Spotlight Series: Digital Industry: A China Perspective
This series highlights the key insights and lessons from our Digital Leadership series of podcasts. We spotlight the important takeaways from our interviews in an accessible format. The following insights come from L. Thomas Rowley of US China Technologies. Stay tuned for the full podcast interview with Tom, in the meantime, take a look at our full library of podcasts.
Let’s talk a little bit about your background and tell us a little bit of how you got involved with IT, and specifically how you got involved with IT in China.
Sure. I had started out initially in IT working for a systems integration firm, it was actually based in Taiwan, and I had an opportunity to start some work in a very early systems integration firm, and actually the founder of that firm was ex-Dec fellow, and he’d come from the mainframe Dec world. It was the beginning of when we were getting to client server architecture, and we were responsible for putting together business applications using Oracle, Oracle database, and now of course, things have moved to packaged implementation.
You ultimately ended up in mainland China as I understand it. Did you go directly there from Taiwan, or did you come back to the US?
I had a little bit of a stop back in the US where I picked up a couple of degrees in the United States, particularly at the University of Pittsburgh, where I’m originally from. After that I had worked for SAP, doing a stint for a few years, and then I got an opportunity as you’ve mentioned, to join with CNOOC, which is China National Offshore Oil Company as their Executive Director of IT, and that launched a period that I’d spent in China for 10+ years. So, that’s where I worked back into mainland China.
Based on that experience, what do you think the difference is between the US approach to digital technology, and digital transformation of business, and how its approached in China? How do cultural norms come into play, what are the primary differences that you’ve noticed on the different sides of the ocean there?
Well, just to abstract it, everybody’s approach towards IT generically is kind of similar, but there’s a lot of historical-cultural differences that may drive changes into how things are implemented, and how technology is adopted. In China there are a couple of things that are driving that, one of which is China is a communist country. They had a long period where the government management is based as a central power. So, the central power of the government, they lay out plans particularly on a five-year plan schedule, and those plans are passed down to the large companies, what we call in China state-owned enterprises, or SOEs of which CNOOC was one of the major ones.
Those five-year plans get passed down to the SOEs, or the State-Owned Enterprises in China. Those plans are digested by the SOEs, these large companies, and they create additional sub-plans from them. Those plant could be in technology, or in production and so-forth, and since I was in technology, we were responsible for taking the five-year plan and trying to map out the IT transformation based on those plans.
That’s kind of at the high level, and I could go into some examples of that.
That’s great, let me explore that a little bit more with you. One of the biggest challenges that organizations in the US, and across the Western world face with digital transformation, is it often means significant organizational change, or cultural change. Even in a capitalist society that can be a challenge, organizations are structured to conduct business a certain way, and therefore there’s an internal resistance to it.
The other part of it of course is companies inevitably work with other organization’s partners and customers that you may need them to cooperate to enact digital transformation. So, those are our challenges over here, would those be the same in China, or be different, maybe greater or less; how would you view that?
I think they have similar challenges. One thing you have to keep in mind is, a lot of these SOEs are very large. Just because of the size of China, the population, the SOEs are seen as these large state-owned enterprises, again I’ll use that phrase SOE but State-Owned Enterprises are SOEs, they’re not only seen as driving industry, but also as a catalyst to help employment and ensure social stability. So, there’s a balance there that I don’t think we have in the United States, or at least it’s not prevalent, it’s not the main focus. There’s a direct tie between the government and these enterprises, as actors in the industry, and in the social fabric. So, making sure there’s stability, but yet some kind of level production, this is something they have to balance.
Now that’s definitely a different approach. As we all know, certainly in the US you’re an employee at will, so companies will cut staff if they need to – although I think there is still also a bit of sense of social responsibility here.
I just want to add to it really quickly, one example with another SOE that I’d worked with, another large one called CAM China, we had to shut a number of plants, and particularly on the West shut a plant and that would be it, they would get their notice, make sure HR did its rounds to notice everybody. But within China, when you shut your plant, you’re responsible to ensure that those employees are moved off to somewhere, where they can find employment, or maybe move them into another plant, so there’s a lot of moving around. It’s quite different just from that, and I know this is not a technical component, but this is still very relevant I think in the way of the difference between the two models.
Absolutely, and of course as I mentioned, there’s organization and cultural challenges here as well, so it’s never just about the technology. But speaking of technology, let’s explore another subject which is information and data; of course, digital transformation does require different approaches to data, how you share data, and how you share it with business partners, customers, and collaborate around that data. I understand in China that could be a challenge, those different approaches to data, and the free flow of data in China, than there is in other parts of the world.
Yes, one of the big things is, and I don’t know how much the audience is aware, in China there’s an establishment what they call the Great Firewall of China, it monitors and blocks websites and content outside of China, and that’s actively monitored and managed by China central government. They have their own version of some of the major websites that we have, including for example Baidu which is basically China’s version of Google. So, China through Baidu effectively manages the flow of information, and this management steers visible content to the consumers in one way or another that’s different than we would have in the West, where it’s open.
More and more companies in this part of the world are moving data to cloud-based services, whether it’s from AWS or Microsoft, or even Google. I say moving like it’s a seamless thing and everybody’s doing it, but there’s still some resistance over here for security, and confidentiality reasons, but definitely it’s a trend. How might that play out in China, are there equivalent services over there, how do they deal with that?
Absolutely, so with a lot of things you’ll see, as I mentioned China is not supporting Google, I think there’s other platforms they’ve shutdown, or have very limited access in China. So, China also has encouraged their own domestic technology platforms that would mimic what we’re doing with AWS. Alibaba has what they call Aliyun, which is Ali cloud if you were to translate that, so they have their own domestic indigenous setup that the government tries to encourage. If you think of it as a glass half empty, China is trying to manage the content to their own extent, the other side is they’re just trying to build up their own industry. It’s how you look at it! But definitely they do tend to build up their own industries, and I don’t think technology is any different there.
Which we’re seeing front and center in the current trade dispute, aren’t we, in terms of the protection of specific industries.
So just in general, if you think about our approach to technology and digital transformation, versus theirs, what do we do well, what do they do well?
That’s a great question, it depends on who you talk to in the West. There’s a group of folks that seem to want to bash China, and there’s another group that say they’re going to overrun us with their own products and so-forth. But if you stand in the middle and look at it, there are some things that I think they did do well, I found that whilst over there China is very good at obviously top-down driven types of projects. Once the Chinese were able to go ahead, and the employees were able to get on the same page, the execution was very quick, and I was surprised because there’s oftentimes a large number of employees, and it takes a lot of orchestration, but the execution oftentimes is very quick. So, I think we could take a page from them on the planning execution side.
On our side I’d say the US is particularly strong in its ability to continuously improve. We’ve got the ability and framework structures that allow us to undertake something, and constantly re-evaluate it, tweak it, and so-forth, and I think China is still struggling with that area. I think that speaks towards the ability to get a quality product on time, and always constantly trying to strive to improve on that product, and the delivery of the product.
Then I think on the US side, we’re particularly good in terms of having an innovative fabric or foundation at the very bottom, that helps percolate a lot of different ideas and so-forth, that bubble up from that. I think this helps the whole concept of ideation to realization, which I think is just not established very firmly in China as of yet.
That brings up another point, which is there’s been a lot of talk in the last year or two about the area of artificial intelligence, or machine learning. Maybe because of the reason you mentioned earlier that top-down approach, they’re investing a lot of money, and there’s some speculation or predictions that they’re going to race ahead of us in this area. Is that realistic, or do you think it’s a little bit overblown? What’s your thoughts on that?
Exactly, so in addition to doing some of the work over there, I’ve also taught at a University in an engineering institute in China. I did see the governments pushing AI, pushing machine learning, and I’m not surprised to hear they’ve spent a lot of money on it. I’m sure they’re going to get to producing a group of people that are out there, focus on that, and they’re going to make some inroads in that area. The problem is, sometimes with the direction they take at times, there’s not a base to receive it, so even though they push it down, there’s not the underpinnings that help allow for traction to develop, and then as I mentioned, continuously improve at the base. I think that’s where they don’t have quite the mechanisms that we have.
Interesting. So, despite the resources that they’re throwing at it, that doesn’t imply necessarily that they’re of course going to race ahead of us.
I think it’s like how much traction do you get, what’s the return on the investment, and I think in that model sometimes the return’s not as high as they’d like to have, or that you would expect. I can say that.
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