NEAL CONAN, host:
This is TALK OF THE NATION. I'm Neal Conan in Washington.
Think where we'd be without the telephone, airplanes, radio, of course, TV, computers, the Internet. The United States has led the world in technological innovation for more than a century, but long ago, China served as the center of innovation for a thousand years. The Chinese invented the compass, gunpowder, paper, porcelain, the wheelbarrow and oceangoing ships. In 2005, China may be on the cusp of regaining its role as a technological leader.
Last month, we kicked off a multipart series on China to better understand that country's emerging muscle. We looked first at China and trade with someone who helped open the country more than 20 years ago. Today we continue with a look at technology and innovation. John Seely Brown was one of the people at the epicenter of Silicon Valley's explosion into a major center of research and development. He also knows a thing or two about what it takes to foster creativity and invention. We'll talk with him in a few moments.
Later this hour, the seeds of a comeback in the once vibrant marshes of southern Iraq. And NASA finally awards astronaut wings to three men who soared into space 30 years ago as pilots of the X-15.
But first, innovation, technology and China. If you've experienced Chinese innovation firsthand as a visitor or as a competitor, give us a call. How does Chinese technology compare to the US, South Korea, Japan or Europe? Our number here in Washington is (800) 989-8255. That's (800) 989-TALK. The e-mail address is firstname.lastname@example.org.
And we begin with Time magazine's Shanghai correspondent Bill Powell. He's been tracking Chinese forays into technology. Thanks for waking up again in the middle of the night to talk with us, Bill.
Mr. BILL POWELL (Time Magazine): Not a problem, Neal.
CONAN: A story in American papers today reports that hackers using Chinese Web sites are attacking computer networks in the Department of Defense and other US agencies. Have you seen evidence of this?
Mr. POWELL: Right. It's actually something that a couple of our correspondents in the US have been working on, and we'll have the story out about--next week. It is certainly possible that Chinese hackers are behind this. Lord knows there are a lot of hackers in China, both--you know, probably some working for the government and others just, you know, sort of typical, independent hackers. However, it is not necessarily clear that even though these attacks are thought to be coming from computers in China, that necessarily the attackers are located in China.
It is possible, as I understand it, in the hacking world to basically use computers to play leapfrog, and these attackers could be in Russia or Europe or basically anywhere, use Chinese open computers as kind of a transmission base, if you will, and attack what are, as I understand, unclassified databases that the Pentagon runs thus far. I think the answer is we don't know. It is certainly plausible that Chinese could be behind this, but it could be someone else, and the investigation continues.
CONAN: When we think of China, we don't necessarily think of Web sites and hackers in our first thought.
Mr. POWELL: Right.
CONAN: You've been writing an article about China's scientific and technological rise. I guess we should no longer be surprised at this.
Mr. POWELL: No, exactly right. We should not be. Particularly the younger generation here is utterly computer literate, addicted to the Internet, just as our 20-somethings are, and as one would expect, given the sheer numbers, the sheer scale of this place--this is a country, after all, of 1.3 billion people. There are a lot of very sophisticated, smart kids coming out of the universities here, both engineers and scientists, who are able to hack into computer networks or devise new drugs, working for a biotechnology company or go to work for a foreign multinational and help in their R&D efforts. So there is enormous progress being made technologically here, both for, you know, good reasons and I suppose illicit reasons.
CONAN: I'm curious, one of the things that people thought about the Internet and the kind of communications it made possible when it came on the scene was that it would inevitably lead to--well, let a thousand political flowers bloom, if you will. Is China able to control political content on the Internet while allowing the same kind of innovation technologically to expand as quickly as it has?
Mr. POWELL: Yeah. It's a good question, and I think the answer is they are desperately trying to do so; that is, there is an enormous amount of effort that goes into trying to control content on the Internet. There are banned phrases and words and subjects in chat rooms, for example, whether it be Falun Gong, the quasi-religious mystical group that is banned in China, or Taiwan is another buzzword. How successful these efforts are is murky. I think they're pretty successful. And I can tell you just as a foreign correspondent based in Shanghai, there are times when you can't get to Web sites or I can't pull stuff up on the computer about these subjects that would not be a problem elsewhere. So, however, I think the more sophisticated one is in terms of using computers and utilizing the Internet, there are ways around the Internet police, basically. It's a big game of cat-and-mouse. But this much is clear, the Chinese government does try very hard to try to snuff out those sprouts of freedom that people thought that might come in the wake of the Internet.
CONAN: Getting back to technology, though, there are obstacles, but also, there are an awful lot of resources working in China's favor.
Mr. POWELL: Yeah. No question. One of the things that China has done on the positive side is to--is it's a pretty open regime in terms of foreign investment, and one of the things that they have encouraged--and that's to put it mildly--foreign companies to do, whether it be Nokia or Microsoft or Intel or whomever, is to bring technology with it when they open factories here; set up R&D centers as well, research and development centers. And many have done so. Many have done so very successfully. Nokia, for example, the big cell phone company, now does 40 percent of its global research and development at its Beijing R&D office. Just a couple of months ago, they won an award at a European conference for an innovation for high-speed transmission of a large amount of data just on cell phone networks.
Microsoft similarly spending a lot of money on R&D here. So there is real progress. And also at indigenous Chinese companies as well. Huawei is a company that is typically viewed as a possible threat to Cisco, the big US Internet router company. That's viewed as a fairly innovative company doing cutting-edge research in that field.
However, as you've said, there are also problems, and the biggest problem is intellectual property protection. The--or rather, more specifically, the lack thereof.
Mr. POWELL: The inability of entrepreneurs to protect their ideas, whether it be an idea that comes, you know, from a big company or from the Chinese Steve Jobs who's in his garage somewhere. If you're going to have that idea stolen by four guys down the street, and a week later, they're going to be on the street with a copycat product in--you know, name the industry--that's a big problem, and that still is a big problem. And I think pretty much across the board, even Chinese government officials would acknowledge that that is a deterrent at the moment anyway toward technological innovation here.
CONAN: Bill Powell, thanks very much. And again, get some sleep, all right?
Mr. POWELL: All right. Thank you, Neal. Bye-bye.
CONAN: Bill Powell, Shanghai correspondent for Time magazine. He was with us from his home there in Shanghai.
And now let me introduce John Seely Brown. He's with us here in Studio 3A. Former director and chief scientist at the Xerox Palo Alto Research Center and co-author of the new book, "The Only Sustainable Edge: Why Business Strategy Depends on Productive Friction and Dynamic Specialization." Thanks very much for joining us today.
Mr. JOHN SEELY BROWN (Author, "The Only Sustainable Edge: Why Business Strategy Depends on Productive Friction and Dynamic Specialization"): Great to be here. Thanks.
CONAN: Any surprise that Chinese Web sites may be being used to hack into Defense Department and other agency sites or at least being piggybacked on?
Mr. BROWN: Well, not really. I mean, first of all, Bill said it right. We don't really know. We know that the last set of attacks came from Chinese computers. We don't know where they actually started. A lot of the Chinese computers are surprisingly open, not very well-protected, so it's not too hard for any of us in any country to take over those computers and launch attacks here. Nevertheless, you build reputation very often within kind of the technological elite groups of young kids by being really great hackers, and this is one of the ways to build a name for yourself. So, you know, that is part of the social process he's underlying here. Notice that these attacks are not getting into the serious secure systems. They're getting into the peripheral of the aged systems inside our defense system.
You know, the other thing I would note is that the increase of attacks over the last three years has only doubled. In some sense, the number of computers has more than doubled, the number of people Internet sophisticated has more than doubled. So if you actually normalize this, this is not all that surprising either. But I think it's worth looking into. And, of course, we just have to figure out how to make all our computer systems more secure, including the ones we have in our home, because there's the ability for somebody else to take over my home computer.
CONAN: Yeah. We were just talking about...
Mr. BROWN: Absolutely.
CONAN: ...worms and bots and...
Mr. BROWN: Right, right.
CONAN: ...all those other creatures earlier...
Mr. BROWN: Yeah, yeah.
CONAN: ...in the week, but that's a universal problem. Let's get on to China and technology. Is it overblown, do you think, to say that China could overtake the US, which is, of course, still the innovation leader in the world? But is it overblown to say that China could overtake the US within a decade?
Mr. BROWN: No, I don't think it's overblown. I think there are a lot of forces at work here, both in our country and in China, that we just have to come to a better understanding. There is a certain kind of complacency we find--I find--in this country that just simply believes in innovation as our birthright. Nobody can ever match our ability to innovate. You know, having spent the last 25, 30 years in the Silicon Valley, you know, I got to tell you that it's gotten a little bit sleepy. It's gotten a little bit complacent. It is so easy for some of the best CEOs I know to simply say, `John, don't worry. We will innovate.' And I say, `Yeah, but have you been over to some of these kind of Silicon Valleys in China? Have you begun to see the kind of energy, the kinds of idea pollination--cross-pollination, these kind of innovation ecologies that are developing over there? What makes you so sure?' The surprising thing is very few of our people here spend that much time in some of these hot spots, these innovation hot spots in China.
You know, the second thing is that--you know, is the education system and basically...
Mr. BROWN: ...the number of people being trained is phenomenal in terms of the science system.
CONAN: We'll have more on China and high-tech when we come back after a short break.
I'm Neal Conan. You're listening to TALK OF THE NATION from NPR News.
(Soundbite of music)
CONAN: This is TALK OF THE NATION. I'm Neal Conan in Washington.
China was left out of the game for a good chunk of the 20th century. Now look in your rearview mirror and you'll see Chinese high-tech closing fast. We want to hear from you on whether Chinese technological future can impact your future, your business, your life. Have you been face-to-face with Chinese innovation? (800) 989-8255. And our e-mail address is email@example.com.
Our guest is John Seely Brown, the former director and chief scientist of the Xerox Palo Alto Research Center. And let me ask you, you were talking about these centers of innovation. I mean, it's rare to find the Steve Jobs in his garage creating that eureka product. What is it about China that you see that might mirror what you saw in Silicon Valley all those years ago?
Mr. BROWN: Well, I think there are two things that are happening. First of all, you find a very active university system, and around the universities, just like in the Silicon Valley, you find massive kind of science parks growing up that become innovation ecologies in their own right. But I think in understanding China, you've got to realize that there are really three Chinas. There's the first China that has to do with the western provinces we hear all those stories about immense poverty. The second China is what most of the media ends up writing about, and those are the state-owned enterprises, the multinationals. The start-ups--or not the start-ups, but the companies that spin out of these state-owned enterprises.
CONAN: Particularly military enterprises.
Mr. BROWN: Well, I mean, in some sense, government enterprises...
Mr. BROWN: ...in general, but, I mean--and most of the companies you know about and the big names, like CNOOC, for example, you know, came out of bigger operations. They're partially public, partially maybe not public. There's a shadow kind of ownership behind the scenes. There's a third, though, and the third has to do with an intense number of entrepreneurs that are really garage-based companies. These are much more like the Silicon Valley type companies. It is very hard to get money, unlike Silicon Valley (unintelligible). So as a result, there are whole new ways to think about innovation. It's like necessity is the mother of invention, and what's had to happen over here is these start-ups basically can't get the money to be able to become big fast. They have to be able to move with blinding speed because much of this new high technology is turning over much more like fashion.
We ought to come back to that notion later. And what it really means is you can't do it all yourself. So you really have to figure out what you're going to be great at, specialize in that, and then find partners to work with. And you start to assembles these networks of partnerships all over the place in order to construct things. So if you look, for example, at the cell phone industry, you know, we don't recognize today, but in some ways, you and I grew up in this country where the laptop and the workstation is kind of the dominant platform. Well, in the 21st century, that's not the dominant platform. There's going to be a very sophisticated cell phone platform that actually has instant messaging, it has multimedia, it has digital TV based on it. It has the ability to have short message services that are for fee, and these platforms are going to be the dominant force of how we actually get work done and how we communicate.
CONAN: I just hope they have bigger buttons, that's all.
Mr. BROWN: Well, actually--or voice recognition.
CONAN: Something like that.
Mr. BROWN: Right, right. But these are kind of the dominant platform we think in the 21st century, as is digital high-definition television, and in these capacities, actually China is outstripping us. They are the dominant players. They are the ones that are pushing this edge so fast that, you know, they are defining what we, you know, have coming back into this country. So they are the dominant innovators.
CONAN: Let's get some callers in on the conversation; (800) 989-8255. E-mail is firstname.lastname@example.org. And we'll begin with Jeff, and Jeff's calling from Pueblo, Colorado.
JEFF (Caller): Thanks for taking my call.
JEFF: I'm the editor of two trade magazines in the plastics industry. One serves mostly North America. The other is a global publication. As you can imagine, our readers who make plastic products, which are used in everything that we use every day, have been pretty heavily impacted by the loss of manufacturing to China. And, you know, I don't doubt the Chinese ability to innovate, but they've also benefited greatly by the fact that a lot of our best technology, especially in manufacturing, is going over there willingly. And one of the big challenges manufacturers face is getting over there--and your previous guest discussed this--getting to China and dealing with threats to intellectual property and property rights, and it's been a huge, huge challenge, and it's a tremendous challenge and a double-edged sword for manufacturers. And I'd be curious to hear how your guest might comment on that.
CONAN: John Seely Brown.
Mr. BROWN: Sure. I mean, you know, I think your point is very well-taken. I think you're finding that there are ways to deal with some of the intellectual property issues, I mean, like basically, you've got to figure out what particular piece of your manufacturing technology is the key piece and how do you maintain control over that? And so it is not an easy world to work in. The question is, is it a possible world to work in? And what are the new types of techniques to work in this type of a world, where intellectual property is a much looser enterprise than it is in this country?
CONAN: It sounds like you're not seeing a systemic proposal to resolve this situation, new laws to protect intellectual property.
Mr. BROWN: Well, first of all, what is a law? I mean, law has to enforced. And, you know, I think we all recognize that the more that China innovates, the more interested they are in actually starting to protect these things. So this story is going to get better and better, because they are becoming better innovators, and they want to protect it.
CONAN: Jeff, thanks very much.
JEFF: Thank you very much.
CONAN: Let's go now to William. William calling us from Sacramento, California.
WILLIAM (Caller): Good morning.
CONAN: Good morning for where you are, yes.
WILLIAM: I'm in Sacramento, California, and I just wanted to offer an observation. I was over in China on vacation about seven years ago, and from what I observed there at that time, I likened it to how I think our country must have been--America, that is--during the 1800s, manifest destiny and the Industrial Revolution. I mean, we were hungry, we were motivated. You know, there was no limit to what we thought we could do, and that's what I observed in the Chinese. I mean, you couldn't tell if it was Sunday, Monday or Tuesday. Each day, everybody is out there just going, going, going. And it didn't matter what their job was. They were serious about it. And as your guest just mentioned, you know, the United States is sometimes faulted for complacency, and I'm telling you, those Chinese, they are at it, they are hungry, and sometimes it's hard to get the internal motivation into people. You know, they might have the brains, but internal motivation is hard to get, and these people have an abundance of it. And that's all I wanted to offer. Love your show. You guys have a good day.
CONAN: Thanks very much, William. Well, you know, I remember distinctly the description of a European visitor to the Centennial Exposition in Philadelphia in 1876, who described America as a nation of inspired tinkerers. Is this now something that might better describe China?
Mr. BROWN: Oh, I think it describes China extremely well. I mean, the sense of energy, the sense of passion to get ahead now. I mean, they've been held back for so many years that, you know, after the reformation started to happen there, people began to see there's a chance. We've got to make up for lost time. So you find that. But the energy there is phenomenal. You know, the caller is absolutely right. I mean, you go into the parking lots in these start-ups, you know, on Saturday at 7:00 in the evening, and they're still basically filled. So, you know, they're there for passion. They're there actually to be able to construct things, but they're also doing it partially for nationalistic reasons. I mean, in fact, a lot of Chinese Americans are going back to China, bringing tremendous entrepreneurial skills back in order to do something for their motherland. And that's really kind of a reverse brain-drain that's happening, is taking incredibly interesting skills, but the sense of let's do something together is also there.
CONAN: Let's get another caller in. This is Jamieson. Jamieson from Boston.
JAMIESON (Caller): Hi. How are you?
CONAN: Very well, thanks.
JAMIESON: Well, I'm calling--I actually live and work in Beijing. I've lived there for the past three years. I work for a consulting company which helps VC-backed companies and telecommunications and IT enter the China market and help use American technologies in China. And I just had a couple of comments on the innovation question. Well, a lot of my experience has been such that there is not great innovation, and I think that the innovation that is there is coming a lot from Chinese people's experience working for American companies, where they learn that, where they're working for Lucent and Siemens and Nokia and some of these international companies, and that's where they're learning these skills.
CONAN: Would you agree with that?
Mr. BROWN: I mean, you know, first of all, they're learning skills from all over. I mean, Silicon Valley actually grew up by being spun out of places like Fairchild and HP and actually Xerox Park, too. But I think that, you know, first of all, we have to recognize that a rapid succession of incremental innovations can lead to some very surprising things, so small steps taken rapidly actually produce some quite big. And the speed at which these small innovations are happening is huge.
Now, you know, if the caller--and, you know, we can look both at Beijing and down in Shanghai. If you look at the design shops that are actually these, you know, stand-alone, privately owned design shops that are actually designing the chips for these cell phones, where the RF is actually getting done, where the new application--ap--silicon is actually getting done that plugs into the CPU inside the cell phone--those are actually mostly privately owned, and those ideas are coming--the grassroots ideas. So, you know, I agree with you partially, but look at this third China and look at the interactions between the second China and the third China. I think you get a lot--kind of--and more nuanced notions of where ideas are coming from.
JAMIESON: Yeah. I agree with a lot of that. Although, you know, we're finding a lot of the core technologies are still coming from American companies (technical difficulties) and the chips that are used in the cell phones...
CONAN: Well, your chip in your cell phone is betraying you. I'm afraid you're weaving in and out, Jamieson, so I'm going to have to say goodbye.
JAMIESON: OK. Thank you.
CONAN: We appreciate the phone call.
Let me ask you, is there a sense in which--whether you can detect this? Are Chinese modeling their technological innovation on Japan, on the United States? Are they--is this a conscious--or can you see comparisons that may be conscious or unconscious?
Mr. BROWN: You know, I think that we can draw interesting comparisons from both. And if you look at Japan, which was, of course, you know, tremendously powerful in the '80s, what difference now in China vs. Japan?
CONAN: Well, also similarly, Japan in the '50s was seen as a place that did...
Mr. BROWN: Absolutely.
CONAN: ...manufactured cheap knock-offs.
Mr. BROWN: Right. That's true. And I think the catch is that there's a tremendous amount of diversity happening in China. You know, Japan is more of a monolithic type of a culture. And so it's very much state-controlled top down. What you really have happening here is you have a much more of a bottom-up type of thing going on in the third China. Now in the second China it is more top down. So you have kind of both top--bottom-up and top-down starting to come together, clashing with each other and so on and so forth. So the dynamics here is a little bit more complicated.
I think in terms of the US, one of the kind of birthrights we do have is we have an education system that trains our graduate students to fight back. Now if you're not willing to challenge authority, you're not going to be a great innovator. And so the real challenge that the graduate schools in China have is not how do you produce brilliant people well-trained in mathematics, physics and so on and so forth, but how do you get those students to be able and willing to challenge authority. And that's a cultural transformation. It's beginning to happen. If you look at the best universities there in Beijing, Tsinghua, for example, you'll find a lot of the entrepreneurs of these start-ups actually teach at the university and are bringing that cultural transformation into the core of the university.
CONAN: We're talking with John Seely Brown. He's the former director and chief scientist at the Xerox Palo Alto Research Center and co-author of "The Only Sustainable Edge: Why Business Strategy Depends on Productive Friction and Dynamic Specialization." If you'd like to get into our conversation on China and the future of high technology and innovation, give us a phone call. Our number is (800) 989-8255; that's (800) 989-TALK. Or you can send us e-mail as well, and the address is email@example.com.
You're listening to TALK OF THE NATION, which is coming to you from NPR News.
And let's get another caller on the line, and this will be Neil. Neil, calling from San Francisco.
NEIL (Caller): Oh, hello. Yeah. You say there's three Chinas. Well, I would suggest there's a fourth China, and that's Taiwan. And I seem to have read that 40,000 factories have been put up with Taiwanese capital, and that, you know, we know there's a lot of companies and innovation there. Where does that fit into this whole equation?
Mr. BROWN: Good question, because a tremendous number of the money for some of these start-ups, and a lot of the entrepreneurial experience is coming, you know, across the strait there. And so the Taiwan original design manufacturers, these huge ODMs, actually do the original design there, but their huge supplier networks now spill out brilliantly into southern China. So you see tremendous kind of interaction going on, often below the surface. In fact, I think there's even something called the pirate's ferry that goes back and forth between Taiwan and southern China, not acknowledged by anybody, but there is a tremendous amount of traffic going back and forth and a tremendous amount of experience going back and forth.
NEIL: Yeah. It looks like it's hard to say, but will that eventually become part of the whole China thing, or will Taiwan always be kind of a separate factor to a certain extent?
CONAN: If Mr. Brown knew the answer, I'm sure President Bush would be interested in it...
NEIL: (Laughs) Right.
Mr. BROWN: Pass.
CONAN: Thanks for the call, Neil.
CONAN: I did want to follow up on that remark you made earlier, and that was about this idea of fashion and technology.
Mr. BROWN: Right. You know, think about the cell phones today. Basically both in Japan, definitely in China and beginning to be in this country, you have to look at what your cell phone is--is a fashion-type statement. That means that basically like fashions, they're turning over at blinding speed. Every three months, you want something new. Now let's go back to the intellectual property issue, 'cause that's the really tricky issue, 'cause most of us think in some ways, the fashion industry is one of the most innovative industries there is in the world, but fashion has zero intellectual property protection. They have no copyright and they have no patents on designs, OK? Fabric, yes, but not the designs.
What this means is that the fashion industry has to run like mad to keep innovating. So if you do a tremendous innovation today, soon as it hits the street, you've got to start again. And so that creates the energy, the momentum to build fast, fast, innovate, innovate, innovate. So I'm saying that that kind of a notion is actually beginning to, you see, spill out now in terms of, for example, these new cell phone-type platforms.
CONAN: What can we learn from China?
Mr. BROWN: You know, I think we can learn a lot. And I think, in fact, one of the big things that American businesspeople have yet to learn is that we ought to be able to learn something back from China as they're obviously learning from us. I think part of the catch is, how do you actually work productively with massive networks of suppliers? If you look at the way that we tend to work with suppliers in this country--take the automobile industry--we tend to tell the suppliers exactly what to do, and they have to meet our specifications exactly. And basically we never ask them, what are their ideas? Also, we never bring them together to say, `Hey, lookit. What compromises could you folks make in order to make this whole subassembly better?' China, that's happening all the time. And so the way that the...
CONAN: But aren't these partners--aren't they sometimes competitors?
Mr. BROWN: Yes. Yes. And in fact, this, again, has to do with the necessity is the mother of invention. So on the one hand you've got to, you know, stay at the very cutting edge of your particular specialty, but on the other hand, you have to be able to work with others to get the bigger product, the bigger, you know, subassembly actually built. So you have a `coopertition' happening. So you have folks that both compete and collaborate, and what's really happening here is not only are they coming together and sharing ideas, sometimes informally, sometimes formally, but there's a kind of productive friction that is starting to develop, a creative abrasion between these different players, and from that abrasion, they're actually both getting better.
And so one of the kind of key notions is, I think that the survival strategy of the kind of--what we call the only sustainable edge, from our point of view, is how do you work with others to get better faster? So the question now of the sustainable edge has to do with how do I build capability faster than anybody else? If you can figure out how to do that, you're going to be on top, period. End of story. And so their techniques, their kind of new management processes and practices and innovation practices emerging in China, really have picked this idea up to the extreme.
CONAN: We're going to take a short break, and when we come back, we'll take a couple more questions about innovation, China and the 21st century. Again, (800) 989-8255. Our e-mail is firstname.lastname@example.org.
We'll also talk about the Iraqi marshlands. Water is returning. So is life. Also, NASA honors the civilian pilots who flew jets more than 50 miles into the sky 30 years ago.
I'm Neal Conan. You're listening to TALK OF THE NATION from NPR News.
CONAN: This is TALK OF THE NATION from NPR News. I'm Neal Conan in Washington.
And here are the headlines from some of the stories we're following here today at NPR News. A federal commission has voted to close Washington, DC's, Walter Reed Army Medical Center. Most of the staff and services will move to the National Naval Medical Center in nearby Bethesda, Maryland. And a proposed United Nations declaration would demand that the international community take responsibility for protecting civilians from genocide. Aid groups are urging the United States not to water down the language in that declaration. You can indeed hear details on those stories and, of course, much more later today on "All Things Considered" from NPR News.
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Right now we're talking about technological innovation and China and the 21st century. Our guest is John Seely Brown. He's the co-author of "The Only Sustainable Edge," a former director and chief scientist at the Xerox Palo Alto Research Center.
And let's get some more callers on the line. This is Jane. Jane, calling from Bethesda, Maryland.
JANE (Caller): Hi. How are you? Thanks for taking my call.
CONAN: Very well.
JANE: I had somewhat of a comment and a question. I think that China has an unfair advantage in bring a product or an idea from initial concept to the market because of their significant lack of regulation, be it for environmental, health, occupational safety regulations and even employment laws. And you know, you might have seen parking lots full at 7:00 at night on a Saturday. That might also be because the individuals are forced to do it and because of the lack of regulations and protections that they have.
CONAN: John Seely Brown, is that fair?
Mr. BROWN: Well, I mean, there's some truth to this. I'd put a different spin on it. The parking lot issue we're talking about is actually on the privately owned enterprises, these much smaller type of entrepreneurial operations. And you know the government actually doesn't have very much say what's going on, and so that's where you'll see the passion being developed. If you look at the state-owned enterprises or the big, huge companies that have spun off from that or the multinational companies, you don't actually see anything like those parking lots filled on the weekends. So there's a tremendous difference, I find, between what type of firm is this and who's actually--you know, is it a private enterprise, totally private, totally owned enterprise, or is it a shadow industry behind it or a shadow government behind it?
You know, absolutely, there are tremendous problems with human rights in the western provinces, of course, and the working conditions are not particularly good. And, you know, I think the US is correct in trying to put constant pressure on, trying to make sure that the working conditions are better.
CONAN: Jane, thanks for the call.
JANE: Thank you.
CONAN: One of the things that you talk about, though, is this idea--we think of China, and we think of it as a monolithic place. This was--after all, it still is in many respects a communist country with very little political variety allowed anywhere. Yet you say that this does not operate on the economic level.
Mr. BROWN: Yeah. I think, in fact, one of the biggest misnomers there is, to think of China as a monolithic, top-down, totally government-controlled country. I mean, obviously there is a government, but it's surprisingly decentralized, and they have surprisingly little control over the provinces, the provinces and the municipalities inside those provinces. Now that's where taxes get collected; they move up, not down. And there's a tremendous amount of competition between the provinces. I think that's part of the pragmatism that underlies kind of this whole China reform movement in terms of the social capitalism, in terms of saying, `Let the different provinces try out things slightly differently.' The ways that these firms start in Shanghai are quite different, and the types of companies that you find there are quite different than in Beijing. And, you know, I think it pays to pay very close attention to how these different provinces actually work and how the different municipalities within those provinces work and how they compete with each other. It's fascinating.
CONAN: Let's get one more caller in before we have to change subjects. Perush(ph). Perush, calling from Milwaukee.
PERUSH (Caller): Yeah. Hi, and thanks for taking my call.
PERUSH: This is my question: Given that we're talking about technological innovation in the 21st century in China, I was curious about your guest's opinion on where he sees India fitting into this puzzle.
Mr. BROWN: Yeah. It's a good question, because you know, in fact, in our book, we actually look as much at India as we do at China, 'cause I think that both these countries are having different types of innovation challenges and opportunities. As you know, China--I mean, India is probably, because of the lack of a good physical infrastructure, has been specializing much more on software, but they've also found brilliant ways to think about the distribution of products.
Mr. BROWN: So that basically the end deliverer does a lot more of the assembly of the product. So there's some very clever ideas in terms of what we call process networks in terms of how do you ship the products out, and how do they get molded in order to fit that unique customer's requirements? There you see India probably leading China. In China--in both countries, they're doing incredible things, by the way, in biotech, nanotechnology, life sciences, which is, again, at the very cutting edge of what I think of as the technological world.
PERUSH: Can I have a follow-up question, Neal, or...
CONAN: If you keep it short.
PERUSH: OK. Very quickly, so do you see India as having positioned itself as a service technology innovator and China as a physical technology innovator?
Mr. BROWN: Well, clearly, you know, India has turned out to be incredibly good as a service industry. As you also know, depending on how much you deal with India, is the Indians are actually outsourcing some of that stuff to China.
PERUSH: Right, right. OK.
CONAN: Perush, thanks very much for the call. We appreciate it.
And, John Seely Brown, thank you so much for taking the time to join us today.
Mr. BROWN: Thank you.
CONAN: John Seely Brown's book is "The Only Sustainable Edge: Why Business Strategy Depends on Productive Friction and Dynamic Specialization."
When we come back, to the marshlands of Iraq.
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