China: Myths and Realities of the Internet's One Billion Person Market
Presented by: Alex Dyner, Norman Ng
Originally aired on June 11, 2020 @ 7:30 PM - 8:30 PM CDT
A conversation with JD Cloud's former Head of International, Norman Ng, who was instrumental in forging the recent partnership between Cloudflare and JD.
English
China Network
Interviews
Transcript (Beta)
Welcome, everyone, to our segment on China, myths and realities of doing business in China.
I'm Alex Dyner. I'm from the Special Projects Group at Cloudflare.
Very happy to have with us Norman Ng, who previously was at JD.com, the Internet giant, running international business development there, and previously was the head of products for JD Cloud.
And Da Han from Cloudflare, who joined the company about a year ago from Alibaba, where he built out Alicloud Europe, ran international business development for them.
And what brought us all together was a partnership that JD and Cloudflare completed about a month ago.
And so we thought this would be a great opportunity to talk a little bit, not only about doing business in China and some of the myths and realities, I think, that international business people and, you know, including U .S.
and European business people have, I think, in China.
But I think before we get there, it'll be interesting as well just to speak more generally about some of the cultural differences and maybe myths and realities around that as well with both you guys, who have spent, you know, a lot of time in both countries, in both China and the United States.
And so I thought it'll be helpful maybe to, if you could, speak a little bit about your childhood, your upbringings, what it was like growing up in China and then transitioning to the United States.
So maybe Norma, maybe I'll start with you and we can take it from there.
Sure. Thank you. Thank you, Alex, for the great introduction. I'm really happy to be here.
And first and foremost, I just want to say that these guys here, Alex and Da, they're the best business partners that I ever have, like, you know, talking about, you know, international business development.
So I'm really happy here to talk about the general topic around doing business in China or U.S.
companies doing business in China in general.
To your question, Alex, I think there are a lot of myths and realities in China, but I don't know if I'm the most qualified person to talk about it, frankly, because I actually grew up in Hong Kong back in the colonial days, like when they're still under British rule.
So I spent my childhood there, you know, up till when I was like, you know, going through high school and then moved to the U.S.
for college. But I do actually see a lot of very standout differences.
And I think a lot of our conversations today will kind of circle around these three very unique combination of characteristics as we talk about China.
People have to understand, I'm sure people know that, you know, China as a country and as a market, A, it's huge, it's very big and it's also very different.
But then there's also a change, a third kind of characteristic that people sometimes forget is that it's also very, you know, changing very fast, very fast moving.
It's big, it's different, it's changing very fast. It makes it really hard to, for external companies to actually do business in China, as well as for, you know, frankly, you know, business inside China to see how they should react and work with, you know, companies outside.
But before all that, you know, talking about kind of cultural upbringing, I would just cite one thing, which is, I think, true, even though, you know, there was British rule and I'm looking at it, you know, just a general, what we call traditional Chinese kind of upbringing.
I think because of the need to educate, you know, the mass, I think the kind of, you know, the ratio of resources, you know, child to teacher ratio and whatnot in China and actually in Hong Kong, you can see it generally in Asia, it's very different.
You know, we often say that it's very like spoon-fed, it's very much like, you know, they would honor like the conformity in terms of education.
So everybody has a big syllabus, you know, it's very top down from teachers, very like, you know, instructional, kind of feeding knowledge and information.
At least that's what, you know, it is nice in my era.
And I think, you know, lately, there has been some changes.
So that might be the myth part is that China's not always like that.
If I looked at my kids having spent like the last 10 years in China, you know, whether they're in international schools or even some of the local schools, they are now very different, you know, talking about some narratives with like schools here in China.
Now they value a lot in terms of, you know, kids speaking up, even though they have to be very rigid and kind of get a hands on.
But it's still very, like now very open, very much like a Western kind of atmosphere that they value, you know, the need for kids to express themselves, you know, to value the creativity side and value the most importantly, the building up of self-confidence or confidence in general.
So I think those are things that I take away that, you know, from my childhood on education that I see the biggest differences because like, as I grew up, I'm like, even for English, I was like, you know, back in the colonial days, right, I speak, I learn English, the British English, I speak very much British English, supposedly, but I actually don't get a lot of chance to speak.
My actually written and oral, I mean, written and verbal are pretty good when I'm reading, writing, but I never get to speak or listen to it much.
So that's very different. They don't get a lot of the interactive kind of education.
I don't know about Don, maybe he's a bit more kind of representative of me in China.
I was gonna ask, I was gonna ask that. But Norman, you do think that that is sort of a real thing that I actually happened to live, I lived in London, England until I was nine years old.
And the system there is more rote, I thought when I was there, at least, than in the US, whereas you say it is kind of, there's more focus on kind of, you know, the creative elements and kind of building up the confidence.
You think that's consistent with what you experienced in Hong Kong as well, that it sounds like?
Not when when I was young, like when I was very much like when you were, I don't know how old we are, when you're nine years old in the UK, it's very somewhat rigid.
It's a set syllabus and very kind of fixed set of, you know, way of education, very draconian.
But these days, I'm saying in Hong Kong, and these days, even within Mainland China, you're seeing a lot more kind of interactive, you know.
Oh, I see. That's interesting. Yeah. So they're opening up and kind of like, you know, bring that element, those elements into the education system.
Dao, what about your experience when you were growing up, or what you see now with maybe some of your family there?
Yeah, definitely.
I saw the change in the past, like, 20, 30 years. You know, I was born in the 80s, 1980s.
So my past was very, like, typical Mainland Chinese. Spent like 18 years for the elementary school all the way to the middle school.
And then before you can go to the college, you have to decide which big city you have to go.
Usually, there was good, good quality universities in the big cities like Beijing, Shanghai, Guangzhou, blah, blah, blah, right?
So usually, if you are really good at academic, you get a university in the big cities.
And then through the university system, you will consider whether you want to, after the bachelor degree, you want to get into the job market, or you want to have some higher education, like master, blah, blah, blah.
I think I'm agree with Norman that at least in my generation, I get my bachelor degree in 2002.
So before that, usually, it's like a set menu.
You want to go to a specific major, you have a set menu, like the classes, the lectures, the fundamental classes, it's almost there, right?
There are some, like, elective classes, but the most, if you are in the electronic engineering, you talk to the other folks from other universities, basically, you are learning the same thing, almost the same thing from each and every university.
But I think nowadays, the education system in China are more and more open.
The mandatory classes are still there, but it gets very limited scope.
And then you have many things else to learn to, you know, to be a, to be more open-minded.
That's my general understanding about this education system.
And back to myself, after the bachelor degree, after I got my master degree plus, by the way, in China, usually the master degree will cost you, I really think cost you two and a half year, even three years, you know, but we know in U.S.
and in some other education systems, probably you can get the master in one year, right?
So after I get my master, I spend like seven years with Samsung APAC region, and if you probably, I want to change my career path from engineering to something else.
So I end up in Carnegie Mellon Business School and then spend the next steps in the U.S.
and between U.S. and China.
Do you think when you were talking about how the system is changing a bit, do you think they are, are the Chinese sort of moving towards the West?
Are they borrowing elements of Western education and kind of integrating it into their curriculum or is something else going on there?
I think we are trying to learn from the Western system because the old education system in China was learned from the Soviet Union or Russia, whatever.
Basically, it's the same manner, right? But most of the Western countries, even just to myself, my MBA education, most of the classes are all elective, right?
You basically probably have like 10 percent, 20 percent, that many, but all the other 70, 80 percent, you can find a direction and choose whatever you want.
As far as you hit your score, you hit your, you know, final test, you're fine.
But in China, at least in my generation, we don't have a lot of choice.
Once you choose the major, almost it's not that many. But now it's getting much, much better, I believe.
And both you guys as well, you're both raising, you both have, happen to know, you have children and that you're, you're both living in the U.S.
now and raising children there. Do you think parents focus on different things in China versus in the U.S.?
There are certain stereotypes, I think, then that Western folks probably have of Chinese parents.
Do you think it's, is there a kind of sort of a different mentality and is that changing as well?
Well, it's really hard to gauge because, A, I cannot, you know, say, you know, what's the stereotypical, like, you know, U.S.
parents view of Asian parents. But I can say that in general, like, because this topic, I just come up and get a feel in general that, you know, what do you, you know, as parents want the most out of their kids.
And people used to say, I think it's like, there's no truth in it. In Asian countries, because of the fact that I talked about very scarce resource, everybody's competing the limited resource.
So parents actually want their kids to be successful.
And like, that is like the ultimate goal. And how do we mean by successful?
It's not like, you know, being happy, being healthy, being rewarding, kind of, you know, giving back to society, but at least need to survive, need to be successful.
So I think that is, and I, again, I don't represent the whole, but it comes up very often as they looked at, you know, what kind of path I lay out, what kind of, you know, a prep school or what kind of like, you know, education or, you know, after school, I need to kind of prep my kids.
It's roughly towards like a gearing focus, what we call like, you know, success or think view of success, where it's like here, I'm sure like parents in the States would love their kids to be successful also.
But that doesn't mean that that's like the one and all and only goal, right?
They have to be a good person, right? They have to kind of, there are many different, there's a society, there's like social sides, it's not just themselves.
But it's that view that I see the most drastic, and it kind of manifests itself in many different kind of more of the behavioral side in terms of like their eagerness into kind of like, you know, paving the right path to college, or like I said, like, you know, rolling into different classes, or being focused in terms of, you know, not falling behind or not losing on what we call losing on their starting line, right?
You've got to have like, what kind of like, I don't know, you know, kind of training, whether it's like math or very rigorous kind of training, things that you know, that, you know, kids were not, you know, their intelligence difference, even if it's the same IQ, like, if you do more training, you just get better, like things like, you know, math and things like that.
So they put a lot, I would say, you know, a lot more emphasis over emphasizing some of those things.
And that actually reinforced the whole stereotype, all Asians are good at math, that kind of thing, because, you know, or even like, you know, that's what, you know, kind of, kind of, kind of is kind of like a, I don't know what they call it a virtuous or vicious cycle.
So the difference between like, you know, how the ultimate goal being successful, or some of the more rounded kind of like, you know, accomplishment, I would say.
Yeah. And to be clear, I mentioned it up in a positive way, just about the work ethic, I think of, and also just, you know, having worked with when you when you were at JD, and we're observing that and their partnership with Baidu and others, and just the Chinese sort of economic engine in general, they're, you're totally right about stereotyping different people, everyone's different.
Yet, yet, I think there's an admiration for the work ethic as well.
And so it's an interesting, interesting, kind of, you know, thought to think how, is there something different there?
As well, comparatively, I mean, I don't know what I don't know what you think about that.
Yeah, I think one thing, either you are in the education system as a child, or in the in the company, as an employee, is the peer pressure and the competition, meaning, say, I'd say, at least in my generation, probably now, it's also the truth that in China, education results, especially the good education results is still very limited.
So compared with the, you know, the huge population, the population density, in the in the big city, like Beijing, Shanghai, as a child, you really have to work, you know, not work, but study very hard to get into the good school, even for the private school, you know, I guess, no man's even for international school, I think it's the same.
So we may also apply that to the professional life in the technology company, like Ali, like Tencent, JD, even though companies hire a lot of people, but compared with the the employee in China, compared with the talent in China, you know, a lot of people, you know, want to get into the big companies, the competition is very, you know, crazy.
So we heard about this 996, this thing, I, honestly, I personally don't like that so much.
But you just have to, you know, survive that and then thrive. Right, exactly.
If you don't, it's not an option, it is a must, I think it's like a prerequisite to even kind of, you know, keep up, you know, with the rest of the competition.
So it's all about scarce resources, and, you know, the competition around you.
So it is very fierce, like, you know, when I was at Microsoft in China, we used to say, we hire like the top 0.0 something percent of the talents, and getting, imagine how hard, you know, just dimension, like, you know, you know, thinking about, you know, your education, and kind of competing for those, like, few slots in the great universities, even that is not the end of it, you kind of kind of get a competed to getting into, you know, big companies, like, you know, or like, you know, at that then big Western companies, that was really, again, really hard.
And then even getting in there, we do like, you know, annual reward system, I still remember giving like a kind of because we have a strict curve, people know about Microsoft, we have a strict curve, and we have the great people.
And this is the guy from Tsinghua, who's like probably the best, you know, high tech college in technology in China, is the first time in his life getting something that's like less than a B.
So, you know, it's a big hit. So it's also hard to kind of, you know, manage people, but on the work ethics side, I mean, we actually have managers in back then, even in these MNC saying that when you talk about work-life balance, I was shocked hearing a local manager say, you know, no work, no life, that's a work-life balance.
If you don't work, you don't have a life later. So, you know, when we talk about, wait, wait, wait, is it the right way of actually communicating this?
So, but in a sense, it is that actually reflects some of the nature that how folks are brought up, the kind of pressure and the environment that folks are in that keeps them sharp, keeps them on their toes, keeps them kind of really on a competitive edge, everybody.
So they work hard, they think they have to work hard, they don't think there's another option, that is the only way to not exactly get ahead, it's just to stay where you are, I think.
So that is like the general situation is about very fierce competition and scarce resources.
I was going to ask, does that translate into the workplace?
I think you already answered that, which you would say, yes, it does.
And there's a different feel, especially at tech companies working for Chinese tech company versus US tech company.
So moving to kind of a business setting, that was interesting in terms of hearing about, you know, the foundation of how you guys grew up and whatnot.
Moving to the business side, you know, that's a super broad question.
And I think you're, I'd love to get both of your perspectives on, you have so much experience in this.
How do foreign companies go wrong, trying to do deals in China?
You hear about how difficult that can be, given some of the cultural differences.
I'd love to hear about that and kind of some of the assumptions you think that people hold that are not Chinese, that kind of really sometimes can trip them up in doing business and in doing deals in China.
Sure. Don, you want to go first or? You can go first. I'm okay either way.
Okay. Well, I think people have to understand, right? Like I said, China's big, China's different and changing really fast.
And a lot of it makes it that, you know, for a lot of companies, I'm going to look at it from the other side, companies in China, it's pretty much like in the baby boomers in the US, they're not, a lot of companies are not accustomed to doing business with the outside.
I mean, they can survive totally by just being a great company, just serving local domestic needs.
So that, and then that's number one. The other thing is that, you know, China's also very accessible.
Like one of the myths is that, oh, there's very, like you see farmlands in China, a lot of people too in Agricultural.
No, like in China, pretty much all the big city hubs are major commerce.
They can get to one another in like what, the flight of two hours.
So when people conduct business in China, they are, they value, they're not value, they're very accustomed.
So the fact that, okay, people might not have the world view of doing this business outside of China on the need to do it.
B, they're actually accustomed to actually seeing a lot of FaceTime, cultivating what we call trust or Guanxi relationship, right?
In China, having that very close knit and very face to face and kind of warm kind of like relationship and doing it internally.
Now you juxtapose it into a view or a world where not just China, but you know, everybody else in the world, right?
People feel strange because as Americans, like, you know, we go do business and in every different countries and it's all very, very different, but then everybody kind of on a certain, I'm not saying contract, contract, but a method of protocol is that, you know, I don't know the language is a different time zone.
I flew 12 hours to your location. So we got to get down to business quick.
We've got to get down to terms. We've got to get down to MOUs, LOIs, or then have a contract.
And that's what we based off of. And there's like binding or legal to protect both sides.
And that's how we get things done. But the fact is that the same geographic and time zone and culture and language differences exist in China still.
But then in China, people are not used to saying why, you know, I still want or hope or expect my business partners, whether they're local or foreign to have this long way of cultivating trust.
And I wouldn't say a pitfall, it's just foreign to a U.S.
company. It's like, why can't I just sit down and get down to business?
People sometimes, you know, if you're like in Japan, you could say, oh, you got to go drink or something, but it's like a different way of cultivating trust.
In the end, I think doing business is still the same around the world.
Chinese companies or anybody in China, I think they value trust, not more than, you know, companies outside of China.
They love like to be building this win-win kind of business partnership, or in the end, business set up.
But how to get there is very different. And a lot of times, it's really hard for a foreign company expecting something very different to get to business and doing it.
And that would make it, I wouldn't say offensive, but it's really hard for Chinese companies to take it all in, you know, combining that I don't know the language, I can't kind of converse really totally well before I know the person that I'm dealing with, to kind of have that trust, then talk about business.
So it's like trust first, and then business versus like, let's get down to business and then go for drinks.
So that is also another thing that I kind of see very different.
And then the other thing is that in the, sorry, I'm taking up a lot of time, but I see this very interesting is that because of the lack of the very hard to actually get quick trust built up, it is oftentimes on the other side that companies would say, you know what, I want more out of it, or I want more of a commitment, or some kind of a upfront kind of like, you know, a win, in the sense that for Chinese companies, I see a lot of great partnerships, actually in China, start up really small with two chairmen.
So it doesn't have to be chairman, but two companies coming in really loose, and then having some kind of small wins or U-turn wins, and then building on top of something more formal.
But it's just harder, right?
As I talked about, you know, in China, it's all very close, small country, very easy to kind of go to different places.
For foreign companies, you have to fly there, or it's really hard to conduct it over Zoom.
It's kind of hard to get down to that level of, it's not worth everybody's time to actually do a lot, a small deal to start with, or something that's really small.
And then hoping that will grow big, because if you don't have the commitment, then you never grow big.
So it's the balance, it's how to strike that just enough kind of commitment, and balancing the probability that something is going to come out, to build the trust, and then to kind of, you know, grow that into bigger.
I think that is the hard part.
And for deals, I wouldn't say companies, because no one company actually do it right.
Many companies fail with different deals, and some deals in some companies actually work.
So we hope that JD and CloudFlips, you know, and it's very confident that it will work, is to find the right balance to start growing that, so it's not asking for too much, and not expecting a lot of commitment, and yet it's still good enough to build the trust and start something to go on.
I think that that is in general the difficult part, and in a very kind of abstract term, not talking down to specifics.
But sorry, we're taking a lot of time.
Yeah, definitely.
I just want to end on a moment, on something that very, I guess one very misleading infer was that, hey, if you want to do business in China, you have to do a lot of drinks.
I mean, you know, trust and relationship definitely is super important, and you know, face-to -face time is super important.
But I think the overall, the business environment in China is changing, right?
Even in domestic China, the sales don't do a lot of drinks to close the deal.
And now it's the same when the international companies get into China.
Usually, I think enough in-person and face-to-face time with your partners in China is super important, but it doesn't mean you have to go to karaoke or go to dinner all the time.
I think more and more, it's about the business value, what, you know, each party can provide to the other.
That's the key. And another area I want to highlight that I feel, at least in my personal opinion, I feel Chinese companies are more agile, more agile, meaning it's not that they don't have long-term vision or long-term strategy.
They do have, but they don't want to stick to something that never changes.
You sign a contract for two, three years, but after six months, you found, once I found, oh, it doesn't work.
Usually, Chinese partner may propose, let's figure out the right way to continue the partnership, rather than we stick to the old plan for the next 18 months, and then we finally fall apart, right?
I think that's something really interesting.
I'm not saying whether it's right or wrong, but I guess be agile and fit into the change and making work is important for the Chinese company.
Go ahead, Norman. Sorry. Oh, sorry. I just want to say, you know, Don's point is that the market itself is changing very fast.
Like if you look at a domestic Chinese company, like a Warner Cloud, they have to actually adjust in and be agile as well.
That's why they don't want to, fundamentally, I think the market is fast changing, right?
It's very big, but it's also quite fragmented. I think that it's a market of one billion people.
Well, maybe for more of the infrastructural companies, like with Cloudflare, it is, but for more of the application, there's all these different economic zones and kind of micro -economies, even within China, so they have to adjust.
You know, I totally second Don's point about it changes really fast.
That's why people have to adjust, and all these partnerships need to be agile and also be able to adapt to those fast changing, just general business and market opportunities in the environment.
Yeah, because I was going to ask as well, I mean, there's a perception is that, is the contract less important in China versus in Western business?
Is that kind of a version of what you're talking about, or is that something different?
No, I think contracts are very important.
I think, A, you know, like the folks in China, I think, especially companies like the big companies, even small companies, they own a contract.
I've seen they own a contract. So it's actually how do you get to the contract?
What put in the contract? And how to actually provide the kind of provisions and the flexibility that talked about, you know, what you're asking in return in terms of, oh, I, you know, protection, all these kind of locking really down so that like, you know, crosses all the T's, something all the I's, that kind of thing.
I think some would be viewed as being very rigid and not very adaptive.
I think you can still get deals like that way, but it'd probably take a lot of time, even if it ever actually goes through.
And then even if it goes through, it might not sustain actually just the general forces of the market because things change.
So then you end up having to kind of throw in amendments and addendums on it anyhow.
So just doing the contract itself might be even more work than actually doing the business.
So, which is something that, again, it's also a balance.
But the contract is still very important. I mean, there's a great legal system.
I mean, people still kind of very much like, you know, even between like two chairmen, I don't think there's just like, you know, gentlemen's handshake, but they're still going to contract.
I've not seen that kind of, you know, big part of it or anything like that.
Yeah. And what about the, and just to be blunt, I want to avoid kind of politics and political issues, but are there things about the, you know, sort of the legal system there and the sort of the political environment that change the way that things are done in the business world fundamentally, do you think?
And it changed the way you do deals and whatnot. I mean, obviously there's a specific regulatory points that come up no matter where you do business in every country you do business in, and you have to kind of go through the regulatory checklists and check all the boxes.
I'm talking about something more kind of more general and holistic.
It's obviously, you know, there's a more, you know, in recent history, a more sort of communist background.
And one thing I've been struck by doing business there as someone who's obviously not Chinese is you have a more kind of communal as I do kind of mentality.
I think it also, even at these large tech companies, and my question is, I wonder if that does that, do you feel like that permeates more generally in business dealings and whether that's through partnerships or just selling a product or services in the country?
Yeah, I can go for it.
Yeah, that's a tricky question. I think we're, you know, at China, at the whole country, I think it's getting more and more open.
I should say that in general, but if we check the specific business area, like financial service, like even some Internet service, cloud service, there are strict regulatory requirements for the foreign companies, like US, European companies to land into China.
Either you have to work with a local partner or do the GEV or there are some like, you know, requirements for how much percentage of equity the foreign company or foreign partner can own.
I think that's true. Honestly, I don't want to judge that.
Just from a pure business perspective, I would say there is less and less grey area and red tape for foreign companies getting into China.
There's more and more clarity on what to do.
And even the MIT or some Chinese ministers trying to explain more and more clearly what should be done for a foreign company to set up the operation of sales in China properly.
So I'd say generally it's a good sign.
And I, you know, even living in US as a Chinese citizen, I can see the market is getting more and more open.
Just it didn't reach the tipping point yet to a fully open market for some sector.
Right, right. It certainly is. Like, so despite a lot of the kind of regulatory and compliance, you know, red tapes that, you know, I think in general, I think the trend for most markets are, you know, getting more and more open, you know, from telecommunications, data centers.
So China, and I think we should look past and kind of figure out, I obviously don't represent in any way the Chinese government, but like, you know, why is it like that, you know, a lot of these regulatory and compliance kind of standards are put in place as we operate, because I've actually operated a foreign kind of cloud service in China.
I also like to operate a local cloud business, which is also very sensitive in the sense is that, you know, ultimately what the government wants is to kind of control information, dissemination, information, dissemination, information, you know, security information, that is actually our utmost importance, and be able to be able to track, like, you know, where this comes from, or be able to, again, control tracking in terms of finding the source and eliminating it or somehow, you know, censoring it or something.
So that kind of control.
So, so long as like, you know, understanding the intention of some of these more sensitive areas, I think, you know, that that is something that from both like an operation point of view, or just even, you know, who a certain company partner with a certain company, I think that is one of the areas that companies should or companies entering China should think about where they are, who they are, and in what regard are they entering?
Are they being cast as for example, like, you know, critical infrastructure, like sensitive technology providers, if they're not in some of those categories?
So much about what flows through the network, and whether you have control over that information, it's not so much about the algorithm, and the way that you secure the network.
So that actually gives a lot of opportunities for even people view as somewhat restricted or somewhat protected or sensitive segment players to kind of go in.
But in general, I don't, I don't know if I'm answering the question, Alex, but you know, there's not so much of a, like, hot basket and say no, except, you know, of certain companies that the Chinese government say no, can't be otherwise.
And I don't, I don't think that there are that those that that this is, to my knowledge, I think it's in general, it's just you need to follow like some of the regulation and kind of like, you know, work with your partner, they're kind of like, they have the right provisions have the right kind of traceability.
Yeah, no, I think that's right.
I mean, I think we've sort of perceived that as well, that it's becoming, there's more opening up despite some of the challenges, obviously, going on at the political level and the business level, it's becoming easier for Western companies to do business there on a lot of levels.
What's the view, sort of looking out from China to the to the West, kind of, you know, curious how that may have changed as well over time, whether it's, you know, the young student kind of in China growing up looking out to the to the United States and Europe.
And I'd also love to start talking about kind of the tech sector specifically, you know, kind of the attractiveness as well of both kind of domestic opportunities and international, but I guess starting with sort of the young student in China growing up, how do you what's the what's the perception there of as that person looks out, you know, to the West?
Um, I wasn't young when I was in China, but I can certainly speak to some of the folks that I manage and mentor, like, you know, we just graduate like in both like, you know, other foreign companies or JD.
I think there's a slight change in landscape.
I think at one point, like, you know, 10 years ago, when I first landed in China, like I said, there's still that halo effect of these big blue chip technology companies.
There are MNCs and multinational companies.
They want to go there. They want to use it. I want to use it.
There's an opportunity for them to use it as a leapfrog to opportunities and say in the US.
And a lot of people in fact, you know, my team, I think I have actually transitioned or transferred 30, 50 kind of engineers like, you know, from China to to to like, you know, headquarters, and they actually really loving.
But I slowly seeing that, you know, that trend is getting less and less because they, you know, both for local opportunities, and even the halo for these MNCs are, you know, disintegrating a lot because the, you know, a lot of the kind of these companies competitiveness and also that some of the homegrown technology and the way they're catching up, including state owned enterprises to kind of benefits and how their opportunities there, I think is, you know, casting a lot of, I guess, like, you know, incentives for the young people to look more inwards domestically to some of the opportunities.
So I think that trend has grown a little bit less, but I'm sure that they're still there.
And on the technology side, if I can say a little bit, I'm sure a lot of the tech because even as a somewhat more, not not young person, I still feel a lot of like, you know, technology being somewhat backwards these days, and then I kind of move from China to, to say, any of the Western world, like, you know, mobile payments, just, it's just different.
I think, you know, they skip the whole generation, a lot of things that take for granted, you know, things get delivered to you.
I mean, JD, right, I just didn't put promo, if you kind of put an order before 11pm, you know, if you were in one of those like major big cities, it should be, it's definitely going to be in your in your house that next day, you know, before, before, like, you know, 2pm or something, does this kind of like commitment, the kind of instant gratification, the kind of way it's very quick, you know, using mobile phones, all the payments and the whole like, you know, the WeChat was kind of like the souped up version of like, you know, LinkedIn plus Facebook plus WhatsApp integrated.
It's just very, this reverse, you know, innovations is really strong, we don't see as much of a copycat, although we still see a lot of people copying, you know, foreign innovations into China, creating a version being protected by the whole national protection from but a lot of it is a reverse innovation, a lot of things that are growing, homegrown new, new scenarios, new applications that are actually exported out to the rest of the world.
And sometimes you don't see it, you kind of miss it, you know, for I'm sure for teenagers, you know, or young kids, like, you know, when they leave the country.
Now, what do you think about that? You were at Alibaba for four years before you joined Cloudflare.
So you have both perspectives as well. Yeah, I'd say I'm not young to no man's land.
My observation is like, even for the young generation for the for the 20s, that these you are very curious and very passionate to come to the best in country for the college for the bachelor for the master education in wherever area, right?
And hearing electronic. But the trend is that more and more people are getting back to China directly after the study in the US or in European countries.
Probably one reason is that I guess they saw the the crazy growth of Chinese Internet companies.
And especially for the people, I guess in the Internet, in the AI domain, because of the huge platform like AliSense and JD, and the huge population, they really have a very good environment or test band to develop their engineering or whatever serious thing to test them in the reality.
I think that that's a trend. And plus, the the package from the Chinese Internet company are really competitive, too.
So they're getting more and more talent back to China.
I guess I can saw that trend. But still, it depends on each and every individual, like Norman, like me, we still live in the States.
And probably we saw the good balance, good balance of work and life here.
I mean, is there a perception that Western US technology, there used to be the perception that Western US technology is sort of ahead, right?
And it was sort of more a bit more, more modern or however you want to call it.
Is there still a perception that that's the case?
Or is there? Has that changed? I know it's changed.
But how do folks how do folks perceive the gap there? If any?
Yeah, I think it's definitely shrinking if there's a gap. I mean, as I share a lot of the kind of, you know, especially on the consumer side, and even on the 2B side as well, a lot of the we talk about, you know, technology or business processes, I don't see a huge gap, maybe somewhat in more of like the service side of business, the maturity of some of the processes that are still, you know, yet to kind of catch up a little bit.
But all the just like with anything, rest of China, anything that is very much hardware, infrastructural, that things you can look and see and feel and kind of get and understand.
It's pretty much like, you know, they understand and can either replicate or kind of reverse innovate, or we'll just kind of add on top of it.
So I definitely that if there's any gap, I think that that is shrinking.
And it's particularly in certain like, you know, scenarios of domains, we would see even a leapfrog kind of effect, like you talked about, you know, the mobile commerce, you know, just mobile payment, just like using even like the social network and a lot of the integration, like the here and now the instant gratification of a legacy in history, not from China, is that it's something I guess we can talk about is how people view like we used to joke around like, you know, personal privacy or information privacy, I think they are more, I think, in general, like, you know, open to, you know, sharing or consenting to a lot of information being shared, whether it's face recognition, I think we make it I think, I forgot which company, definitely Facebook and Google, but a lot of companies in general, I think IBM said, you know, they won't be doing a lot or, you know, continuing a lot of using face recognition, because, you know, there's privacy, there's like the failure rate, but in China, at least from a privacy point of view, nobody, I don't think I've came across people say, No, I'm not going to sign up to service because it's taking a picture of my face.
So people are very open to kind of sharing their information. And that helps kind of companies to last point, I can build up, you know, a lot of the technology and the models and kind of I wouldn't say get ahead, but just make it better in a sense.
So that is somewhat an indirect effect of like, the how people maybe in the Western world is a bit more wary about, let's say, just doing, you know, online shopping and commerce, they're more kind of comfortable going back to PC to kind of finish the transaction.
And so I went like five to three years ago versus using it on the cell phone.
Right now, I think PayPal, everything's changing a little bit.
But in China, it's the other way, people would go mobile first, they'd expect the experience to be on mobile first.
And a lot of the experiences in apps, they don't even have a PC presence.
So that tells you how different it is and how far, I wouldn't say ahead, but you know, the mentality in terms of what's first, what comes first in mind and what's expected of and the whole, it's very different.
So yeah, it's more consumer, I guess, but it's still very good.
You can see, you know, domains that, you know, China is actually kind of quite far ahead.
Yeah. I doubt you agree with that, with Norman's point about privacy, that it's just, it's less, less important to folks.
I think it's less a matter of, it's not less of the concern of the Chinese consumers, maybe.
Yeah. And go back to the general question.
My view is that in the fundamental layer, like the chipset, like the operation systems, I still see US technology, you know, far ahead.
But when we get into the consumer, get into the applications, e-commerce, e -payments, I feel the Internet companies in China are doing a pretty good job to leverage the huge population to build the application, to build the scenario.
So it's really, it's really convenient for, at least for me to travel in China, use Alipay.
But here in US, we have to bring the credit card everywhere. Yeah. I can feel different.
But when you get into European countries, it's more, I shouldn't say difficult, but I really have to carry some cash to pay the taxi and so forth.
Yeah.
Yeah. And I mean, another interesting area is AI, if you think about, if you think about that and I think Kai-Fu Lee said there's, there are basically nine companies today competing for sort of AI supremacy.
And I think either five of them are Chinese and four of them are US or vice versa.
I was going to ask you guys two things.
One is sort of, what are the most sort of interesting and exciting sort of technologies that you're seeing coming out of China today?
And I also wanted to ask about the tech and kind of the startup tech ecosystem there, which I think is fascinating, especially given kind of the economic history of China and the background there.
But what are some of the, I guess, Norman, having been at Microsoft and at JD, two of the, one American, one of Chinese, obviously, but leading Internet companies.
What are some of the most innovative and interesting things that you saw or you're seeing Chinese companies investing in today?
Well, definitely a lot of areas and AI is pretty big. If I want to say is that, even during like the whole COVID episode in China, we are at JD, we've seen a lot of like, we're not even talking about the drones, which is kind of the high end, but these are unmanned automotive, like automated vehicles, like we're doing deliveries or even not just on the boats.
I mean, that you see everywhere people are doing testing it.
But then also like the thing, you know, inside on premise inside facilities, like, you know, inside hospitals, actually, you know, delivering food, contentless.
I think these are actually innovation, great innovation.
I think I'm sure like they have it, you know, in different parts of the world.
So putting that into a scenario that into a form factor that actually is actually functional and valuable in a short period of time.
I think those are things that I see a lot of the, you know, innovation, people look at, you know, police masks actually being able to detect, you know, from where you have, like, whether, you know, folks are actually having this infrared, like sensor of like, you know, temperature, body temperature, like whether they are like you're having a temperature.
These are also very great practical innovation. I think it's like the practicality and talk about the ability to collect data, you know, AI, I think a lot of it from learning and supervised training has to do with the access of data to refine the model.
So they do have a lot of, I think Kai who actually mentioned that is that the who actually gets like the hands on most amount of data actually has a, at least a big edge against their competitor in terms of coming up with like better models that actually then it's like more of a virtuous cycle.
So I think they do have both like practicality, scenarios actually put in, you know, AI put into great scenarios that I've seen on logistics of delivery and whatnot.
But also like, you know, the fundamental, like, you know, from data access to model creation, putting it into the market, that the whole kind of end to end pipeline, actually, you know, there are a few big companies actually having both access, means, willingness and the ability to tie it together and kind of, you know, get that close loop to kind of improve.
So, you know, it's very exciting.
Yeah.
Is it, is it harder, that's Dominic's question for you, is it, do you find it, is it harder to do business in China than, than in other places in the world that you spent time in Europe, sort of developing Ali cloud, Europe, and I think you're based in London, you've worked now in the U S for a number of years as well.
And you grew up and worked for an extended period of time in China as well.
How do you compare that? I'd say it's harder because it's more competitive, more competitive.
I'm not saying a bad word.
If you check even the startup area, like in the past five, 10 years, a lot of capital flow into the same, same category.
Sometimes like the, the O2O, and there's a lot of Chinese version of Uber, Chinese version, Airbnb, they just dump the, the, the, the money into those areas.
And everyone, they subsidize the consumer to do the market penetration.
So definitely, I won't say it's a good thing thing.
When I was in us, I know that the Uber has leaped and most of the, the, the BCP are smarter enough now to invest the third or fourth, but in China, there could be like 10 players in a single vertical or a single market.
I think that that's a difficulty.
It's also easier, either meaning the market's huge. Even if you are the number two, number three player in this vertical in China, you could be the number one in the European countries because the huge population in China really can support the business.
So I won't say, I don't know how to explain it.
It's really dependent on whether you are the top three or the, you know, the one who was dropped.
So you think, you think, you think people are making a mistake by investing in the seventh, eighth, ninth.
So there is over-investment or there, or there, or there isn't.
I think there's over-investment, especially in past years for those, you know, to consumer business.
I think the, the, the more and more focus tend to, to be business recently in the BCP industry nowadays in China, but in the past five, 10 years, most of the money just go to the, the O2O to the, to the business and create, create a lot of, you know, unhealthy competition.
Norman, do you agree with that?
Yeah, I do see that kind of trend, all these hot money flowing in, you know, from the O2O or the coupon like days to like the white share, you know, you see these waves coming in.
Yeah.
I think, you know, like I said earlier, China is big. It changes very fast, but also, it's also very different, even within China.
If we take AI, you know, certain aspects of AI, like speech recognition, like iPlaytech is number one, they were, you know, beating out a lot of the other outside companies like Google or Microsoft, because they're literally different dialects, understanding the dialect in China.
So especially if you work on the consumer and the application side and coming in from, you know, we used to look at, you know, companies like, what is it like, well, like collaboration tools and, you know, big ones like in the States where it seems like they're doing well, but I think as it kind of goes into China, the way of business, the way of life actually, you know, especially the application tier, it's actually very fragmented.
And it's, you know, not only can it, you know, allow, you know, the requirements are different, so to actually create some opportunity for a few players, but then this kind of situation also costs like an over, people thinking that, okay, I, you know, I can be a niche kind of player in this side, but then suddenly there's a lot of like overinvestment, but then eventually we'll see, just like with all the trends, a phase of like consolidation with a few big ones, even like ones that are like the unintentional, that are not initially, you know, in that particular scenario, you know, using the user base and whatnot from the investment and whatnot to gobble up to fast consolidate some of the key winners to kind of create like the de facto, like standard that actually covers like the different scenarios.
So that is also some trends that I've seen more in the consumer side.
I mean, for both of you, I mean, both of your careers are really about making bets, right?
Whether it's through partnerships or investments, building businesses, you make decisions about where to invest and then you build.
You know, if you have to think about whether it's partnering or building businesses or business lines in the United States or China today, how would you think about, I think sort of the relative opportunity and, you know, we have five minutes left, sort of how would you think about the gives and takes of doing that in each market?
I can start, but go ahead Norman. Yeah, please go with that.
Go ahead, please. No, I'll just do a quick one. So I think the long and short of things, I think, you know, obviously if you kind of look, you know, more in what, looking at what your company's like, you know, strategy is like both longer term and near term, I think for some of the near term gaps, I think partnership often actually gives you, it's very like, you know, generic, you know, that's, I think what I see as like, you know, a better way of looking at it, like, you know, the short term for partnership or longer term things, I think that's still also that also don't preclude a partnership, but having that kind of long, you know, investment, you know, have to invest, and then the kind of questions look different, you may have to actually find a partner that actually understand that that is also something you want to have a long term presence, you know, might be after investing yourself, but there is a gap near term, and be able to and willing to kind of partner with you to, you know, build something, you know, and then kind of, as we talked about really early on in this call, how to go out of it and see whether there's a situation or a piece where there's still going to be a great kind of win win, even if it unfolds.
So the long and short of things in order to, as you kind of, you know, compare with your own strategy to decide whether to build versus buy or partner.
Yeah, I think probably for especially for the global company, US, European companies to get into China.
If you are like to be to be business, it's better to find a local partner and then the land will be more smoothly.
If you consider the customer service, the GTM, really, I can feel the local partner can pretty much perhaps the initial phase for you.
I'd suggest that for the for the to say to for the consumer business, I think it's better to think about whether it's really China's your priorities, because there are very strong giant and compact local competitors in the market, most likely they have already established and do a lot of customer penetration in China.
Helpful. So last question, I'll ask, I'll ask each of you, what do you think is the biggest misconception that Western business people have about doing business in China?
Think about it for a minute. I have already mentioned that, you know, you don't need to drink a lot in China to do a good thing.
Right. And that probably is a that probably is a powerful stereotype, actually.
So. Yeah. And yeah, kind of like, you know, one big takeaway. I think like, you know, it would be what I mentioned earlier is that, you know, fundamentally, trust is also very important.
It's not just like, you know, hard and fast terms.
I think it's like, it's still people doing business. So it's kind of how do you kind of meet me at a person in business level, kind of both like you talk about the values and customer kind of values to kind of strike that kind of build from there, like the kind of trust.
It sounded more like an advisor's like a like a like a like a myth.
But I think that would be my kind of like, you know, takeaway.
Right. I guess I'm not answering your question, but it is.
Yeah, that's a very clear takeaway. So I just want to say thank you, Norman. And for for doing this and for and for joining us, I think we're we're just about out of time.
So we really appreciate the time and the thoughts that you shared, everybody. Thank you.
Great. Thank you for having me. Thank you. Thank you, Alex. Yep. Have a great day.
Thanks very much.