Tuesday, May 23, 2006

How Lenovo is Like Microsoft and Dell

According to several managers I know in Zhongguancun, they are running a Linux software company that is mostly funded by China's government in order to create products (such as word processing software, operating systems) and services (such as training). Yet most entrepreneurs in Zhongguancun and, indeed, in China do not like this MO. Why? China's entrepreneurs love the market. The market, not the government, should decide who makes money, what is a good product, and the trends in industry.

It is quite comical, then, that Representative Frank Wolf (a Republican no less), Larry Wortzel, and Michael Wessel have determined that using Lenovo's computers in the State Department is unwise, due to potential espionage concerns. The reason the State Department chose Lenovo in the first place is that there is a competitive bid process, and Lenovo's computers were the cheapest, the fastest, and the best value. In times of budget deficit and current account deficit (not to mention trade deficit), the State Department should be commended. But it is being condemned.

Back to China. Why would the government fund its own Linux-based operating system and programs? Among many reasons, one is that there are existing fears about Microsoft and Dell, both American companies, that their software code and computers, respectively, contain secret code and hardware that will email secrets to Washington. What a far-fetched, feckless fear, I used to think.

As much as I relish being able to excoriate a member of the Republican party, it is disconcerting that Representative Wolf is so ready to capitulate to xenophobic fears. The market is not a panacea. Zhongguancun entrepreneurs' faith in competition and free market values is certainly idealistic. Yet, as one entrepreneur I interviewed once told me, "the government is a little slow. Making a PC these days is like making a TV -- it is not technology. If the government knew that, they wouldn't place so much importance on Lenovo." At the time, he referred to China. Now, I refer to the U.S.