Foreign Policy: No Internet Censorship in China pre-2004

In the Hutong
It’s a dragon, not a windmill
1845 hrs.

In an otherwise superb article about humor in China, Eric Abrahamsen drops a throwaway line that needs to be called-out.

In the late 1990s, the Internet was still entirely uncensored (it would remain that way as late as 2004 or 2005),

While I cannot speak for the definition of the word “censorship” Mr. Abrahamsen is using, I will use the one from Wikipedia that defines Internet censorship as the “control or supression of the publishing or accessing of information on the Internet.”

By that definition, Mr. Abrahamsen would be shocked to know that the central government was restricting access to a wide range of sites on the Internet in the late 1990s. An excerpt from a BBC wrap-up of China’s first 50 years in 1999:

Chinese police departments have been authorised to monitor individual users of the Internet, and they can ask service providers to block troublesome web sites.

A number of sites including the BBC, CNN, ABC and Voice of America have been blocked, and a Chinese computer executive who supplied e-mail addresses to a human rights organisation in the United States was sentenced to two years in prison.

The article goes on to mention a certain religious cult whose name begins with “F” and how authorities blocked all sites with related material, and quotes the head of a human rights group who says his site was blocked as well.

A rose by any other name.

I am sure Mr. Abrahamsen did not mean to mislead, but if the fact checkers at FP are letting egregious misstatements like this one slip, one must wonder what else is getting through.

Should Li-Ning Be Taking On America Now?

In the Hutong
In Pinewood Derby Mode
1432 hrs.

Li-Ning is popping up on the radar. On Wednesday I got a call from Bo Jin of Campaign magazine in Hong Kong asking me what I thought about the company’s announcement that it would be launching a multi-million dollar ad campaign in the US in May, Then today, catching up on my reading, I read Christopher Shay’s excellent piece in Time magazine about Li-Ning’s foray into the US athletic shoe market.

Let me say at the outset that I have a soft spot for the company: Li Ning gave me a job when I really needed one in the early 1990s, and I was fortunate to spend some time working with him and some of the people who helped form the company. Despite that history–or perhaps because of it–I have to wonder whether now is the right time for Li-Ning to be venturing overseas, and more specifically into the worlds most competitive and challenging sportswear market: United States.

A Long Time Coming

In the company’s defense, this move did not happen on a whim. Li Ning has been thinking about the U.S. market at least since the early 1990s, but the company held back, knowing that a secure market position at home and a positive view of Chinese products abroad would be essential before venturing into the home turf of its strongest rivals. They learned that lesson up close: Li-Ning’s parent company at the time, sports drink maker Jianlibao, made a premature and costly foray into more than a dozen countries overseas, including the US. Not only did Jianlibao fail to take off overseas, the drink maker soon found itself under siege at home from Coca-Cola and Pepsico. Today, though I may look, I cannot find a can or bottle of Jianlibao in any Beijing store.

The company–and it founder–believed then that they would go overseas eventually. But with Nike and Adidas starting to make huge forays into China at the time, the immediate focus was to retrench out of first-tier cities in China and learn to beat the global majors at their own game.

Today, sixteen years later, it is clear Li-Ning has made immense progress toward that goal. The brand is  number 2 in China, behind Nike and ahead of Adidas. The company is public, profitable, and took in over $1 billion in 2009. It has set up a flagship store/design center/listening post in Portland, Oregon, America’s unofficial sportswear capital, enabling it to start tapping into that city’s deep concentration of industry talent. And it has signed an NBA star, Baron Davis, as a spokesman.

So why not blitz America?

Leave aside the fact that Nike alone is twenty times the size of Li-Ning, or that the U.S. is an insanely expensive and competitive market in which to do business. Is this the right time for Li-Ning to be leaping into what is probably the richest and toughest sportswear market in the world? Or is there a better path to global leadership for the Chinese upstart?

I would say no, and here is why.

China is Still not Won

Yes, Li-Ning is now the second largest sportswear company in China. But that position is not unassailable. Nike is still tops, and leads in the more prosperous cities where styles, tastes, and habits more closely match those in developed markets like the U.S. I would argue that until the company can beat Nike in the high-end market in China (which more closely matches the mid-range in the U.S.,) the move abroad is premature.

What is more, foreign brands are delving deeper into Li-Ning’s traditional strongholds in 3rd, 4th, and 5th tier cities. The global majors are finding the going challenging, but they have learned that the formula for success in those cities is different than what it is in Shanghai, and persistent and well-funded, they are adapting. And the big international brands are not the only ones to watch: don’t forget Anta and others are fighting for a chance to steal Li-Ning’s crown at home.

Just when Li-Ning should be using its local advantage to secure the home field against the interlopers, it is turning its attention away.

In America, China Isn’t Cuddly Yet

This is not a particularly opportune time for a Chinese manufacturer to go venturing into the U.S. There is a lot of angst and a certain amount of distaste toward China in the U.S. at the moment. I suppose you could argue that as China rises, there will always be some underlying friction and, after all, the Cold War didn’t kill anyone’s taste for Russian vodka or caviar.

Practically, though, the first four or five high-profile Chinese brands to venture into the West are going to be carrying the burden of America’s China Anxiety with it. The Chinese government hasn’t done much of a job burnishing Brand China lately, and the government does not appear ready to soften its stance merely to ease the marketing challenges of its fledgling global champions. (Nor, for that matter, should it.) What that means, though, is that Li-Ning will need to succeed in spite of China carrying a poor reputation for product quality AND serving as the nation’s bogeyman for its economic challenges.

That’s a lot for a company to carry, and doing so will be expensive. You have to wonder if it might not be wise to wait for a day where the headwinds are not blowing quite as stiffly.

Home Is Where The Growth Is

If Li-Ning goes to battle against the majors in the U.S., they are going to be competing against a host of more familiar brands whose products also extend from the top of the line to the outlet store/bargain basement. The profit share in the US is going to the top-end players. Diving into a market with high sales costs and thin margins is no way to build a war chest to defeat Nike in a global battle.

In China, conversely, more people every day have the ability to buy branded sportswear and footwear, and the market remains the largest in the world. What is more, the tastes of millions of loyal Li-Ning buyers are evolving. They are no longer looking for the basics, but more stylish and higher quality apparel. This is where the company has an opportunity not only to grow in unit sales, but to start using its overseas-built design expertise to grow its unit profits as well. Those profits, long term, will be Li-Ning’s competitive advantage as it takes on Nike and Adidas worldwide.

Other, Easier Fruit is Rotting

There are other markets in the world where the global majors remain weak, others where their products are inappropriate to local tastes and incomes, and even some where Nike and Adidas are only present on the gray market. Li-Ning could use its greater experience selling into developing markets to build deeper footholds into India, South America, Eastern Europe, Turkey, and Russia (and possibly Africa). This would help Li-Ning scale up to a size to be able to match the global giants, and it would fight the big boys on turf that suits its own strengths.

If Li-Ning can establish and retain leadership in China and build market-leading positions in the world’s most populated, high-growth markets, they could then take on Nike, Adidas et al at its leisure in their home markets, supported by immense economies of scale and a global footprint.

Better to Follow Mao

The above approach hearkens back to Mao’s strategy to win the revolution in China. Win the countryside and surround the cities. By dominating the developing markets first, and using those as a power/revenue/scale base from which to take on the more cosmopolitan markets of the world is the strategy that makes the most sense for Li-Ning, along with many of China’s bevy of global brand hopefuls.

So the question is what is compelling Li-Ning to jump into the US before taking the logical intermediary steps that might save it from Jianlibao’s fate? I could figure on several possible reasons. Perhaps analysts feel the “time is right.” Maybe it is all of the buzz about Li-Ning being a presumptive “global Chinese brand.” Perhaps the company wants to capitalize on the still-somewhat-fresh image of Li Ning doing his wire-assisted Peter Pan torch run during the Olympic opening ceremonies 30 months ago.

Or perhaps the company is getting impatient. Maybe they have bought into the idea that the global financial crisis somehow opens the door for them in the US and that they’ll never get a chance like this again. Or maybe it is a much simpler explanation: they signed Baron Davis, so that makes it time to go big time in the US.

Yes, there is something exciting about the prospect of a Chinese brand leaping into the global fray, and the company should be applauded for its guts. But when the applause and the excitement die, I hope they can give us all greater clarity as to why they chose this particular path to globalization.

What are the key skills needed to succeed working for a company in China as a foreigner?

It is coming to that time of year again, and my email box is beginning to fill with resumes and queries from young expatriates who are looking to find their fortunes, or at least a job, in the wild, wild East.

Over on Quora I dropped in an answer to the question "What are the key skills needed to succeed working for a company in China as a foreigner?"

My answer fairly sums up what I think are the salient skills and attitudes required to get hired in China's increasingly competitive job market.

Check out the link below.

What are the key skills needed to succeed working for a company in China as a foreigner?

China’s Ad Campaign: To Whom Are We Selling?

In the Hutong
Trying to be impressionable
1306 hrs.

I am a qualified China fan but a detractor of advertising in general, so it was with some trepidation that I read in Gady Epstein’s blog at Forbes.com that China was planning on a TV ad campaign as a means of making China less threatening to Americans. As Gady pointed out, it was bound to be a tough sell, and for my part I subscribe to the theory that advertising is a fine tool to defend a strong brand, but a lousy one to build or re-build a weak or tainted one.

Now, I am working from an assumption that the American people were the audience, here. The fact that this may not have been the case I deal with below.

Start with the Audience, Guys

Having watched the first effort, I have to confess to being underwhelmed. It is not abysmal, but it is still a profound disappointment. The production values were fine, and the general direction of giving China a human face is a step in the right direction. But the ad struck me as so much self-conscious preening, a request if not a demand for respect, rather than than a friendly, human face.

There are, I know, many Chinese who love the ad, and cannot understand what the problem is. Which, in fact, is the problem. The ad, ostensibly, was not meant for Chinese but American eyes. Whoever approved the ad missed one of the first principles uber-adman David Ogilvy spells out in his 1983 classic Ogilvy on Advertising:

“Now comes research among consumers. Find out how they think about your kind of product, what language they use when they discuss the subject, what attributes are  important to them, and what promise would be most likely to make them buy your brand.” [Italics his]

If China was trying to sell itself to the American people, did it know what Americans were ready to “buy?” Because it seemed like the ad was trying to say “look at us – we’re strong, beautiful, and rich, so you’d better make friends with us.”

This sort of message likely to fall flat outside of the Panda-hugger crowd. Indeed, it is a pretty good example a “fear, uncertainty, and doubt” campaign rather than a “hi, let’s be friends” campaign. And if it was designed to make friends, I would bet the government will learn pretty quickly that it failed to work as promised.

Don’t Blame the Agency

While it would be easy to blame the ad agency or producer of the ad for this (and they may wind up tossed under the virtual truck if their client thinks the ad fell flat), I would wager the problem is at least as much, if  not more, on the client side.

Client executives who are new to the ad game tend to fall in love with ads, slogans, and messages that tell them what THEY like to hear, not what will move their audiences.That is, unfortunately, human nature, and in fact what separates a good marketer from your average Zhou is not so much the possession of special skills or knowledge, but the deep empathy for and understanding of group of people and the ability to substitute their preferences for your own. China’s government and business leaders have yet to demonstrate this skill, much less an instinctive feel for the Yankee Zeitgeist.

Make Next Time Better

In my conversation with Loretta Chao from The Wall Street Journal I said we need to expect these sorts of missteps. The Chinese government is caught in that vast chasm between understanding they must communicate with the peoples of the world and being able to do so effectively. We have to expect its initial efforts to be ham-handed, and sometimes laughably so. But we have to applaud their effort, because it reflects their realization that they actually need our trust and support to reach their goals.

What I hope is that the agency and the State Council Information Office commission some really good research on the effectiveness of the ad, understanding what went right and what went wrong, and hopefully winding up with a clearer idea of what China needs say (and, more important, do) in order to earn the friendship and trust of the American people.

And I hope they realize that soft power does not come out of an advertising campaign. You build it by representing to the people of the world something admirable, desirable, and attractive. Soft power is, after all, like sex appeal on a national scale: it is more a reflection of who you are than how you talk about yourself, and if you say you have it, you probably don’t.

Finally, I think it is time that the Party realizes that as China rises, the nation’s audiences now extend far past its borders. It is, therefore, time to identify and promote capable cadres who can communicate well across national boundaries.

Maybe the Echo was the Message

I note above that the ad was “ostensibly” for American audience. We have to entertain in our critique of this campaign the possibility that the real audience for this campaign was actually Chinese.

It is a not uncommon practice in China to say something to overseas audiences or do something in overseas that is actually done with a view to the effect the message or the action will have when it echoes back into China. This is called “chukou zhuan nei xiao,” or exporting something to sell it at home. We do this in corporate communications in China, and the government (and dissidents) have made it a fine art.

It may well be that the most important effect of this campaign as it was designed was to show the Chinese people that the government is spending money to project a strong, proud image abroad. Indeed, it is possible that an ad designed to cater to US audiences would have come across at home as “weak” or too craven to the foreigners.

If the ad was designed with the Echo Effect at the top of the minds of the officials that okayed it, it was actually not a bad campaign.

…if so, that’s a Bigger Problem

But then it brings up a larger, more troubling issue, which is the growing disconnect between China’s self-image and the image it projects abroad.

A nation that conducts its diplomacy – and especially its public diplomacy – so as to cater to domestic audiences is placing its international relations into deep jeopardy. America did so under Bush and in so doing frivolously squandered its soft power.

The statesmen of a powerful nation must endeavor to create a nation of statesmen, communicating to build a strong domestic constituency to support locally politically unpopular but globally essential diplomacy. History is replete with examples, and the one that pops most readily to mind is Franklin D. Roosevelt’s Lend-Lease act.

Coming to this realization is going to be one of the painful parts of China’s maturation as a world power. It will be fascinating to watch how long it will take the Party to confront this particular quandary.

The Hutong Around the Web

David is extensively quoted in this AdAge piece by Normandy Madden that discusses the growing trend among multinationals to develop products for China in the PRC, rather than localize current production.

David outlines several reasons behind this trend, but warns it is not for the newly-arrived:

The success stories come from companies who have a decade or more of experience in China and who have taken their lessons to heart. It may be counter-intuitive, but the best way to earn that experience is to test and modify your current offerings in the crucible of the market.

Also on this topic, take a look at this post “Made for China is Nothing New,” responding to a McKinsey article at the Harvard Business Review blog advocating a “create local” strategy.

——–

David is referenced and quoted in Janet Carmosky‘s article in Forbes recently, talking about the coming decline of China as a manufacturing economy.

——–

David was quoted on the prospects for online video in China in a recent article in Knowledge@Wharton, the online business journal of the Wharton School of the University of Pennsylvania.

An excerpt:

“What we are looking at [with the IPOs] is not just online sites for videos. We are really looking at the birth of two major, 21st-century international media companies,” says David Wolf, founder and CEO of Wolf Group Asia (WGA), a management advisory firm in Beijing and Los Angeles. “They are going to become large international media companies, [involved in everything] from online delivery to online broadcasting channels.”

Read the article here in English, and here in Chinese.

Why Hu Jintao is not a Lame Duck

Hu Jintao
Image via Wikipedia

In the Hutong
Keeping warm
1434 hrs.

Last Friday I had an interesting conversation with Newsweek’s Isaac Stone Fish. Among other things, we talked about the growing meme among China observers that as Hu Jintao takes his trip to the United States, given that he only has two years left in his 10 year term, he is somehow a “lame duck”.

As I told Isaac, Hu is nobody’s idea of a handicapped waterfowl. The importance of Mr. Hu being in the “home stretch” of his administration is at best overstated, and at worst completely misunderstood, for two reasons.

Peak Power

Most observers calling Hu a “lame duck” are looking at the situation in China through a filter formed by years of watching Western politics. In the West, when leaders are elected to office, they begin their administrations by selecting a slate of their own senior bureaucrats and political appointees, allowing them to place their stamp on government and put into place a group of officials prepared to take the President’s direction.

This system, commonly known as “to the victor goes the spoils,” ensures that when a new leader comes office, they not only bring an electoral mandate, they come to office with a tremendous amount of power and at the very least control over their own administrations.

By contrast, when the Communist Party of China selects a leader to take the highest position in the country, that individual’s ascent is the result of debates and compromises at the highest levels of the Party, and the new leader must govern with a team of bureaucrats and political appointees selected for him by the Party’s Organization Department. What this means is that many if not most of the individuals working for this new president are not beholden to him for their political fortunes to the same degree as their Western counterparts, and some, as the result of the compromises that brought the leader to office, may even be members of a rival faction.

After the leader takes office, though, he is able to gradually extend his influence as the Party and the government evolve, as official retire, and as circumstances permit. As such, China’s leaders thus build and consolidate their power over their time in office. This explains in part how Jiang Zemin was able to muster the support to retain his chairmanship over the Central Military Commission for a year after he handed the reins to the Party and Government to Hu Jintao.

Indeed, you could argue that every Chinese leader since Deng Xiaoping left office at the peak of his power. Hu Jintao is unlikely to be any different.

Consensus Rules

The other reason Hu is not a “lame duck” lies in a misconception about the ebb and flow of Chinese government policy that is also rooted in a western view of politics. Leadership changes in western countries, even those where leaders are of the same party, are usually harbingers of policy change, sometimes quite radical (in rhetoric, at least.) This is because those policies are a reflection of the leader and his/her values and priorities.

In China, however, policies are formed over time in response to a wider set of considerations, and decision-making is more consensus-driven, especially foreign policy. China’s leaders are now “first among equals,” and thus less likely to impose their personal imprint on policy. Those policies are not just made by government functionaries, but by the Party, the PLA, and a growing host of domestic special interest groups to which China’s leaders are increasingly beholden.

If Obama makes a deal with Hu today, in other words, he is not making a deal with an administration that is on its way out the door, but with a governing apparatus that will change only incrementally when the new administration takes office. In other words, all other things being equal, Xi Jinping will be as obligated to adhere to the policies and agreements of his predecessor as Hu Jintao is today.

The Lame Duck Problem

This is more than a matter of semantics. The west generally and America specifically cannot afford to put off substantive progress in relations with China until 2013. The problems that plague the bilateral relationships need to be addressed now, and addressed with the understanding that waiting until Xi ascends and consolidates his power, we will have lost as much as five years in the effort.

The time to engage with China is now, and, at the moment, Hu is the man.

Hu comes to the U.S. with a pre-approved script

Amplify’d from www.washingtonpost.com

“For us, China’s decision-making on North Korea was always a black box. There was the party, the Foreign Ministry and the military,” recalled Victor Cha, who served as a Korea expert on the National Security Council in the Bush administration and traveled to Beijing for now-suspended six-party talks on Pyongyang’s nuclear program. Chinese diplomats “are the ones that show up at the table, but I don’t think they steer overall policy.”

Read more at www.washingtonpost.com

The same could be said for Hu in Washington. Make no mistake, any position he takes, any messages he delivers, any concessions he grants have been discussed and vetted before he got on the plane. This is a stark contrast with U.S. foreign policy, where the President makes the deal, then comes back to Congress for approval.

Buy Olive Futures?

Olive oil from Imperia in Liguria, Italy.
Image via Wikipedia

In the Hutong
Burning up the Keyboard
1500 hrs.

In The Wall Street Journal China RealTime Blog, James Areddy  writes a brilliant article about the role oils play in the Chinese diet, and the challenge this presents Chinese policymakers when the prices of oils rise quickly. What intrigued me most, however, was a throwaway comment about two thirds the way down the page.

To counter the oil shock, Beijing is urging consumers to diversify their tastes and consider their health. According to the Xinhua news agency, “Chefs say olive oil complements Chinese cuisine and you don’t have to worry about sacrificing great taste.

If the central government, via Xinhua, is extolling the virtues of olive oil, what happens when hundreds of millions of Chinese start paying attention? What happens to the price of all of oil, especially the extra-virgin varieties, when hundreds of millions of Chinese families decide to start cooking with olive oil?

Can China become an olive oil producing nation?  Or can the rest of the world ramp up production sufficiently to meet the needs not only of health-conscious Americans and Europeans, but of increasingly prosperous and very hungry Chinese?

Back in the Hutong

Just a few quick announcements:

1. I’ve killed the daily summaries with all of my links. It will now post as a single weekly summary on Sundays. Sorry for the inconvenience.

2. I’m back and posting more often for the time being. Feedback is welcome.

3. I am in Beijing for a few months before my next long trip, so give me a shout if you are coming through town.

Matching the Dragon

In the Hutong
Watching the Skies
1512 hrs.

Robert Gates, a longstanding opponent to big-budget weapons systems like the F-35 Joint Strike Fighter, a man who has made it his mission (rightly, in my opinion) to bring to heel the Fighter/Bomber mafia that has been running the U.S. Air Force since 1947, is singing a very different tune this week, all thanks to our friends in Chinese Aerospace. From Elizabeth Bumiller’s piece in The New York Times:

The American weapons that Mr. Gates was referring to included investments in a new long-range nuclear-capable bomber aircraft, which the Pentagon had stopped developing in 2009, as well as a new generation of electronic jammers for the Navy that are designed to thwart a missile from finding and hitting a target. At a Pentagon briefing on Thursday, Mr. Gates said that the jammers would improve the Navy’s ability to “fight and survive” in waters where it is challenged.

Mr. Gates was also referring to continued investment in the Joint Strike Fighter, the Pentagon’s newest radar-evading fighter jet.

The Pentagon provided no estimate on Saturday of the total cost of the three programs or others meant to counter the Chinese buildup in the Pacific.

If a skeptic like Bob Gates is changing his mind about these programs, China may well have pushed the U.S. past a critical tipping point in the nation’s perceptions of China’s intentions. Despite protests to the contrary today (“no, really, Mr. Gates, this is not about YOU. We just want to feel safe,”) these seem to be systems designed if not to defeat the U.S. military in actual combat, then to carve out a sphere of influence into which the U.S. could no longer comfortably project its influence.

What is Beijing Thinking?

In which case, you have to wonder what the Chinese were thinking by showing off two disruptive weapons systems in the space of three months. One school of thought would say that they are doing this for domestic reasons that have nothing to do with the U.S. That’s possible.

Another school would say that the Chinese wanted to give the Americans pause, but gave no consideration to the fact that doing so would fundamentally alter the way the PLA is perceived by fence-sitters in the U.S.

But a third school would suggest that the Chinese new precisely what they were doing, that they knew this would provoke some instant anti-Chinese sentiment on Capital Hill, bolster the Panda-Sluggers in the Pentagon, and cause America to start pumping cash into weapons systems designed to combat a “near-peer” power. In this case, the theory goes, the Chinese want to provoke the U.S. into an orgy of weapons acquisitions that effectively derail the U.S. economic recovery (or at least slash the investments the Obama administration wants to make into rebuilding infrastructure), undermining long-term competitiveness and leaving  the country even more dependent on Chinese financial support.

The last one seems a tad far-fetched. But the more I think about it, the more it seems like a stratagem straight out of Sun Tzu. After all, isn’t this how America ostensibly won the Cold War? By making the Soviets spend way more than they could afford on matching NATO all while having to pour more money into Afghanistan?

Four Strategic Directions

The ball is now in America’s court. China and the world will be looking to see how the U.S. responds. And the smart thing to do is nothing…yet.

It would be foolhardy to be provoked into a spasm of military spending, especially if the grand strategy behind China’s hardware ante-upping may not be about goading America and its allies into a confrontation, but to drive us into a costly and ineffective military buildup that the Security Council powers can no longer afford. What greater triumph could the West hand China than an America doubly weakened by profligacy in consumer credit and arms procurement, lessened in stature, and compelled by domestic politics to retreat behind the dubious security of its coastlines?

Reverting to the postures and strategies of the Cold War would not bring the result America desires. No, this deserves a better, wiser response, one more suited to the strengths, weaknesses, desires, and vanities of a would-be challenger.

1. Calculate – Think Grand Strategy, Don’t React

Time to go back into the planning rooms and devise a grand strategy for addressing a rising Chinese military power, one that does not presume unlimited defense budgets, and one that takes the growth of four rival powers on the Eurasian content as a given (those being China, India, Russia, and the EU.) How does America’s perception of threats evolve? And what, precisely, are China’s true aims? Not the aims they claim, or those Fox News gives them, but what they really seek, what they’re willing to sacrifice to achieve those aims, and how and why those aims might change.

Until the leaders of the services have a better grasp on China’s strategic calculus, they cannot respond with any effect.

2. Educate – Admit America is China-Ignorant, and Start Doing Something About It

It is time to accept that the Chinese know a lot more about America than America knows about them. And that’s not a matter of bad intelligence, but a matter of misplaced priorities. It is time to change that, starting with the Pentagon. As Commander Tom Henderschedt and Lt. Colonel Chad Sbragia wrote in the Armed Forces Journal last September:

Conversely, while many U.S. maritime services personnel are dedicated to China, few currently on the “China account” have visited China, fewer still speak Chinese and nearly none have enjoyed direct, day-to-day experience with the PLAN and PLAN strategic initiatives. Disappointingly, no experts are placed to affect critical Navy Department planning and policy efforts. The deep understanding by the PLAN allows its officers to be extremely predictive on how the U.S. will act, react and negotiate. The inverse is also true — our superficial approach does not allow deep, predictive analysis of PLAN strategic initiatives.

I would venture that, while Henderschedt and Sbragia contain their comments to members of the maritime (i.e., Navy, Marine Corps, and Coast Guard) services, their comments apply to the Army and Air Force with equal or greater veracity. They counsel:

The most important near-term task is not establishing whether the PLAN is or is not a threat, but truly establishing a deep understanding of the PLA Navy, one that would rival the PLAN’s understanding of the U.S. Navy. Then, with clear penetration of Chinese maritime strategic thought, U.S. Navy “China hands” will be prepared to answer any call — from a PLAN threat or a PLAN partner.

China expertise can no longer reside solely among the China specialists in the U.S. armed forces. That knowledge needs to be disseminated, absorbed, debated, studied, and applied. Responding to a “Chinese threat” before truly understanding whether it is even a threat or whether it is something else entirely serves neither America nor China.

3. Rennovate – Don’t Prepare for Cold War II, Rebuild for The World As It Is.

Mr. Gates needs to make some radical changes to service leadership in the same way he took a fire hose to the Air Force. A few more warriors and fewer careerists atop the Pentagon would be a good start. But what really needs fixing is the military’s procurement system.

A list of prescriptions would be book-length, but it is clearly time to burn the old book, because things aren’t working. The focus has to return to a) superb research and development to keep the most recent innovations on tap, b) taking care of the people in uniform, getting them systems that enhance and protect them, and c) disrupting the capabilities of challengers in the most cost-effective way possible. Our challengers have learned to think asymmetrically about us. We need to start doing the same in return, rather than just buying more and bigger gold-plated systems.

We can argue about specifics, but America’s sword is not only tarnished, it is no longer the right weapon. Time for a rethink.

4. Communicate – The Future Lies With Bloodless Victors

Not everything as about knowledge and armaments. The Chinese know better than we that the best victories are won without fighting. And that means good communications. Elucidating America’s intentions around the world in a way designed to promote support for our goals, rather than have the US branded a loose cannon or worse, would be a good way to start. Mr. Obama began his administration that way, and the State Department is doing its part, but the military are, like it or not, diplomats in uniform, and they need to do more.

First, as Hendereschedt and Sbragia urge, there need to be more interactions between U.S. and Chinese military personnel, not to try to “win them over,” as that is unrealistic, but simply to know them better and to open more channels of communication.

Second, the military needs to craft a peacetime psychological operations capability that can work alongside (but separate from) an enhanced U.S. public diplomacy effort. Deterring a challenger without resorting to violence or coming close does not happen by accident: it is the result of a concerted effort to make clear the fruitlessness of a challenge. For too long the U.S. armed forces have shunted psychological operations into the reserve, calling upon its capability tactically and only in time of armed conflict. In this day and age, if you wait for the war to start psyops, you’ve waited too long. And it needs to be strategic, not tactical.

Finally, it is time to answer loudly the public criticism of small-team U.S. military engagement around the world. The oft-repeated wails of academics like Stephen Walt of Harvard that U.S. deployment in 140 countries is ridiculous only demonstrates their misunderstanding of the costs and benefits of such missions. Argue Iraq and Afghanistan all you want, but ignore the benefits of small-footprint presence at your peril. It is just those sorts of missions that are helping the U.S. military make it more challenging for China to achieve low-cost victories in the region. That’s communications, that’s asymmetric.

Again we can argue specifics, but these are the four strategic directions that the U.S. military should take in response to China today. To do less would be foolhardy, but to do more would be premature at best, and at worst could put us on a path to an avoidable and unnecessary conflict.

Daily Summaries 01/09/2011

Posted from Diigo. The rest of my favorite links are here.

Why China’s Hobbled Education System Isn’t Stopping SOEs

In the Hutong
Marvelling at the Chill
1025 hrs.

In an excellent, wide-ranging article for The New York Times Magazine (and one that will inspire  a few posts on this blog,)  David Leonhardt  zeros in on education as one of the obstacles China faces in building a consumer society.

When I met with Guo Shuqing, a party official and the chairman of China Construction Bank, in his office high above Beijing’s financial district, he mentioned that a recent ranking of the world’s top 100 universities included 53 from the United States but just three from mainland China. Even those numbers, Guo said, probably overstated the strengths of China’s universities: “In terms of innovation — really original, creative ideas — they’re very weak,” he told me. By contrast, the American education system helped make possible Google and other companies.

This has become something of a meme among those who dismiss China as a “real” competitor to the U.S. Because Chinese high schools and universities still emphasize memorization over creation and theory over practice, China will be unable to make the transition to a creative, innovative society.

Who Needs Reform?

Yet while education issue is vitally important to China’s future development, we need to be careful about using the state of education and pedagogy in China as a barometer for competitiveness. China’s companies, even its lumbering bureaucratic state-owned enterprises, are finding ways to work around the limitations of the PRC’s politicized, doctrinaire, rote-driven education system.

  • Executive Education – Ranging from full-time paid overseas study, to part-time MBAs, to open admission continuing education and even government-sponsored programs for accounting and administration, Chinese firms are starting to make use of educational options for middle- and senior management that were originally intended for the executive rosters of multinationals.
  • Training –   An unprecedented choice of commercially-available programs, ranging from basic English instruction to secretarial skills to even Dale Carnegie courses, are available to Chinese companies. Even more firms are choosing to develop their own in-house training programs as a means of attracting, developing, and retaining talented staff, without having to spend a fortune on outside providers.  (In some cases, this means paying for program the first time, and using it over and over in-house without paying the provider.)
  • Hiring MNC Veterans – As the pay gap between MNCs and SOEs narrows, going to work for a local company is a viable and sometimes desirable next step for an executive with several years of experience in a multinational. It’s also a relatively easy way for a company to pick up international best practices. That is, if they actually adopt the ideas thinking and techniques that the new employee brings.
  • Hiring Sea Turtles – While their older brothers and sisters may have chosen to go to an MNC first, today’s generation of graduates, seeing their prospects better at a local enterprise, are choosing careers with SOEs fresh out of school.
  • Hiring the Foreigner – There persists the perception among executives lacking extensive international experience that foreigners are overpriced, difficult to work with, and lacking of a fundamental understanding of Chinese business culture. And in many cases, that’s true. Nonetheless, it is an option more companies are trying.

Long-term, the most important of these sources of smarts will be the foreign educated Chinese, and not just those popping over to the US for professional finishing at American graduate schools. Put off by the hyper–competitive university examination and entrance system in China, parents with the financial means are now sending their little emperors abroad for their undergraduate educations.

Start Them Young

And a small but growing number of parents aren’t waiting for university: they are finding ways to enroll their children in international schools in China, or are sending them abroad as middle- or high-schoolers.  The logic is compelling. Despite the loss of some of the virtues of a Chinese education, these young sea turtles will have been formed in a more open educational environment, ostensibly enabling them to think more creatively, be more adaptive, and possibly even more innovative than peers reared in China’s neo-Confucian secondary schools.

The numbers of students in such programs is not so large as to relieve China of its eventual need to reform education. But as long as that option remains politically unviable, it will grow in unofficial acceptance. If and when the Ministry of Education starts allowing the experimental enrollments of Chinese nationals in international schools, the partial outsourcing of China’s elite education will have become official policy.

So while the issue of mis- or mal-educated youth (and a lack of executive diversity) is a real macro problem in China, don’t count on it to slow or stall your Chinese competition for very long. Driven by the management challenges and global ambitions of organizations like Guo Shuqing’s China Construction Bank, China’s wiser companies are finding ways around the education problem.

Daily Summaries 01/07/2011

Posted from Diigo. The rest of my favorite links are here.

China and American Military Procurement

Hutong West
Marvelling at American cable TV
1441 hrs

Editorial: China’s Naval Ambitions: “Beijing’s drive to extend its military and territorial reach is raising legitimate questions about American diplomacy and future military procurement.”

This is an excellent article, but it only scratches the surface. The U.S. military’s procurement system, which has been broken for at least four decades, is now starting to crumble into a compost heap of careerism, mismanagement, wastage and bloat that is leaving the nation’s armed forces all but unarmed.

As China practices cost-effective means like missiles and gunboats to offset U.S. aircraft carrier battle groups, the Navy cannot seem to build the small warships it needs and wanted to build destroyers that were costlier than aircraft carriers; the Marines are flying one white elephant (the OV-22 Osprey) and about to buy another (the Expeditionary Fighting Vehicle, which at $20 million costs as much as an overpriced jet fighter); the Army can’t seem to build a rapidly-deployable fighting vehicle or a new artillery piece, and was discouragingly slow on procurement mine-resistant vehicles; the Coast Guard is buying deep water ships that leak; and the Air Force…don’t get me started on the F-22 Raptor or the F-35.

China’s procurement system is not perfect, and I would argue that the PLA is hogtied by the politicization of the officer corps, outdated doctrine, a weak NCO corps, and a lack of experienced commanders. But China’s peaceful rise is guaranteed as much by a capable and operationally sound U.S. military as it is by the benign intentions of the leaders in Zhongnanhai.

There are huge cracks in the Pentagon, which is being trapped by inertia, crushed under the weight of gold-plated weapons systems, and hobbled by waste. It is time to fix them before they are exploited by others.