Profile: Dr Hong Chen of Shanghai
Published by The Straits Times, Singapore on 2004-10-18
MEETING Dr Hong Chen of Shanghai is a bit like visiting his native city itself. You've got to be prepared to be dazzled by the sheer speed of sight and sound, by the vastness of aural and intellectual architecture, and by ideas that keep popping up dizzyingly. That's another way of saying that Dr Chen talks nonstop, even as he's working on e-mail through his Blackberry digital device, which also feeds him international calls through an earpiece.
"I don't like to let a single moment go to waste," he says, managing in also crunch into a breakfast pastry and sip some coffee at the same time.
You've also got to be prepared for his total conviction in the inevitability of China becoming the world's dominant economy. Dr Chen - who deals in mergers and acquisitions, among other things - says this not with any chauvinistic hubris but by citing an array of facts and figures - and most of all by emphasizing that through its rapid transformation into a market-driven economy, China is well on its way to becoming the world's biggest consumer society, well ahead of anyone's reasonable expectations.
"Yes, I have no doubt that if a country cannot participate effectively in globalisation today, it's simply not going to make progress," Dr Chen said. "It's meaningless for Singapore to consider Shanghai as competition, for example. You can look at someone as competition - but what can you do about it? You cannot stop the trend toward progress. China is growing very fast."
He's successfully tapping into that growth. His newest company, The Hina Group - a private equity firm - just completed its first year, tending to more than two dozen deals, and earned US$2 million. For an investment company, that's like saying Rome was built in a day. The annual revenues of all his other companies - mainly in the telecommunications industry - exceed US$50 million. His views of topics such as globalisation are sought at prestigious venues such as the World Economic Forum. He came to Singapore last week for the Global Entrepolis@Singapore event, where he was a popular speaker at several meetings.
And Dr Chen is not quite 41 years old.
His advice to Singapore? "Become more of an investment gateway for China," he said. "Remember, there are already some 1,100 Chinese companies with offices in Singapore. The Chinese feel far more comfortable in Singapore than even in the United States because of the commonality of culture."
But would Singaporeans' innate competitiveness want them wish to compete with, say, Shanghai?
"Look," Dr Chen said, "Singapore has already invested US$24 billion in China's manufacturing sector. Singapore's success has to come from close collaboration with rapidly growing nearby giants such as China and India. If Singapore takes on China and India as direct competitors, then it may become isolated."
"Singapore has a challenge," Dr Chen added. "It needs to rethink its plans and strategies, especially because places like Shanghai are becoming more and more the favoured destinations for global multinational businesses."
So how does a kid from Shanghai, who grew up during the heyday of communism in China, become an acolyte of capitalism?
"Blame Deng Xiaoping," Dr Chen said, with a huge smile. In 1978, Deng, realizing that Maoism was retarding China's economic potential, reversed the Mao Xedong's policy of admitting only a select few to universities. Deng decreed that anyone who qualified for university should be able to get higher education.
More than 20 million young Chinese applied to go to university; only 20,000 were accepted, Mr Chen being one of them. He received a B.S. in Computer Science from Xian Jiaotong University in 1982 at the age of 19, and a Ph.D. in computer science from the State University of New York at Stony Brook in 1991.
His received his doctorate just as the technology revolution was taking off in the US. Dr Chen quickly made his way to Silicon Valley, where his people skills and ability to raise funds helped him found Aimnet, a leading regional Internet service provider that was acquired by Verio in 1997, which in turn was sold to NTT in 2000 for US$5.6 billion.
The cash-rich Dr Chen then founded GRIC Communications, a global leader in deploying world's largest virtual dial-up and broadband WiFi network in 150 countries. He served as its Chairman and CEO until January 2003, and led its successful IPO on NASDAQ - the New York-based exchange for technology firms - in 1999. He continues to serve as the GRIC's Chairman.
His CV goes on and on - every year, more companies are launched. "I love creating and buildup companies," he says, unabashedly.
Dr Chen served as the President and Chairman of the Asian American MultiTech Association (AAMA) in 2000 and 2001 respectively, the largest Asia Pacific focused, high-tech business and executive association in Silicon Valley with more than 1,000 members. He is the President of the Hua Yuan Science and Technology Association, the most prominent club of mainland born Chinese business leaders in Silicon Valley and China. He sits on the board of a public listed telecommunications software company in China.
So any conversation with Dr Chen inevitably comes back to China, his passion. He feels that with the exponential economic growth that China has undergone in the last decade - averaging nearly 10 per annually - many Chinese companies are experiencing difficulty finding top-level talent. That's where Singapore could serve as a source of supplying Mandarin-speaking executives, he said.
"The Chinese are not very comfortable with non-Chinese speaking top-level executives," Dr Chen said.
He's also a tad concerned about what China does with its US$400 billion trade surplus. He feels that China would want to go more and more global, acquiring companies, especially in the United States.
He's also worried by the speed of domestic economic growth in China has been fuelled by the annual foreign direct investment of more than US$53 billion. That, coupled with often-reckless loans by Chinese banks to real-estate developers in urban centres, has overheated the economy. Economists now worry whether the Chinese economy will come in for a hard landing - which is to say, whether its annual growth will fall to below 3 percent - or a soft landing, which would be around 7 to 8 percent.
In this regard, Dr Chen is an optimist. He feels that the banks are already cutting back on their urban credits. But where the money really needs to go, he said, is to China's 10 million small-and-medium-sized enterprises.
"China is a SME dominated country," he said. "That's where future growth lies, not just in Shanghai and Beijing."
Of all the extraordinary economic developments he's witnessed in the last two decades since he graduated from college - decades that coincided with a dramatic spurt in technological progress - was there something that surprised him the most?
"Yes," Dr Chen said.
And that was?
"How small San Francisco International Airport is, and how outdated," he said. "I recall as a young man going there and being so impressed by its size and efficiency. Nowadays I land in Shanghai and am simply overwhelmed by the hugeness of the airport, not to mention the city. That tells you something about progress. If you have the ambition, you can achieve your objectives very quickly indeed."
That remark, as much as anything Dr Chen during the interview, offered an insight into his own success.
Senior Writer and Global-Affairs Columnist