James Chu is founder and Chief Executive Officer of China Internet Corporation Limited which is owned by Xinhua News Agency of China. China Internet Corp. marks a major new initiative by China's Xinhua News Agency to provide limited Internet access for Chinese companies interested in business-related information and contacts. The company anticipates 200,000 subscribers within a year, and more than a million by 1999.
Mr. Chu studied computer science at the University of California at Los Angeles, graduated with honors from UCLA's Master's program, and has been working now in the computer field for more than 20 years. His eclectic background includes stints as a systems programmer, a marketing manager, an entrepreneur (in the mail order and the retail bakery businesses) and a real estate developer. Now in his mid-40s, Mr. Chu relocated to Hong Kong three years ago to work as a management consultant to the Rancord Company, using a proprietary method to produce corporate cultural changes. In 1993 he founded the Hong Kong branch office for Aramex, a large air courier company. Mr. Chu speaks English, Cantonese and Putonghua. This interview with Educom Review was conducted over the Internet. His address is [email protected], and his Web site is: URL: http://China.com/.
Educom Review: Did Xinhua News Agency accept your idea immediately, or did you have to "sell" it? What kinds of conversations did you have to have in order to get support for it?
Chu: Even though it took some explanation of my concept and design, they were in general quite knowledgeable on the Internet as a whole. In fact, during that time, the Chinese Government also started a national project called the "3 golden project" - the "golden gate" for automating the customs department, the "golden card" for developing electronic commerce and finance, and the "golden line" for the Internet. The main idea is to adopt western technology for the economic development of China.
After they understood my concept and saw how it fit into what they were trying to do to promote trade (using traditional methods such as distribution of printed catalogues, conventions, exhibitions, etc.), they decided to give it a try. They structured the new company, China Internet Corporation Limited, under one of Xinhua's wholly owned subsidiaries, Fortune China Development Co. in Hong Kong.
Even though Xinhua is the major shareholder of CIC, we intend to build up CIC as an international company, with affiliates and partners all over the world. We also will be setting up an "honorary advisory board" to advise CIC in the development of Internet commerce and trading. Selected executives from different countries will be invited to participate.
ER: The Internet is well-known for its freedom of expression, which is often controversial even in the United States. What restrictions are contained in the content guidelines you received from the authorities in Beijing?
Chu: This seems to be the question that raises the most interest among journalists. The fact is, we NEVER received any content guidelines from the authorities in Beijing. Our decision to restrict our services to trade and commerce only is based on the following considerations:
1. Given our limitations (antiquated phone system, language barrier, etc.), what is the best way to utilize our resources?
2. Given the presence of competition (current and future, in Hong Kong and in China), what is the best marketing strategy that we can formulate now?
3. Given the technology of the Internet (worldwide coverage, ease of use, etc.), how can it best be used to generate the most profit?
4. Given the concerns of governments (both Chinese and abroad, including the U.S., Canada, Singapore, Hong Kong, etc.), what is the best direction that the company should take?
5. Given the circumstances at this time (China opening up, shifting into a market economy, lack of marketing information for foreign companies, etc.), what is the best opportunity?
It is absolutely true that the Internet is well-known for its freedom of expression. However, based on the above conditions, we found the best and highest use of the Internet for us during this time is "trade and commerce" only.
Of course, situations change all the time. If the market condition calls for another approach in our business, we will adapt to satisfy that need. For example, currently we do not plan to offer full Internet access in China because:
1. Local phone lines are low bandwidth.
2. The international link to the U.S. backbone is expensive.
3. There's a language barrier.
4. Distribution of some Internet content poses a potential violation of Chinese law.
If the phone system is vastly improved in the future, if English is widely used, if people are willing and able to pay a higher price to access foreign contents directly, and if the law changes in China, we will definitely offer full Internet access. In fact, we will consider that possibility even if there is only slight change in that direction. Who would want to miss a business opportunity?
Before I forget, let me tell you our strategy in solving the above "problems." We will set up servers in all major cities in China, linked by phone lines. We will offer foreign companies the opportunity to set up Web pages on our servers, in Chinese language. Of course, we will translate the language for them. These companies can either use our "standard" Web page design or create their own custom designs. Since all our members will be online, they can communicate with these foreign companies via e-mail. If necessary, we will even provide e-mail translation service. The above services are chargeable but the fees will be pretty low when compared to the benefits they bring. By doing this, we solved all the above problems and can provide vital business information to our members, in addition to helping foreign companies market their products in China. Also, there is profit for us. Pretty smart, huh? :^)
So you see, in our special case, this issue of censorship is blown way out of proportion. This is more of a business decision than a government decision. Of course, avoiding the possibility of breaking any Chinese law will allow me to sleep better at night, too. P.S. A Zen question for you: What is the effect of "freedom of expression" when nobody cares what you said? (From: what is the sound of a tree falling when there is nobody to hear it?)
ER: We know the answer, but we're not telling. And, we can sympathize with your need for sound sleep, but exactly how are you going to filter the information you plan to make available to the Chinese people?
Let's take an example. You have recently requested (and received) permission to translate and redistribute Edupage in China.
Edupage provides a great deal of business and information technology news, but also covers the social, political and cultural aspects of information technology. If and when Edupage reports-let's say-a lively dispute about pornography on the Net, will your sleep be interrupted?
Chu: We are not really censoring the information. Because we are providing only e-mail service to our members inside China, they cannot access the Internet anyway. What we plan to do is to put up Web pages for companies who want to market to China, on our servers inside China. Thus, our members can still have access to some of the info on foreign companies. If they want some information that is not inside our server, we will provide them with the appropriate e-mail contact so that they can talk to the company directly. Thus we make our system useful to our members without having to provide full Internet access. In any case, since their English is limited, they won't be able to understand what they find anyway.
As to your other question, we have not decided on distributing Edupage in China yet. The decision criteria would be whether that info is useful to our members or not. We will decide on that later. Even if we decide to carry it, and you talk about pornography, it would still be OK. I think the government is pretty liberal as long as the information carried does not cause instability among the people. (An example like this for America would be like: racial comments are NOT allowed because it breaks the law or, to see it from another angle, causes social instability.)
Another fun question for you: You have heard of the story of the three blind men learning about the elephant: one thinks it is like a tree, one thinks it is like a leaf and one thinks it is like a brush.
The riddle is: what do you end up with if you send three blind politicians to the elephant?
ER: Okay, what do you end up with if you send three blind politicians to the elephant?
Chu: I ain't telling! :-). What do you think?
ER: Try to explain for us the state of computing and communications in Hong Kong and in mainland China. What is the extent and nature of information technology use in businesses and in universities?
Chu: The development of the Internet in Hong Kong is, I would say, on par with the rest of the world. There are currently 15 Internet service providers and that number is increasing almost weekly! Currently, all university students have e-mail accounts and most of them have access to the Web. Of course, the biggest group interested in this is the students, at both the high school and university levels.
As to the commercial usage of the Internet, it is just beginning. A lot of the "foreign" companies in Hong Kong either have heard of the Internet or are already using it. Because of the increased media exposure on this subject, more and more companies are becoming aware of this now.
In China, all the universities are being linked up as we speak, to form the CERNET backbone. Most of the equipment and lines are being donated by international corporations. Members of CERNET created most of the Web pages currently accessible by the world.
As to regular Internet access, the Ministry of Post and Telecommunications has a monopoly on that and they have been testing it for several months now, in cooperation with Sprint, the U.S. phone company. They have links from Shanghai and Beijing to the U.S. backbone, and they are providing the service to their subscribers. I understand that there is a high demand on their service and a waiting list of applicants. Business use of the Internet, I would say, is almost zero for now. Just to clarify our position, since CIC does not provide Internet access in China, we are not in conflict with the Ministry of Post and Telecom.
ER: Look into the future and predict what China Internet will be like in five years . . . 10 years . . . 25 years. And what about China itself?
Chu: In five to 10 years, China Internet will have the most extensive network set up inside China. If the market requires, CIC can become the biggest ISP. If not, CIC will be the AOL of China, offering an e-mail gateway to the world. By that time, CIC would be involved in: Online education, offering MBA programs, Internet shopping, EDI (electronic data interchange) for business-to-business transactions, and anything else that requires the use of a network.
Of course, all these new activities will be on top of the bread-and-butter of the CIC, which is to have all the companies in China and Hong Kong as its members and to have the most extensive product and service catalogues. Also, CIC will have the largest "translated mirror site" in the world, with all the major corporations around the world having Web pages set up inside CIC's servers all over China, in Chinese language.
CIC's business strategy will be copied all over the world by different companies in different countries. The world of trading will be totally changed. Middlemen will largely disappear and retailers will buy directly from manufacturers. In fact, a lot of the manufacturers are also starting to sell directly to end users by means of the online catalogue. Eventually, it will all evolve to the point where the end user is communicating directly with the manufacturers, and having their orders done exactly the way they like it. (like Wendy's hamburger :-) ).
China will be a very different place then. It will have evolved into the manufacturing factory for the world, with billions of workers working. Politically, it will probably be a lot more liberal than today, with a governmental structure that is totally new and unheard of before, that can truly serve all its citizens. By that time, Chinese from all over the world will try to immigrate back to China but will be rejected because China simply will have too many people on its own.
In 25 years, the world will be so different that neither you nor I will recognize it, if we survive all the problems. If not, roaches will inherit the world and a roach god will appear . . . .
ER: Well, thank you very much for this interview. And one more thing now: tell us the answers to the riddles.
Chu: You are very welcome. As to the riddles, they were designed to invoke thinking. The answer is not important, as each will create his or her own based on experience and insightfulness. However, if we all start to ponder these questions, such as, "What is politics?", "What is leadership?", "What is democracy?", "What is freedom?", "What is opinion?", "What is listening?", "What is choice?", "What is love?", "What is responsibility?", "What is human right?", "What is human responsibility?", etc., maybe, just maybe, we can start to "create" a society that we can't even imagine for now, something that will allow a quality of life that is unimaginable, a true sense of freedom that relates to our "being" instead of the superficial freedom of speech or whatever, a harmony with each and everyone and including our environment (and I am not talking about ecology either), a true sense of living and not just surviving.
Enough of my bullshit.
Lastly, it is you that I need to thank. I always find it easy to talk and hard to listen. This time, I talked and you listened. Therefore, I should thank you.