Pando

We asked Yahoo cofounder Jerry Yang: How much will China's tech companies shape the new global economy?

By David Holmes , written on October 23, 2014

From The News Desk

Alibaba. Tencent. Baidu.

We hear the company names and we see their impressive valuations. But very few Westerners actually use these products and services, and therefore it's difficult to sense how big a role they will play in shaping the new global economy, particularly because of China's attitudes toward censorship and Internet freedom.

These uncertainties arose at tonight's PandoMonthly in San Francisco, featuring Workday CEO Aneel Bhusri and Jerry Yang, the cofounder and former CEO of Yahoo, which owns a stake of the Chinese ecommerce giant Alibaba worth an estimated $34 billion.

So how big a threat do these companies pose to US Internet giants? And how important a market is China for Western companies to pursue?

The answers to both questions are, well, complicated to say the least. But the main takeaway from tonight's fireside chat is that there's too much uncertainty surrounding China to write off what could be the most important market of the next decade.

"I don’t think the story’s over, and it’s dangerous to say 'this is China and this is the way it will be forever,'" said Yang. For that reason, he questioned Google's decision to pull its search engine out of the country as a stand against cyber attacks and censorship.

"A lot of people say Google should have never pulled out," Yang said. "Maybe they’ll be right in the long run. But now they’ll have a hard time getting back in."

Workday's Bhusri also weighed in on the China conundrum. Doing significant business in China means having data servers in that country. “We have to get comfortable about the data being secure there,” he said, which is hardly a foregone conclusion.

So what about Chinese companies competing in US markets? Will there come a day when the average American goes straight to Alibaba instead of Amazon?

Certainly the US has plenty of regulations on commerce. But Yang says the market is friendly to new entrants -- as long as they have a great product.

"I think in Western markets, especially the US market, it’s still very much a meritocracy."

Finally, despite the vast differences between the United States and China, they share two important things in common: An entrepreneurial culture and a huge local consumer market.

"China and US share this commonality that entrepreneurship is a good thing. It’s an OK thing to get out of work for a year to build a company."

While working class heroes may bristle at that reality, it may put China in a better position to rival Silicon Valley than even domestic hubs like New York or Los Angeles. I mean, unless the government's iron fist takes control of all business done over the Internet, destroying any chance of success in Western free markets. Like Yang said, it's complicated.

[Photo by JJ Casas]