China’s Alma Mater

It’s a classic East-meets-West scene: A Western visitor meets a Chinese businessman in a Beijing teahouse. Only in 2006, the teahouse is located in a shopping mall featuring a Starbucks and clothing stores from London’s Savile Row, and the discussion centers on LSU football.

The Chinese businessman, John Zhang, is a Louisiana State University graduate; he’s also the CEO of SiteView, a network management software company. SiteView already counts many Chinese companies as clients. Some day, Zhang hopes to have many American clients as well.

Surprised? Don’t be. After traveling to Beijing for the launch of CIO Insight China, meeting with Chinese CIOs and IT vendors, and reviewing our research findings on China, it seems likely to me that many U.S. companies will start working with Chinese IT vendors.

Many U.S. companies already have an IT presence in China. This month’s CIO Insight Future of IT Survey reports that 54 percent of companies with revenues of more than $1 billion are likely to provide or arrange IT support for a facility in China within the next five years. Companies that operate in China and employ Chinese IT professionals are going to find advantages—such as localized features or local support—in using Chinese software and service companies. Offshore outsourcing to China is also becoming significant. Only India and Canada receive more outsourcing activity from the U.S., according to our March 2006 Outsourcing Survey.

The linguistic, cultural and political differences between China and the U.S. aren’t to be trifled with, but they may not be overwhelming given the large number of Chinese business people educated on U.S. soil. Take Neusoft, a Shenyang-based IT services and software company. Zhaoxia Lu, the senior vice president and COO of Neusoft, told me her company chose that name in honor of Northeastern University, her alma mater. Hundreds of thousands of Chinese have studied in the U.S. and other English-speaking countries: In the 2005-–2006 academic year alone, 62,582 Chinese studied in U.S. universities, according to the Institute of International Education’s “Open Doors 2006” report; only India sends more students to the U.S. Many of them studied business, computer science, IT and engineering. And many American universities, including the Stevens Institute of Technology, the University of Maryland and Fordham University, have established IT and MBA programs in China for Chinese students.

Of course, having a CEO educated in the States isn’t enough; Chinese companies will have to earn U.S. business on their own merits. An official with the China Software Industry Association asked me how Chinese firms could compete in the U.S. Low prices, I told him, are attractive, but they are not sufficient to win and keep American CIOs as customers; quality, reliability, service and trust matter more. Likelier obstacles to business between U.S. and Chinese companies are intellectual-property concerns and the rising protectionist sentiment here. According to the December 25, 2006 issue of BusinessWeek, there are 20 “basically anti-Chinese” bills being prepared for the incoming Congress.

The U.S. has taught many of China’s students about IT. We would be short-sighted if we ignore what they offer their alma-mater country after they return home to China.

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