Why I Study War (And Why You Should, Too)

Starbucks Lido

Blogging on the BlackBerry

0921 hrs.

In the midst of a discussion about business in China, a friend of mine and I had reached that point in the conversation where the talk was either on the verge of becoming profound or it was about to descend into arcana.

The discourse paused for a moment while the waitress brought our drinks. There was a relaxed pause as we each caught our mental breath.

“I’ve been meaning to ask you a question for a long time,” he said. “Why do you read so much about war?”

Yes, why?

It was one of those questions that slams your brain into a hard left turn, not just because it was a hefty change in the direction of the conversation, but because it cut right into me. With all the books, blogs, papers, webcasts, magazine and newspaper articles on China, business, marketing, strategy, and communications out there, what the hell am I doing studying military science, military history, and international security?

I gave a flippant answer: “I enjoy it,” and quickly returned to the previous topic. But there is more to it than just the recreational value.
Truth is, after three decades studying the martial sciences and two decades in business, I have discovered that not only does “studying war” enrich the development of business leaders, but also that a lot of businesspeople and companies desperately need a mental dose of modern military thinking.

Swords into pruning hooks

Let’s address the question of morality first, as I am painfully aware that many people equate the study of war with the dangerous propigation of man’s warlike instinct.

What is gained from the study of a subject depends entirely on the intent of the student. You can study anthrax with a view to using it to kill others, or you can study it so as to develop a cure, or to eliminate it and other infectuous diseases. In the same way, you can study war to help you plan an insurrection, organize a terrorist network, or invade a country. You can also study war to end an insurgency and what drives it, or defend a country from external threats.

Or you can study war as I do: to gain insights that can be intelligently applied in more peaceful endeavors. In fact, I think studying studying war is a moral imperative, even if the very idea of killing people and breaking things nauseates you – especially if killing people and breaking things nauseates you.

War’s immense cost to mankind in blood and treasure through history is staggering. For us to waste any opportunity to derive whatever benefit possible that can be derived from that experience is unconscionable. A moral person may recoil from the ravages of war, yet acknowledge that we are ethically bound to extract from its study any lessons, innovations, models, or giudance that can be put to peaceful, productice, positive use.

Business and war

Of all fields that martial endeavors have influenced, perhaps the most compelling – and controversial – is how it influences business.

Drawing equivalence between war and business is an imperfect comparison at best. You may not buy the idea that “business is the moral equivalent of war,” but like war business is fundamentally conflict and competition between groups for tangible ends. War is usually kinetic (the military’s way of saying that it involves killing people and breaking things), and business is rarely kinetic, but there are enough parallels that key lessons can be shared between the two fields.

War and commerce are both conducted in the face of great uncertainty where the participants usually have a lot – or everything – at stake. Freedom of action is restricted – or enabled – by a series of factors outside the control of the individual. Time is insufficient, resources limited, and stress is high. The cost of failure, while not quite as severe in business as combat, is nonetheless high and very real.

Creating the business strategos

The first and most obvious way a study of war can enrich a business mind is in strategy, or, more specifically, helping a businessperson become a strategist – or at least a strategic thinker. In no field is strategy as important – nor the strategic art as well understood – than in the military, and the warrior-scholars (no, that is not an oxymoron) of history have added more good thinking to the field than all of the business thinkers put together.

For example, you probably know people who have read (or who have claimed to read) Sun Tzu’s The Art of War. Long before Michael Douglas quoted Lao Sun while playing Gordon Gecko in the film “Wall Street,” businessmen were tapping the ancient wisdom to inform their thinking. (Just a thought – anyone who actually did read Sun Tzu and took it to heart would never be caught quoting him. Why, after all let your opponent know how you think?)

The point is that Sun Tzu – a military scientist, after all – probably wrote the capstone text in business strategy, yet he was never even thinking about business. The reason his thinking is accepted in commerce is because generations of businesspeople had the foresight to recognize that good thinking, regardless of its origin, is what you need to succeed in business.

But wait…there’s more…

So why stop at strategy? (For that matter, I wonder why most businesspeople go no further into the martial realm than Sun Tzu for their strategy, but that’s a subject for another post.) There are a host of other areas where the military experience can enrich business thinking.

Take marketing, for example. Jay Conrad Levinson has made a career taking the simple ideas of guerrilla warfare – fighting larger rivals with unlimited resources when you have almost none – and applying them to marketing. Less known (for now) but equally wise Mike Smock has taken the theories of Sun Tzu and strategic visionary John Boyd and incorporated them into his Attack Marketing approach.

Just as marketing can benefit from a little martial thinking, so can consulting, managing global and dispersed enterprises, communications (internal and external), event management, and a host of specialty areas like medicine, telecommunications, and network theory.

There are entire spheres of business operations where the armed forces – especially those of the west – continue to match if not lead enterprise in the development of new thinking and approaches. Logistics and supply chain management, recruiting, training, intelligence, staff functions, career management, and creating and optimizing teams are areas where business owes much to the constant developments in these fields being driven by the armed forces.

Still not convinced?

You may be thinking “hey, aren’t military types the thick-headed dudes we saw in ROTC who went into the armed forces because they couldn’t get into grad school?” While I can’t speak for your experience, understand that it’s easy to be opinionated when your opinions aren’t going to get people killed. The looming specter of death, defeat, and dishonor can turn a rigid thinker into an open-minded scholar awfully quickly.

Warriors become thinkers by necessity, not by preference. It is fair to say that the United States Marine Corps, for example, is a superb example of The Learning Organization. (Does your company produce a recommended professional reading list that covers each level of the organization? No? The Marines do, and the program has been so effective that all of the rest of the US armed services have picked up the practice.)

Even if you don’t buy the whole business-war parallel, I urge you to pick up the book The Medici Effect. Frans Johansson describes how incorporating ideas from fields unrelated to your own with issues in your own area are a tested and accessible path to innovation. The application of, say, a new history of the Battle of Midway to your day-to-day work may seem counterintuitive, but I’m 100 pages into the book and I’ve gained insights into Japanese institutional dynamics that for me opened a whole new vista on Asian management. That’s “The Medici Effect” at work.

All the help we can get

Globalization and the tempo it forces on us has made doing business insanely complex. You especially feel this in China, where the pace is brutal and the conditions in constant flux. Against that context, and particularly as we pause at the edge of what look to be even harder times ahead, we are foolish to ignore any rich vein of insights and approaches to difficult problems.

The Youku Gambit

In the Hutong

Is it mist, or is it fog? YOU decide

1402 hrs.

Youku’s public relations team are pumping out a release claiming bragging rights as the most popular video site in China, based on a survey by the Data Center of the Chinese Internet under the China Internet Society, a government-sanctioned trade group.

I question the impartiality of surveys that come out of trade groups singling out a paying member as a market leader, especially when those surveys just happen to use the success metrics advocated by the company in question. Given that iResearch, Baidu Index and Google Trends apparently confirm Youku’s position, why bother leading with the weaker statistic?

But let’s leave that aside for the moment, and grant that Youku may in fact be in the lead. What is more important is why, and what that means for Youku’s future.

Quick, get the popcorn – Youku is loading

Youku is particularly happy about that the statistics suggesting that people spend more time on Youku than on its competitors’ sites. There is a good reason for that, as Senior Analyst Elias Glenn at Pacific Epoch pointed out on Twitter today. Youku acknowledged in its release the importance of “professionally produced” long-form content (i.e. movies and TV shows) to the company’s performance.

What is unclear is whether some, most, or all of that long-form content is being show without prior permission of the copyright owners.

There are two possibilities.

Is that the Union Jack or the Jolly Roger?

First, that Youku has reached agreements with all the copyright holders of the content on its site, including 20th Century Fox, the distributors of the Cameron Diaz movie “What Happens in Vegas” that I was enjoying on Youku (sponsored by 51jobs) just a few minutes ago. Or Universal, who kindly allowed Youku to show me “Leatherheads” with George Clooney, and this year’s blockbuster, “Iron Man,” courtesy of the generous folks at Paramount.

If that is the case, they are to be commended, and I will happily join the line of people seeking stock when Youku goes public. Somehow, I don’t think that’s happened yet.

The second is that Youku has not reached those agreements with all of the copyright holders, that its vaunted filtering systems are failing to pick up the pirated videos (despite being able to filter politically objectionable content), and that Youku is building its spectacular user numbers based on its role as a pirate multiplex.

That is going to be a concern to both investors and advertisers.

While China may not enjoy a reputation as an ardent defender of intellectual property rights, the time where a company with Youku’s profile can openly operate as a copyright scofflaw are rapidly coming to an end. Baidu and others have learned that China’s intellectual property laws are slowly growing teeth, and Youku, laying claim to the mantle of the most popular site of its type, would be an ideal chew-toy.

There’s something happening here

As discussed in a post at the beginning of the month (“The online video Hail Mary”), it would be unwise to discount the collective wisdom of Victor Koo, his advisors, and his investors. These are not foolish people. They knew their license was in the bag, and they invested more money.

Similarly, I believe they know that a rights reckoning is coming, that at some point Youku will cross an invisible line in the sand and battalions of television copyright attorneys will descend from the sky, spewing paper death in the form of cease-and-desist letters, or worse.

There is a strategy afoot, one that could never work in the U.S., but can work in China because of the very restrictions the government has placed on conventional media.

I’m not sure what the strategy is, but here is my scenario:

The aforementioned regiment of airmobile copyright attorneys shows up at Youku, girded for battle. Victor Koo opts to parley. Koo suggests that the two sides are in a position to help each other. Content providers – especially the foreigners – need a way to provide access to their content to Chinese people that will help undercut DVD piracy. Youku needs content offered in a format that does not overtly threaten the broadcast powers-that-be.

Youku has the audiences, a decent relationship with regulators, and growing advertising revenue. For a cut of the revenues earned on their content, the copyright owners agree to hold off for a period of time on pressing any claims. Meanwhile, Koo and company engage in a vigorous four-way discussion involving Youku, regulators, advertisers, and content owners to evolve into the country’s leading online TV outlet.

Youku then cuts similar deals with the local broadcasters, very few of whom have had much success building their own online offerings, and would be just as happy letting Koo do all the work in return for a cut. After all, 50% of something beats 100% of a cost center.

This would never play in the U.S.

But here? Where legal music goes for $0.15 a track and where Batman can’t make it past the censors?

It might just work.

Business in the Shadow of the Fuwa

In the Hutong

Conference calls: the scourge of globalization

0931 hrs

Was walking through the lobby of the IBM building on my way up to the office the other day I ran across something quite cool: a giant carpool map behind a desk attended by two IBM staffers who were signing people up for carpools.

Carpools? In Beijing?

In the wake of the pre-Olympics anti-pollution restrictions, the options for the building’s workers were simple: carpool, or public transport.

All of which served to remind me that if necessity is not the mother of innovation, she is certainly a midwife.

The precautions being taken to ensure a safe and secure Olympics for all involved are inconvenient – especially for business owners near the venues. But for the vast majority of us, a little planning and ingenuity produces workarounds that can work out well for everyone. Several companies are taking the opportunity to experiment with telecommuting, carpooling, remote sites, and the like.

Anyway, a few other thoughts about the fun of doing business around the Olympics – courtesy of Marketplace Radio and Scott Tong – are here and here.

Silicon Hutong a Must-Read Olympic Blog

In the Hutong

Well, it was looking nice earlier

1612 hrs.

IDG News was good enough to name Silicon Hutong one of the six blogs to read during the Olympics.

Those of you who have followed the Hutong for a while know that we’ve been in a higher gear since mid-May, and we’re going to continue that pace through the Olympics.

If you’re new to the Hutong and you’ve just found us because of the IDG article, welcome to the Hutong. Comments are welcome, as are e-mails and other forms of communication, so don’t be shy.

Full Disclosure

Futong East Road, Wangjing

Dodging oncoming traffic

1547 hrs.

As someone with business interests in many (but not all) of the industries I cover, I have occasionally struggled with the issue of disclosure. Having never taken a journalism course or done much research on the topic, I’ve been a bit oblivious about the rules. As I’ve become more regular about posting and my readership has begun to rise, I felt it was time to come clean. But I haven’t known how.

Recently, however, I stumbled upon a site called DisclosurePolicy.org. The site uses a simple tool to help you design a disclosure policy that is appropriate for you and your blog. Check it out. In the meantime, here is ours, which will be posted as a separate page attached to the blog:

This policy is valid from 17 July 2008

This blog is a personal blog written and edited by me. For questions about this blog, please contact David Wolf (siliconhotong at mac dot com).

This blog does not accept any form of advertising, sponsorship, or paid insertions. We write for our own purposes. However, we may be influenced by our background, occupation, religion, political affiliation or experience.

This blog abides by word of mouth marketing standards. We believe in honesty of relationship, opinion and identity. The compensation received may influence the advertising content, topics or posts made in this blog. That content, advertising space or post will be clearly identified as paid or sponsored content.

The owner(s) of this blog is compensated to provide opinion on products, services, websites and various other topics. Even though the owner(s) of this blog receives compensation for our posts or advertisements, we always give our honest opinions, findings, beliefs, or experiences on those topics or products. The views and opinions expressed on this blog are purely the bloggers’ own. Any product claim, statistic, quote or other representation about a product or service should be verified with the manufacturer, provider or party in question.

This blog does contain content which might present a conflict of interest. This content will always be identified.

To get your own policy, go to http://www.disclosurepolicy.org

There is NO next-best thing to being here

Wangjing Gardens, 23/F

Looking over Northwest Beijing

1414 hrs.

As we watch these global arguments around whether heads of state should come to China for the Olympic opening ceremonies, another question rears its head in the shadows: where are all of the CEOs? And not just around the Olympics, but generally?

There has been a noticeable dropoff in the visibility of the multinational CEO in China. Part of this is the result of growing restrictions on the time national leaders spend in the presence of non-Chinese business executives, which itself is partly the result of the falling priority Chinese policymakers assign to foreign investment.

I sense, however, that there is more to it than this. Market access is no longer as problematic as it once was. Corporate focus has shifted to the day-to-day conduct of business, and many executives have likely convinced themselves that it is not as important to come to China as it once was.

One immediate example: as Apple opens their first China store in Beijing this week, Steve Jobs could not be bothered to decamp beautiful metropolitan Cupertino to attend the opening, much to Apple’s loss. (We in the Hutong fervently hope that this is not for health reasons, and if it is, respectfully withdraw the preceding comment.) But Apple is not the only guilty party. The CEO who regularly comes to China (i.e., more than once per year) is the exception, not the rule.

That by itself is shortsighted. But I submit that much more is needed.

Put your butt where your business is…or will be

I am a huge fan of self-education generally, and I think that learning about China via books, web sites, blogs [see my blogroll], magazines, podcasts and other formats is a huge help to give yourself a strong foundation, maintain a clear view of China’s evolving context, and stay current when you cannot be here.

For someone interested in China as a tourist or as an intellectual exercise, that and the occasional trip would be sufficient.

But for an individual who is counting on China as a significant chunk of his or her company’s future, simply popping in now and again isn’t enough. I discussed this at length with Christine Lu at China Business Network in a recent podcast, so I won’t repeat it all here, but two points bear discussing – one that I made in the chat, one that I thought of later.

First, such a long parade of CEOs have aped key phrases like “how important China is to our company” and “how committed we are – and I am personally – to China” that those words have become platitudes. Officials and Chinese consumers alike simply ignore them. If you want to make it clear you are committed to China, you have to stop talking and start doing.

The best way I can think of proving that – better even than a monetary investment – is physical location. If China is so important to your company, Mr. Chairman, then transfer the flag. Take advantage of modern technology and the host of magnificent places of lodging and living and move to China for a bit.

Is China 40% of your business? Can it become 40% of your business? Then pack the bags and come spend 4 months a year here. I guarantee you that the insights, relationships, and brand value you get in the process will make it well worth your while.

MBWA is not about frequent flyer miles

Second is a lesson from Tom Peters – the best way to run a business is to spend as little time as possible at headquarters. Peters called it “managing by walking around.” To Wal-Mart founder Sam Walton, it meant four-and-a-half days a week on the floors and stockrooms of his stores and distribution centers. To my dad, it meant spending about six hours a day on the factory floor, and most of the rest with customers.

To an executive running a global business today, it means getting on the plane and renting long-stay suites in countries that may not offer the creature comforts you’re used to. Suck it up. Sure, you have great people running your offices, branches, and subsidiaries around the world. This is not about them. This is about you having an instinctive feel for the market so that your smart people on the ground can spend their time winning and keeping business, not giving you an extended course in China 101.

Elsewhere on the net

I also had a chance to talk to ChinaONTV about the China ICT conference, where I was a substitute moderator. Not quite as insightful an interview, but I really enjoyed my time at the conference and thought it stood out above a lot of the local tech confabs. Try this link if you’re in China, and this one if you’re not.

E-tailing: Report on E-Commerce in China

Starbucks Guomao 1

Deleting Spam. Again

1034 hrs.

Paul Denlinger over at China Vortex points us to a new report from the Research Institute Data Center of China Internet, which claims that online spending in China passed US$37.5 billion in the first six months of the year, representing a 58.2% jump over the same period in 2007. The report goes on to predict that overall spending online in China will surpass $86 billion for all of 2008.

Given that the report supports my belief that electronic retailing in China is on the verge of really taking off, I was pleased to see it. But I have reservations about the report nonetheless.

The first is a small thing. There appears to be no distinction made between “electronic commerce,” which can cover business-to-business transactions along with business-to-consumer and consumer-to-consumer, and “electronic retailing,” which is primarily business-to-consumer but also includes a large chunk of consumer-to-consumer.

This is important because business-to-business commerce in China is huge (remember the Alibaba IPO?), and could well be skewing the numbers. Let’s set that caveat aside for the sake of argument.

The second concern the research itself. I used to conduct market research seminars for foreign students coming to China, and I noted that, with apologies to Mark Twain, there are lies, damned lies, and statistics, and that this holds trebly true in a country where there is a long history of massaging numbers to serve political, economic, and commercial purposes. I am concerned this might be the case here.

I didn’t manage to find the organization that produced the report online, nor have I actually seen the report and reviewed its methodology, so I it is hard to judge the veracity of the numbers. What is more, AFP notes that the Data Center of China Internet is an industry group, so I worry that the report may have been influenced by its sponsor.

If you can get your hands on the report, give it a read, but have a full salt shaker close at hand.

The way I normally handle reports of this nature is to give more credibility to the overall trend than the actual numbers. The real takeaway from this is that e-commerce in China is – as Paul Denlinger says – hitting the bend in the hockey stick.

Andrew Nathan and the Olympics

In the Hutong

Learning to type while horizontal

2040 hrs.

In the thin guise of reviewing six books about China and the Olympics, Columbia University professor Andrew Nathan writes a lengthy and impassioned critique of human rights in China. Nathan holds senior positions with Human Rights Watch and Human Rights in China, and in writing in The New Republic he is preaching his gospel to a receptive congregation.

Whether you agree with Nathan’s opinions or not, the essay deserves a read, if nothing else because it spells out succinctly the position of human rights advocates on the nature of government in China. Nathan sees the Chinese government as a vast, crafty conspiracy serving interested in nothing but its own survival, and he sees the Chinese people as alternately cowed by corrupt government bullies and anesthetized by the superficial trappings of economic success.

(Nathan stops just short of acknowledging that the advocates of human rights – and he, by extension – engage in their own form of reality distorting propaganda. A nice touch.)

In short, it is not a balanced appraisal, but it is one that for the sake of balance demands our attention.

Funny, I Thought It Was a New Kind of Herb…

In the Hutong

One month to go

2039 hrs.

There are a lot of terms people use that they do not really understand, and I am as guilty of that as anyone out there. I didn’t understand “soft power” until I read Joseph Nye’s book. I had no clue about social networking until I actually started doing it.

And even though I deal very rarely with finance, there have been two occasions when I’ve used the phrase “Basel II requirements” in a conversation about Chinese banking when I realized I only understood a single specific piece (the minimum capital requirement) of the global standards by which banks are increasingly judged. I kept smiling, but I broke into a cold sweat.

You know that feeling, right? That feeling like you are walking happily across a frozen lake, and then you wake from your reverie to realize that you are on thin ice, that you have walked the conversation right up to – and sometimes beyond – your real level of knowledge. And you are about to be exposed for the pretentious idiot that you are for having had the conversation in the first place.

Okay, well, maybe you don’t. But I’ve felt it, and I hate it. Once my internal baloney alarm kicks in, there are only two solutions: never, ever, go there again; or set about learning more.

So I went hunting, and I found this juicy little pdf at the Bank for International Settlements website – the full text of Basel II: International Convergence of Capital Measurement and Capital Standards Revised Framework – Comprehensive Version. At 347 pages of dry text, it was probably more than I needed, but being the finance tyro that I am I kind of get a kick out of reading it. I feel like I’m a fly on the wall at a meeting of central bankers. The wikipedia entry was a little too light on detail anyway.

You Can’t Dive the Pyramids, but You Can Dive the Great Wall

In the Hutong

Blinds shut, air conditioning on ful

1743 hrs.

Last weekend, The Village Grouch of Sinoscuba led ImageThief and a small band of my fellow Dadu-based divers to a reservoir north of Tianjin. Their mission: to dive the Great Wall.

To those of us who picture the great wall as a series of small citadels on jagged peaks linked by a serpentine brick breastwork, the very idea of diving the Great Wall is a bit absurdist. But there is actually a section that found itself drowned by a reservoir in the 1980s that extends to a depth of 65′.

Will took his underwater video rig with him and got some cool footage. Check it out at the National Geographic site here.

Foreign TV Crews Cleared to Broadcast Live News from Beijing

Starbucks Yuanyang Tiandi

Listening to the rumble

1347 hrs.

Geoffrey Fowler at The Wall Street Journal looks like he scooped just about everybody, reporting that foreign TV crews would be allowed to uplink their news coverage of Beijing directly to satellite during the Olympics. Olympic broadcasters are even allowed to broadcast directly from Tiananmen Square, the political and spiritual heart of the city that is miles away from the venues.

On the one hand, this is a big deal, probably the first time foreigners have been permitted to uplink TV signals directly from Beijing for almost two decades.

Two thoughts jump quickly to mind:

First, I think we can be pretty sure that security around Tiananmen Square and similar venues will be even tighter than normal. I foresee lots of crew-cut lads in sweats mixing in with the crowds.

Second, I wonder how much of this concession was driven by growing broadcaster frustration over the hassles getting facilities in and around the Olympic Green ready for the big show? “Gee, we’re sorry about the logistics stuff. Oh, by the way, NBC, you can set up your broadcast booth in Arrow Gate if you want…”

Just bummed I won’t be able to see the NBC coverage here in Beijing…

Quoted: the Sign of the Times is No Signs

In the Hutong

Wondering how gross the weather can get

1724 hrs.

In part to prevent ambush advertising around the Olympics, and in part to tone down the level of in-your-face advertising in Beijing before the Games, the city’s government has taken down over 30,000 outdoor advertisements in Beijing, including some of the most high-value billboards in the country. Normandy Madden gives a good rundown in the July 7 AdvertisingAge.

George Gallate, the Asia-Pacific CEO of Euro RSCG, is not happy.

“I’m quite surprised by the amount of control they are able to do [sic]. But this degree of control is one step too far in one of the most important aspects of an open economy, the right to advertise.”

Leaving aside the fact that my most recent check of political science texts fails to turn up a mention of a “right to advertise,” Mr. Gallate and his fellows in the ad business are understandably tweaked: some of those billboards list out at over US$50,000 a month, which would mean just under $9,000 in agency commissions at standard rates for a single billboard.

The ban doesn’t stop at billboards – it includes the light-boxes along Beijing’s main thoroughfares, bus shelters, and even the ads on buses and subways. Either the ads are being sold to Olympic sponsors at highly preferential rates, or they’re being held back.

Cough, Cough: Bang, Bang

Starbucks Pacific Century Plaza

Noticeably fewer locals, noticeably more visitors

1355 hrs.


Recreational pyrotechnics are as integral a part of Chinese holidays as gratuitous gifting, constant partying, and excessive drinking. Catastrophic factory accidents and an annual toll of those killed and wounded by fireworks have driven the government to occasional fits of regulation. Each time, however, regulators back off, responding either to a general backlash or to implicit pressure from the massive cottage industry that has grown up around fireworks in China.

Officials now have another reason to rethink fireworks: air quality.

Oooh, Pretty colors…(wheeze)…

In a July 4th article in the Los Angeles Times, Marla Cone notes:

Scientists in India found that airborne barium increased by a factor of 1,000 after a huge fireworks

display there. Strontium, which creates red, and copper, which forms a blue hue, can also be toxic.

“The use of heavy metals like barium or strontium should be reduced or, if possible, avoided,” said

Karina Tarantik, a chemist at the University of Munich in Germany whose lab is working on cleaner

pyrotechnics.

Much of the new research has been propelled by concern over perchlorate, which has been used since

the 1930s to provide oxygen for pyrotechnic explosions.

Perchlorate, which has contaminated many drinking water supplies from military and aerospace

operations, can impair the function of the thyroid gland by blocking the intake of iodide. Fetuses are

most at risk, because thyroid hormones regulate their growth.

Because of legal restrictions on the sale and use of fireworks – not to mention some understandable paranoia about wildfires – Los Angeles on July 4 cannot compare with any Chinese city on a national holiday. Nonetheless, the Southern California Air Quality Management District (AQMD) notes that on July 4 particulate levels in L.A. increase 100-fold and do not return to normal levels for nearly 24 hours.

One wonders what a similar measurement would render in Chinese cities, especially in the winter months when weather seems to trap particulates in a layer near the ground.

A Technology Solution

The article explains how one heavy user of fireworks, Disneyland, has turned to the Los Alamos National Laboratory for help in developing cleaner fireworks. With some experimentation, the lead materials chemists took an “entrepreneurial leave” from the lab to found DMD Systems and produce the cleaner fireworks. Voila. Cleaner fireworks for about the same cost as other US-made fireworks.

Of course, these are much more expensive than the Chinese-made types, which are well on their way to being branded “dirty” fireworks.

The entire issue points up another opportunity for China’s domestic innovation efforts. If a tiny US company can come up with fireworks that produce mostly water, nitrogen, and carbon dioxide, there is no reason that China cannot turn its efforts to finding a substitute for its gunpowder-based pyrotechnics. I would bet that a determined effort could do better than DMD Systems.

That would help preserve a robust export industry (98% of consumer fireworks and 80% of professional fireworks used in the US are made in China), but it would also head off the growing issue of fireworks and air pollution in China. Yes, I know, there is an emotional attachment to using gunpowder because, after all, that was a Chinese invention.

But it is time for China to re-invent gunpowder. A billion sets of lungs depend on it.

Olympics: Whither the Great Venues

In the Hutong

Productivity = no TV in office

1917 hrs

We are still over a month away from the opening ceremonies, and I am already hearing of reporters filing stories on the “Olympic Legacy.” Yeah, I know, it seems a bit early for that kind of speculation, but especially for those of us who will remain behind when all of the athletes, officials, and visitors have left, it is a matter of real concern.

From the point of view of the people here in the Hutong, the infrastructure improvements alone are worth the hassle of the games coming to town. We are being left with: a beautiful (huge) new airport terminal with an extra runway on the side; the beginnings of a rapid transit system worthy of the name; a whole lot of new buildings; wider streets; and vast belts of green where once was concrete.

Quiet Giants

Oh, yes – we’re also getting some brand new sports venues, and all the rest are getting facelifts.

It does not take a futurist to know what will happen to these magnificent venues after the Paralympics closes in September. Some, like the beach volleyball arena, will come down instantly. Others will see their seating removed. A few – most notably Arup’s iconic National Aquatics Center, or The Water Cube (that’s [H20]^3 for my fellow geeks) have been designed with a post-Games life in mind.

But many, I’m afraid, will stand silent for much of every year.

There are two issues, separate but somewhat related.

Promoters must Promote

First is the dismal state of the live events business here in China. I do not put myself out as an expert in this field, but I’ve been working along the edges of the business for long enough to know that the problem here is neither the number of people who would attend a concert, nor the cost of a ticket, nor of a lack of bands, symphonies, stage plays, artists and the like who would be willing to come to Beijing.

The problem is with the promotions side of the business. Live event promotion is for all intents and purposes a state monopoly. With all due respect to the hard-working people in that monopoly, it is too often fair to say that events are poorly promoted, badly managed, and sometimes not fun at all. And that’s just from the consumer point of view. I can only imagine how it must drive sponsors and tour managers nuts to deal with promotors who do not appear to be interested in helping to put on a killer event.

Just to take promotions: I read the weekly entertainment giveaways as closely as the next guy, and I find myself learning about events, plays, concerts, and the like either the day of or a week after the fact so regularly that it is infuriating. I can more readily find out about who is playing the Greek Theatre in Los Angeles next season than I can find out about a concert in Beijing a month from now. Frankly, unless I see an ad two weeks in advance in The Beijinger or I’m regularly checking the Emma website, I may never find out.

Unfortunately, I doubt major improvement – a stage where tour organizers and event sponsors are all talking about how easy and enjoyable it is to take a show through China – is in the offing anytime soon. That would require genuine competition in the live events promotion space, maybe opening it up to other state-owned media organizations like China International Television Corporation, Shanghai Media Group, China Radio International, or even the Phoenix Satellite folks. That is just not in the cards right now.

We need a new ball game

The second issue is the state of professional sports in China. There is more to creating a successful (dare I say “world-class”) sports league that slapping some spiffy kit on a bunch of healthy young males.

If you want an idea of how far professional sports have progressed in China, take a look at professional soccer. There is a league. It has its hard-core of followers. But it is by no means the popular sensation here that it is even in Japan, much less anywhere in Europe.

I once had a long, drink-sodden discussion in a karaoke bar with one of China’s senior soccer coaches. He blamed China’s lack of soccer prowess on a whole range of issues: lack of endurance, lack of speed, inadequate diets as children, whatever. And he may have been right.

When you look around the world at some of the leading sports leagues, though, you start to see a pattern emerge. When a country is a global leader in a given sport – any sport – it is because of a system.

Take English soccer. Sure, there are plenty of foreign players in the Premier League. But English soccer got where it was because of the Football Association. With clubs in nearly every city, suburb, village, and hamlet across England, all ranked in over a dozen tiered leagues based on performance, you have a system designed to screen, identify, and develop talent from the largest possible pool over the longest possible time.

Take American baseball. The kids start with t-ball, then move on to little league, then high school, then college. At each level, only the best stay with it as they grow. Then there are seven levels of professional minor-leagues as development programs for the major leagues – last time I counted, there were over 329 teams in five countries all developing professional baseball players for the 30 major league teams.

American basketball and football rely much more heavily on high schools and universities to develop players, but given that these two sports are arguably the most successful and lucrative sports at the collegiate level, they do a fine job screening, recruiting, training, and preparing athletes. (I’m not in favor of this approach, personally. The Village Grouch and I both advocate either a minor-league system like baseball or an association system like English soccer. But that’s not happening anytime soon.)

Japanese baseball, Canadian hockey, and Australian rugby all follow similar systems.

The formula for developing exciting professional team sports, therefore, is simple: create a system that by enabling broad participation at the earliest practical age ends up casting the widest possible net talent, opening the door for each player to get the the best opportunity for development, and you wind up with a huge pool of talented team players rather than a few stars surrounded by second- and third-rate players who are just no fun to watch.

China needs to find a way to duplicate the essence of systems like those of the Football Association and Major League Baseball in a way that is locally appropriate. Of course, the scale of such an undertaking means that it will take at least a generation to produce professional sports of a high caliber. But now is as good a time as any to start.

Wanted: motivated bureaucrats

If any of the above is to change, it will require some severe motivation from someplace very high in the government. More than just about creating sports leagues, holding concerts, or filling expensive venues, this is about creating industries of entertainment, ways to identify, nurture, showcase, and reward talented Chinese people as well as bring them the greatest talent from around the world.

If the hearts of the nation’s policymakers are not stirred into passionate pursuit of robust live entertainment and sports industries by the prospect of the economic development and opportunities they would bring, perhaps the sight of these giant venues – national treasures – sitting empty and quiet will do the trick.

I think it will happen. China’s leaders detest waste and love an opportunity.

Now if someone would just make the suggestion.

Chinese Whispers and the Art of Corporate Philanthropy

In the Hutong
Starbucks lemon tea is a diuretic
1752 hrs.

Moments of national emotional outpouring can be times of great peril for foreign companies in China. Foreign companies are easy targets (just ask Carrefour), and the high profile that served you so well yesterday becomes an instant liability. The best response in these situations is often to lay low and ride out the storm.

But there are moments when standing to one side in the face of national tragedy is unconscionable. One of those moments came in the wake of the Great Sichuan Earthquake of May 12, 2008.

J’accuse!

To their credit, the foreigners stepped up.

In rapid succession, one foreign company after another stepped forward to offer assistance, giving in kind if what they produced could help, giving in cash if in-kind was inappropriate, and in many cases doing both. Some companies dug into their corporate treasuries, others also organized employee donations. Many gave something, some gave a lot.

But it was not long after the news began reporting episodes of selfless corporate gift-giving that SMS messages and blog posts began to circulate, criticizing a host of companies – many of which had in fact given quite a lot, but had refrained from publicizing their gifts – for stinginess in the face of human tragedy, accusing them of either giving nothing or not enough.

Dance of the eThugs

Many here in the Hutong, including the Party Secretary, expressed their disgust at these lynch-mob tactics. At best, these were righteous outbursts of people hurt by what they believed to be the failure of foreign companies to live up to their end of China’s implicit social contract.

At worst, though, there was some less-than-charitable activity taking place. As I mentioned in a recent post on Internet-word-of-mouth in China, there are companies and agencies who are not above hiding behind false identities or anonymity and spreading disinformation about rivals.

It would be foolish for anyone to levy a blanket indictment on China’s netizens for this eruption of ill-founded bile. At the same time, it would be foolish to ignore what it implies.


Charitable values and the value of charity

The Judeo-Christian-Islamic (JCI) tradition is quite specific about the ways charity should be given. Rabbi Sir Jonathan Sacks, in his thought-provoking ethical treatise To Heal a Fractured World, notes that the Jewish sages identified eight different levels of charitable giving. One relevant passage:

“What matters is not how much you give, but how you do so. Anonymity in the giving of aid is essential to dignity. The poor must not be embarrassed. The rich must not be allowed to feel superior.”

Even though frequently observed in the breech, the importance of giving anonymously is hard-coded into JCI tradition. The greater the earthly reward the giver takes for his gift, the lesser its ultimate value as a genuine act of giving. (Even the U.S. Internal Revenue Service has addressed this concept in the way it values donations to philanthropic causes.)

In China, the reality is quite different. While there are many people in China whose views accord more closely to the JCI approach, There is among many Chinese almost an expectation that a giver would take credit for a gift. Why ever not? After all, wasn’t the credit the main point of the gift in the first place?


From you much is expected

It is this implicit expectation among parts of the audience that makes philanthropy in China so complex. In the U.S., a company or individual may choose to give openly or anonymously. Nobody asks. In China, however, while many people approve of anonymous giving, many people will assume that if you don’t talk about it, you haven’t given.

There is an unspoken rule for companies doing business in China. If you come here to make money, the rule goes, you are expected to give something back. The rule applies to both foreign and local firms, but the implicit belief is that somehow the foreigners owe more.

As a rule, corporate giving during “normal” times does not fall under much scrutiny (although this will  change in the not-too-distant future.) In moments of national crisis, however, there are people keeping score. Some of them are impartial. But some of them are working for the other team.


No modesty please. We’re Chinese

Put simply, companies and prominent individuals need to be prepared to give in times of disaster, and they need to be prepared to talk about it.

The complex audience in China – some preferring anonymous giving, some keeping score, and lots of people in the middle – changes the way you will need to give. Transparency demands that not only will you need to err on the generous side of caution, you must be prepared to up the gift soon afterward.

Communicating about it, however, is more of an art form than a science. What you say about your gift, how you say it, and how you pass the word are situational. What comes across as discreet communications in one situation may come across as crass and uncaring in another.

When I suggested the importance of talking about your giving on Twitter, somebody actually asked the question – at what point does all of this talk devolve into disgusting self-promotion? (I think he was being rhetorical, but I digress.)

My answer was that there is no clear line between discreetly publicizing the good works you have done and sounding like you are turning disaster into corporate opportunity. It comes down to good instincts.

The Imagethief gave an even better answer – it is like the line between pornography and erotica: I cannot define the former, but I know it when I see it.


Talk, but listen first

This is another one of those places where having a really good gut feel for the the market and your audiences is critical.

Even more important, especially for those of us not born and raised in China, is having smart people around you who can instinctively tell where the winds of zeitgeist are blowing. Take their counsel and listen to what they have to say.

Not only will you protect your reputation, you will also set in motion a constructive cycle in your company where everybody sees the value of corporate and personal giving, and where you will be more likely to give (and give well) the next time.

And that’s a very good thing.