Leap of faith

I served at Hewlett-Packard for 25 years since I joined it in 1982. My work at China HP Co Ltd for 16 years gave me an opportunity to witness and participate in China's reform and opening-up process.

In 1991 I was assigned from HP Taiwan to China HP Co Ltd to oversee HP's computer business on the Chinese mainland. In 2000 I was appointed vice-president of HP's global operations as well as the president of China HP Co Ltd and retired from these two posts in May 2007. I would like to describe the changes I witnessed during those 16 years in four aspects:

Dramatic change in the IT market

China's IT market, at its early stage, was subject to several constraining factors. The market was quite small as the government and businesses spent inadequate money for information technology infrastructure. The government had adopted an approval plan for imports of computers, while the United States and European countries were still practicing the Coordinating Committee for Multilateral Export Controls (CoCom), which put an embargo on Western exports to East Bloc countries including China.

Also a planned economy in China meant that the IT spending was mainly driven by the government's budget. All these factors limited the takeoff of China's IT market.

However, the market witnessed overwhelming changes when China was pushing forward its reform and opening-up policy. In 1994 the CoCom ceased to function.

The government's approval plan for computer imports was abridged, tariffs on IT products were dropped to zero and domestic firms started to revamp themselves in order to cope with a changing market environment.

The rapid rise of foreign investments and a slew of government policies to increase operating efficiency boosted an information technology swing in the country. The emergence and popularity of Internet, followed by the increasing income of Chinese people, boosted consumer spending and turned the Chinese mainland into the most lucrative IT market in the world. That lured more global IT majors to invest in China and led to a rapid rise of many domestic companies.

On the second hand, major global IT players started to rethink their strategies in resource-rich China. Many companies started transferring manufacturing activities, research and development (R&D) and outsourcing to China. Now the country is the world's largest manufacturer of IT products and its strength in R&D and outsourcing is also on a sharp rise. More than ten years ago I moved all of my family members to the Chinese mainland. Looking back, I never expected China's IT market would experience such dramatic changes. Neither did I expect China would have a crucial impact on the global IT market. China's reform and opening-up policy has affected every single industry in the country and all the people here. However, from a global perspective, I would say the policy impacted the IT market most.

Changes of customer demand

In the IT market, at its initial stage, major customers were the government agencies and the State-owned enterprises (SOEs). The private economy was quite small and limited almost only in Guangdong province. As a result, customers' decisions in IT spending were constrained by bureaucratic practices, which always focused on doing things in a planned manner.

Thus, adopting the most advanced technologies, technology transfers and improving their own technological strength became the most important factors in affecting customers' decisions in choosing IT suppliers. But at the same time returns on investment, operating efficiency and cost cutting were largely ignored.

However, with the changes brought by the reform and opening-up policy, decision makers started to take costs, efficiency, return and speed into consideration.

They not only increased spending, but also changed their requirements for the IT divisions. IT divisions were no longer only units to provide technology support, but also operating units. Those experienced in business operations replaced heads of IT divisions with technology backgrounds.

And the rapid development of the consumer market is challenging the ability of IT companies to respond to the fast-changing customer demands. Such changes have affected both customers and IT suppliers such as HP. We had to readjust our sales and service strategies in line with market changes and customer demands. In fact, many IT companies, which entered China at an early time, have already been washed out of the market because they were unable to catch up with the changes.

China HP

China HP Co Ltd was established in 1985 and is the first Sino-US hi-tech joint venture. HP is one of few global IT giants that are running their businesses in a joint venture manner in China. The establishment of China HP benefited from the improvement of Sino-US relations as well as the great importance Chinese government attached to the hi-tech sector. China HP used to focus mainly on sales and marketing, but in the past 23 years it has grown into a well-known hi-tech company that is now involved in various areas including manufacturing, R&D and outsourcing. Changes to both of its size as well as its importance to HP's global operations, have been very dramatic.

Such an achievement could never be achieved without the effort from all of our employees, the support from our headquarters and customers and most importantly, the support from Chinese government. Underlining that, HP was one of the very first IT companies allowed to conduct manufacturing, R&D and sales in China.

The most crucial factor to China HP's rapid growth is our ability to make constant changes to adapt to the market and customer demand. In 1991 when I joined China HP, I actually had an impression that I was joining a State-owned company. As it is a joint venture between HP and the Chinese government, many management practices were greatly influenced by government policies such as a ceiling on salaries, free dormitories, company shuttle buses, a rigid recruitment policy as well as various welfare policies. The way an SOE is run overshadowed every part of China HP. That gave rise to confusion in our corporate culture. China HP's corporate culture was different from that in HP's operations elsewhere.

However, after Deng Xiaoping's inspection tour to the South China in 1992, China HP's executives were determined to introduce a slew of reform policies to adapt market changes and rebuild China HP with a goal towards become a globally competitive business.

China HP was one of the first to join Beijing municipality government's pilot in a housing policy. We amended the housing distribution policy and free company shuttle buses. Instead we provided employees loans to buy flats, sold the dormitories to employees, integrated welfare into the salaries and significantly increased salaries. We also changed many management practices such as the approval policy on employees' overseas trips, abridged a system which required a dual-leadership from both Chinese and foreign parties as prescribed by the agreement when forming the joint venture.

HP's board also gave the president of China HP more empowerment. And we also conformed China HP's management practices to those of HP's operations elsewhere in the world. I would say China HP would not reform itself and would never attain its large achievements without the sound environment created by China's social and economic reforms.

Also, to capitalize on the market opportunities brought by the changes, China HP also introduced strategic reorganization by improving our service offerings, market coverage, building more subsidiaries, getting closer the local market and customers, tailoring products to local markets, increasing investment and strengthening manufacturing, R&D as well as outsourcing.

My own career

Joining China HP was a big decision not only for my own career development, but also for all of my family. When HP headquarters asked me of my willingness to work on the Chinese mainland in 1991, I said, "yes" within less than two minutes. Many people believed I was risking my career and did not understand why I would leave HP Taiwan, where I had a promising future. But years later, many people envied me as I made the decision much earlier than others to develop my career on the mainland and grasped the chance to grow with one of the most successful growth stories.

My experience on the mainland has been the most important and crucial in my life. The booming mainland market broadened my career opportunities and enriched my experience, knowledge and skills. I have retired from China HP and relocated my family to the United States but my link with the mainland remains intact. That is also partly because my son is married a mainland lady. I'm really grateful to HP, my former colleagues, customers, partners, the government and my friends, and most importantly, the reform and opening-up policy which has given me numerous opportunities.

The author is the former president of China HP Co Ltd during 2000 to 2007. His leadership helped HP earn a reputation as the most admired multinational in China for several consecutive years and himself as one of the most respected home-grown chief of a multinational's China operation.

(China Daily 05/12/2008 page6)