane that went down was ours and the Chinese surveillance had to force land in New Jersey? Are they entitled to leave right way or wouldn’t we want to detain them long enough to really find out what happened? While in detention would we serve them hamburgers or would we serve them steak? The Americans, I understand, were treated to the best the Chinese had to offer and got their big Mac only after they got back to the US of A.
There are those in the Bush Administration where human relationships do not enter their thinking. Didn’t matter if our crew was treated with the best under the circumstances. Didn’t matter, as we found out later on, that apparently the other Chinese pilot actually guide the stricken American plane to the airstrip and thus avoided having to ditch at sea. As far as these people are concerned, China is going to be the next evil empire whether China likes it or not.
Debate over WTO and Olympics 2008
With that attitude, there were resistance on China entering WTO and same parties questioned whether China “ deserved” to host the Olympics. The resistance to China entering the WTO melted away when the economic implications were made clear to the nay Sayers. Let me simply raise the question, namely how can we have a world trade organization if the largest country and the 6th largest economy—and the only trillion dollar economy expected to double in ten years—is excluded?
Those opposed to China hosting the Olympics followed similar line of reasoning. Namely, why should a country with such a “horrible human rights record” be rewarded with the hosting of this event? Whether China has such an unimagined human rights policy and whether such criticism is steeped with a heavy dose of hypocrisy is a subject for another day, though I have written a chapter on this subject for a book Prof. Ling-chi Wang is putting together. Let me simply point out that to even raise the question on whether China deserves to host the Olympics is to put this issue on a certain presumption that in itself deserves examination. Who do the Olympics belong to? Is it just to member nations of the West or is the most populous nation in the world entitled to a fair stake? Should the right to host be based on human rights? If so, on whose criteria of human rights? Thank goodness, Beijing has been given the right to host Olympics 2008, thus freeing us of years of rancor and bitterness and this discussion is now moot.
Multilateralism vs. unilateralism
Perhaps this is the place to pause and take a look at unilateralism vs. multilateralism. The recent despicable terrorist attack on New York and Washington suggests that there is a price to be paid for being the most powerful nation in the world and this cost is dear. Furthermore, the attack confirms the notion that not even the most powerful nation can stop those bent on destruction and terrorism. All of this should suggest that unilateralism (i.e., we are the most powerful nation and we can call the shots) is not a workable approach. Only by working with all other nations of like mind, will we have any chance of stopping and heading off future acts of terrorism. We can’t possibly exist as a fortress standing alone; we need to be part of the worldwide community. We need the sympathy and empathy and cooperation of everybody in the world if we are to have any hope of stopping this kind of horror. And, it probably doesn’t take a genius to conclude that a missile defense system of any kind is irrelevant to preventing this kind of disaster in the future.
Changing to unilateralism of a different kind, I would like to contrast how American mainstream look at Taiwan and how differently most Chinese Americans look at the same subject. The U.S. foreign policy rests on the premise that democracy is good, any country that practices democracy has to be on the right. Thus Taiwan becomes America’s Asian model of democracy. Chinese Americans look at Taiwan more closely and sees a different picture.
A Chinese American view of Taiwan
We see tradeoffs as price of democracy. Public security in Taiwan has perceptibly suffered when Taiwan became a many-voiced society rather than one under martial law. Open accusations of corruption in the form of black gold politics help brought down the KMT, the party that had been in power for over 50 years. Gangsters ran openly for office and assassinate other public figures that got in their way.
One item of good news was the orderly transition of government, after the most recent presidential election, from the KMT to the DPP, but that was almost the end of good news. While the previous administration demonstrated their ineptitude in dealing with a debilitating earthquake, the new one treated the people to live TV where they watch with horror while four workers stranded by rising flood water were eventually swept away to their death as contending agencies bickered over who should go to their rescue. The stock market has plunged to less than half of its high. Unemployment rose to new high and for 2001 Taiwan faced its first economic contraction in 26 years.
In the meantime, it became increasingly obvious that Taiwan’s economy is intricately and irreversibly tied to the mainland. Anywhere between 500,000 to 1 million Taiwanese now live and work on the mainland. Young professionals in Taiwan now believe their career path runs through Shanghai. In fact the hottest selling books in Taipei all dealt with living and working in Shanghai. According to most recent polls, about one-third of the population are now in favor of reunification with the mainland, which represents a tripling of the favorable sentiment compare to when Chen Shui-bian first assume power. All of this should be telling our political leaders that the sentiment towards independence on the island is nowhere as fervent as it might imply if we only listen to the noises from the Chinese American communities in New York, or Cupertino or Orange County.
I am a member of the committee in the Committee of 100 preparing a white paper for President George Bush to brief him on his October trip to China. My particular contribution is to argue that it is in our American interest to get the two sides of the Taiwan Strait to sit down and talk rather than supplying Taiwan with weapons. Because by talking about defending Taiwan, we are guilty of misleading them into a false sense of the extent of American commitment.
Reprehensible role of Lee Teng-hui
Of courses, thanks to Singapore’s role as an intermediary, government representatives of Taipei and Beijing sat down to talk as early as 1992. They even came to agreement on some issues and by 1993, it really look like they were making good progress towards resolution. Then Lee Teng-hui, then president of Taiwan stepped in. To this day, I am not sure the American public or politicians fully appreciate the sabotage job he did on the developing relationship.
American mainstream think of Lee Teng-hui as Chinese or perhaps as a Taiwan Chinese. Actually we Chinese Americans have come to know him as a true Japanese. His first language, the one he speaks with his wife at home, is Japanese. His older brother was killed during the war fighting for the Japanese and his name is in fact posted in the Yasukuni Shrine in Tokyo. The same controversial shrine that house the names of known war criminals. Given his Japanese roots, then his action becomes understandable. He has publicly pooh-poohed the occurrence of Rape of Nanjing and does not feel that Japan should apologize for their conduct of World War II atrocities. He has written a book on the merits of dividing China into roughly seven equal parts, Taiwan being one of the parts. He has privately admitted in one-on-one interviews to Japanese journalists that his love and loyalty is to Japan.
It has become increasingly clear to Chinese Americans, at least, that Lee Teng-hui does not have Taiwan’s best interest at heart. Not only has he sabotaged the budding cross strait relationship but also he has cleverly splintered the heretofore-dominant KMT into many factions and so weakened the control that the opposition party was able to gain control and succeed him as president with less than 40% of the popular vote. How much of this is known and familiar to Washington? What do you think?
Contrasting celebrations of the U.S Japanese Friendship Treaty
Last weekend in San Francisco, we saw a happening that closely mirrors the dichotomy of views between mainstream American and those of Chinese Americans. I am referring to the celebration of the 50th anniversary of the U.S. Japanese Friendship Treaty. Our government to this day is quite willing to forget and overlook the many atrocities committed by the Japanese soldiers during World War II--the massacres, rapes, looting and arson, the brutalization of women, the live dissection and amputation of innocent civilians as experiments without anesthetics and the slavery of POWs, including American POWs. Our government justified the cover-up 50 years ago on the basis that we do not want Japan to go communist, a tenuous thesis at best. What can be the cause for our government’s complicity today? Why is it so difficult for our government to point out to Japan’s government that until they formally apologize and atone for their past, Japan can never be fully trusted and accepted by their neighbors in Asia?
The one remarkable sight I saw Saturday was that while Colin Powell and foreign minister Tanaka and other high ranking officials from both sides were celebrating the anniversary inside the War Memorial Opera House, noisy demonstrations were being held across the streets flanking the building. Young old, male female, Asian and non-Asian former American POWs stood shoulder to shoulder loudly demanding that Japan apologize. There were flags from Korea and the Philippines mixed with the PRC flag and Taiwan flag. This is the first time I have seen Chinese Americans holding aloft and waving both the Taiwan flag and the PRC flag. Except for Lee Teng-hui, all Chinese stand together on this issue.
Hours in front of the TV watching the replay of the collapsing World Trade Towers until the incredulous brain finally accepts the horror as grim reality makes it a challenge to think deeply about this or any other issue. However, in the ensuing counter offensive against terrorism, the bilateral U.S.-China relationship will be important and will inevitably be transformed. Hopefully we will see enlightened leadership from both countries working together to forge a united front against the terrorists. For those seeking the next evil empire, we have found it and it is not China.
When I was first asked to speak at the Commonwealth Club, the spy plane incident was still fresh on my mind and I had been pondering for a long while over the toughening of stances the U.S. and China were each showing to the other side. How much was substance and how much was due to differences in style, I wondered. Since that time, both sides have found ways to soften their positions. Secretary Colin Powell’s visit to Beijing, which took place just shortly before Congressman Mike Honda and his delegation went to China, was widely regarded by the Chinese leaders to be hugely successful—more favorably regarded, I would venture to guess, than his trip might be regarded in Washington.
The theme of my talk is to differentiate and contrast the views of China as proposed by its critics in America’s mainstream and mine, a Chinese American. I hope to at least point out that some of the criticisms suffer from ignorance and lack of knowledge of China’s culture and attitudes.
The spy plane incident
The mid-air collision between an U.S. surveillance plane and a Chinese jet took place on April 1, certainly a cruel April Fool’s hoax if there ever was one, and the initial response from the Bush Administration was to demand the immediate return of the plane and the personnel and China’s reply was to demand an official apology from the U.S. It took days before Secretary Powell and President Bush expressed concern and regret over the possible loss of the life of the Chinese pilot. The crew and rest of the surveillance team came back to the U.S. to a heroes welcome some 11 days after the accident. Eleven days do not seem like too big a deal now in retrospect, but at the time every daily delay was a bid deal in the media and with the folks in Washington.
The spy plane incident is just one example of how the perspective can be so different between that of the Bush Administration and me, a Chinese American. The initial tone of the Bush Administration was strictly a legalistic one, a position based on international law. To wit, we were over international waters, we did no wrong, we are entitled to fly over there and we are entitled to have our plane and crew back. My reaction was hey wait a minute how about some words of regret over the loss of a life? I had the opportunity to go on CNN on the following Saturday, a week later, and I tried to offer some “shoe-on-the-other-foot” perspective. What if the plane that went down was ours and the Chinese surveillance had to force land in New Jersey? Are they entitled to leave right way or wouldn’t we want to detain them long enough to really find out what happened? While in detention would we serve them hamburgers or would we serve them steak? The Americans, I understand, were treated to the best the Chinese had to offer and got their big Mac only after they got back to the US of A.
There are those in the Bush Administration where human relationships do not enter their thinking. Didn’t matter if our crew was treated with the best under the circumstances. Didn’t matter, as we found out later on, that apparently the other Chinese pilot actually guide the stricken American plane to the airstrip and thus avoided having to ditch at sea. As far as these people are concerned, China is going to be the next evil empire whether China likes it or not.
Debate over WTO and Olympics 2008
With that attitude, there were resistance on China entering WTO and same parties questioned whether China “ deserved” to host the Olympics. The resistance to China entering the WTO melted away when the economic implications were made clear to the nay Sayers. Let me simply raise the question, namely how can we have a world trade organization if the largest country and the 6th largest economy—and the only trillion dollar economy expected to double in ten years—is excluded?
Those opposed to China hosting the Olympics followed similar line of reasoning. Namely, why should a country with such a “horrible human rights record” be rewarded with the hosting of this event? Whether China has such an unimagined human rights policy and whether such criticism is steeped with a heavy dose of hypocrisy is a subject for another day, though I have written a chapter on this subject for a book Prof. Ling-chi Wang is putting together. Let me simply point out that to even raise the question on whether China deserves to host the Olympics is to put this issue on a certain presumption that in itself deserves examination. Who do the Olympics belong to? Is it just to member nations of the West or is the most populous nation in the world entitled to a fair stake? Should the right to host be based on human rights? If so, on whose criteria of human rights? Thank goodness, Beijing has been given the right to host Olympics 2008, thus freeing us of years of rancor and bitterness and this discussion is now moot.
Multilateralism vs. unilateralism
Perhaps this is the place to pause and take a look at unilateralism vs. multilateralism. The recent despicable terrorist attack on New York and Washington suggests that there is a price to be paid for being the most powerful nation in the world and this cost is dear. Furthermore, the attack confirms the notion that not even the most powerful nation can stop those bent on destruction and terrorism. All of this should suggest that unilateralism (i.e., we are the most powerful nation and we can call the shots) is not a workable approach. Only by working with all other nations of like mind, will we have any chance of stopping and heading off future acts of terrorism. We can’t possibly exist as a fortress standing alone; we need to be part of the worldwide community. We need the sympathy and empathy and cooperation of everybody in the world if we are to have any hope of stopping this kind of horror. And, it probably doesn’t take a genius to conclude that a missile defense system of any kind is irrelevant to preventing this kind of disaster in the future.
Changing to unilateralism of a different kind, I would like to contrast how American mainstream look at Taiwan and how differently most Chinese Americans look at the same subject. The U.S. foreign policy rests on the premise that democracy is good, any country that practices democracy has to be on the right. Thus Taiwan becomes America’s Asian model of democracy. Chinese Americans look at Taiwan more closely and sees a different picture.
A Chinese American view of Taiwan
We see tradeoffs as price of democracy. Public security in Taiwan has perceptibly suffered when Taiwan became a many-voiced society rather than one under martial law. Open accusations of corruption in the form of black gold politics help brought down the KMT, the party that had been in power for over 50 years. Gangsters ran openly for office and assassinate other public figures that got in their way.
One item of good news was the orderly transition of government, after the most recent presidential election, from the KMT to the DPP, but that was almost the end of good news. While the previous administration demonstrated their ineptitude in dealing with a debilitating earthquake, the new one treated the people to live TV where they watch with horror while four workers stranded by rising flood water were eventually swept away to their death as contending agencies bickered over who should go to their rescue. The stock market has plunged to less than half of its high. Unemployment rose to new high and for 2001 Taiwan faced its first economic contraction in 26 years.
In the meantime, it became increasingly obvious that Taiwan’s economy is intricately and irreversibly tied to the mainland. Anywhere between 500,000 to 1 million Taiwanese now live and work on the mainland. Young professionals in Taiwan now believe their career path runs through Shanghai. In fact the hottest selling books in Taipei all dealt with living and working in Shanghai. According to most recent polls, about one-third of the population are now in favor of reunification with the mainland, which represents a tripling of the favorable sentiment compare to when Chen Shui-bian first assume power. All of this should be telling our political leaders that the sentiment towards independence on the island is nowhere as fervent as it might imply if we only listen to the noises from the Chinese American communities in New York, or Cupertino or Orange County.
I am a member of the committee in the Committee of 100 preparing a white paper for President George Bush to brief him on his October trip to China. My particular contribution is to argue that it is in our American interest to get the two sides of the Taiwan Strait to sit down and talk rather than supplying Taiwan with weapons. Because by talking about defending Taiwan, we are guilty of misleading them into a false sense of the extent of American commitment.
Reprehensible role of Lee Teng-hui
Of courses, thanks to Singapore’s role as an intermediary, government representatives of Taipei and Beijing sat down to talk as early as 1992. They even came to agreement on some issues and by 1993, it really look like they were making good progress towards resolution. Then Lee Teng-hui, then president of Taiwan stepped in. To this day, I am not sure the American public or politicians fully appreciate the sabotage job he did on the developing relationship.
American mainstream think of Lee Teng-hui as Chinese or perhaps as a Taiwan Chinese. Actually we Chinese Americans have come to know him as a true Japanese. His first language, the one he speaks with his wife at home, is Japanese. His older brother was killed during the war fighting for the Japanese and his name is in fact posted in the Yasukuni Shrine in Tokyo. The same controversial shrine that house the names of known war criminals. Given his Japanese roots, then his action becomes understandable. He has publicly pooh-poohed the occurrence of Rape of Nanjing and does not feel that Japan should apologize for their conduct of World War II atrocities. He has written a book on the merits of dividing China into roughly seven equal parts, Taiwan being one of the parts. He has privately admitted in one-on-one interviews to Japanese journalists that his love and loyalty is to Japan.
It has become increasingly clear to Chinese Americans, at least, that Lee Teng-hui does not have Taiwan’s best interest at heart. Not only has he sabotaged the budding cross strait relationship but also he has cleverly splintered the heretofore-dominant KMT into many factions and so weakened the control that the opposition party was able to gain control and succeed him as president with less than 40% of the popular vote. How much of this is known and familiar to Washington? What do you think?
Contrasting celebrations of the U.S Japanese Friendship Treaty
Last weekend in San Francisco, we saw a happening that closely mirrors the dichotomy of views between mainstream American and those of Chinese Americans. I am referring to the celebration of the 50th anniversary of the U.S. Japanese Friendship Treaty. Our government to this day is quite willing to forget and overlook the many atrocities committed by the Japanese soldiers during World War II--the massacres, rapes, looting and arson, the brutalization of women, the live dissection and amputation of innocent civilians as experiments without anesthetics and the slavery of POWs, including American POWs. Our government justified the cover-up 50 years ago on the basis that we do not want Japan to go communist, a tenuous thesis at best. What can be the cause for our government’s complicity today? Why is it so difficult for our government to point out to Japan’s government that until they formally apologize and atone for their past, Japan can never be fully trusted and accepted by their neighbors in Asia?
The one remarkable sight I saw Saturday was that while Colin Powell and foreign minister Tanaka and other high ranking officials from both sides were celebrating the anniversary inside the War Memorial Opera House, noisy demonstrations were being held across the streets flanking the building. Young old, male female, Asian and non-Asian former American POWs stood shoulder to shoulder loudly demanding that Japan apologize. There were flags from Korea and the Philippines mixed with the PRC flag and Taiwan flag. This is the first time I have seen Chinese Americans holding aloft and waving both the Taiwan flag and the PRC flag. Except for Lee Teng-hui, all Chinese stand together on this issue.
Hours in front of the TV watching the replay of the collapsing World Trade Towers until the incredulous brain finally accepts the horror as grim reality makes it a challenge to think deeply about this or any other issue. However, in the ensuing counter offensive against terrorism, the bilateral U.S.-China relationship will be important and will inevitably be transformed. Hopefully we will see enlightened leadership from both countries working together to forge a united front against the terrorists. For those seeking the next evil empire, we have found it and it is not China.
Subscribe to:
Posts (Atom)
