Discuss the effects of a rising China on investors and entrepreneurs in Silicon Valley
Silicon Valley Future Academy (SVFA) held a special edition of its Knowledge Series of events in Mountain View, California, gathering some of the biggest names in the Chinese and American technology industry to discuss the effects of a rising China on investors and entrepreneurs in Silicon Valley. The event, organized in partnership with the America’s Branch of the Cheung Kong Graduate School of Business (CKGSB)，HYSTA Chart Member Club (HYSTA CMC) and Asia Society Northern California (ASNC) , featured a keynote address by Professor Xiang Bing, CKGSB’s founding dean, in addition to a fireside chat between Bing and Ken Wilcox, the founder of Silicon Valley Bank on the global impact of new technologies and innovation in the U.S. and China.
Professor Bing’s keynote address described the recent rise of the Chinese economy, the state of its current economic development, as well as the key differences between the US and Chinese economic orders, like the role of state capitalism and Confucianism philosophy in China’s economy. He also pointed out, that despite the belief that China’s rise has come at America’s expense, China actually captures very little of the economic value produced in the global supply chain for popular merchandise like Apple’s iPhone. After all, Foxconn, the Chinese manufacturer of the iPhone, earns just $7.40 for each $800 sale. “I think it’s the Chinese who have made the American economy great again,” Bing said. “To me, the Chinese are more like Filipino nannies in Hong Kong — we free American people up to have them concentrate on higher-value added activities.”
This line of thinking sparked a debate between Professor Bing and Wilcox during their subsequent fireside chat, with Wilcox arguing that just because much of the manufacturing work that has shifted from the wealthy world to China is “low value-added” work, that doesn’t mean that America hasn’t suffered from the loss of those jobs. “The US needs some of that dirty work back,” Wilcox said. “Not all of our children are really equipt or interested in knowledge-based industries or in high value-add jobs. We have plenty of children who would really be happier in factories, and we don’t have them anymore.”
Bing countered that with the coming wave of new automation and artificial-intelligence technologies, both the U.S. and China are going to have to figure out how to transition their populations to doing work outside of manufacturing, either in the knowledge sector or in service jobs. Wilcox agreed on this point, and suggested that this could be a major problem for both the U.S. and Chinese societies, because many workers in both countries are “not equipped” for such jobs.
Wilcox and Bing differed somewhat on the solution to the potential problem that AI and automation would create great wealth for some, but also lead to massive unemployment, because there will be too few tasks that humans can do better than machines. Bing argued that the U.S. and China — countries he proposes are the “most capitalist” on earth — could learn to adopt “socialist” policies that better redistribute wealth, as is done in Western Europe.
While admitting that high and growing wealth and income inequality are problems that could lead to social unrest, Wilcox worried that too much reliance on redistributive policies, without requiring that citizens work to earn their keep, could also lead to social malaise. Instead, he proposed crafting policies that would lead to “a situation where everyone is working at a level that’s appropriate to their innate ability and skill set,” but where most people work far fewer hours per week than is common now in China and the U.S.
Wilcox and Bing also had a productive back-and-forth on the topic of the relative openness of the Chinese and U.S. economies, what American entrepreneurs need to do to succeed in the Chinese market, and whether the Chinese government is doing enough to create a level playing field between domestic and foreign companies. Wilcox — who spent four years in China as part of Silicon Valley Bank’s joint venture headquartered in Shanghai — argued that the Chinese government is too focused on protecting domestic companies, in part because there is no clear delineation between government and business, as many prominent Chinese officials are also involved in various business ventures. “If your own stupidity doesn’t prevent you from doing poorly in China, there’s a fairly good chance that state capitalism will make it difficult to succeed,” Wilcox said.
While admitting that the Chinese economy could benefit from further opening to foreign competition, Bing countered that the perception that foreign companies aren’t successful in China is unfounded. “I think the significance of foreign companies in China may be larger than in the US,” he said, pointing to firms like GM, McDonald’s, and Pepsi, which have found China to be a large source of new revenues. In fact, Bing argued, foreign investment has been one of the key drivers of Chinese economic development, much more so than Japan or Korea. “Samsung does $30 billion in sales in China, but in Korea you see very few foreign companies,” Bing said.
Despite these disagreements, both Bing and Wilcox expressed great admiration for the economies and cultures of both the U.S. and China, and agreed that each country had much more to gain from further economic integration. One obstacle to more entrepreneurial success by Chinese in America and vice-versa are the significant cultural differences between the two countries. Wilcox and Bing argued that this cultural distance could be bridged by more emphasis in America on Chinese language education, while the Chinese government could attract more foreign students to China by relaxing its control of the Internet and the availability of information.
Most important, they argued, is that political and business leaders in both countries realize that fostering economic cooperation between China and the U.S. is a much better approach than one that frames the relationship as a zero-sum competition. “When Chinese and American companies collaborate they create great things, and there’s too much focus on competition,” Wilcox said. “I honestly don’t think that who’s first is as important as how much we accomplish together.”
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Silicon Valley Future Academy is committed to becoming a premier global executive education and venture innovation service organization that helps companies and leaders design/execute innovation, technology and business solutions. With the support from our partners, Silicon Valley Future Academy develops a four-fold service programs: Silicon Valley In-depth Core Executive Education Curriculum, Enterprise Innovation Accelerator, Venture Capital Investment and Venture Growth Advisor. We aim to gather the best faculty members, connect with the best quality resources, bring the most cutting-edge ideas, and deliver the most impactful and valuable results.
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