Lee Kai-Fu

Microsoft’s China syndrome – the WTO column

(later also at Chinabiz)
Being big in China has quite a few drawbacks. You are watched more closely by the government, media and the public, to mention just three problems. And when you have a reputation of being wildly successful in other markets, friend and foe expect you to outperform in the Chinese market too.
Mostly life is not that easy and even those who were successful in China for some time, find it hard to continue that achievement over the years. Each month brings new corporate victims of what I would call the China syndrome: a company stumbling over its own expectations and the heritage it took along from its home market.
Incidentally those companies offer me a peek behind the scenes, and that is often even more unsettling than what you can see in public. Dropping sales, missed targets and the inability to develop a decent business model often goes along with very unpleasant scenes behind the curtains. But then, in exchange for this peek into their internal affairs, I’m not allowed to share it in detail with my readers.
They all say the come to the Chinese market for the long haul, but especially for listed companies that long haul ends every quarter.

Very seldom the public is allowed to peek over then fence and therefore an ongoing labor dispute involving Microsoft and Google is such a nice opportunity to see a pattern that is all too familiar in China. The case in a US court was triggered off by a former employee of Microsoft in China, Lee Kai-Fu, who left for Google, despite clauses in his labor contract banning such a move. In China nobody really cares about those contracts, but when corporate emotions in the US get into place, it is war.
It is a pity that US media do not print the f-word in full, since that seems to be the most often used verb in the account we get from at least Mr. Lee. They now use rather obscure descriptions like, “an expletive to describe his company's treatment by the Chinese government.” Through a spokesperson Bill Gates denies to have used the f-word or other offensive terms in describing the relationship to between his company and both the Chinese people and its government. Just imagine how many senior managers now fear qualifications used in internal discussions on the Chinese market might end up in court, and consequently in the media.
Lee Kai-Fu describes his former company as incompetent. Microsoft had become a joke to the Chinese government, he said, and morale at its China operation was low while employee turnover was high. "Microsoft just wasn't getting it," he said in one of the media reports.
Of course, the fact he defected to arch enemy Google and that his former boss had just about missed the opportunity to receive China’s president Hu during his now-postponed state-visit to the US adds to the momentum, but the frustrations of Lee Kai-Fu are not unique.
Microsoft’s efforts to court various Chinese government departments failed and larger departments picked open-source platform Linux in stead of Microsoft, because of deep-felt mistrust in the US giant. Basically, Microsoft was unable to realize or acknowledge that is was seen as a threat, and not a peace loving giant, who does not evil.

Stepping back, have a look at yourself, seems to be very tough for those suffering from the China syndrome.

Fons Tuinstra

PS: I tried to find a picture of Lee Kai-Fu, but he was already thoroughly deleted from the Microsoft servers. Fortunately, some were left in cyberspace.