America’s Digital Giants vs China
2 questions and 1 prediction with Ray Wang
We live in a world of digital giants looking to conquer the world. R “Ray” Wang has been working with these giants for years and his latest book, Everybody Wants to Rule The World sets out to give us much needed perspective on their business goals and how they will affect us, in our private and business lives.
R “Ray” Wang is the CEO of Silicon Valley based Constellation Research Inc,, He co-hosts DisrupTV, a weekly enterprise tech and leadership webcast that averages 50,000 views per episode and blogs at www.raywang.org. His ground-breaking best selling book on digital transformation, Disrupting Digital Business, was published by Harvard Business Review Press in 2015. Wang is well quoted and frequently interviewed in media outlets such as the Wall Street Journal, Fox Business, CNBC, Yahoo Finance, Cheddar, and Bloomberg.
I reached out to Ray to engage in a conversation on how American digital giants are grappling with the China market and also to get Ray’s feedback on his travels across America.
Frederic Guarino: You have a very deep connection to Asia and I think it allows you, more than most actually, to see beyond Silicon Valley. If we put purpose first, is that how America’s digital giants, who do want to rule the world (your latest book), are going to put the marker down and win against the Tiktoks and other brands coming from an undemocratic authoritarian society ?
Ray Wang: I think it’s a little bit different: what the digital giants are looking for is to win on a commerce level. They’re not looking to win an ideological war and I think that’s the difference. They’re capitalists, their job is to go out and win markets and conquer new worlds, deliver new products and services and create new innovations. There’s no political bent. The challenge for digital giants in Asia is that the Chinese-backed ones, while they want to do the same things, don’t have the same freedoms to pursue the pure goals of actually winning markets. They’re doing it with an agenda that’s not always necessarily the agenda that the leaders or founders may want to play.
Frederic Guarino: That’s an interesting point commerce versus ideology because Mark Zuckerberg himself, who is more in the commerce box very clearly said a few times that he needed to have all of the ability to conquer these markets because he was afraid that digital giants from an undemocratic society would basically sap at democratic institutions.
Ray Wang: Apparently there was a meeting when Xi was in Seattle. Mark was in the room with a whole bunch of other executives from Microsoft and Salesforce and other folks and Mark spent all his time trying to show Xi how cool, “Hey I speak Chinese, we should open up these markets !” Xi was just like “Who’s this yapping little dog ?” Mark just basically feels that he’s at a disadvantage because the companies in China have all the advantage in the world of dominating a market but not necessarily using the same rules. They’re not on an even playing field.
Frederic Guarino: Very few people have taken the time to either understand or try and analyze what happened with the sidelining of Jack Ma. China’s leading digital giant of sorts being told by the communist party “you’re too big, why don’t you take a pause right now and we’re going to dictate what’s what” How is that in your experience being felt in the Chinese digital world right now ?
Ray Wang: It’s one thing to be told “you’re too big”, it’s another thing when authorities come in and crack down on your ability to do business and your family ‘s livelihood and tell you to go take a hike and disappear for a little bit. That’s massively different. People in the US or in other countries may say “hey tech giants are too big” but they can’t just shut them down the same way China has.
I think that’s put a ripple of fear in the tech community in China
I think that’s put a ripple of fear in the tech community in China. I remember talking to some really good friends who are in China and we’re comparing notes, this was just before COVID hit. They said “The Chinese model is so much better, it’s so efficient: we can do x y and z, we can do. These are some really good friends who were born outside of China, in the US, Canada and in the uk. I had to tell them: “Do you not understand you’ve just lost all your personal freedoms? Is it something you’re willing to exchange for this level of efficiency or this level of success ?” I don’t think it really hit them until Jack Ma happened.
Notice how every single China digital giant CEO has had some kind of scandal: some kid running around Minneapolis is accused of underage rape, how did that happen ? Suddenly it was discovered this one was embezzling x y and z, etc. All these things just naturally popped up !
We have to go back 40 years or even 30 years to see how we got here and when the opening of the economy was thought through and when all these conversations were about how China would actually come into the industrial world. I don’t think they ever thought it was about the Western world, it was about the modern world. We have to go back to the princelings. The idea was to send one kid to the army, one kid abroad to learn. One of these folks would come back to a state-owned enterprise and one to a privately held company.
The idea was to come back and have expats teach China what they needed to do and learn, at some point get rid of the expats, which they did, and then be self-sufficient without having to rely on the West. They did a great job and everyone kept their part of the bargain, except for Xi.
Frederic Guarino: I also keep hearing about efficiency: “they’re doing this cutting edge research” and my reply is “there’s no rule of law, they do not enforce contracts”. They’re robbing themselves by making Hong Kong a shadow of itself, where there’s a flight of capital flight of people. How many times is that going to have to be repeated ? I don’t understand why someone like Ray Dalio keeps saying “we need to engage China”
Ray Wang: The China conversation is no different than the conversation we had about the Soviet Union in the 1970s: the model is amazing, people are doing great, everybody can eat, look at the advancements they got to space before us. It ultimately flies in the face of humanity in terms of what is important to people: having free will, having freedom, having the ability to to make your own choices.
Every person in power right they get into power and want to remain, that’s why checks and controls and rules are in place. That’s why we have constitutions and rule of law, because if you don’t have that, you can’t function, everything becomes a dictatorship.
Frederic Guarino: Moving on to your summer is interesting because you’ve been traveling all across America. What are the lessons learned that you can share with us of this book tour where you’ve been to like a dozen cities already.
People really crave human contact and people’s levels of fear and their understanding of proportional response to risk are all over the map
Ray Wang: People really crave human contact and people’s levels of fear and their understanding of proportional response to risk are all over the map. It’s just interesting to see how much everyone’s situation is different and that unique sets of policies don’t apply. The fear factor can never be underestimated.
Everyone has just gone through the world’s largest reality tv experiment: this is the only shared experience the entire world has had right as we’ve been fracturing for years with our own individualized content our preferences what it is we’ve never had a shared sacrifice like i would say we’ve experienced shared sacrifices differently but we’ve never had a shared sacrifice like this
Frederic Guarino: Not at the same time you’re right. Even if you go back to World War II, probably the most momentous event on a global scale. It didn’t happen for every single pocket of population at the same time: the Asia-Pacific part of the war wasn’t in sync with the European part of the war
Ray Wang: Thank god, we couldn’t produce enough tanks, that’s true of planes you know we would have been dead if that happened but the point being is you’re right.
This is one shared event which we haven’t had and it really showed that our belief systems and our value systems even whether you know it doesn’t matter what country you’re in. There are generalities of beliefs: beliefs of the individual versus the common man, common women there’s a belief that government can help versus government is the problem. There’s the belief that if you’re not educated we will make you educated.
There’s a belief that “hey freedom at all costs”, even public health. People really need to dissect the politics out of it and take a bird’s-eye view of the Earth and think about humanity and what that means and determine how much of this is who we are and why and what is important to preserve. This force towards conformity is scary, but on the book tour I would say that I’m most fascinated by the fact that people finally understand that digital is not a channel.
They’ve known that for a while, it’s just that they can communicate that it’s digital as a channel but still have no business model, still have no monetization model so therefore “we’re not really digital”. A lot of people who are advanced in digital understand that they’ve still got a long way to go and that’s probably the most important realization from the tour.
Frederic Guarino: In closing the series is two questions and one prediction. What’s your prediction in your area of interest for the next five years ?
What we’ll learn in the next five years is that the Western world will have to band together instead of continuing to be divided.
Ray Wang: I predict that the weaponization of tech giants by China will result in an increased shared understanding of the role digital giants will have to play going forward.
In the first cold war we forgot that our assets were the industries that were in a free and open and democratically elected market and at times we were attracted to go help the Soviet Union. Our greed got in the way, our need for politics or to play different sides, but I think we’ll eventually understand that the Western world and open societies need to band together to protect their values, as opposed to succumbing to the greed and attractiveness of autocratic opportunities.
What we’ll learn in the next five years is that the Western world will have to band together instead of continuing to be divided.
