Elliott Ng

I am Five of Eleven, Tertiary Adjunct of Unimatrix Tnooz

Earlier this year, I was inducted via a set of secret geek travel blogger rituals into Tnooz as a Node.  The name is reflective of Chief Editor (or shall I say, Prime Node) Kevin May’s sense of humor and futurist leanings.  Presumably, the power of Nodeship is to harness all of the wisdom of each individual writer/blogger/contributor into a greater collective understanding of travel.  Therefore, I have added my own distinctiveness to the Tnooz Collective.

photo source: aboutwomyn.com

My latest post:  interview with Eva He about upcoming China TDS 2010

I had a chance to briefly interview Eva He, the editor of TravelDaily.cn and organizer of the China Travel Distribution Summit, about trends to be discussed at China TDS.  Since she briefly brought up the issue of Google, I asked her what she felt about the sense of an unfair playing field for foreign companies. This was most recently expressed by Jeffrey Immelt, CEO of GE.  Here are his comments reported in the Wall Street Journal:

It’s getting harder for foreign companies to do business there, he told Italian business leaders. “I really worry about China,” the FT quotes him as saying. “I am not sure that in the end they want any of us to win, or any of us to be successful.”

Immelt was apparently giving vent to the growing anger among international businesses who believe that China is engaged in a systematic effort to siphon off their technology, and then turn that technology around and use it against them in China and overseas.

He should know better than anybody: GE has been handing over technology in everything from rail locomotives to antipollution equipment to gain access to the domestic Chinese market.

For international multinationals, technology transfer has long been the quid pro quo of landing deals in China.

Foreign businesses have meekly gone along with this arrangement because they assume that since the biggest markets in everything from wind turbines to mobile phones have moved to China, you have to be in the country if you want to be No. 1, No. 2 or even No. 3 in the world. Without scale, global businesses can’t be industry leaders, they can’t remain on the frontiers of technology, and they become more vulnerable to competition. But scale means that you’ve got to be in China.

That calculation gives China enormous bargaining power.

Yes it does.  Compared to aerospace and internet search engines, travel has some great characteristics that make it a better industry for foreign companies to go into:

1. Unlike aerospace and internet search, travel is not a national security or sensitive industry.  Internet search is media, and media is a national security industry.  Foreigners have a hard time understanding that.  Based on reading the works of other people, namely Richard MacGregor’s The Party (banned in China), my impression is that Xinhua is an arm of the government that performs the functions  of BOTH the Associated Press, AND the CIA (or whoever in the US government does domestic “open source” (public source) analysis).  The press serves to keep Party members informed and is an important check-and-balance against the management reporting received directly through the Party and the government.   But all the juicy stuff is not for public distribution through news outlets.  Internet search and news portals are a critical tool to shape popular opinion and I’m surprised the government doesn’t try to control it even further…since it is a national security industry.
2. Travel is also inherently cross-border. In order to help the domestic tourism industry flourish, you need to support outbound tourism as well.  Only then will providers and consumers taste international service standards and demand that of the domestic industry.  It is not possible to be too mercantistic in tourism:  try to attract inbound tourism dollars but prevent outbound tourism from happening.
3. Travel is a strategic pillar of the latest 5 year plan. I haven’t seen the actual documents that reference this, but it has been widely quoted by both Chinese officials and Western travel industry people (WTTC, Amadeus) so this implies that there is National level support for travel development.

Honestly, I sympathize with Jeffrey Immelt and he is expressing a reality that most companies discuss international but see no benefit on expressing publicly.  The even greater truth is that business is hard for ALL businesses in China, not just foreign businesses.  The only businesses that get advantages are the large state-owned or state-supported enterprises that have a plug-and-play relationship into the Party through some kind of sponsorship.

Resistance is futile.  You will be assimilated.

Now, I must go back to my regeneration chamber.