Smart Cities, Digital Nations by Caspar Herzberg

Author:Caspar Herzberg
Language: eng
Format: epub
Publisher: Cameron + Company
Published: 2017-03-17T04:00:00+00:00

LESSONS LEARNED

By 2014, the political winds, far stronger than any experienced in Songdo, were buffeting Cisco’s business strategy and results in China. As Edward Snowden became famous to some, infamous to others, fresh questions about nations undertaking surveillance—and embroiling IT companies in the efforts—surfaced and consumed the media’s attention for weeks. The U.S. National Security Agency, long regarded as aggressive in its tactics against other countries, stood accused of intercepting and modifying IT equipment before it was shipped to China and other nations. China, already sensitive about similar accusations concerning Huawei and ZTE Corporation, was quick to punch back. China Daily (English version) called for the punishment of “pawns” that had compromised national cyber security at the behest of the American government. Economic trends predicted a difficult fiscal year for Cisco; the effect of Beijing’s stance was impossible to quantify, but the drop in the company’s sales was bruising in any event.

The circumstances were so unusual and grave that Cisco’s then-CEO John Chambers was compelled, in May 2014, to write a letter to the White House. He addressed the alleged interception of IT products and stated, “We simply cannot operate this way; our customers trust us to deliver to their doorsteps products that meet the highest standards of integrity and security.” Along with a request for Washington to help restore confidence in U.S. industry, Cisco sent a clear signal to Beijing, to say nothing of existing Cisco customers, that the company acknowledged the gravity of their concerns and saw no benefit in leaving any “back doors” open in the networks they constructed.20

China is not a market for the fainthearted. Beijing is determined to spur innovation until the nation has reclaimed its dominant position as an innovator, a position it held through much of recorded history but lost during the nineteenth and early twentieth centuries, when Western nations succeeded in wresting control of territory and markets. To make the gauntlet yet more difficult to run, the Chinese are intent on becoming leaders in ICT. The call to “punish” Microsoft, IBM, Cisco, and other Western-based internationals did not start the fire, although it certainly fanned the flames. Supplanting these companies with their national competitors would not be a simple reaction to Snowden’s revelations: It would be the fulfillment of a greater strategy.

Of course, these challenges are not exclusive to ICT companies. China’s productivity is so impressive, its sophistication as a competitor and a creator so daunting, it would be a surprise to few if the level of nationwide FDI dropped considerably in the years to come. The money to be earned fueling this nation’s growth has brought uncounted businesses to China’s borders, but not all will be able to cross. Fewer still will be able to persevere once on the other side.

Despite these challenges, I remain optimistic about China, and Cisco’s position within it. Numbers do not lie, and conditions for investment and revenue will remain challenging for several years. But the lessons derived from years spent working with the leaders of this nation hold a great deal of value.

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