Mind the Gap | China never really stopped being a copycat, and that’s why its tech companies aren’t changing the world
Copying and reverse engineering accelerated new product launches, but eroded China’s competitiveness
Western technology businesses struggling to enter China are often accused of displaying a self-serving, haughty “singular thesis or lens.” But Chinese technology companies equally suffer from a blurred world view.
In a recent CNBC interview, Michael Moritz, Chairman of Sequoia Capital, one of Silicon Valley’s top venture capital firms, stunned viewers by saying, “The reason that most Western companies fail in China is because of their own doing. It’s got nothing to do with the Chinese government or regulation, it’s a whole series of Western imperial arrogance that brings about the downfall of many of these companies in China.”
Security experts will tell you that mainland Chinese don’t fear personal reputation risk when committing fraud
Moritz is one of the most successful VCs whose investments have included Google, Yahoo and WhatsApp. But, his unsubstantiated and inaccurate remarks demonstrate that he has little to no experience about the hurdles that face foreign technology enterprises in China. Or that he is trying to curry favour by spreading his own type of propaganda.
Complying to local Chinese laws and localising products has particularly odious implications for international technology companies. Sequoia’s China office should tell him that, for example, foreign payment transaction firms are barred by law from operating in China. UnionPay operates a government sanctioned monopoly. The supposed “arrogance” of foreign competitors is irrelevant.
The biggest objection for technology firms is that the Chinese government demands to see their source code- their most valuable secrets. It is probably the number one impediment to selling technology systems and services.
Moritz ought to talk about the risks of a Chinese partner defrauding a foreigner or misappropriating their intellectual property. It’s considered okay in China to rip off foreign corporations.