China's Future in the Tech Industry

I read an interesting article from Larry Seltzer recently about how the Chinese would love to get rid of all the American tech in their country and replace it with homegrown innovations. But the article fails to mention some important elements - like how that would actually happen.

The Chinese want to replace American computers because they think that anything from the U.S. may be used to spy on them. Seltzer also noted that the Russians want the same thing, but are not as well trained at manufacturing tech. But in allowing China to become the manufacturing center of the world, the West has handed to the Chinese all the tech we've developed and shown them how it works and how to build it.

When I was a kid, there was a big deal made about technology transfer. All of our technologies were important for all sorts of security reasons. There were rigid controls on export. Heaven forbid a chip get into the hands of the Russians or the Chinese.

What ever happened to that? Profits trumped ideology, that's what.

After exporting the understanding and manufacture of complex technologies to China, what stops them from developing new equipment and expertise, and keeping it for themselves? What I often hear as a counter argument to this is so old-fashioned that I'm now calling it out. "Well, the Chinese do not have an innovative culture like we do. They can copy but cannot invent." Yeah, maybe in 1940 this was true. No longer. It hasn't been true for 20 years. It's an arrogant, misguided thought.

Here's a prediction: within the next 20 years, China will become a major aircraft manufacturer competing with Boeing and Airbus.

The only cultural handicap I see within China is an inherent inability to do modern marketing. In China, after years of communism and state control, marketing—seen as a foolish capitalist tool used to sell things—took a back seat and remains there.

But that's it. And that can change in one generation.

When you travel to Asia, people like to lecture you about their culture and its strengths and weakness, as well as other cultures' strengths and weaknesses. I recall 20 years ago being told by a Korean engineer that the weakness of the Koreans as compared to the Japanese was that the Koreans were not as adept as the Japanese at precision engineering. He cited various examples of things the Japanese could do that nobody else could accomplish.

Today that great Japanese advantage (insofar as precision engineering goes) still has Japanese branding—but the products are made in China. China was not even in this conversation 20 years ago. How did this happen so fast? Because they, and we, trained China how to do all these things.

China took it a step further and now makes much of the precision machining gear, too.

If the Chinese had a better grasp of branding, marketing, advertising, and merchandising, everything would be not only made in China, but sold under a Chinese brand. They have the manufacturing, engineering and design chops. They have the structure. They have the capability. They just do not have the selling prowess.

If they did, they could say, "we are not making any of these Western-branded products like Apple anymore. You are on your own. We are selling our products exclusively." And we'd be toast.

This will take a while, but it is coming.