Author Mark Atkeson I How Chinese Entrepreneurs moved China Forward

Join author Mark Atkeson on his 30-plus year journey of living and working in China, an eyewitness to China's great transformation into a superpower.  As both an entrepreneur and investor, Mark shares his firsthand experiences in a country that lifted 800 million people out of poverty over that period, spurred in large part by innovating Chinese entrepreneurs. In his book "Risky Business in Rising China" Mark offers why the U.S. will remain competitive with China, identifying both the country's strengths and challenges. 

Transcript

Jeanne Gray: I'm Jean Gray, publisher of American Entrepreneurship Today and host of the podcast series, Experienced Voices, where I talk with highly accomplished people who share the critical elements that led to their success.

 How does a country in 30 years go from roads filled with bicycles to being filled with automobiles? Our guest today on Experienced Voices is author Mark Atkinson, who lived and worked in China during this great transformation that moved 800 million people out of poverty. He shares the important role that entrepreneurship and innovation had in a country controlled by the Communist Party.

He's here today to discuss his book, Risky Business in Rising China. Welcome to Experience Voices, Mark.

Mark Atkeson: Hi, Jeanne. Thank you very much for hosting me on your show today. 

Jeanne Gray: Well, you have a very intriguing story. I call it the Great China Adventure. So let's start with how you went down this road that ended up taking up a significant portion of your career.

Mark Atkeson: Great question, Jeanne. So, You actually go back over 80 years ago, and my grandfather was an officer in the U. S. Navy in 1938 and 1939. They would be based off of Shandong province in China. And in those days, you know, Japan was at war with the Chinese. And so that part of the country was basically occupied by Japanese soldiers.

And my father and his younger brother, Ted, who were, you know, 12 and 10 at the time spent summers of 38 and 39 actually, you know, on the ground in wartime China. And in my book that experience, that amazing experience of, you know, really sort of shocking frightening scenes is captured in an appendix that my uncle Ted wrote.

And subsequent to that, my father actually, you know, much later in life served as the first general counsel to the Asian Development Bank which was run by, you know, mostly Japanese people. This was in the late sixties. You know, but he could see already from you know, that vantage point that Asia was a land of, you know business opportunity.

And, you know, so my father encouraged his children, including me to study Asian languages. And so I embarked on both engineering and the study of Chinese. And then now let's fast forward to the Christmas of 1982 and, you know, put yourself in the shoes of a college freshmen. I was 19 years old. And, you know, my family flew into wintry Beijing on a Pan Am 747 that was nearly empty.

And our airplane on taxiing to the terminal was met by Chinese soldiers in padded overcoats and fur hats with AK 47s. You know, not the type of reception that you get today in Shanghai. And You know, so we then subsequently drove into the city on a very, you know, a narrow two lane concrete road.

We got into the city, all the buildings were only two or three stories tall and, you know, people were wearing threadbare mouse suits, riding very simple black, you know, bicycles with no gears. And absolutely no cars, no neon, no, you know, no vitality in the country at that time, you know, which isn't just an incredible contrast to, you know, the bright lights, big city that people experience today when they fly into, you know, Beijing or Shanghai.

And, you know, we, we traveled around Beijing and, and Shanghai and other cities. The, you know, the, the, the scene was the Chinese were very stoic. They were obviously extremely poor. And you know, the sense you got was it was hard to tell that China was going to take off. And in my book, you know, I, I write about having The the, the sort of the horror of my appendix became inflamed and then I had an appendectomy in a very primitive hospital at wintertime in Xi'an you know, so which was another sort of strong, strongly imprinted on my mind experience.

But so I came out of China from that tour. And the media was beginning to portray China as a frontier for business. And, you know, so there was no question that fortune 500 companies were beginning to make moves to, you know, put production into China and to try to figure out how to access the Chinese market.

So everybody from, you know, Coca Cola to Procter and Gamble to Boeing was really eager to get in. And so I made a decision at the end of college. To, you know make a commitment to getting myself into China which was in stark contrast to my engineering classmates, you know, most of whom went to AT& T for, you know, engineering jobs.

And they thought I was crazy, you know, because in those days China wasn't the place to be in Asia. It was really Japan. But so I ended up with a machine tool company out of Cincinnati. And I chose these guys because, you know, they were very down to earth. They were very friendly and they were committed to putting me into China and keeping me in China for two years.

So I, you know, that was really the first big career move for me in China. Let me, let me step back just for a moment and say, so, you know, I wrote the book, Risky Business in Rising China, and there are really sort of three rationales behind why I, I embarked on this effort. The first was I wanted to chronicle these 30 years of my life in China and, and, you know, honestly, Jeanne, my children had no idea what I had done there and couldn't, you know, answer their schoolmates as to, you know, what did dad do?

So I, I needed to explain that in detail to them. The second thing is that those 30 years coincided with an amazing reform period of China's, you know, so you think that the start of that arc was this incredibly poverty stricken country and over 30 years the Chinese threw ideology out the window and basically focused on You know reforms to the economy to allow markets to allocate resources, which was a huge change from, you know, the communist approach of the past of state, you know, central planning of the economy, which had just been a huge failure.

And, you know, so over that 30 year period, the most amazing thing that happened was that. 800 million people were lifted out of poverty. And, you know, just to put that into perspective, that's probably the most important event of our lifetime, you know, maybe even more important than the fall of communism in the Eastern, in Eastern Europe.

And then the, you know, the last reason I wrote the book is that it covers a pretty wide range of industries. And experiences I worked in everything from, you know, the machine tool world to modern commercial aircraft maintenance for, you know, 747s and, and, and other large commercial aircraft in China.

I worked in mobile technology. I worked in venture capital and, you know, towards the end of the book, I worked not only in automotive parts, but I also you know, pioneered a electric vehicle operation, you know, where we were early into the market. So, you know, it, it for those seeking to understand China.

There's quite a broad range of exposure to different industries for, you know, for people to understand lessons learned. So back to your question about, you know, what was this change? So, you know, again, people went from. The early years of extreme poverty and, you know, threadbare mouse suits to people about, you know, I, I, I would say several years into it the private sector was coming along.

The first thing the private sector did, as you can imagine, was street vendors came out and sold blue jeans and other nice, nicer Western clothes than, than what people had before. And. You know, my business counterparts went from mouth suits to business suits and people went from bicycles to, you know, very cheap cars.

You know, they might be secondhand Japanese cars or they might be, you know, a, a fiat from Italy. But, you know, people were moving up into the world and then a major change occurred in the nineties, which is that China allowed the general public to start buying apartments and, you know, think about that, that a country of over a billion people, nobody owned.

Their apartment and all of a sudden they opened up this opportunity and you know, look at where that is led You know China today everyone, you know, 90 percent of the population basically owns the home they live in, you know, almost predominantly apartments and 70 percent of the urban middle class You know, which is over 400 million people has I'm, I'm sorry.

All of the urban middle class has 70 percent of their net worth tied up in apartments. So, you know, the property sector became an enormous deal. And then if we fast forward to today you know, Chinese went from bicycles to, you know, over 300 million cars in the country. And, you know, not just everyday vehicles, but, you know, Porsches, Mercedes, Teslas you name the brand, they, they, they have it.

So China has really come full circle and, you know, if, if, if one visits China today, you know, traffic is a major issue. Most people are on internet. Everyone has, you know, a sophisticated telephone. So, so China's transformation has really come a long way. You know, I'll mention that in the book Many of my career opportunities came about because of this modernization.

You know, that I worked in the automotive sector because there was enormous demand for transportation. And, you know, I worked in. Automotive parts, I worked in electric vehicles on the on the mobile side, you know, the first access to the internet, the first access to, you know, social media and entertainment was really through people's mobile phone and not through, you know, a desktop computer or a laptop computer.

So I, you know, I ended up running a venture capital fund where we were focused completely on the mobile sector. So you know, I like to think of it, Jeanne is the analogy I have is that. China's modernization was very much almost like a tsunami or a very large ocean wave that built over time. And then when it was peaking, you know, globalization was sending a lot of outsourcing business to China.

Chinese people had urbanized, you know, the migrant labor and the countryside had gone to the cities to build the world's tallest buildings. And, you know, today where we're at is that. The wave has crested and unfortunately, you know, we're now in a situation where, you know, the central government is beginning to pull back and to restrict the private sector in ways that is really causing this you know, this, this wave of activity in China to, to, you know, to crash on the beach, maybe is a way to look at it.

Jeanne Gray: Well, that is. A phenomenal experience. You know, for a person I've been told I like adventure, I probably would have loved to have been there with you. But share a little bit about your mindset because. You explained or described, you know, your family had a history connection with, with China and your fellow college students thought you were crazy in the timing of where you were going.

So where were you getting the rush? Were you getting the rush for applying your, your language skills or you just enjoy the challenge of something, doing something different? 

Mark Atkeson: So, you know, at the very beginning here I was 23 years old, you know, in my first experience coming out of college and, you know, it was exciting and, and also somewhat, you know, frightening that, that as a 23 year old, my, my Chinese was only what I'd learned in the United States.

You know, I was a budding engineer and, you know, when I first went into China I would say youthful wanderlust was a big motivation for me. It was, it was a time of, of life for many young people where, you know, you have no commitments, the world is sort of your oyster and I didn't. I didn't really find going and sitting and working at AT& T to be very appetizing.

And when I asked other, you know industries if they would send me to China, for example, the financial services sector, I had an interview with those guys, which I described in the book. And when they found it out, I wanted to go to China. They immediately, you know, killed the interview because Japan is where, you know, the financial services sector was in those days.

So, I, I went to China on the back of, like you say, I, I was seeking to do something different. And I felt that I could afford to take a risk to try something new. And it's one of the messages, you know, that I I keep coming back to in the book is that. As I moved through my career in China, it was important to get out of the mold that I was in and reinvent myself into new things and to take risks in new businesses.

Now, what allowed me to take those risks and, you know, what basically mitigated the risk was the fact that China would, you know, became an economic juggernaut that there was enough opportunity out there that you could go in new directions. And for sure you would find the opportunity to fulfill what you were looking for.

Jeanne Gray: So you were having these very early experiences working for companies, but you were also working then directly with Chinese entrepreneurs. You were there at the genesis of entrepreneurship and innovation. So how would, do you see the Chinese entrepreneur? At that time versus the one that we see today, it's what changed or did anything change?

Mark Atkeson: No, very good question. So, you know, I, I I made a big career change where I moved from the manufacturing world where I was representing, you know, first a machine tool company and then a, Aircraft engine company called Pratt and Whitney and, you know, the, the innovation that we were seeing in China at that time was the Chinese central government was requiring us to transfer know how, you know, for our product lines in order to get access to the market.

So part of what I was doing was figuring out how to localize certain types of products, you know, in the, in the world of machines and also in the world of aircraft engine parts in mainland China. And then I made a switch to the investing world. And I joined two other guys and we began investing in the, the mobile sector because, you know, that was basically the largest sector where Chinese people were accessing the internet and our business model Jeannenewas to find Chinese entrepreneurs.

Who often had spent time in the United States or other countries, and we're bringing, you know, successful business models from these markets outside of China into China as well as, you know, technology platforms into China. And then we're localizing them for the China market, you know, so we worked with a company that took a interactive media business model from Norway and we ended up implementing it in China, the and then.

We took a, a guy who had been working in Japan and he brought back a technology for downloading Java applications to mobile phones. And we successfully connected him with, you know, China mobile and he got in the business of, you know, helping Chinese consumers to download entertainment and games and things to their phones.

And so it was a lot of fun and it, and it, and it was a time where. Chinese entrepreneurs were really coming from nothing and didn't have any, you know, this wasn't about connections. It was all about. Are you a smart person? You know, can you work hard? Can you find that market opportunity? You know, can you sell something?

So it was all the blocking and tackling, you know, that we have here in America where, where, where people were, were, you know, they could see that with economic growth in China, new opportunities were being created for them. And if they read the, the successes from outside of China properly, you know, they could implement the same thing inside of the country.

And then I, I, I worked later on from the venture capital world, I worked with an entrepreneur named Xiao Qingping, who was a self made guy. You know, he'd gone down early in his life and made a ton of money in Southern China. Go go years of the high non property bubble. So this was a, a Southern province that just had a, you know, a crazy wild East experience of, of building, you know, residential and commercial real estate, which all subsequently crashed, but.

He got out in time, he made a bundle of money and then he came to Beijing and he set up an internet business because again, you know, he could see that the internet was a huge growth opportunity and, you know, so I worked with Xi Jinping to implement one of the things we did is a lot of people are familiar with the American Idol singing show and here in America, you know, you can vote for your favorite singer sending a text message.

To, you know, designating you're the person you're voting for. And so we did that in China and it was for a contest called Supergirl, which was run by Hunan television, and it was an enormous success, you know, while votes only cost pennies per vote. Over 800 million votes were cast in one season.

And, and, and so, you know, our little company made you know, a decent amount, made millions of dollars off of pennies per vote. And then, you know, what we experienced, Jeanne was, you know, and this is sort of classic as to what eventually happened to Chinese entrepreneurs is the state became aware of this, a huge scale, you know, that was taking place.

And they could, you know, obviously interpret that and say, this is a, you know, a major experiment in democracy, which is potentially destabilizing for the central government. And, and so guess what, you know, we got shut down and the state regulator eventually decided that, you know, mass voting Where people were interacting with, you know, television and radio through their mobile phones was, you know, not an acceptable form of of business.

So, you know, what did that mean for my you know, my Chinese entrepreneur friends. So these guys, again, you know, they had been. Self made often, you know, initial money through property development and, and you know, residential property sales. And then as they develop new markets and they had to adapt to restrictive regulation from the government, many of them decided that once they had reached sort of a critical scale of wealth.

It was time to leave and, and so to be very honest with you,Jeanne, I mean, a bunch of these guys ended up, you know, moving their families to the United States or to Canada and, you know, buying a house in Vancouver or buying a house in San Francisco. And, you know, getting out of the casino which is a real shame for, you know, for the Chinese country, the loss of the best and brightest, you know, this brain drain due to too much restrictive policy is a serious problem for them and, you know, to your, you know, more fundamentally to what's happened to entrepreneurs today in China is that Under the current regime, you know, we have a strong man, Xi Jinping, who's in power, who has really decided that in the interests of social stability and security, the Communist Party can't let the private sector become too powerful.

And, you know, so he's taken on. Restricting the biggest tech companies in China. And just to give you an idea of, you know, what these guys, the trajectory they were on, two of the biggest ones are Alibaba, you know, which is basically similar to sort of Amazon and the e commerce world. And Tencent, which is a gaming company and, you know, media company and both Alibaba and Tencent about three or four years ago, had market values similar to our biggest tech companies here in the U.

S. And we're well on their way to becoming, you know, trillion dollar market value companies. And over the course of these last three years, Xi Jinping and the, you know, the state government have Regulated a lot of their businesses out of existence have put, you know, major restrictions on, you know, how they can IPO, you know, how they can spin off and IPO parts of their businesses.

And so, you know, today, Alibaba and Tencent are only worth about. One third of you know, their original market value. And so in addition to that the state has, you know, put very harsh requirements on Chinese entrepreneurs to be ideologically in line with the central government. So, you know, think about this and think about if Biden and the U.

S. government told Elon Musk that, you know, you have to do what we say. And if, and in fact, not only that, but we're going to strip you of your leadership of, you know, Tesla and SpaceX, and we might actually put you in jail for a while. So, so it's been a very it's been a very hard time for, you know, Chinese entrepreneurs, but you know, so how do they respond?

I mean, I, I think the interesting question now is how does the private sector adapt? To, you know, all of these restrictive policies. And I do think that one of the good news you know, things that's going to come out of innovative Chinese people, you know, adapting to regulation from their own government is that.

We will start to see more, you know, China out activity where Chinese companies will come and localize production here in the United States. And, you know, so we often view certain areas that the Chinese are in as, you know, they're threatening to us. It might be, you know, artificial intelligence, it might be electric vehicles, it might be solar panels or lithium ion batteries.

But I do believe that, you know, we're already seeing, you know, in fact, in solar panels, we're already seeing Chinese companies coming and setting up factories in Ohio and other parts of the U. S. To get around, you know, restrictive tariffs from the U. S. and restrictive policies from the central government in China.

So, I, I, I, I, I think you will see more of Chinese entrepreneurs and maybe less as competitors and more as colleagues. 

Jeanne Gray: Well, that, that would be, that would be, I guess would be very good for America, right? They'll be, they'll be creating jobs here. That's which, what everyone's goal is. So. Given where China is today with their innovation, you mentioned some of the industries, solar panels artificial intelligence, green and we see China as a a behemoth, a giant awakening, share a little bit about why America still is competitively ahead of China And is able to sustain a competitive edge.

Mark Atkeson: So, you know, when we compare America and China you know, we have to acknowledge that, you know, the Chinese do have certain strengths, which are, you know, we're not going to be able to replicate that in the, in the short term future. So, you know, let's take electric vehicles, for example, that you know, Tesla is our, you know, our, our best electric vehicle company here in the United States.

And I say that because. It's probably got the greatest volume. It's got probably the most interesting product. And Tesla has just done an amazing job of, you know, integrating not only the car, but all the electronics, the user interfaces. So. You know, when you get into a Tesla, it sort of wraps around you like an iPhone.

And the Chinese are also there. And, and the reason that the Chinese can do that is because number one, they have an incredibly large foundation in lithium ion battery production. And that just goes back to the idea that, you know, long ago, the Chinese were a supplier to Apple. A lot of people don't realize this, that BYD.

Which was invested in by Warren Buffett, you know, is China's biggest electric vehicle maker, but its origins were that it was a mobile phone supplier. It was a mobile phone battery supplier to Apple. And then it got into the car making business. The Chinese also have. A very large base of software programmers and engineers who, you know, are well educated and, you know, the numbers are astounding now, you know, given that that means that, you know, the Chinese can produce.

Pretty decent, you know, electric vehicles in quantity in America here, what I have personally experienced and, and I'll, you know, I'll just go in the book. I described this in my chapter about us producing electric vehicles in China for the U. S. market and what we ran into was we assumed that we could source, you know, the basic design of all the technology in the car in China.

And in fact, it was nearly impossible to find back in 2008 in China. And so we resorted to coming back here to the United States and we ended up turning to. You know, aggressive tech companies here in America, most of them very small, who are employing, you know, the best and the brightest people in the world.

I mean, that's, so that's right. There is a interesting indication that we may have as many Chinese engineers working in America as they have in China. So, so on the, on the basis of finding these very bright. Young engineers here in America, we were able in record time to design a sophisticated drive train, a battery management system and a battery pack for our car 10 years ago, which I would argue that, you know, that that technology is basically state of the art in the cars here that you see here today.

So America does is incredibly successful at continuing to attract the best and brightest to our country who end up making huge contributions to innovation. And that hasn't changed, you know, many Chinese entrepreneurs, as for the reasons that I mentioned, in order to get around restrictive regulation in China.

Want to come here to the United States. And it, you know, ironically, so let's take a, a famous artificial intelligence export from China, which is tick tock. You know, TikTok is probably the most influential Chinese AI company here in the United States. It's succeeded in addicting over 50 percent of our population, many of whom are over 35 years old.

And, you know, TikTok is. Eager to get out of china and read domicile itself, you know somewhere else right now singapore But you know if it needs to it, it would read domicile itself in the united states So the the good news is that is that for us in america that? We're always going to be leaders in innovation.

We will pick and choose the technologies where there will be profitable return. I, I do believe,Jeanne, that in certain key technologies, the Chinese will proceed to commoditize the products. So I do believe, similar to what happened with solar panels, I do believe that lithium ion batteries will become a you know, a heavily commoditized product, which will benefit U.

S. consumers dramatically, you know, that electric vehicles of the future will be much cheaper because of the low cost batteries that we source from, you know, Chinese producers, and we might have You know, Ford is already showing that they would be sourcing from Chinese producers here in the United States where we're good is, is figuring out where is the value, where is the real return?

And, you know, I'll take you back to long ago, you know, 30 years ago, the competition that we had with Japan, where America for a long time, you know, there was a lot of paranoia that. Japanese memory chip producers were going to put our integrated circuit businesses out of business. And, you know, in the end what resulted is the Japanese basically commoditized the memory chip market and, you know, the Koreans got heavily involved with Samsung and other companies like that.

And in the end, the Americans stuck with, you know, processors and higher value added, you know, application specific circuits. And so you look at our, you know, you look at our, our semiconductor champions of today companies like Nvidia. And they are who they are, and they are as profitable as they are because they figured out, you know, where the real, the real value lied.

So I guess part of my point,Jeanne, is that you don't want to take the Chinese head on in an area where, you know, they've already created a large scale industry. The Chinese are not about cornering these markets. They're actually about, you know. Sharing the the production surplus from these, from their capabilities with the rest of the world.

So it does benefit U. S. consumers. Let me make a comment also about America, which I think a lot of us as Americans sometimes, you know, we we forget about or it's hard to see, you know, when, when you're reading media every day about how China is going to take over the world in America, we have a underlying assumption that if you give people power, you know, they will be corrupted and so at the core of our, what You know, political system, we have checks and balances and we have separation of powers and, you know, that flows down into a a country where in our economy and in our society.

We value the rule of law, we value transparency and that really is meaningful because, you know, honestly, as a country, we can make the same mistakes as China and Japan did in the past, you know, everyone remembers the financial crisis of 2008. Which was brought about by excesses in, you know, the, the real estate sector here in the United States.

And, you know, so we had our own you know, blow out similar to what the Chinese are sort of experiencing right now in their real estate sector. But the beauty of America is that. You know, we have the political will, we can change leaders, we have the innovation, we can find new solutions, and, and we don't have people in power who stay in power and maintain the status quo, which would generally lead to stagnation.

And, and, and so we are able to find solutions. And, you know, here we are today in the United States with. a much stronger economy than, you know, what we had in 2008, largely because as a country and a society and, you know, as you know, a system we figure out how to correct the, the mistakes of the past and, and we move on.

Jeanne Gray: I think that's a really interesting point and perspective because when we were going through it in 2008 through 2010. You don't feel like there's an end to the tunnel that will be at a higher level than where you are. But that is the great resiliency of our country because I always think about when people think of history is America has always gone through a major challenge almost every 10 to 15 years anyway.

You know, whether it's the depression, World War II Cold War, you know, there, there's no necessary making it sentimental about some of those periods. We've gone through tough places and we've come out of it. So speak a little bit about corruption and intellectual property. Those are two things I hear a lot about that are challenges for the Chinese.

Mark Atkeson: Yes. So you know, you've probably heard the, you know, the stereotypes and the, and the griping of us businessmen who've been to China and you know, so think about corruption this way. So I wrote a chapter in the book called combating corruption where I worked for an investment fund where I, I ran I was responsible for turning around one of their spoiled investments in, in automotive parts.

And the investment was, largely spoiled due to the fact that there was endemic corruption, you know, on site at the factory where everybody from the general manager down through the purchasing department and the sales department and the finance department, everybody was taking some form of bribe or kickback for, you know, doing bad things.

And so the chapter opens with a scene where I'm firing my head of export because he and his henchmen were driving vans into the factory. And loading them, you know, basically stealing our product and putting them in the vans and then They would drive the vans off and they ended up labeling our product with international, you know, big name brands like Bosch.

And then they would package them in fake packaging and send them to Southeast Asia, you know, to Thailand and Malaysia to make, you know, 100 percent profit. So they were literally stealing and selling this stuff in other countries. So you know, your initial reaction could be, well, this is, this is, you know, really bad and it must be impossible to do business in China.

I don't think that's the case. You know, let me just highlight one other type of corruption, which is that when you have a country where there's only one political party and that's the Communist Party, it does mean that, you know major actors in the Communist Party are also, you know, receiving all types of favors for not only themselves, but you know, their friends and family.

You know, which is also a significant type of corruption. And you know, so the regime is constantly working to weed out the bad actors particularly among, you know, government officials so that it doesn't, you know, destroy the economy. I would say that, you know, why Is China a country that has, you know, this sort of endemic corruption?

Part of it goes back to, you know, coming out of extreme poverty. You, you know, you have to put yourself in the shoes of somebody who's nearly starving, you know, in a, in a, in a country where, you know, central planning is failing to feed people. And, you know, you have to do whatever you can do to survive.

And, and that is not necessarily, you don't see it as ethically bad. You see that, you know, allowing yourself to survive is basically what's most important. So, you know, a lot of Chinese basically came from a background of extreme poverty and, you know, so this taking of kickbacks and other things was seen as like perfectly normal.

And you know, we react very negatively for good reason that when people in government in America you know, take bribes and kickbacks we tend to fire them in, in, in China, you know, it's sort of assumed that, that if you have the good luck to be an official, you know, you're going to somehow leverage that authority to make life, you know let's say comfier for yourself.

I, I, I will end my comment on the corruption front with the following, which is that I do think the younger generation in China has grown up at a different time and a different perspective. And, you know, what does that mean is that, you know, the younger generation, the Gen Z and the millennials have really grown up.

With a much wealthier country much sort of you know, better exposure to what goes on outside of China. For example, in the United States, many of them were educated in, in America and, and, and other countries. And, you know, the, the younger people have a belief often that the businesses that they move into, you know, that the processes and the procedures that are in place to prevent, you know, various types of corruption, they believe in those systems now.

So I do think that a generational change is going to make China, you know, a fairer, a more transparent place. In the long run, and that's really, you know, at the end of my book, I have an afterward where I talk about, you know, the youth are, are are going to take China in very positive directions. The, you know, the, the, the bad news is we have to wait a while.

But the good news is that. The younger generations in China, I think will, will, will point the country in the right direction and, and also towards a more collegial relationship with us in America. 

Jeanne Gray: Well, that's pretty encouraging to hear the other, the other factor in solidifying relationships is the aspect of intellectual property and, and, and spying, you know I've heard, you know, Corporate leaders here in the U.

S. describe some sting operations that have had to occur within their companies to, to root out spying. Where, where do we stand on that? Well, it's both a government issue as to whether or not they're going to lessen their aggressiveness about espionage industrial espionage. 

Mark Atkeson: So, so U. S.

companies are, are often challenged, you know, when they enter the China market because you know, the the Chinese government has often, you know, put up a requirement that in order to give you access to the Chinese market, you know, you need to transfer some type of product know how into China. And in my early years, you know, I write about how I ran this project for a machine tool company.

And then later for the jet engine company where, you know, we figured out. To transfer products that were really not meaningful, you know, to our, our, our current product IP and, and, and so that, you know, we mitigated the risks of teaching the Chinese how to do things because we taught them about things that were not that meaningful anymore and, and didn't really like, you know, give them the solution, the keys to you know, our latest technology.

But, you know, the Chinese are very adaptive. I wrote in a chapter, I worked for Sony Corporation where we were selling integrated circuits into the China market. And there was one day we went to a, a street stall in Nanjing and in those days this was back in the 1980s the U. S.

government had restrictions on the sale of technology to communist countries. And you know, similar to what we have today, now with the restrictions on, you know, chips being sold into China we were only allowed to sell a certain size memory chip into the, into China. And so my Sony colleagues and I walked into the street stall and we looked in the glass case and we could see the Sony chip that the guy had was way more capable than the one that we were trying to sell him.

And we said, where did you get that? And he chuckled and wouldn't answer our question, but we were then told by our Hong Kong intermediaries that agents all the time were buying these chips in the markets outside of China and Hong Kong and just stuffing their suitcases and carrying them in and selling them in China.

So unfortunately, you know, putting bands on the sale of technology is a real challenge because it's very hard to actually, you know, police that. And, you know, I've seen news reports today that the Chinese, even for, you know, AI chips are getting their hands on. You know, even some of the stuff from NVIDIA and and getting it into China.

Later on, you know, there, there, there came a time when I worked in the electric vehicle world. I mentioned that we spent a fair amount of our shareholder money, our U. S. shareholder money on developing, you know, all the key drive train and battery management technology here in the U. S. And when we were working with our outsourcing partner in China, they actually, at one point, Tried to hold us hostage where they said, you either give us the intellectual property for this car, or, you know, we're not going to produce it for you.

And, you know, our response, I was with our internal legal counsel at the time talking to these guys and the legal counsel and I excused ourselves from the room. And he just said, look, we're not going back. We're not, we're not even going to address this subject. You know, and, and you know, so we ended up walking out of there.

I, I assume at some point they either would have changed their position or we would have had to find a new partner. So China does have that, you know, does and continues to have that challenge, but. One thing I would say today, you know, so here we are in a world where the Chinese economy is slowing They don't necessarily have all the cards now, you know when it comes to you know being an outsourcing location for the u.

s American companies can shop from you know, vietnam to indonesia to malaysia And, and so my advice to Americans who, you know, seek to do business with China is shop around you know, you should always try to look for, you know, multiple alternatives to whoever you want to partner with and, you know, you should play them off against each other.

I, one of the things that I found that was very successful was that when you're getting Chinese to bid on you know, certain. Things they want to sell you you can play them off against each other. You can use one party's bid to, you know, lower the price from another party. And the Chinese in general will not collude.

They won't go out in the parking lot and decide who's going to get the bid and then everyone basically takes a piece of it. That's not what they do. They do actually actively compete against each other. And this goes to my story that that's why the Chinese are commoditizing solar panels and that's why they're going to commoditize lithium batteries is that.

They're not a, they're not here to corner those markets, they're just here to produce. And, you know, we benefit from, you know, lower and lower costs of Chinese competing with each other. 

Jeanne Gray: I think that's a, a significant point where you're mentioning Vietnam, Singapore, all these other Asian countries that are freer, maybe not democracies, but have more liberties.

And that they are able to act as a competitor with China and allows the U. S. to have some alternatives in this in this race that, that may be occurring. So, well, I've very much enjoyed our talk today. Mark I read the book, I think, really with what's going on, it's, it's a great asset to, for people to be reading it and gain a perspective China's in the news a lot every day, and I think people gain some insight from the book that they would not have thought of.

I thought it was some great stories in there. 

Mark Atkeson: Great. Jeanne , so just for your audience for their benefit. The book is called Risky Business in Rising China and you can find both a paperback version and a Kindle version on Amazon You can also email me mark risky business at gmail.

com If you have any questions it's been an honor to be on the show. I'm really excited about, you know, sharing lessons learned over 30 years working in China with your audience.

Jeanne Gray: Oh, it's, it's been great. Thanks again, Mark.

Mark Atkeson: And thank you, Jeanne. 

Jeanne Gray: You have been listening to the podcast series, Experienced Voices. To hear more and subscribe, visit americanentrepreneurship. com forward slash podcast, where you will also find a form for listener feedback.