China: Myths and Realities of the Internet's One Billion Person Market
A conversation with JD Cloud's former Head of International, Norman Ng, who was instrumental in forging the recent partnership between Cloudflare and JD.
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, Norman, maybe I'll start with you and we can 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 conversation 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 for external companies that 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 fixed 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 next part is that China's not always like that.
If I looked at my kids haven't 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, for my childhood on education, that I see the biggest differences, because like, as I grew up, I'm like, even for English, and I was like, you know, back in the colonial days, right, I speak, I learned 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, pretty good.
And I'm reading, writing, but I never get to speak or listen to it much.
So there'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.
So I was gonna I was gonna ask, I was gonna ask that.
But normally, you do think that that is sort of a real thing that actually happened to live.
I was 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 that in the US, whereas you say it is kind of, there's more focused on kind of the creative elements and kind of building up the confidence.
You think that's right? That's consistent with what you experienced in Hong Kong as well.
And 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.
And you can 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.
Oh, I think that's interesting. Yeah. So they're opening up and kind of like, you know, bring that element, those elements into, into the education system.
Well, what about your experience when you're, when you're growing up, or what you see now with maybe some of your, your family there?
Yeah, definitely. I saw the change in the past, like, 20, 30 years, you know, I was born in 80s, 1980s.
So my, my past was a very, like typical Man in China, spend 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, those good, good quality universities are 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 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're 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 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 half year, or even three years.
But we know in US and in some other education system, probably you can get the master in one year, right?
So after I get my master, I think 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 step in the US and between US 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, not Russia, whatever.
Basically it's just that many, 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 person, 20 person, that many, but all the other 70, 80 person, you can find a direction and choose whatever you want.
As far as you hit your score, you hit your 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 just that many. But now it's getting much, much better, I believe.
Both you guys as well, you're both raising, you both have, happen to know, you have children and you're both living in the US now and raising children there.
Do you think parents focus on different things in China versus in the US?
There are certain stereotypes, I think, that Western folks probably have of Chinese parents.
Do you think it's, is there a sort of a different mentality and is that changing as well?
Well, it's really hard to gauge because A, I cannot say what's the stereotypical US parents view of Asian parents.
But I can say that in general, because this topic has come up, we get a feel in general that, what do you, as parents, want the most out of the 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. That is the ultimate goal.
And how do we mean by successful? It's not like being happy, being healthy, being rewarding, being kind of giving back to society, but at least you need to survive, you need to be successful.
So I think that is, and again, I don't represent the whole, but it comes up very often as they looked at what kind of path I lay out, what kind of prep school or what kind of education or afterschool I need to kind of prep my kids.
It's roughly towards like a gearing for this, what we call success or the view of success.
Whereas 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, ruining the 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.
Like you've got to have like, what kind of, like, I don't know, you know, kind of training that 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 or things like that.
So they put a lot, I would say, you know, a lot more emphasis, overemphasizing 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 a vicious cycle.
So the difference between like, you know, how the ultimate goal being successful, or something more rounded, kind of like, you know, accomplishment, I would say.
Yeah. And to be clear, I mentioned it in a positive way, just about the work ethic, I think of, and also just, you know, having worked with when you were at JD, and observing that and their partnership with Baidu and others, and just the Chinese sort of economic engine in general, there, you're totally right about stereotyping different people, everyone's different.
Yet, I think there's an admiration for the work ethic as well.
And so it's just 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, 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 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, the education resource, especially the good education resource is still very limited.
So compared with the, you know, the huge population, the population density, 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, Norman, even for the international school, I think it's the same.
Right. 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 employees 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.
Honestly, I personally don't like that so much, but you just have to, you know, survive that and then thrive.
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, thinking about 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 get to compete into getting into big companies like, you know, or like, you know, at that time, 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.
It's 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 MNCs 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, oh, we got to go, I said, 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 were brought up with 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 at it or 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 I'd love to get both of your perspectives on it because you have so much experience in this.
How do foreign companies go wrong trying to do deals in China?
Because 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.
Do you want to go first or? You can go first. I won't get you there. 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, you're 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 is also very accessible.
Like one of the myths is that, oh, it's very, like you see farmlands in China, a lot of people still 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 and 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, 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 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've 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, a 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 that's, I wouldn't say a pitfall.
It's just foreign to a US company. It's like, why can't I just sit down and get down to business?
People sometimes, you know, in Japan, they say, oh, you got to go drink or something.
But it's 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 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 this, 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 we 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, or 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, 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 a chairman, but two companies coming in really loose, and then having some kind of small wins, or new term 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 closed, small country, very easy to kind of go to different places.
For foreign companies, you have to fly there, or it's really conducted 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 worked, and 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 going.
I think that that is in general the difficult part, 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 leading 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 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, it doesn't work.
Usually, a 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.
I think that's something really interesting.
I'm not saying whether it's right or wrong, but I guess being agile and fitting to the change and making it work is important for the Chinese company.
Go ahead, Norman. Sorry. Oh, sorry. I just want to say, Daw's point is that the market itself is changing very fast.
If you look at a domestic Chinese company like a Warner Cloud, they have to actually adjust and be agile as well.
That's why they don't want to... Fundamentally, I think the market is fast changing.
It's very big, but it's also quite fragmented. I think people are thinking that it's a market of one billion people.
Well, maybe for more of the infrastructural companies like Microsoft, it is, but for more of the application, there's all these different economic zones and micro-economies, even within China, so they have to adjust.
My second, Daw'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 general business and market environment.
I was going to ask as well, there's a perception that is the contract less important in China versus in Western business?
Is that a version of what you're talking about, or is that something different?
No, I think contracts are very important.
I think folks in China, I think, especially companies like the big companies, even small companies, they own a contract.
I've seen that they own a contract.
It's actually how you get to the contract and how to actually provide the provisions and the flexibility that Daw talked about and what you're asking in return in terms of protection, all these kind of locking it really down so that it crosses all the T's, 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'll probably take a lot of time, even if it ever actually goes through.
Then even if it goes through, it might not sustain, actually, just the general forces of the market because things change.
Then you end up having to throw in amendments and addendums on it anyhow.
Doing the contract itself might be even more work than actually doing the business, which is something that, again, is also a balance.
The contract is still very important. There's a great legal system.
People still very much like... Even between two chairmen, I don't think there's a gentleman's handshake, but they're still going to contract.
I've not seen a big partnership or anything like that.
Yeah. Just to be blunt, I want to avoid politics and political issues, but are there things about the legal system there and the political environment that change the way that things are done in the business world fundamentally, do you think?
It changed the way you do deals and whatnot.
Obviously, there's specific regulatory points that come up no matter where you do business in every country you do business in, and you have to go through the regulatory checklists and check all the boxes.
I'm talking about something more general and holistic.
In recent history, a more communist background. Yeah.
One thing I've been struck by doing business there as someone who's obviously not Chinese is you have a more communal, as I do, mentality, I think.
Also, even at these large tech companies.
My question is, 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?
I can go first. Yeah. That's a tricky question. I think China and 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, 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 build a JV, or there are some requirements for how much percentage of equity a 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 are trying to explain more and more clearly what should be done for a foreign company to set up the operational sales in China properly.
I would say generally, it's a good sign. Even living in the US as a Chinese citizen, I can see that the market is getting more and more open.
It didn't reach the tipping point yet to a fully open market for some sectors.
Right, right. It certainly is. Despite a lot of the regulatory and compliance red tapes that Da talked about, in general, I think the trend for most markets is getting more and more open from telecommunications or data centers.
I think we should look past and figure out. I don't represent in any way the Chinese government, but why is it that a lot of these regulatory and compliance standards are put in place as we operate?
Because I've actually operated a foreign cloud service in China.
I also operate a local cloud business, which is also very sensitive in the sense that ultimately, what the government wants is a kind of control of information dissemination, information dissemination, information security.
That is actually of utmost importance, and being able to track where this comes from.
Being able to, again, control tracking in terms of finding the source and eliminating it or somehow censoring it.
That kind of control.
Understanding the intention of some of these more sensitive areas, I think that is something that from both an operation point of view or just even who a certain company partnered with a certain company.
I think that is one of the areas that companies entering China should think about where they are, who they are, and in what regard are they entering.
Are they being cast as certain, for example, like critical infrastructure or 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.
That actually gives a lot of opportunities for even people who view as somewhat restricted or somewhat protected or sensitive players to kind of go in.
In general, I don't know if I'm answering the question, Alex, but there's not so much of a hot, fast rule and say no, except of certain companies that the Chinese companies say no.
I don't think that there are, to my knowledge. I think in general, you need to follow some of the regulations and kind of work with your partner to have the right provisions, have the right kind of traceability.
Yeah, I think that's right.
I think we've sort of perceived that as well, that there's more opening up and it's becoming, 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 West?
I'm curious how that may have changed as well over time, whether it's the young student kind of in China growing up looking out to the United States and Europe.
And I'd also love to start talking about kind of the tech sector specifically, 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 perception there of as that person looks out to the West?
I wasn't young when I was in China, but I can certainly speak to some of the folks that I kind of manage and mentor, like, you know, who just graduate like in both like, you know, other foreign companies or at 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, multinational companies, they want to go there, they want to use it.
I was a user, 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, my team, I think I have actually transitioned or transferred 30, 50 kind of engineers like, you know, from China to like, you know, headquarters, and they actually really love them.
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 they're, 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, the kind of benefits and how there are 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, I can say a little bit, I'm sure a lot of the tech, because even as a somewhat more, not young person, I still feel a lot of like, you know, technology being somewhat backwards these days.
And then I kind of moved 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 they take for granted, you know, things get delivered to I mean, in 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 double 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, 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 protectionism.
But a lot of it is a reverse innovation, a lot of things that are growing, homegrown, new, new scenarios, new applications that are effectively 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, too.
I think 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 countries for the college for the bachelor for the master education in wherever area, right, engineering, electronics.
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 that I guess they saw 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 to test them in the reality.
I think that's a trend.
And plus, 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't 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 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? Is there, has that changed?
I know it's changed, but 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, especially on the consumer side, and even on the 2B side as we talk about 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 yet to kind of catch up a little bit.
But all the, just like with anything in the 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 they understand and can either replicate or kind of reverse innovate or 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 scenarios of domains where you would see even a leapfrog kind of effect.
Like you talked about, the mobile commerce, 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 lot of things.
And I think part of it also has to do with the legacy in history, not from China, is that and it's something I guess we can talk about is how people view, like we used to joke around, like personal privacy or information privacy.
I think they're more, I think in general, like open to 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 they won't be doing a lot or continuing a lot of that, at least using face recognition because there's privacy, there's like the failure rate.
But in China, at least from a privacy point of view, I don't think I've came across people saying, no, no, I'm not going to sign up the service because it's taking a picture of my face.
So people are very open into kind of sharing their information and that helps kind of companies to Da's point, that can build up a lot of the technology and the models and kind of to, 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.
I went like five to three years ago versus using it on the cell phone.
Right now, I think with 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 like 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 different.
You can see, you know, domains that, you know, China is actually kind of quite far ahead.
Yeah. I mean, Da, do you agree with Norman's point about privacy, that it's just, it's less important to folks?
I think it's 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 chip set, like the operation system, 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 the difference.
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.
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 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, you know, 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 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, you know, even during like the whole COVID episode in China, we are at JD, we've seen a lot of like, you know, we're not even talking about the drones, which is kind of the high end, but these are manned automotive, like, you know, automated vehicles, like we're doing deliveries, or even not just on the roads.
I mean, that you see everywhere people doing testing it.
But then also like the thing, like, you know, inside on premise inside facilities, like, you know, inside hospitals, actually, you know, delivering food, content list.
I think these aren't 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 in the, you know, innovation, people look at police masks, actually being able to detect real from way ahead, like whether, you know, folks are actually having this infrared like sensor of like, you know, temperature, body temperature, like whether they are like having a temperature, like 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 a 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, you know, the hands on most amount of data actually has a at least a big edge against a competitor in terms of coming up with like better models that actually then it's like more of a virtual cycle.
So I think they do have both like practicality scenarios actually put in, you know, AI putting into great scenarios that I've seen on logistics of delivery, and whatnot.
But also like, you know, the fundamental like, you know, from from data access to model creation, putting it into 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 to to kind of improve.
So, you know, it's very exciting.
Yeah. Is it? Is it harder? That's the 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?
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 US 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 that was it.
If you check, even the startup area, like in the past 510 years, a lot of capital flow into the same, same category, sometimes like the O2O.
And there's a lot of Chinese version of Uber, Chinese version, Airbnb, they just dump 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. Since when I was in the US, I know that Uber has leaped.
And most of the the VCP are smarter enough not to invest the third or fourth.
But in China, there could be like 10 players in a single vertical or in a single market.
I think that's a difficulty. It's also easier, easier, 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 really depends on whether you are the top three, or the one who was dropped.
So you think people are making a mistake by investing in the seventh, eighth, ninth?
So there is overinvestment or there isn't?
I think there's overinvestment, especially in past years for those two consumer business.
I think the more and more focus tend to be business recently in the VCP.
In the industry nowadays in China, but in the past five, 10 years, most of the money just go to the O2O, to the two-state business and create a lot of unhealthy competition.
Norman, do you agree with that?
Yeah, I do see that kind of trend. All these hot money flowing in from the O2O or the coupon days to the white share, you see these waves coming in.
Like I said earlier, China is big.
It changes very fast, but it's also very different.
Even within China, if we take AI, there are certain aspects of AI, like speech recognition.
iPilotech is number one. They were beating out a lot of the other outside companies like Google or Microsoft because they're literally different dialects, understanding the dialects in China.
Especially if you work on the consumer and the application side and coming in from, we used to look at companies like, what is it?
Like collaboration tools and big ones like in the States where it seems like they're doing really well.
But I think as it kind of goes into China, the way of business, the way of life, especially the application tier, it's actually very fragmented.
Not only can it allow, the requirements are different, so to actually create some opportunity for a few players, but then this kind of situation also costs an over, people thinking, okay, I can be a niche kind of player in this side.
But then certainly there's a lot of over-investment, but then eventually we'll see, just like with all the trends, a phase of consultation with a few big ones, even ones that are unintentional, that are not initially, in that particular scenario, 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 the de facto standard that actually covers the difference in the end.
So that is also some trends that I've seen more in the consumer.
I mean, for both of you, 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.
If you had 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 could start, but go ahead, Norman.
Yeah, please go, Doug. Go ahead, please, no worries. 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 looking at what your company's like, you know, strategy is like both long term and near term, I think for some of the near term gaps, I think partnership often gives you this 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 actually investing yourself, but there's a gap near term, and be able to be 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 they're 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 what to do 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 land the land will be more smoothly.
If you consider the the customer service, the the GTM, really, I can feel the local partner can pretty much perhaps the initial phase for you.
I'd suggest that. For the consumer business, I think it's better to think about whether it's really China's priorities, because there are very strong giants and 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 business.
And that probably is a that probably is a powerful stereotype, actually.
So yeah, and 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, hard and fast terms.
I think it's like, you know, it's still people doing business.
So it's kind of, how do you kind of really, at a person in business level, kind of both like, you talk about the values and, you know, end 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 myth.
But I think that would be, you know, my kind of like, you know, takeaway.
Right. I guess I'm not answering your question.
But at this point, that's a very clear takeaway. So I just want to say thank you, Norman.
And for doing this, and for joining us, I think we're, we're just about out of time.
So really appreciate the time and the thoughts that you shared, everybody.
Thank you. Great. Thank you for having me. Thank you. Thanks, Alex. Yep. Have a great day.
Thanks very much.