Eric Nee: The China Syndrome
As China emerges as the world's second-largest market for digital technologies, China's government and Chinese IT companies are minting new standards in an effort to keep profits at home. The impact on U.S. CIOs may be substantial.Chinas meteoric rise from a closed, near- feudal society to the most dynamic economy on the globe has been mostly good news for U.S. CIOs and captains of technology. An enormous supply of cheap labor, coupled with modern factories, means that prices for most high-tech gear should remain low for years to come. Armies of highly educated yet low-paid scientists, engineers, accountants and other professionals provide a long-term opportunity for U.S. firms to get skilled work done for less. Add to that the millions of newly minted middle-class Chinese and thousands of growing businesses ready to buy, buy, buy, and whats not to like? Well, there is another side to Chinas emergence as an economic power, and one that poses a threat to the U.S.: Chinas use of its growing economic might to try to dictate critical technology standards. Chinas current effort to establish its own 3G wireless standard has little chance of success outside some parts of China, and is mostly an annoyance. But in the years to come, China may be able to use its heft to dictate standards in newly emerging markets, and to use them to its own advantage. The implications of this could be profound, because whoever sets technology standards will also control the direction the industry takeswho wins, who loses, and where the wealth created by that technology ends up.
For the past 50 years, the U.S. has held sway over most technology standards, and over the technology industry itself. Not only were U.S. companies such as IBM Corp. and Intel Corp. the most innovative creators and biggest producers of technology, but U.S. consumers and businesses were the largest buyers as well. That symbiotic relationship helped make the U.S. the most powerful country in the world, and helped U.S. companies become the most creative and productive users of information technology.