Copycat culture drags down China's IT innovation

Global Times, May 31, 2011

Editor's Note:

Microsoft still enjoys massive market share on PCs worldwide, but with Apple dominating new markets in smartphones and tablets, the aging IT firm is looking to innovate. Can it find the talent it needs in China? Is the Chinese IT industry prepared for the future?

Global Times reporter Gu Di (GT) talked to Zhang Yaqin (Zhang), corporate vice president of Microsoft and chairman of Microsoft Asia-Pacific Research and Development Group, on these issues.

GT: What's the state of innovation in China's IT industry?

Zhang: Right now everyone is highly passionate about start-ups, but there is not enough innovation. Only 20 percent of people are doing innovative work, while the other 80 percent are merely copying others.

For example, three months after Youtube, the US video-sharing website, was launched, 100 or 200 similar video websites had been founded in China. As soon as the "group buying website" Groupon appeared in the US, thousands of group buying websites were created in China.

These aren't sustainable models, because anything that everyone can imitate won't last long. Start-ups are not enough; we need innovation.

I once spent a week in Israel. The country, with a small population of 7 million and limited resources, surprised me because it had no settled model of innovation. The book Start-Up Nation, which examines the story behind Israel's economic miracle, notes that their companies and individuals like to think independently and they start up innovative businesses. To encourage Chinese enterprises to innovate, we should create a freer environment and opener competition, thus they will have the motive to innovate.

GT: Many talented domestic graduates are snatched by transnational enterprises. Will this have any effect on our indigenous enterprises?

Zhang: I don't think so. First, there are many talented people in China now. Second, some domestic enterprises are gradually transforming into transnational enterprises. On a micro level, our company has also cultivated a lot of elite talent for domestic enterprises. The Chief Technology Officers (CTOs) of Tencent and Alibaba are from our company. It seems that most of the CTOs in large domestic software companies have come from our company. It is a good thing that our company could be a cradle for CTOs.

GT: Some people think there are too many engineers and leaders with engineering backgrounds in China but too few leaders undertaking strategic architecture. They hope that there will be more people like Bill Gates, who like to do strategic thinking. Is this fair?

Zhang: Yes, China is not short of CEOs, engineers, programmers or even those pioneering, bold and adventurous CEOs. What China lacks is architects and CTOs.

When making a product, everybody just wants it to be done as early as possible, ignoring future prospects. Take the way the telephone industry always does things in China. They write specific programs which can be used only for one type of phone. Proper strategic architecture would help a programmer write a single program which could be used again with a changed interface and modules, saving time, effort and costs. But few people can make this kind of decision.

GT: Bill Gates once said: "In this business, by the time you realize you're in trouble, it's too late to save yourself. " Now many famous IT enterprises have fallen behind the times or have become obsolete. As the tycoon of the PC age, which may now be disappearing, how will Microsoft handle the crisis?

Zhang: Two months ago, I asked in a meeting attended by thousands of people: "Who has ever heard of Kenneth Harry Olsen, the founder of Digital Equipment Corporation (DEC)?" Only 20 or 30 people raised their hands, which shocked me. Olsen passed away in America in February and Gates specially wrote an article in honor of him, "The father of the microcomputer." He created a whole age and he was once my idol.

But now few people know him and DEC has gone. It shows that the IT industry is full of changes and crisis. If you don't innovate or subvert yourself, maybe your business will disappear in several years. As Gates once famously said, "Microsoft is always away from bankruptcy only 18 months." From my point of view, not only for Microsoft, but also for all the IT industries, they need to make breakthroughs themselves and subversively make innovations. New things and subversive technologies will emerge every five or 20 years successively followed by new industry models and a batch of new companies.

Microsoft has been around for almost 36 years and it meets different competitors every five years, which adequately demonstrates the ever-changing situation of IT industry.

In the past five years, Google, Facebook, Twitter and Chinese Internet companies indeed changed the structure of the industry. I believe that there will be a lot of changes in five years but there is no way to know.

GT: In your opinion, what direction will the IT industry move toward? Will it focus on technology, socialization or politics?

Zhang: From the perspective of Microsoft, we are still a technological company, which produces products and tools. Judging from the trend of Internet socialization, the biggest advantage of the Internet is to eliminate interpersonal prejudice, make the world "flatter" and drive the progress of everybody in society.

Social development is always connected to technological advancement. The Internet transforms itself into a kind of culture from technology. The Internet provides everybody a platform to interact online to improve technologies online. I think it's interesting and there will be more fun in the future IT industry.

It's too early to say that the present companies leading the IT industry are totally winners because maybe something will overturn them someday in the future. I think that is just the inherent unpredictability of the IT industry.