Memo to Tom Ridge: Thanks, really, but fix the bloody visa approval problem. Now.

Inside the Bunker in the Silicon Hutong
Let me start by complimenting the dedicated men and women in the various divisions of the U.S. Department of Homeland Security. Created out of nothing 36 months ago, these people have a thankless, almost impossible task: building a wall around the U.S.A. to keep terrorists out.

But the denial by the Immigration authorities under the DHS of visas to 3 key members of a Chinese delegation to a WLAN conference is just plain wrong. We could dismiss this as a horrible mistake perpetrated by well-meaning but over-enthusiastic consular officials. But I think that might be a bit simplistic.

This incident is not isolated: it is the latest in a long string of visa denials to Chinese nationals that is gradually sapping the ability of U.S. companies to do business in China. The visibility of this mistake makes it clear that something is fundamentally broken in the system that governs visa applications and processes, and that needs to be fixed. NOW.

What’s at stake? Well, let’s look at this one incident.

Getting the Chinese to the table to participate in the creation of global standards around wireless LANs (rather than creating needlessly disruptive national standards that gratuitously deviated from global norms) required over a year of concerted effort and letters of protest from Colin Powell and the White House. China’s agreement last April to play by global rules was a huge step forward for China and for the industry – and was a huge boost to Intel, Cisco, and a dozen U.S. companies.

Now that we have these guys at the table, we stop them at the door and say “sorry. Can’t come in. No reason given.”

From here in the Hutong, it looks a lot like the Americans are playing games.

Political meddling in regulatory and administrative processes is a bad M.O. for any government. That said, I’m delighted that I wasn’t within the blast radius when Craig Barrett, John Chambers, and Colin Powell heard about this. These men are going to be sharpening their knives for some poor bureaucrat’s head.

But the problem is not bad aparatchiks: it’s lousy procedure. And we American businessmen have stood by far too long and accepted the “tough s***” attitude Immigration officials adopt when we try to explain that they are shooting American business in the kneecaps by doing this.

Great job, DHS. But really – this is a problem. Fix it before the backlash gets so huge it hampers your ability to do your main job: protect Americans.

A Subsidy by Any Other Name…

In the Silicon Hutong, looking out at First Ring Road

The highly articulate Jason Dean published an interesting article in the Wall Street Journal today describing the plan of the Chinese government to open a venture capital fund designed to “invest” in the local semiconductor industry. Initially the fund will have US$121 million at its disposal.

This would be a very interesting and possibly even positive development, if the fund were intended to give new firms with compelling technologies the seed capital to bring their tech to market. That is, after all, what venture capital funds do with their money.

Unfortunately, that’s apparently not what’s intended. Reading between the lines (Jason is the master of innuendo), the money will instead be used to offset the 17% subsidy the local firms will no longer be getting from the government under WTO rules.

While it’s unclear whether $121 million (if that’s how much it turns out to be) will actually offset the subsidy loss, the way it looks like the funds are going to be distributed is just a subsidy by another name.

Without getting into whether the government even belongs in the VC business (it reeks of an industrial policy), one would hope the WTO keeps a close eye on this, and indeed that once the program is announced there will be appropriate measures taken to ensure that a) the process of allocation is transparent, b) the process of allocation is in keeping with the behavior of a venture capitalist, not a government hand-out, and c) if it even begins to smell like a subsidy, that the WTO cries foul.

That said, what is really sad about all of this is that there is a screaming need in China’s semiconductor industry for real venture capitalists, because there are some incredibly bright engineers out there with very good ideas that need some cash and some hand-holding to turn their ideas into businesses.

The government would be better off creating the fund and putting it in the hands of some very smart, proven venture capitalists. The VCs, with their management expertise and their ability to choose companies with a fighting chance, could really help China’s domestic tech sector a hand up, rather than another worthless handout.

Nokia’s Lost Gamble

In the Hutong,
Heat On

1736 hrs

Well, it appears that now Nokia is finally admitting that after three years, N-Gage is a disappointment, missing it’s internal sales targets by something like 67%. Engadget is quoting a Nokia Multimedia division lead Anssi Vanjoki as saying that, as a result, “we need to make some changes.”

Well yes, that would be good. Instead of euthanizing the TacoPhone, however, they’re simply going to stick the games on more phones, apparently reiterating a corporate commitment to ugly phones with stillborn functionality.

The writing is on the wall for Nokia. Until they stop trying to own every single step of the mobile phone value chain and replace that approach with something roughly approximating a logical strategy, Motorola, Samsung, and a host of very hungry competitors are going to turn them into reindeer jerky.