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Market Analysis

West Responds To China's Rise by Spreading FUD

Recent western coverage of Chinese technology firms has seemed to take a two-pronged approach: marvel at the speed at which they have increased market share and then cast doubt on the precepts of the companies themselves and the culture from which they spring. It always reminded me of something, but I only just realised where that sense of déjà vu – or its Chinese language family equivalent – came from.

When IBM first started to worry about rivals like Amdahl threatening its dominance of the early days of business computing, it is said that its sales people would do anything to raise concerns about the strength, legality, longevity and technical capabilities of those companies. A term was coined for this attempt to spread a negative pall: Fear, Uncertainty and Doubt, or FUD for short.

“Oh, East is East, and West is West, and never the twain shall meet” is an old remnant of Rudyard Kipling but it contains an essential kernel of truth. There remain strong cultural differences between the hemispheres in terms of ways to do business. The western media likes to harp on about the east’s perceived loose approach to intellectual property, cloning, employee rights, the background of leaders and sundry allegedly nefarious activities.

These things go in cycles. When Silicon Valley first came to the attention of the rest of the world it saw Japan as the enemy in RAM and electronics and talked about cartels, unfair pricing and so on. In the 1970s, growing up in the UK, I remember the same thing happened in the automotive sector. The Japanese cars might be cheaper and have better features but they rust, they don’t keep their value and so on. In fact, the British cars were essentially uncompetitive and Japanese cars later became highly reliable, serviceable... and rust-resistant.

The same tune is being sung about Xiaomi, Alibaba, Tencent, Huawei and the rest of the new Chinese forces. They are damned with faint praise while FUD surrounds them. 

There are some legitimate concerns of course, but what is being played out here is a battle of market forces. China has the right prices and the right products for the time and is succeeding. A lot of what we understand about these companies may seem alien but then the west is a pretty odd place too and the technology sector has seen plenty of piratical, immoral behaviour, even among some of the richest nations on earth. With its long history of copyright theft, corporate malfeasance, executive stock option backdating, use of legal strong-arming and manufacturing offshoring, the US, Europe and others may fling mud - but they are also coated in the same stuff.

Martin Veitch is Editorial Director at IDG Connect

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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