Remembering the 5/12 Earthquake Victims

May 12th, 2009

It has been a long time since I last posted, for which I apologize. I won’t insult your intelligence by offering some excuses, but I will try to get back on a more regular schedule. I thank you for your understanding. If you would like to follow an unadulterated distilled real-time version of my thoughts, then I’d encourage you to follow me at twitter.com/pdenlinger

Today is the first year anniversary of the May 12 earthquake which killed an estimated 100,000, mostly in Sichuan, and causing untold damage and suffering. It also awakened the Chinese government and people to the suffering of ordinary Chinese in a way which did not happen before. I don’t have anything to add which I have not already said in the previous year, so I will offer a few links which I wrote last year.

    • China’s Telecom Shakeup And What It Means

    May 28th, 2008

    Several days ago, a different kind of earthquake happened in China in the telecoms field. Unlike the Sichuan earthquake which took so many lives and caused so much damage, this shakeup was not unexpected. It’s ramifications will be large, if not huge, and it’s worth going into some depth to get a deeper understanding of how this change will affect the development of mobile usage of the Internet in China.

    Before leaving the Sichuan earthquake as a subject, I would like to point you to this excellent slideshow by CIC Data (h/t to Tangos Chan) which shows how China’s grassroots social media has helped in the disaster rescue and recovery process.

    China’s New Telecom Landscape

    The main points of the new joint interagency government announcement by the MII (Ministry of Information Industry), NDRC (National Development and Reform Commission) and Ministry of Finance (MOF) are phrased as an opinion and encouragement. (Note: When you get two government ministries and one super-ministry “encouraging” you this way, you do what you are encouraged to do, even if you are China Mobile and have the largest single-country number of subscribers in the world. After all, this is China, not the US, where big corporations tell Congress and the executive through lobbyists and lawyers what they want and are willing to do, and then sell it to the American people through the media as “being in the best interests of the people”.)

    The main points are:

    • China Telecom is “encouraged” to acquire the CDMA business of China Unicom
    • China Unicom and China Netcom are encouraged to merge
    • The basic telecom service of China Satellite should be merged into China Telecom
    • China Tietong (part of the railways infrastructure and the third fixed line operator after China Unicom and China Netcom) is to become a wholly-owned subsidiary of China Mobile

    All six operators (China Mobile, China Telecom, China Unicom, China Netcom, China Satellite and China Tietong) have been asked to separately submit their implementation plans to the relevant ministries where they will be encouraged (again) to reconcile their different plans and agree on a schedule. Once this is completed, the Chinese government will then announce the granting of the three 3G licenses and which operators they will go to.

    Following the reorganization, there will be three companies left, which meshes perfectly with the number of 3G licenses to be granted by the government. There will be one license granted for each of the new 3G technologies: TD-SCDMA (China’s natively-developed standard), CDMA2000 and WCDMA. Current opinion is that China Mobile will get the TD-SCDMA license, with China Unicom and China Telecom getting the other two foreign technology licenses.

    Reaction

    The immediate reaction on the HKSE, where China Mobile, China Unicom, China Netcom and China Telecom are listed was unfavorable to China Mobile, the giant in the mobile sector in China. Goldman Sachs issued a sell rating on China Mobile.

    You can bet that the six companies will be burning the midnight oil to complete and submit their implementation plans so that they can get the 3G licenses as soon as possible, which should be sometime within the next 3-6 months. Most likely it will not happen before the Beijing Olympics, even though the network infrastructure is there, simply because there is a lot of training and testing to be done.

    My Take

    This change marks the end of the first stage of the rollout of mobile phone services in China. While China has the largest single-country number of mobile subscribers, most people use mobile overwhelmingly only for voice and SMS services. From a business standpoint, China’s telecom industry has been in a wait-and-see mode for the past two years.

    This second generation, or next stage of mobile services will be about a renewed rollout and introduction of more data services, and the more important metric for the operators will be ARPU (average revenue per user) instead of number of subscribers. So please, let’s stop talking about number of subscribers, and let’s talk about ARPU instead from now on.

    ARPU will be the real metric to measure the performance of the three operators. I say “It’s about time!”

    This change opens crack and opportunities for investment and new players, and gives more choices to Chinese consumers. China Mobile, the industry leader in mobile services, has continued to expand the number of subscribers, having the world’s largest number of subscribers in one country, with more than 500M. China Unicom has been playing catchup because it started as a CDMA service provider (as opposed to China Mobile’s GSM) and although it also later entered the GSM field. The small independent mobile operators such as Tom.com, Linktone and KongZhong have all languished because China Mobile was seen as the dominant player which wanted to completely dominate the platform and application-level services. While it would be a real challenge for those companies to claw their way back to health, venture capital and private equity firms can now look more favorably at the next generation of mobile services, which will no longer be as dependent on a single mobile provider, since there are now three choices available, and they will differentiate on the basis of how they cooperate with service providers and services they offer to Chinese consumers.

    In order for Chinese startups to survive and prosper, they will increasingly differentiate themselves on their business and execution skills instead of just technology. Good management will be key.

    It goes without saying that Apple’s iPhone will be the most high-profile beneficiary of the change, since it will have two other mobile operators to talk to besides just China Mobile. Instead of just having a loyal base of hacked iPhone users in China, Apple will have a chance to test its vision of the mobile Internet with Chinese users.

    The major handset makers such as Nokia, Sony-Ericsson and Samsung will also want to test their application services among Chinese users, and will have greater chance of reaching them.

    There are many opportunities in search and display advertising, and subscription-based services. Most of these opportunities are not infrastructure-related, but service- and tool-related. I will talk about some of these opportunities in the future.

    While this is a short-term setback for China Mobile, it will ultimately help the company because instead of becoming a lazy monopolist offering bad services, it will have to compete on service. This will make the company more competitive when China starts planning seriously for 4G.

    I give the plan an enthusiastic “thumbs-up”!

    This is a good example of central planning working to help competitiveness, and in favor of consumers.

    It would be nice if, ahem, other countries with large consumer markets, took a closer look at this move and how it helps competitiveness.

    Tianya BBS Provides Platform Connecting Sichuan Earthquake Victims, Volunteer Suppliers

    May 27th, 2008

    The Tianya BBS, as I have mentioned earlier, is one of the leading BBSes in China. It has now launched a special BBS connecting victims in the earthquake affected areas, with those individuals and companies wanting to voluntarily provide goods and services to help them. (h/t to to the Google China blog for mentioning this).

    Here is the most recent news in English about the earthquake.

    The BBS is in Chinese, but if you are outside China and don’t read Chinese, all you need is someone who reads Chinese to help you understand what is most needed, and in what places. With the Internet, you don’t even need to know someone personally, all you need to do is to reach out and ask.

    One good place to start looking for people who know both English and Chinese is Yeeyan.

    Google China’s Search Log Displays Moment of Mourning

    May 23rd, 2008

    Google Search

    Google China’s blog (in Chinese) mentions a Google search query log which dramatically shows the moment of silence and mourning on 2:28PM on May 19 for the victims of the May 12 earthquake in Sichuan.

    Apparently, even Google search queries fell off dramatically during that three-minute moment of silence where Chinese stopped everything they were doing to observe a moment of silence.

    The graph says it all.

    Let’s See How Many Ways We Can Get This Wrong

    May 19th, 2008

    Following the Sichuan Wenchuan earthquake, it has been very interesting to watch how the Chinese government and people have reacted, and how many western observers have reacted. For the first time in Chinese history, the Chinese government has ordered that Chinese flags have to be lowered to half-staff, for three days from May 19-21. What is most significant, is that this is the first time that the flag has been lowered for ordinary civilians in Chinese history, ever.

    China has always had a larger population than other countries, and the country has had very bloody periods in its history. Some 20M Chinese were killed in the 19th century during a civil war, the Taiping Rebellion, and possibly another 20M were killed in WWII, when Japan invaded China. Millions also died because of bad political policy decisions in the 1950s and 1960s, which reached their culmination in the Cultural Revolution.

    Unlike in Washington DC, where you can find war monuments to Americans killed in WWII, the Korean War and the Vietnam War, there are no war memorials to Chinese soldiers or civilians killed in these wars, or to any who died as a result of bad government policy decisions. For the most part, they have just become unknown individuals who died and are now forgotten.

    This is why the decision to lower the Chinese flag for ordinary civilians is so different and marks a break with the past. For the first time in its history, the Chinese government is saying that it is OK to mourn for ordinary civilians. This did not happen during the Tangshan earthquake, which killed some 450,000 civilians in 1976, or in 1989, or even so much during the SARS crisis of 2003.

    For the first time, a Chinese government has embraced the idea that any human life, even that of ordinary human lives, has value. Actually, this is a very western concept, and is a very important step on the road to democracy. Is this not a valuable change in China’s reforms and opening up? This will make it that much more difficult for any Chinese government to dismiss the value of any Chinese lives which are lost in the future, whether they are due to natural disaster, or war, or for political reasons.

    The Chinese government and party have activated their media, and issued an edict that entertainment websites should shut down over the next three days, entertainment programming should be curtailed, along with three minutes of mourning each day.

    This move immediately attracted strong criticism from many members of the Twitterati in the US who, to put it frankly, have embarrassingly little understanding of China, and continue to see China in over-simplified black and white stereotypes, as you can see in this feed from Robert Scoble’s Friendfeed account.

    When I think that the people who have Friendfeed accounts represent smart, well-educated, tech-savvy people, and they say these things, I just get depressed. The stereotypes and distrust of China just run so deep.

    I get a very different view simply because I read Chinese, and I know what many Chinese say and think on the Internet, where people have much more latitude to express themselves than on TV and the print media. Sure, the government has an agenda and is spinning and exploiting this to make themselves look good. And in some ways, they are doing it in a clumsy way. But the government is now accountable to protect the lives of ordinary Chinese.

    After 9/11, the US government claimed all kinds of special powers, including surveillance wiretaps, the need to kidnap and torture terror suspects, and the need to invade Iraq because the government of Saddam Hussein had weapons of mass destruction, and the government needed to keep these weapons from falling into the hands of terrorists. If there is one thing we can learn from all tragedies, it is that all governments have agendas, and they will exploit every opportunity to push their agendas in the event of a tragedy.

    But it does not mean that the original intent should be completely dismissed out of hand as the actions of a dictatorial regime.

    Maybe I’m asking too much, but can some people, Americans especially, try to look at China through the eyes of the Chinese, and not always try to scare and frighten other Americans into asking what the “rise” of China means to the US and the west? Is it too much to think or ask that maybe, just maybe, Chinese don’t spend everyday plotting how to steal their jobs and turn America into a third-world economy? And that maybe, they are just ordinary people who are trying to get along in life, and raise their child and get him/her in a good school, and buy a house? And that the government is far from perfect, but it has allowed ordinary Chinese to have a much better standard of living than before, and is now, for the first time, beginning to care for and mourn the loss of ordinary civilian lives?

    There’s a very simple rule: If you reach out and treat people like friends, they tend to act like friends, and if you treat them suspiciously, they become enemies.

    In the beginning, it’s hard to reach out and trust people you don’t know well as friends because they seem so foreign and different, but it’s always works out better in the end.

    UPDATE 5/20/08: I was interviewed by Christine Lu of China Business Network about this article and you can read that interview here. This article is also referenced in a blog article for the Guardian (UK).
    EastSouthNorthWest has an article about how the Central Publicity Department, which is a Chinese government and party organ in charge of making sure that the official line is carried in the Chinese media, dealt with the earthquake crisis.

    How Chinese Websites Are Helping Donations For Sichuan Earthquake Victims

    May 16th, 2008

    There has been a strong outpouring of support in China for the victims of the Sichuan earthquake, and I thought it would help just to give those outside China and/or do not read Chinese a picture of what is going on in the online world in China.

    Tianya is one of the larger BBS sites in China, and they have created a page where Tianya users and visitors can make cash contributions to support earthquake victims and help the recovery.

    Tianya has given visitors five options for making cash contributions:

    1. Online payment using Taobao’s online contribution

      2. option

    2. Making an offline cash donation using a specially set-up post office account
    3. Making an offline cash donation to the Chinese Red Cross using a specially set-up account at ICBC
    4. Foreign currency donations are accepted at an account set up by Jet Li’s One Foundation
    5. Community members can also donate goods to receiving offices in Chengdu, from where they will be sent on to earthquake victims.

    There is a warning to Tianya members that they should be careful about who they donate their money to, as there are fraudulent accounts which have been set up to take donations.

    The page further lists corporate donations from Chinese companies for earthquake victims, with amounts listed in Chinese yuan.

    Leading gaming site Shanda has also set up a donation page for online gamers. Shanda chairman Timothy Chen Tianqiao donated 1M yuan to earthquake victims, which was matched by online gamers. Shanda then added another 1M yuan, making for a total 3M yuan which, according to an announcement, has already been sent to Sichuan for disbursement.

    The9, another US-listed game publisher and distributor, created a simple page to announce their donation of 1M yuan.

    Giant Interactive, also listed in the US, has created a page on their Zhengtu site where players can post their best wishes to Sichuan victims. They do not ask for money/goods donations.

    Perfect World, a leading online game publisher, went public last year in the US under the PWRD symbol. Their BBS for their online community has not mentioned anything with regard to the earthquake or any drives to make donations to earthquake victims.

    China’s Biggest Challenge for Developing the West

    March 30th, 2008

    shanghai.jpeg

    The Chinese government has done much to encourage the development of China’s west, particularly Sichuan province, which is the home to some 100 million people, making it larger in population than any single western European country, including Britain, France and even Germany.

    From a business and consumers’ point of view, the region holds tremendous promise. Many large western companies, including Intel, Wal-Mart, MacDonald’s and KFC have all moved into the region in the hope of capturing some of the yuan which locals have to spend. From a consumer marketing point of view, and also from the manufacturing point of view, the region holds great promise.

    However, this is still not enough. Compared to the east coast region’s of China, it is still far behind.

    So what is holding the region behind in development?

    In two words, it’s human talent. “Interesting places attract interesting people” is one of my favorite mantras. When I go to a place, I like to find interesting people, regardless of their profession, and listen to what they have to say. I look for different angles and insights from individuals which I cannot easily find elsewhere. Most of the time, I think of these people as very smart generalists.

    My experience is that Shanghai and Beijing is full of interesting intelligent and very talented people, which is why I’m attracted to these two cities in China. They are evolving rapidly, which means that these cities have not yet congealed around certain professions in the way American or European cities, or even Hong Kong, have. They are full of surprises, and most of the time, these are pleasant surprises.

    My theory is that these two cities draw the best Chinese talent away from the rest of China, leaving the other cities to struggle with the people they can convince to stay there, who usually are not as smart and talented. So, when Chinese or expats talk about Tier 1 cities (Beijing and Shanghai), they could just as easily be talking about quality human talent.

    This creates a problem for western China: they have the consumers, and they can have good manufacturing up to the middle of the value-added chain, but they cannot catch up with Beijing and Shanghai at the top of the value chain.

    Unless cities like Chongqing can figure out a way to keep the best human talent in Chongqing, the wealth and knowledge gap between the western part of China and the Tier 1 cities will continue to widen. Instead of climbing to the top, they will peak out around the middle and won’t make it into the ranks of world-class cities.

    What the Chinese government, and most other governments, fail to understand is that it is not buildings, boulevards and museums which make cities world-class, it is very literally human talent. In spite of China’s huge population, I have only seen two cities, Beijing and Shanghai, which have the potential to make them world-class.

    While some Chinese may take this as a slight, it’s worth remembering that the US, which has only 1/4 the population of China, but has a longer history as an economic superpower, has only three cities which can be classified as “Tier One”: New York, Los Angeles and Chicago.

    There must be some undiscovered rule which makes this the case.