Loud Thoughts

As an employee, you work for a company and receive pay. As a consumer, you spend money and receive goods and services. If you have savings, you invest and hope for a good return. How you play these roles pretty much decides your financial future. China, as a key player in globalization, affects all three.

For the whole society, Citizens of developed countries are better off because of globalization. US benefited from globalization greatly. Interest rate is low, that makes doing businesses easier. Prices are low, since China provides cheap merchandises, that makes consumers' lives easier. Supply chain get moved offshore, that makes the costs lower, and companies make more profit, stock prices go up.

But these benefits are not distributed evenly. Few pockets of population suffered. Depressed wages makes those without an investment portfolio poorer, even considering the lower prices. Interesting investment opportunities are abroad, domestic new ventures are harder to start. Governments, particularly US, do not really know how to handle this. You cannot wait until they figure this out for you.

As an employee, you must accept that you are competing and collaborating with people who are far away, not necessarily share your values, and not really respect your ways of life. Relentless improve yourself until you are the best in the world. Be adaptable and flexible so that you can switch lanes quickly, without knowing which lane to switch to before hand. Protectionism does not work, since trade barriers raise prices faster than your wages. It also weaken the “protected” industry and accelerate their demise.

Invest smartly. Those companies who exploit globalization will profit from it; others will peril. Put your investment money on the right companies. Reap the benefits from globalization, not be the victim of it. Influence your employer to be global conscious. Make sure you are on the right side of the equation, no matter what your employer does. Oh, yes. This assumes you have money to invest, based on the fact that you spend less than you earn.

The truth is that globalization can be good for everyone, but not always. Fate is in your hands, the best the government can hope for is not damaging the whole society. Push yourself to learn. Save and invest smart. You will be OK.

Throughout my tenure at the security post, I never quite figured out why is Trusted Solaris so esoteric.
This lesser known operating system can give your enterprise a competitive edge and it is absolutely available to everyone in the world. And, as part of Solaris, it is free too.

It will protect your business. It is compatible to Solaris and run as fast. It is decades ahead of Windows or Linux in terms of security. Joanne Masters once said, “if you are getting a dog to protect your home, would you buy a Doberman or a Chihuahua?”

About 15 years ago, to capture US government business, Sun developed an operating system that met their stringent security requirements. At that time, it was known as Compartmented Mode Workstation (CMW), at B1¹ level. Today, Sun's Trusted Solaris is the only commercially available multi-level operating system that runs on standardized, readily available computers. It has long been certified with more profiles in Common Criteria, at EAL4² level, than Linux, Windows, AIX, HPUX, and many more commercial operating systems.

Over the past decade, Solaris engineers merged two code bases step by step. The hugely popular Solaris 10 represent the pinnacle of this merger. There is no more two distinct operating systems. Solaris 10 and Trusted Solaris is now one. Few features that only very security sensitive customers want are collected into what will be marketed as the Trusted Extensions to Solaris (we call it TX for short).

What exactly make this operating system extension the most secure one? A simple concept and meticulous polishing the details over the long years. The concept is Mandatory Access Control.

For other operating systems, access control is discretionary. The individual that owns a document may grant others accessing privileges, such as reading, erasing, modification, or backing up. When the document changes ownership, all bets are off. Some software implements Digital Right Management (DRAM) control over documents with encryption technology (e.g. only the one with the password may open this file), but those controls can be easier circumvented.

In a system with Mandatory Access Control, all documents are labeled and all individuals too. An individual may access the document only when her label matches the document's. For example, an individual with the manager label may read documents that were labeled for manager only. Labels are hierarchical. A “senior” label can assume all privileges of a “junior” one and more. This matching follows a set of policies that are separately and independently established. This concept is also called “multi-level security” in the circle.

This concept is easier described than implemented. In addition to file system modifications, Solaris engineer must also enhance desktop, networking, printing, even devices such as USB and microphone (think about it). In addition, a comprehensive and secure auditing mechanism was put in place to capture all attempts to circumvent security. To simplify the policies, they also designed Role-Based Access Control so that complicated matching rules can be simplified. Sun is the only commercial company that knows how to do these right — securely with high performance. Their knowlege is decades ahead.

World Economic Forum (WEF) came to China again. This year, it established a permanent office here in Beijing. The summit took over two floors in China World Hotel and lasted 2 days. Like all good conferences, those events not on the programme are more interesting. WEF organized those into private events. Then you have the spontaneous meetings in the lobby bars or nearby restaurants. Those are the truly invigorating.

In two closed sessions I participated the discussions on venture investment and global competitiveness. Sharing the table are smart, well-informed, and influential people from around the world. These topics are important to Sun. The venture industry worries about moving capital, cultivating innovations, and the state of the talent pools — the same topics that keep Sun's executives awake at nights. The other forum focused on using technologies to improve the country's competitiveness. That's exactly what Jonathan's “digital divide” message is about.

WEF does not do keynote speeches. Instead, it invites luminaries on stage for debates that are engaging and entertaining. In the opening plenary session, I was shocked to hear Shiozaki Yasuhisa's (盐崎恭久: Japan's Senior Vice-Minister of Foreign Affairs, a professional diplomat) sharp words on China's policies. He asked for friendlier Sino-Japan relationship, administrative transparency, enterprise independence, and improvement on social openness and democracy. That sparked a round of exchanges on various aspects of this fast-moving society. China's key representative from National Development and Reform Commission (I thought it was JIAN WeiXin 姜伟新, but the programme said it was CHEN DeMing 陈德铭) responded gracefully and diplomatically.

The 2nd day's session touched on IPR —
digital contents, patents, copyrights, and technology standards. WANG JianZhou (王建宙), Chief Executive, China Mobile, and YANG YuanQing (杨元庆), Chairman of the Board, Lenovo Group, delivered consistent yet complicated messages.

• China respects IP now. It is no longer just lip services. Greg Shea of USITO observed that 90% of the IP disputes are among Chinese entities. China will respect IP for itself.
• China will not tolerate IPR that handicaps the country, gives foreign entities unfair competitive advantages, or prohibitively expensive for the enterprises. Lenovo put it bluntly. If Microsoft did not agree with a license price that is affordable to the society, they wouldn't have the pre-installation deal.
• The conventional wisdom, or the established practices, are dangerously narrow-minded. Web2.0 made content creation and delivery far more complicated than existing laws were designed for. Here we have new business models based on paradigms in which current IPR concepts are irrelevant.

Augusto Lopez-Claros, Chief Economist and Director of Global Competitiveness Network, will soon publish the global competitiveness report that places China lower than what people expect. After all, how can this country be less competitive and demonstrates the fastest growth for 10 years in a row? Isn't that the very definition of competitiveness?

He explained that weak institutes — juridical systems, sound banking systems, etc. — will hinder the country's productivity. Few participants, myself included, begged to differ. Innovations can change the rules of the game and should matter more. Also, Dr. Lopez-Claros may have chosen the wrong metronome to meter this country that marches to its own drumbeat. Justices are swift and fair, but not carried out through the court system that westerners are accustomed to. Businesses got sufficient fundings to operate, but not through the banking systems. This society has been in existence for thousands of years. After the session, few of us exchanged stories on how things are “really” done. Very enlightening.

Once again, I walked away tired, full of ideas, much educated, carrying a thick stack of business cards, and with many new friends

Senior talents, those with 10+ years of relevant experience, are so hard to find in China.

Cultural Revolution

From 1966 to 1976, China suffered the famed cultural revolution. The ferocious intensity on thought control stopped the country from anything else. The society regressed, decades of hardwork wiped out, a whole generation of people forsaken.

Schools closed during the cultural revolution. Kids graduated from high school found no possibility for higher education. During the 1st few years when schools reopened, the government made exception to the rule of prescribed age for college entrance. They came in droves and became the 1st batch of college educated elites of modern China. Chinese call them LaoSanJie (老三届, the three old classes). They are in their late-50s today.

The first uninterruptably educated batch entered college around 1980. At that time, there were only about 300 universities in the country. From 1980 to 1985, these schools produced graduates that are less than 0.1% of the population. For the country, only less than 2% of the population were college educated or better. If you found one of them today, he or she is most likely managing a big government agency already.

Around 1985, numbers of universities and students started to grow and exploded started 1995 during the 9th 5-year planning cycle. Nevertheless, it is hard to fight against time. The oldest of them would have graduated only 17 years and barely 40 years old today.

A typical silicon-valley senior engineer job description will include the requirements of “10+ years of relevant experience with an advanced degree.” To hire in China, “fluent in English” is also a requirement. You will be searching in the pool of statistical zero.

Every companies that need senior talents must solve this problem.

Solutions

The easiest solution is to force growth — making junior people do senior works. This “sink or swim” practice is highly problematic. People crash and company suffers from inexperienced leadership. But, for many, there is no alternative. They are the only ones we got.

Companies can also import talents. Taiwan and Hong Kong are two ready sources. These regions share the same history and culture. The talents are ethnically Chinese, differing only in Mandarin accents and the degree of exposure to western ways of life. They have the much needed senior leadership, market-based management style, willingness to coach and mentor, and the all important blood kinship.

China could also import talents from US or other developed countries. First target those sea turtles (in Chinese, “returnee from abroad” sounds like sea turtle). China enterprises covet sea turtles for their western education, relevant work experience, and the ease of integration culturally and linguistically. They understood how things are really done here, and also knew how could thing done differently.

The last choice is use westerners. They face three main barriers for their success: language, culture, and trust. Although many westerners have mastered Chinese, most stopped after few working phrases. Chinese culture is conservative, family-centric, conformative, hierarchical, and contextual (it is really how it was said), hugely different for those new-age, silicon-valley “can do” cowboys. Lastly, the near colonization (think Hong Kong and Macau) about 100 years ago left deep wounds that are not fully healed yet.

MNC's Advantage

MNCs, like Sun Microsystems, have an enviable option of partnering with their US establishments. They can get senior leadership easier and less expensive. They are in good position to leverage China's youthful energy and capture the market with speed.

This is the “offshore to grow” recipe.
Recruit young talents, abundant in China. Choose carefully for those with open minds and relatively fluent English. Find a leader in charge of talent cultivation and organization growth. Forge partnership between the energetically young and the experienced wise with the right incentives and organization structure. Leverage the agility to capture the market. Win for China employees, win for US employees, win for the company.