China's change merchants: A new breed of CEO emerging in China is wiring the nation—and portending change for just about everything else - Technology

Chief Executive, The, March, 2002 by David Sheff

Zhongguancun, China's Silicon Valley, is as different from California's as imaginable. Rather than sprawling corporate campuses, this section of Beijing feels more like East Broadway in Manhattan--though here the vendors are selling circuit boards and software instead of tube socks. Central to China's multi-billion-dollar technology industry, it is transforming the most populated nation on Earth.

Beginning at Third Ring Road, Zhongguancun heads north along Haidian Lu, the main street, lined with offices and showrooms of hardware companies such as Apple, Compaq and Legend, the number-one personal computer-maker in China. Innumerable software companies are tucked along side streets and, further to the south, lie myriad multistoried research and development centers and assembly plants. It all ends in the north at Beijing University, which spawned many of the technology companies. In Zhongguancun, you can't miss the euphoria--and the vertigo. China and the Internet individually and together represent opportunity, but huge risk is also in the air-the type of risk inherent in any revolution.

Every CEO of every entrepreneurial company I've ever met in California's Silicon Valley has described his or her company as revolutionary: "Our company will change life as we know it!" "We are changing the world!" But whereas such innovators as Andy Grove, Steve Jobs, Tim Berners-Lee and the like are true pioneers of the information revolution, most company founders were doing little more than providing alternative ways to buy books, flirt or unload Fiestaware. The Zhongguancun business leaders are different. In most cases, they could have easier and more comfortable lives in America. However, they are devoted to building the Internet and other communications technology specifically to shake China loose from its stagnant, isolated and repressive past, to raise the standard of living and create new-economy jobs. Most important, the entrepreneurs are passionate about building an indestructible, modern infrastructure that includes a vast, uncensored pipeline of information that will connect China--first its teem ing metropolises and eventually its remote villages -- with the rest of the world.

The new generation of Chinese CEOs is an unlikely group of revolutionaries, yet their similar histories brought them together and have guided their crusade. They are businesspeople born at the time of the Cultural Revolution and raised on Mao, scattered by Deng Xiaoping's reforms, and then sobered and politicized by Tiananmen Square. The trauma of June 4, 1989, inspired them to repatriate and found businesses with a mission. They are committed to information technology, particularly the Internet, precisely because of its potential to change their world.

The leader of the entrepreneurial movement is Edward Tian, now the CEO of China Netcom, a telecommunications company that has, in two short years, wired China with the world's most sophisticated broadband network. Tian, is known throughout China as the man who built, from the ground up, the nation's Internet. As a cofounder of AsiaInfo, the country's first homegrown Internet infrastructure company, he helped construct the backbone of the country's national and many provincial networks. AsiaInfo is one of the most dramatic success stories in the new China--the first private Chinese firm to go public in the West. Which is why Tian baffled many of his friends and angered AsiaInfo's board when he announced that he was leaving to work for China Netcom, or CNC. The government-funded startup was designed to compete with the 700,000-employee, state-owned monopoly, China Telecom.

Passion for technology and China

Beijing is often dismissed in the West as if it were a singles intractable and immovable voice. But when a report showed that Chinese technology paled by western standards, the government supported the influential Chinese Academy of Science in spinning off a western-style entrepreneurial company designed to shake things up. Tian was tapped for the top job. Credit Suisse First Boston analyst Jay Chang says Tian was an inspired, if not obvious, choice. "They looked to Tian because he has passion--for technology and for China--and charisma. He has an enormous ability to keep people focused on the task at hand. He also has a willingness to learn. But his background was not in telecommunications, so his learning curve would initially be steep.

When Tian first heard the proposal in March 1999, he turned it down. His firm was preparing to go public. Besides, CNC's ownership structure--a result of the high-level meetings in Beijing--seemed untenable. Four shareholders, the Ministry of Railways; the City of Shanghai; the State Administration of Radio, Film and Television; and the Chinese Academy of Sciences; would each have a quarter interest in exchange for a $25 million investment. In addition, the company would be regulated by a fifth agency, the Ministry of Information Industries, which also runs China Telecom. Translation: five demanding bosses whose interests could contradict one another. However, the scope of the project began to keep Tian up at night. This new company could transform China. Chang puts it this way: "If somebody came along and said to you, 'I want you to create what could become China's largest company. You'll have all the relevant government support, and you can in the process contribute immeasurably to the people of China,' wh at would you say?"