Last week at the Fortune Brainstorm conference I was on an early morning breakfast panel to talk about the Internet in China. The room was mainly occupied by corporate types, which meant that most people wanted to hear about investment opportunities. They did not particularly want to hear about the ways in which companies are helping the Chinese government to censor the Internet. I was asked to be on the panel precisely because none of the other panelists could be counted on to discuss this issue (in fact most were hoping to avoid it), and the moderator wanted to make sure that the facts of the China Internet censorship situation got covered.
One of my fellow panelists, Chinese media entrepreneur and blogger Hung Huang put it pretty aptly when writing about the panel the following day: "My goodness, writing about this is even more exhausting than writing about male-female relations." Indeed. In fact I had such a headache afterwards that it has taken me days to get around to writing it up. [I have translated her blog post in full at the bottom of this post - though I'm sure it has mistakes so please post corrections in the comments section.]
Morgan Stanley's Internet guru Mary Meeker first gave an overview of the Chinese Internet sector and the most lucrative trends and investment opportunities. Her presentation was an updated version of slides and a report released by Morgan Stanley late last year (Click here to download them). Interestingly, she pointed out that despite the fact that China already has more Internet users under 30 than any other country in the world, investment risks include the possibility of economic slowdown, "regulatory risks" (i.e., arbitrary, unpredictable and non-transparent regulation by the Chinese government of the Internet sector), "dearth of innovation," problems with management quality and "excessive capital inflow."
I started my comments by saying that I sympathize with many Chinese friends who are frustrated with the Western media's focus on the censorship issue, when there are so many other cool and positive things happening on the Chinese internet. I said I was impressed when I attended last year's first-ever Chinese bloggers conference at the creativity and energy of Chinese Internet entrepreneurs. And it is true that the Internet has opened up a broader space for discourse than ever before. (In fact, I used Huang's blog as an example of this in a draft book chapter (PDF) I wrote on Chinese blogs back in January.)
However. The issue of Chinese Internet censorship in my view remains non-trivial - for commercial reasons as well as human rights reasons. By complying with Chinese government demands that companies take on the pro-active role of censor, and in Yahoo's case helping put dissidents in jail, has a substantial and long-term, global impact on these companies' worldwide reputations and brand images. I pointed out that there is legislation being considered by congress that would make it illegal for any company listed on the U.S. stock market to conduct this kind of censorship and surveillance. (For the most up-to-date, amended version of the Global Online Freedom Act, click here.) If passed this would have an impact even on Chinese companies like Baidu. I said that I understand that from the Chinese perspective, this is "mei ban fa" - there's nothing they can do about it. But the issue is not going to go away, and people have to face this reality. What's more, the Chinese government's arbitrary, un-transparent, unaccountable approach to censorship, which puts the burden of censorship decisions on companies rather than government officials, is having an impact on analyst evaluations of the Chinese internet sector. ThinkEquity has a new report, cited in this recent article on MarketWatch which concludes that this arbitrary, unpredictable, un-transparent regulatory environment It creates an "uneven playing field" - a situation which heavily favors Chinese companies (or foreign companies in partnership with Chinese companies like the Yahoo!-Alibaba team) versus more independent efforts like Google's.
The report's authors write:
"We feel that U.S. Internet firms, in particular Google, will continue to struggle to penetrate the market as core ideological conflicts between the Chinese government and American media make China a far-off, if altogether limited, opportunity, given China's current political realities.
"The Chinese government remains the ultimate arbiter of media content. Control over media and communication is a core strategic asset of the Chinese communist regime and, as such, the government is intimately involved in the development, nay, it is the final arbiter, of media content, both traditional and new, in China."
Unfortunately there was not enough time during the 1-hour session with 6 panelists to get into some of the finer points of the issue. When I talk about the problem of companies collaborating with government censorship, people assume I am advocating that companies should never comply with government censorship demands. That is not actually what I am advocating. Governments worldwide often have good reason to ask companies to censor child porn, terrorist sites, pornography, hate speech, and so forth. But in China the government does not make its requirements clear, delegates the specifics of censoring specific content to the companies, vaguely threatens them with reprisal if they fail to uphold vague and unclear laws, and what's more, demands for censorship are often made verbally without any clear legal process, clear or transparent legal procedure, or any attempt at accountability on the part of the officials making the demands. This is very different from censorship requirements imposed on companies by a government thas been elected by its citizens and whose laws represent the consent of the governed at least to some extent, and whose officials can be voted out of office for passing repressive laws or implementing them in a thuggish manner. Until the Chinese government stops passing the burden and responsibility for censorship onto companies, and until the Chinese government starts being honest with its citizenry about what it is seeking to censor and why, the "uneven playing field" will persist in China's Internet industry and could get worse as companies are forced to compete more on their political savvy and government connections rather than the quality of their products. It is in the business interest of companies to make all reasonable efforts to resist complying with censorship demands that have no clear legal basis, and which then cause users to blame the companies for censorship (as in the Michael Anti case) rather than where the responsibility really belongs - the government. It's also in companies interest to be honest and transparent with users about what is going on.
One of the other panelists said that Chinese users don't care about these issues. It's true, the majority of users in any country are non-political. But its not that nobody cares. Look at this virtual voodoo doll expressing frustration with censorship, and Chinese commenters discussing whether yahoo might sell them out, and this Technorati tag (GFW for "Great Chinese Firewall") through which Chinese users track discussions of internet censorship. I am reminded of an essay written by a Cantonese blogger Chiu Yung soon after Michael Anti was censored by MSN Spaces, in which he concluded: "the Chinese people are a rung lower than everybody else not because the foreigners look down on us. It's because Chinese people devalue other Chinese people; Chinese people don't treat their own people like humans."
Certainly, the priority of most Chinese Internet entrepreneurs are in business to make money; they have not chosen their professions out of some sense of civic duty, for the most part (though there are some admirable exceptions). This is, interestingly in stark contrast to many Chinese journalists and news editors, who are sticking their neck out and taking some risks to push for more freedom of speech.
The Brainstorm blog cites Huang making a very valid point: Chinese officials are more likely to be persuaded by economic arguments than by human rights appeals:
"If I were China"s Information Minister," said Hung, "I'd be a lot more impressed by claims that Chinese companies are undervalued and that censorship hurts economic competitiveness than I would by Western complaints about human rights."
Agreed. I hope more businesspeople and trade negotiators from the U.S., Europe and elsewhere will indeed make that argument.
In her post below, titled "Brainstorm," (translated literally as "storm in the brain") Hung Huang accuses me of an excess of idealism which causes me to be "biased" about China. Obviously my views of China are colored by my own personal experiences. Hers are colored by her life of relative privilege, and are somewhat different than that, say, of these peasants evicted from their land , or this woman whose brother has been detained without charge for six months. Maybe I do talk much about these people, and the fact that their perspectives are often censored, and fail to talk enough about the many things happening in China that are worthy of praise and admiration. But if I do, I hope I am doing my small bit to counter-balance the fact that Huang and most of her countrymen are largely silent. Granted, it may be futile and dangerous for them to speak up, and perhaps I would be silent if I were them. But the consequences for me to speak are not so grave, and thus I feel that I have a responsibility to do so. If the price is a bit of sneering by Chinese bloggers about my naivete, spiced up with irrelevant comments about my personal life, I can handle that.
Yesterday I took a minibus over the Rocky Mountains from Vail to Aspen, to participate in Fortune magazine's "Brainstorm" [literally translated as "storm in the brain"] conference.
这里开会非常认真，我的第一个讨论会是早上七点半开始，题目是中国和互联网。主持人是《财富》远东编辑，第一个发言的是Morgan Stanley的Mary Meeker 女士。她的分析比咖啡因还灵，我立刻竖耳聆听。她说中国现在有几个第一：30岁以下的互联网用户我们是世界第一多，30岁以下的手机用户我们也是第一多，今年我们的互联网和手机用户人数就会超过美国，也是世界第一了。然而，中国整个电讯工业的市场价值是日本的一半，也就是说我们的市场虽然大，但是资本认为我们没日本市场值钱。这是为什么？有三个原因：一是我们整个金融支付系统不转，二是我们政府对内容的管理没有法律化，公开化；三是我们自己在互联网上面的创作能力还没有充分体现出来，大部分网站的功能，我们还是在效仿国外的。
The conference here is very earnest. My first discussion began at 7 a.m. The topic was the Internet in China and the moderator was the Far East editor for Fortune. The first speaker was Morgan Stanley's Mary Meeker. Her analysis was more incisive than caffeine and I immediately perked up my ears to listen. She said that China now has several firsts: we have more Internet users under 30 than any other country in the world; we have more cellphone users under 30 than any other country in the world; and this years our internet and mobile phone users will exceed that of the U.S., making us first in the world. However, the value of China's telecoms sector is only half that of Japan's. There are three reasons: First is that our financial system doesnt work well; second is that our government's management of content is not open or in accordance with legal procedure; third is that our ability to innovate on the Internet has not been fully realized, and most of the features on our websites are copied from abroad.
第二个发言的是一位在中国投资互联网赚了大钱的年轻人，叫Steve Jurvetson. 好像他是百渡的原始投资者之一。他说中国人挺厉害的，他投了一个公司从几个人，一年之内就发展成四百人，而他们作为风险投资者，也不可能按着个儿的分析这些公司的表现，所以干脆就以多投来取代准确率上面的不足，也就是说，如果你有钱，可以到中国来撞大运，只要胡几个大的就行——这战略不错，跟我妈打麻将的战略一样，多打总能胡一次大的，胡了就能把其它输掉的都拿回来。
The second speaker was a young man who has made a lot of money investing in China's internet, Steve Jurvetson. It appears that he was one of the initial investors in Baidu. He said that the Chinese people are very talented. One company he invested in went from a few people to 400 people in one year. As high-risk investors, with such growth there's no way to make accurate projections the company's performance. So the investment strategy focuses on investing in a lot of things rather than in being able to predict correctly what will succeed. In other words, if you have money, you can come to China to try your luck, and as long as you get a couple big bets right that's all you need. This is a good strategy, it's the same strategy my mother uses in playing mah jong: if you gamble enough you'll always win a big one. And if you win big you'll be able to make back your losses.
第三个发言的是我十几年前的邻居和朋友，Rebecca Mckennin. 她中文很好，我单身的时候她有个中国男朋友，我天天晚上听见他们在楼上狂欢，气得要死。后来Rebecca 去了CNN当记者，上电视了。但是现在她辞了高曝光、高收入的活儿，准备到香港大学当老师，教多媒体，这点我很佩服，是很有理想的人。但是，有理想的老外对中国的印象永远不如有目的的老外对中国印象好，而大部分美国媒体从业者，特别是著名新闻媒体的记者都属于有理想的，这也就导致外国媒体对中国的报道一边倒，Rebecca 也不例外。我特别怕咱们这儿说什么“净化网络”之类的事情，这事如果是必要的，也不能用这种愚蠢的说法去办，一是特别容易让外国媒体误解，又给人家一个小题大做的把柄，真是何苦；二是这种宏观的，理论的，概念的东西很难执行，有个公开的法律性的东西多好，大家一看就知道，骂韩寒敢情犯法，那就算了，别惹事儿了。Rebecca 发言时间很长，我估计她说的话都属于要被净化的内容，但是由于我胆小，又比较稀罕我这博客，所以我就不重复了。但是我还是希望把这“净化”量化一下，这样我也不用这么遮掩，就这一段破字，让我足足耗了两个钟头才写完——就这一段！
The third speaker was my neighbor and friend from ten-plus years ago, Rebecca McKennin [sic]. Her Chinese is very good. When I was single she had a Chinese boyfriend. Every night I heard them having fun and it pissed me off. Later, Rebecca went to CNN and became a reporter, went on TV. But now she has left the high-profile, high earning job, and is planning to go to Hong Kong University to become a teacher, teaching multimedia. I admire this, that she is a very idealistic person. But idealistic foreigners never have as good of an impression of China as foreigners with selfish motives do. And most of the people who have been journalists in China, especially for major media organizations, are all idealists. This leads to a bias in the foreign media towards China, and Rebecca is no exception. I am always loathe to talk about issues related to "internet purification" [a Chinese euphemism for censorship]. If this policy is necessary, one shouldn't use such silly terms to implement it. One reason is that the foreign media misunderstands and they are given an excuse to make a mountain out of a molehill, which is really too bad. Second is that this kind of broad, theoretical, and impressionistic thing [policy] is very hard to implement. It would be good if there were an open, legally-grounded approach, then everybody would be clear about what's going on and what's against the law, and that's that, and then it wont be so exasperating. Rebecca spoke for a long time, and I think most of her speech was the kind of content that would need to be "purified." But because I am timid, and I treasure my blog, I won't repeat it. But I still want to bring up this "purification" and this way I don't need to cover it up. Just writing this paragraph of darn words has taken me two hours to write - just this paragraph! [Thanks SJ for helping to correct this translation. -RM 7/6]
Then Justin Tang and I spoke. I talked for a long time about how the foreign press is not fair to China, especially making such a big deal about Google and Yahoo recently. There isn't a country in the world that doesn't have any internet controls. France doens't allow facist websites, and child porn sites are banned around the world. China has its own regulations. Unfortunately, they're not codified in law, and have thus become an excuse to curse China. Justin said one thing that made a lot of sense. He said he hopes people will look at the situation from the perspective of Chinese internet users when they report the development of China's internet. Foreign political perspectives are not something that most Chinese internet users pay attention to. This made a lot of the foreigners sit up straight. I thought why doesn't this guy go help out the [state council] Information Office and [communist party] Propaganda Department? He would be very effective.
The last person to speak was a female CEO who basically agreed with Justin's views. She made an interesting comparison. She said that after having interacted with leaders from both the U.S. and China, she is certain that Chinese leaders understand the Internet better than U.S. leaders do. I think she's quite qualified to say this, since she is a technology advisor to the Bush administration and a board member of Cisco.
Ok, that's my report. My goodness, writing about this is even more exhausting than writing about male-female relations.