Business

The Sun Rises in the East

By Rachel Sussman

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The expansion of the IT industry in emerging markets such as Brazil, Russia, India, and China is well-documented by the modern mass media. Stories touting this development phenomenon usually mention the historically unparalleled window of opportunity, the massive populations of untapped demand, and fresh, unsullied markets for IT products and complementary products and services. All the above are true – but there's more, reveals Wang Xing Yao (王星耀), head of Sun Microsystems' China Lab. Wang puts a friendly face to Sun's emergence in China, detailing the current state of China’s IT industry and some hurdles Sun will have to navigate in its new environment.

The Sun Microsystem(太阳微电子系统) China Lab is the research and product development core of Sun's China presence. The research undertaken by the China Lab team not only ties into the development of Sun's creations, but also in ensuring that disparate needs in a vast nation are all properly attended to. "China is very large and different people have different needs. We expend a lot of effort ensuring that all the different requirements of people across China are met," explains Wang.

Despite its focus on the needs of the Chinese people, Wan maintains that the China lab sees IT in a global sense. To do this, Wang continues, Sun pulls in a diverse staff with a variety of backgrounds. "Some companies, like Microsoft, tend to keep employees where they have studied or where they are from. Sun pulls employees from many different countries and keeps an international presence."

This is supported by Sun's enlightened talent scouting policy. Though Sun has a noticeable presence on high school and college campuses in China, Wang says, by adding that diversity has a great impact on Sun's ability to cross continents.

But surely Sun's success can be attributed to more than just the talent who staff the company. Sun's changing of its NASDAQ ticker symbol – from SUNW to JAVA – indicates the true focus of their business and research efforts, Java. The popularity of this open-source programming language, one of Sun's most lucrative creations (which garners a whopping $100 million per year merely in licensing revenues), will play a large part in easing the transition of Sun into the China market.

Java currently enjoys strong popularity as a programming platform for technologies as common as cell phones, computers, and servers, among others. Cooperation arising from practical application of Java into complementary technologies is one of Sun's most profitable aims – and the nature of business in China is perfectly conducive to this, Wang insists. Noting the demand for Sun in developing nations, Wang expounds, "The use of Java is prominent in developing countries like China and India." This willing audience and Sun's name recognition pave the way for a successful transition into the China market and carve a niche that he feels other companies may not be able to achieve.

But what are these challenges to Sun's success in general, and in China more specifically? Well, there are a few over which Sun has expressed concern. The first, and most pressing to Sun in particular, is the open-source nature of Java. Essentially, other entities are free to access, develop, and improve upon the Java software at will, with no required licensing fees to or purchase from Sun. Companies who have the time and resources will not need Sun's input to use Java in their own applications. Competitors can work to improve upon Java's basic design in ways perhaps more appealing, convenient, or practical than using Sun's Java. Wang's assertion of Sun's strong China associations with other IT companies and its role in assisting smaller IT companies will assist in minimizing the affect on Sun's bottom line, but it appears to be Sun's most publicized current business issue.

The second is the hot-topic issue of intellectual property infringement, which doesn't affect only Sun specifically, but concerns IT corporations of all makes and models, whether expanding into China or not. However, differing intellectual property (IP) laws between countries do not appear to help the issue. Wang admits that "the significant infringement of downloading software, music, and movies" has many IT companies scrambling for alternative business solutions. IP issues related to software and IT technology have also proved difficult to navigate, Wang explains. Solutions to these IP problems, especially in the international arena, remain elusive.

Third is the notion of the so-called "internet bubble." Considering the consequences of rushed growth of internet businesses and the burst of the Western bubble in the mid- to late-90's, it is easy to understand the fear for such a "bubble" in China. Especially with what Wang describes as a sort of "dependence" by other industries on IT stability. "If for one day technology were suspended, it would prevent a lot of things from working properly."

The final challenge – and one that Wang insists will be ongoing – is the continued collaboration and search for new partnerships between Sun and non-IT related industry enterprises. He talks specifically of healthcare and finance, though there are many others. The potential for advancement is great. But Wang asserts that catering to their needs and building strong partnerships is both important and difficult. Besides competition between IT companies for these enterprises' attention, there is also the rise of in-house research and technological growth – which may allow these industries to progress all on their own.

But Wang sees a place for Sun to cooperate with these other enterprises far into the future and gauges that this will be one of the Chinese IT industry's greatest impacts on China's economy. "Collaboration and interdependence is increasing. Application of [IT] products in other industries will be integral to economic development." And so, Sun enters China with the prospect of a bright future and the opportunity to surmount global IT challenges. And if Wang's responses are any indication, Sun has the matter well in hand.

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