HARVARD AND CHINA

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HARVARD AND CHI N A A R E S E A R C H S Y M P O S I U M M A R C H 2 0 1 0 E X E C U T I V E S U M M A R I E S O F S E L E C T E D S E S S I O N SH A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 2 C O P Y R I G H T © 2 0 1 0 P R E S I D E N T & F E L LOWS O F H A R VA R D C O L L E G E SESSIONS WELCOME AND OPENING PLENARY PAGE 3 THE CHINESE CENTURY? PAGE 6 CHINA—DYNAMIC , IMPORTANT AND DIFFERENT PAGE 9 THE MORAL LIMITS OF MARKETS PAGE 12 WHO CARES ABOUT CHINESE CULTURE? PAGE 15 MANAGING CRISES IN CHINA PAGE 18 CHINA’S NEWEST REVOLUTION: HEALTH FOR ALL? PAGE 21 INNOVATIONS CHANGING THE WORLD: NEW TECHNOLOGIES, HARVARD, AND CHINA PAGE 25 CLOSING REMARKS (F. WARREN MCFARLAN) PAGE 28 CLOSING REMARKS (DREW GILPIN FAUST) PAGE 31H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 3 OVERVIEW The world is going through the second great wave of globalization. Globalization isn’t just economic; education is also globalizing.Amid this globalization wave, the engagement of China and America is critical as the economies of these two countries will shape the world economy. It is important for Harvard University and Harvard Business School to be part of the engagement between China and America.The creation of the Harvard Center Shanghai represents a next stage of Harvard’s engagement in Asia. It is another step in the journey of becoming a truly global university. CONTEXT Dean Light and Professor Palepu reflected on the role that globalization plays in education, the journey to create the Harvard Center Shanghai, and the mutual benefits of deepened engagement in China. SPEAKERS Jay O. Light George F. Baker Professor of Administration and Dean, Harvard Business School Krishna G. Palepu Ross GrahamWalker Professor of Business Administration and Senior Associate Dean for International Development, Harvard Business School WELCOME AND OPENING PLENARYHarvard Business School’s process of globalizing has many important elements. These elements include having a global: • Student body. Twenty years ago, Harvard Business School had a relatively small number of international students and few Chinese students.Today, HBS has quite a few Chinese students and the student body is highly international. • Faculty.Today HBS’s faculty comes from across the world, including a half dozen faculty who understand Mandarin, several of whom also can teach in Mandarin.The faculty also includes Bill Kirby, one of theWest’s foremost China historians, who splits his time between HBS and Harvard College. • Curriculum. HBS’s curriculum and cases have become global relatively quickly.There are now courses on doing business in China, immersion programs—including programs in China and elsewhere in Asia—and many other global components in the curriculum. • Alumni group. As HBS students are increasingly international, so too are the school’s alumni. In Shanghai, there is an increasingly active alumni organization. In addition to HBS’s global focus, Harvard University also has adopted a more global perspective.The university is seeking to leverage the work and interest of the entire Harvard community in the global arena. For example, Shanghai is a hotbed for undergraduate internships. One seemingly simple change that will allow students from across Harvard to engage in international opportunities is Harvard’s decision to move to an integrated school-wide calendar.This common calendar will allow coordination of programs across different schools and will make it easier for students to engage in these coordinated global programs. While these elements are important for Harvard to become a truly international university, it also became apparent that being part of the engagement between China and America required that Harvard have a greater presence in China. So, in the last two years, the decision was made to pursue a footprint in China, specifically in Shanghai. Shanghai is the right city and this footprint is in the right place—a central location in Shanghai, on top of two key subway lines. It is important for Harvard to be part of the globalization of the economy and education. Harvard and China have a long-shared history. During the first great wave of globalization around 100 years ago, education also was being globalized.There were students at Harvard College from Shanghai as well as other locations in China.The first classes at Harvard Business School included students from Shanghai. Also, Harvard Medical School was active in Shanghai. Then the world changed. FollowingWorldWar I,the Great Depression, and World War II, the previous wave of globalization gave way to very local political and economic attitudes. Economically and educationally, China and America were not linked. Now, we find ourselves in the second great wave of globalization, which has been building over the past two decades.Today,the world economy and education are being globalized in unprecedented ways. China is now the world’s second-largest economy; the future of the global economy depends on the ability of China and America to engage with each other in a constructive, integrative way. In the long term, engagement between China and America is critical.Recognizing this,it became clear that Harvard should be part of this engagement. “I believe the Harvard Business School and Harvard University must be part of that engagement and must be an important part of understanding how the world economy, the Chinese economy, and the American economy are evolving, and how we can engage with each other.” — Jay O. Light H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 4 WELCOME AND OPENING PLENARY KEY TAKEAWAYS“We could enable [Chinese CEOs in an executive program] to experience Harvard Business School without having to go to Boston, and that’s a real landmark.” — Krishna G. Palepu Historically, great universities have been located in countries with great economies. The stellar universities of Britain, Germany, and America all rose as their societies rose. By taking a global perspective and by opening research and education centers around the globe, particularly in Shanghai, Harvard Business School and Harvard University are seeking to become the first school to maintain its prominent stature as economic forces shift around the globe. The opening of the Harvard Center Shanghai demonstrates the continuing commitment to becoming a truly global university. As a scholar who studies multinationals in emerging markets, Professor Palepu knows how hard it is for organizations to make the commitments that are necessary to transform themselves into global enterprises.The opening of the Harvard Center Shanghai demonstrates such a commitment by Harvard. It marks a continuing evolution in HBS’s global journey. Beginning around 1995, HBS began opening global research centers around the world.The first of these research centers opened in Hong Kong and the school now has six centers, which have contributed significantly to the school’s curriculum. About five years ago, a faculty committee chaired by Professor Palepu recommended expanding and converting these research centers into research and education centers. The rationale was that, in HBS’s view, there isn’t a distinction between research and education, and the uniqueness of HBS is that synergy between research and education. But part of this evolution requires physical infrastructure where classes can be taught.The infrastructure in Shanghai is the type of educational infrastructure that is needed. H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 5 WELCOME AND OPENING PLENARY KEY TAKEAWAYSH A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 6 OVERVIEW Many people say the 21 st century will be the “Chinese Century.” However, similar statements made a century ago didn’t come to fruition.Yet for those who have spent time in the country, it is hard to doubt that China will play a critical world role in the next 100 years. China is rapidly moving forward in pursuing unfulfilled dreams in areas of infrastructure, entrepreneurship, and education. Still, as central of a role as China will play, this century won’t belong exclusively to China.This will be a century for all in the world who share common aspirations and who work and learn together to solve common problems. CONTEXT Professor Kirby shared his thoughts on whether this will be China’s century. He looked back at the past century and examined the key factors propelling China forward. SPEAKER William C. Kirby Spangler Family Professor of Business Administration, Harvard Business School;T.M. Chang Professor of China Studies, Faculty of Arts and Sciences; Chairman, Harvard China Fund; Director, Fairbank Center for Chinese Studies THE CHINESE CENTURY?China’s rise in the 21 st century is based on its recovery in the 20 th century. Some people claim the 21 st century will be the “Chinese Century,” which is hard to question. But viewing this as China’s century doesn’t come at the exclusion of other countries; it comes as part of a global community. In large measure, China’s success in the 21 st century is based on its recovery in the 20 th century and its pursuit of longstanding, unfulfilled dreams. “If China is in some measure to define the 21 st century, it is because of its recovery and rise in the 20 th .” — William C. Kirby The longstanding dreams China is working to fulfill are: • An infrastructure dream. China is built on a long tradition of infrastructure. In his book The International Development of China, published in 1922, Sun Yat-sen envisioned a modern China with 100,000 miles of highway and a gorgeous dam. He foresaw a “technocracy,” which has been translated in Chinese as “the dictatorship of the engineers” (an apt definition of China’s government today).This infrastructure dream is becoming a reality as China builds highways, airports,telecommunication systems, and a dam that couldn’t be built anywhere else except in China. • A private enterprise dream.While the government is building the infrastructure,the private sector is building a rapidly growing middle class and a consumer economy.This economy includes proliferating retail stores and new Chinese brands (many of which are targeted to “Mr. and Mrs. China”). No one knows how large the middle class is, with the best guess in the 200–250 million range. There is a group in China termed the “urban middle class.”These individuals are 20–50 years old; 80% own their own home, and most don’t have a mortgage; 23% have more than one property.About one-third have a car; they love to travel; and they are beginning to buy stocks. (However, the gap between this new urban middle class and the rural—a gap that has always existed—is growing fast.) One hundred years ago, China seemed on the verge of the “Chinese Century,” but it didn’t come to fruition. In the early 1900s, many experts thought China was on the verge of the “Chinese Century.” A host of books proclaimed China’s awakening.This view was based on: • A revolution in business. China was experiencing its first golden age of capitalism. China had a sizeable middle class and the glamorous city of Shanghai—not Tokyo or Hong Kong—was the international center of East Asian commerce. It was also a golden age for entrepreneurship. • The formation of Asia’s first republic. About 100 years ago, under Sun Yat-sen, China engaged in a grand historical experiment in forming Asia’s first republic. • A revolution in education. In the first half of the 20 th century, China developed one of the strongest higher education systems in the world. Based on the political climate, the business environment, and the educational system, it was an optimistic time in China. But China’s politics took a decidedly military turn with a series of leaders cut from the same cloth—Yuan Shikai, Chiang Kai-shek, Zhu De, and Mao Zedong.This military turn set China back, but it also provided the foundation for China’s global strength; China could not be defeated by Japan inWorldWar II and could not be intimidated by the Soviet Union. Ultimately, China’s first golden age was undone by the Japanese invasion, the Communist rebellion, and above all, the ruinous policies of the first 30 years of the People’s Republic. China’s entrepreneurs were forced underground and overseas and China’s progressive universities were swept away. “At a time when the rest of East Asia prospered, China went backward.” — William C. Kirby H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 7 THE CHINESE CENTURY? KEY TAKEAWAYSOther Important Points • Three Shanghais.Within the borders of Shanghai are three different Shanghais: 1) the old walled city of Shanghai, which housed some 400,000 Chinese when Westerners first settled in Shanghai in the 1840s; 2) the Bund, which became a major financial hub; and 3) the new Shanghai, which is the Shanghai of the future. • China’s constitution. In the 1910s, Chinese PresidentYuan Shikai asked Harvard’s President Eliot to recommend an advisor to help draft a new constitution for China. Eliot recommended Frank Goodnow,the leading political scientist of the day. Goodnow drafted two constitutions:the first made Shikai president for life and the second would have made him emperor, had he not died first. • 180 degrees. About 100 years ago, America sold textiles and clothes to China and Americans bought Chinese railway bonds, which were viewed as good investments but turned out to be worthless.Today, Americans buy their textiles and clothes from China and China buys American treasury bonds, which hopefully fare better than the Chinese railway bonds. The changes in consumption in the huge new middle class are changing entire industries, such as agriculture.There are major changes in how food is grown, distributed, and sold—without using more land.This includes the dairy industry and the growing Chinese wine industry. • An education dream. No story is more central to China’s future than education. (Chinese families will delay any purchase in order to fund education.) China is rapidly building massive, modern university campuses, such as Chongqing University.These universities will be a welcome challenge to American universities and other leading global schools. “It is this area [education] that I think will clearly determine whether or not this will be China’s century.” — William C. Kirby Harvard shares China’s dream of training and educating future global leaders.This is seen through the fact that each of Harvard’s schools has important relationships in China. Harvard and China share common educational challenges.Among them are to: – Not simply train, but educate the whole person. – Educate a person not simply as a citizen of a country, but as a citizen of the world. – Measure and value not only research, but teaching and inspiration. – Extend the promise of higher education beyond the upper and middle classes. – Determine the proper level of governance and autonomy so universities can serve a broad public purpose. H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 8 THE CHINESE CENTURY? KEY TAKEAWAYSH A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 9 OVERVIEW The Harvard Center Shanghai’s state-of-the-art bilingual facility expands access to the HBS experience to non-English-speaking executives in China. Featuring high-tech equipment and world-class interpreters, the facility disintegrates language barriers for an uncompromised HBS classroom experience.The case method, the fast-paced exchanges, and the cold calls are all there. CONTEXT Professor McFarlan shared his experiences spearheading HBS’s executive education ventures in China and described the state-of-the-art, HBS-style, bilingual presentation space at the new Harvard Center Shanghai facility. Participants then experienced the facility for themselves as Professor Li Jin led discussion of an actual HBS case. SPEAKERS F.Warren McFarlan Albert H. Gordon Professor of Business Administration, Emeritus, Harvard Business School Li Jin Associate Professor of Business Administration, Harvard Business School CHINA—DYNAMIC , IMPORTANT AND DIFFERENT• An hour’s class requires a team of three translators, each working 20-minute stints. • The room has double-sized blackboards: half for Chinese, half for English. “By the time you’re 15 minutes into it, you literally forget that you’re not in an English-speaking classroom.” — F. Warren McFarlan Despite all the high-tech equipment, people are the critical link. While high-tech equipment makes the facility translationcapable, it is the people—faculty and translators—who are most critical to delivering an uncompromised HBS educational experience. A bilingual presentation is quite labor-intensive behind the scenes: • Two professors are necessary for blackboard notes in both languages; they need to confer in advance to coordinate plans. • Slides must be translated in advance. Getting translations done in time requires coordination. • During class, professors must become skilled at realizing who is speaking by the red lights since there is no voice change for translated material. Complicating this a bit is a 15-second lag time before the translation arrives. • No less than expert translating skills are a must. “The critical link lies behind the glass walls; you must have world-class interpretation simultaneously.” — F. Warren McFarlan The bilingual facility dramatically expands access to the HBS educational experience. Chinese executives who would not have been able to experience HBS are now able to do so, thanks to the presentation space at the Harvard Center Shanghai. Its capabilities were demonstrated by a recent program at the Center. It consisted of 66 CEOs, 65 of whom didn’t speak English. Without this facility,these individuals would not have been able to participate in this HBS program. Since 2001, HBS and its Chinese business school partners have provided bilingual executive education in China. Harvard Business School has offered executive education programs in China in partnership with leading Chinese business schools since 2001. Professor McFarlan spearheaded the first co-branded program with Tsinghua University (at the request of HBS graduate and former U.S. Treasury Secretary Henry Paulson when he was CEO of Goldman Sachs). Two-thirds of the instructors in this seminal program were HBS faculty, one-third wereTsinghua professors trained in HBS methods.The program was bilingual from day one, with classes conducted in both Chinese and English (realtime translation of classroom exchanges was transmitted by earphones) and HBS case studies focused on Chinese companies and are available in both languages. Harvard’s bilingual classroom disintegrates language barriers to deliver an uncompromised classroom experience. Creators of the HBS/Tsinghua program knew that only real-time translation would allow the fast-paced, interactive experience of an HBS classroom to be replicated in a bilingual setting. “Sequential translation wouldn’t work,” said Professor McFarlan.“The pace of the class would slip; you’d lose 50%.” In the Harvard Center Shanghai’s state-ofthe-art bilingual facility, content lost in translation is no greater than 5%–10%. The presentation space looks much like its classroom counterpart in Boston, with some critical differences: • At each seat are headphones with settings for English and Chinese. Professors who aren’t bilingual wear earphones as well. • Students desiring (or called upon) to speak push a button, which flashes a red light, telling translators at the back of the room whom to tune into. • Teams of expert linguists deliver immediate translations of the exchanges to listeners’ earphones. H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 1 0 CHINA—DYNAMIC, IMPORTANT AND DIFFERENT KEY TAKEAWAYSWith the need to bridge language barriers in education and business only rising in our complex, globalized world, facilities with built-in translation capability are the wave of the future. Despite their high price tag ($3 million), many more are bound to be built. “There isn’t another classroom in China that is like this.” — F. Warren McFarlan Case Discussion Professor Li Jin’s class discussion featured a 2007 HBS case that was previously used in the course Doing Business in China and is now taught to all first-year HBS students in the required Finance course.The case is about three competitors in China’s new media advertising market. It focuses on the decisions that altered their market positioning and led to their ultimate consolidation. The case described unpredictable actions and unforeseeable events that highlighted the different ways that CEOs in China might think about their companies (e.g.,like legacies to be built and nurtured, or as pigs to be fattened and sold). A CEO’s mindset might be based on whether the CEO was an entrepreneur/founder or a professional manager brought in to run a company. The case also demonstrated how unpredictable events in the quickly evolving Chinese market can open windows of opportunity that are soon slammed permanently shut. Those who act quickly, anticipate the future moves of others, and view situations in nontraditional ways can be rewarded, while those who sit tight will lose ground. H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 1 1 CHINA—DYNAMIC, IMPORTANT AND DIFFERENT KEY TAKEAWAYSH A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 1 2 OVERVIEW Without realizing it, societies around the world have drifted from market economies into market societies. Marketbased thinking has permeated all aspects of society, affecting societal norms in areas of life not traditionally influenced by markets. The problem:When a society decides that a market is acceptable in a particular area—that certain goods/services may be bought and sold—it is deciding that the goods/services can be valued as commodities. But some aspects of life are damaged, degraded, or corrupted if they are commoditized. Missing in today’s market societies is attention to the moral limits of markets. Societies need to decide which social norms are worth preserving and should not be part of a market. CONTEXT Professor Sandel described the growing role that markets play and asserted that markets need to have moral limits. SPEAKER Michael Sandel AnneT. and Robert M. Bass Professor of Government, Faculty of Arts and Sciences THE MORAL LIMITS OF MARKETS• Social services: For-profit schools, hospitals, and prisons are proliferating as market-based approaches come to these areas. A trend in education is paying children to read. Concierge medical services in the United States and scalping of doctor appointments in China create markets for access to medical services. In 2000, India legalized commercial surrogacy and a market for low-cost, outsourced providers is developing. • The environment: The idea of tradable pollution permits and carbon offsets creates markets for polluting. • Immigration: Proposals have been made to make a market for immigration by selling the right to immigrate to America for perhaps $50,000 or $100,000.Another idea is a market for refugees. Countries would each have a quota, which they could sell or trade. Markets such as these will inevitably affect social norms, often in unexpected ways. For example, if children are paid to read, will they become conditioned to only read when paid and not read for the intrinsic value of reading? Or, if polluters can simply trade pollution permits, does that make pollution acceptable and fail to motivate behavior change? “Pure free-market economists assume that markets do not taint the goods they regulate.This is untrue. Markets leave their mark on social norms.” — Michael Sandel Society must ask, “What should be the moral limits of markets?” The examples of market-based approaches are unsettling. Even if the parties involved in a market-based transaction consent (which is not always the case; in some instances they are coerced), these market-based ideas are distasteful. Most people find the idea of a refugee market distasteful, even if it helps refugees. A market for refugees changes a society’s view of who the displaced are and how they should be treated. It encourages market participants to think of refugees as a product, a commodity. The role of markets has grown in our lives. The world has become infatuated with markets. In recent decades, societies around the world have embraced market thinking, market institutions, market reasoning, and market values.The focus on markets is based on the abundance created by markets. The fact is that markets are powerful mechanisms for organizing product activity and they create efficiency. Often overlooked is the fact that markets can affect society’s norms. The application of market thinking to non-market areas of life assumes that markets are merely mechanisms, innocent instruments.This is untrue.Markets touch—and can sometimes taint—the goods and social practices they govern. An example comes from a study dealing with childcare centers.To solve the problem of parents coming late to pick up their children, centers imposed a fine for late pickups. The social norm had been that late parents felt shame for inconveniencing the teachers to stay late.When this norm was replaced with a monetary penalty, a market for late pickups was created—and late pickups increased. Parents now considered a late pickup as an acceptable service for which they could simply choose to pay.The presence of the market changed the societal norm. “The market is an instrument, but it is not an innocent one.What begins as a market mechanism can become a market norm.” — Michael Sandel Market-based thinking and approaches have the potential to affect social norms in many areas where norms were traditionally non-market areas of life.These include: • The human body: Black markets exist for organ sales. Some marketers are now paying individuals for tattooing the company’s logo on their bodies. Infertile American couples are outsourcing pregnancy to low-priced surrogates in India. H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 1 3 THE MORAL LIMITS OF MARKETS KEY TAKEAWAYSOther Important Points • Collaborative education. At www.justiceharvard.org, anyone can attend Professor Sandel’s popular Justice class.This virtual classroom features videos of lectures including student exchanges, the reading list, discussion guides, and a discussion blog. The site had more than one million viewers in its first few months.Translated versions appear on Chinese websites (which is fine with Professor Sandel if they are accurate). Experiments in virtual classrooms offer opportunities for collaboration between Harvard and university partners in China. Live video-linked classrooms would create a “global public square” permitting discussions in real time. Such discussions would illuminate East/West similarities and differences, leading to more nuanced understanding of both cultures. It is often assumed that the two cultures’ conceptions of justice, liberty, and rights are fixed, but the reality is more complex. Rich historical traditions contain multiple voices and contrary viewpoints within them. A virtual classroom enabling interaction between students in China and America would enable fascinating comparisons of ethical and philosophical thinking within cultures as well as between them. • Learning and teaching. China has long been a“learning civilization”—evolving through engaging with other civilizations and cultures—while America has been a “teaching” (code for “preaching”) civilization.America could benefit from incorporating China’s learning mindset. When a society embraces a market approach and decides that certain goods may be bought and sold, it is deciding that those goods can be valued as commodities. “Some of the good things in life are damaged or degraded or corrupted if they are turned into commodities.” — Michael Sandel Thus, deciding to create a market and to value a good— whether that is health, education, immigration, or the environment—is not merely an economic question. It is also a political and a moral question. Societies must confront markets’ moral limits. Societies, however, often fail to grapple with such moral questions.This causes market economies to drift imperceptibly into market societies, without it having ever been decided that they do so. “Because we haven’t had that debate about the moral limits of markets, we have drifted from having a market economy to being a market society.” — Michael Sandel The world’s market societies need to recognize the moral limits of markets and to define societal norms worth preserving. Case by case,the moral meaning of goods and services must be figured out and the proper way of valuing them decided. Ideally, this should happen collectively, via public debate. Much thought needs to go into how to keep markets in their proper place. “Only if we recognize the moral limits of markets and figure out how to keep markets in their place can we hope to preserve the moral and civic goods that markets do not honor.” — Michael Sandel H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 1 4 THE MORAL LIMITS OF MARKETS KEY TAKEAWAYSH A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 1 5 OVERVIEW Currently, there is tremendous interest in China and Chinese culture.As China grows in wealth and influence,those who do business and study in China want to learn and understand the culture.The reality, however,is that China does not have a singular culture that can easily be understood. China doesn’t have “a culture”; it has “culture.” Elements of China’s culture include its history, poetry, literature, art, food, and contemporary culture, including movies, television, fashion, and books. It also has cultured people who are educated and worldly. Those who believe the various aspects of China’s culture are all based on history are misinformed. All aspects of China’s culture and its societal practices (including business practices) are incredibly dynamic and constantly changing. CONTEXT The speakers discussed why it is so difficult to try to define Chinese culture and offered perspectives on China’s cultural history and modern cultural practices. SPEAKERS Peter K. Bol Charles H. Carswell Professor of East Asian Languages and Civilizations, Faculty of Arts and Sciences, Director of the Center for Geographic Analysis, Institute for Quantitative Social Science Xiaofei Tian Professor of Chinese Literature, Faculty of Arts and Sciences WHO CARES ABOUT CHINESE CULTURE?In the sixteenth century, sea transportation brought with it the opportunity for the exchange of ideas between Europeans and Chinese, creating links between the East and West that continue today.The Chinese civil service exam, for example, became the basis for the British civil service exam, eventually serving as a model throughout theWestern world. Since the late nineteenth century, China has been actively absorbingWestern influences. It is worthwhile to note that a value not considered native Chinese at the time it is introduced eventually may became part of the criteria that is used to describe what is Chinese today. Globalization creates the need to maintain a sense of native identity. As the forces of globalization grow, there is a strong impulse in China to maintain a sense of local and native identity. Chinese citizens are brought together by a real sense of belief that they share a common identity and culture. But there is some danger in this way of thinking. By basing this sense of national identity on perceptions about the country’s cultural past, the Chinese are relinquishing their claim to the present and the future. If all modern culture is bound to what is considered foreign and everything native belongs to the ancient past, Chinese cultural tradition loses the very elements that make it dynamic. China can no longer afford to be self absorbed and must allow the knowledge of world cultures to become part of Chinese culture. “A point of danger is that this way of thinking leads to the ossification of the cultural past so the vibrant, dynamic, complex,cultural tradition of China is reduced to a one-dimensional monolithic entity.” — Xiaofei Tian Chinese culture is not easily defined. Wide diversity and lack of a central, contemporary Chinese “culturescape” make defining Chinese culture in a singular way difficult. Chinese culture is a mixture of many elements, both native and foreign, that are constantly evolving. From an ideological standpoint, Confucianism is considered by many as the core of Chinese culture, yet this is a flawed premise.Although Confucianism is definitely a part of China, it is only one part of a much larger picture. It also could be argued that Chinese culture is embodied by its traditional poetry and the aesthetic experience it elicits.Yet, this notion of Chinese culture is incompatible with the dogma that exists in the Confucian Classics. Aspects of culture in China can be found by studying China’s history, literature, religion, food, and popular culture, including movies, television, books, and fashion. But as the diversity of each of these areas demonstrates, there is a huge variety, constant change, and no singular definition of culture in China. “There is no China culture; there’s culture in China.” — Peter Bol (corroborated by Xiaofei Tian) There is a difference between culture and a cultured person, whether Chinese or American.The values that a society’s culture promotes do not necessarily reflect the values that a cultured person holds, such as being educated and worldly. For a cultured person, culture matters, and debates over the hopes and best ideas for society are linked to actual practices and how people live. Chinese culture is a dynamic, continually evolving tradition. The Chinese cultural tradition is vibrant, dynamic, complex, and ever changing. In the fourth, fifth, and sixth centuries, the translation of the Buddhist text from Sanskrit into Chinese led to an incredible cultural transformation in China. H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 1 6 WHO CARES ABOUT CHINESE CULTURE? KEY TAKEAWAYSOther Important Points • University o erings. Elite Chinese universities have begun offering liberal arts education programs, allowing students to take courses across departments. • American managers. Few American managers speak Chinese and most are ignorant about Chinese history and practices. • A negotiating culture. China has much more of a negotiation culture than the United States, where people are more accepting of rules and authority. Schools of higher education must educate students about the history and tradition of different cultures. Many of today’s college students are products of diverse transnational backgrounds;they are multilingual and have a global perspective. In addition, the new professional managerial class conducts business on a global basis. “This new global elite needs a new forum of linguistic and symbolic capital that is transnational, so world languages, world literatures, and world cultures must be offered at higher education institutions.” — Xiaofei Tian To fit with this reality, schools of higher education must offer courses that teach the comparative history and tradition of different cultures, giving students the opportunity to study, examine, and interpret different cultures in the new global context. “The challenge as China grows in wealth and power is to make the next generation of cultured students aware that China’s cultural heritage is part of humanity’s cultural heritage.” — Peter Bol Attendees commented that they understand the difficulty of defining “the culture of China.” However, as individuals and companies doing business in China,they still expressed a desire to better understand China.The speakers distinguished between “common practices” and a deep societal culture.With effort, it is possible to gain some degree of understanding about common practices. However, as with culture, practices constantly are changing. Learning about the country and its practices can be facilitated by learning the language, learning about the country’s history, and reading the country’s literature. H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 1 7 WHO CARES ABOUT CHINESE CULTURE? KEY TAKEAWAYSH A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 1 8 OVERVIEW Crises often highlight shortcomings in governments’ ability to safeguard people from harm and to contain fallout from unforeseen scenarios. Retrospective analysis provides rich learning opportunities for addressing shortcomings and preventing or mitigating similar damage in the future. Governments have as much to learn from other nations’ crisis experiences as they do from their own. CONTEXT Professor Farrell discussed implications of the financial crisis for regulatory policy decisions facing governments. Professor Howitt discussed lessons in crisis management from recent disasters in the United States and China. SPEAKERS Allen Ferrell Harvey Greenfield Professor of Securities Law, Harvard Law School Arnold Howitt Adjunct Lecturer in Public Policy and Executive Director of the Roy and Lila Ash Institute for Democratic Governance and Innovation, Harvard Kennedy School Michael B. McElroy Gilbert Butler Professor of Environmental Studies, Harvard School of Engineering and Applied Sciences MANAGING CRISES IN CHINA• Having the right capital requirements. Reforms in capital requirements might include mechanisms allowing institutions to draw down capital during a crisis versus having to raise it mid-crisis. • Having resolution mechanisms that address moral hazards. Needed are mechanisms to wind down financially insolvent institutions that ensure creditors experience losses— so there is incentive to avoid undue risk in the future. • Having regulators trained in both economics and law.The SEC has expertise in law but lacks expertise in economics;the Federal Reserve is strong in economics but lacks deep expertise in regulation. Both are needed. • Minimizing the role of credit rating agencies in bringing complex products to market. U.S. securities law enshrined the positions of the incumbent ratings agencies, forcing investment banks to use the agencies to rate complex structured products that the agencies lacked expertise to understand.These regulations should be repealed. “I would highly encourage China and other countries to avoid the U.S. regulatory treatment of credit rating agencies.” — Allen Ferrell • The systemic significance of non-depository-taking institutions, such as Fannie Mae and Freddie Mac, Bear Stearns, and Lehman. • The instability of the repo market as a financing source. The crisis has taught much about how reliance on the repo market (i.e., overnight lending) affects leverage in the system—both degree of leverage and how it interacts with capital. Key Takeaways (Disasters) Recent disasters in the United States and China highlight both nations’ shortcomings in crisis management. This century, both the United States and China have been affected by traumatic events. The United States lived through the 9/11 terrorist attacks and anthrax scares as well as Hurricane Katrina; China had the SARS epidemic, the Wenchuan earthquake, and the blizzards of 2008. Key Takeaways (Financial Crisis) U.S. regulators’ focus is misplaced: The financial crisis was about standard banking activities; not proprietary trading. Looking at the composition of the U.S. banking sector’s losses and write-downs stemming from the financial crisis is instructive, holding lessons for regulatory policy. The breakdown: • More than half (55%) of losses came from traditional lending activities: 34% from direct real estate lending and 20% or so from other kinds of direct lending. • About 31% of losses resulted from banks’ exposures to securitized products (not from securitization processes per se). From a regulatory standpoint, a bank’s exposure to its own products is a good thing, giving it “skin in the game.” • Losses from proprietary trading were relatively trivial at only 2%. • A similarly small portion of crisis-related losses came from banks’ private equity activities (about 1%). Despite the focus in the United States on proprietary trading as an area in need of reform (e.g.,theVolcker proposal), the financial crisis had little to do with proprietary trading. The vast majority of banking losses (85%) reflected positions that soured for various reasons in the standard bank activities of lending and securitization. “The moral of this story is that the losses were driven by the traditional activities of the banks . . . which is potentially relevant to thinking about Asian regulation.” — Allen Ferrell With Asian banks heavily involved in traditional banking, the crisis holds regulatory lessons relevant for them. The Asian financial sector is heavily involved in direct lending, less so in securitization at this time. (Hopefully, given the importance of securitization for funding, that will change.) Given this business mix, the U.S. financial crisis holds relevance for Asian financial sector regulation going forward. Some lessons include the importance of: H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 1 9 MANAGING CRISES IN CHINA KEY TAKEAWAYS• Awareness of the critical interdependency between local and national capacities. More than 90% of people rescued from theWenchuan earthquake rubble were saved by family or friends; not by the central government’s late-arriving responders. Neither national nor local governments can manage crises on their own. Needed are management systems capable of rapid but decentralized support and connections between national and local capacity. • Stronger local capacities. Localities need to improve their capability to handle as much of a disaster’s effects as possible, since outside aid is often slow to arrive. Once it does, local and national responders need to work closely together. • Faster national capacities. Central governments should focus on accelerating their responses and improving their ability to operate in a decentralized fashion. “[We need to] think about the roles of local government and remote aid to prepare management systems capable of a rapid but decentralized surge of support.” — Arnold Howitt Other Important Points • Shadowy bailout motivation.Transparent counterparty data is lacking to assess the systemic risk had AIG failed. Goldman Sachs says it didn’t have significant counterparty exposure, having hedged its AIG positions; whether that was the case for other counterparties is unclear.The Inspector General’s bailout report suggests a rationale was protecting AIG shareholders—less appropriate a motivation than mitigating systemic risks. • Short shrift for recovery preparation.There are three kinds of disaster preparation: 1) prevention/mitigation (e.g., building codes); 2) emergency response; and 3) recovery. Preparing for recovery is often overlooked. As a result, money is thrown at recovery immediately after an event, and often wasted at great social cost. The two governments’ responses highlight shortcomings in crisis management, including the ability to prepare for emergencies,manage events during crises, and recover from them. China and the United States have structural similarities that make their problems of disaster management similar, including: 1) large and diverse land areas; 2) multilayered governments; and 3) high regional variation in emergency response capabilities. These factors contribute to the chaos in disaster situations. Local resources are often overwhelmed.The arrival of national resources on the scene is delayed by travel time; once there, outside personnel lack local awareness, slowing rescue efforts. Agencies not accustomed to interacting don’t know how to collaborate and cooperate. Lack of coordination causes inefficiencies; confusion reigns; the delays carry a social cost. Crisis management systems should reflect local/ national interdependencies and be capable of rapid, decentralized support. Governments face diverse crisis threats: natural disasters, infrastructure or technology system failures, infectious diseases, purposeful harm. Preparing for emergency response is difficult for governments; crisis management is unlike governments’ typical activities.The work is crucial, involving urgent responses to high-stakes situations that come without warning in unknown locations. Quick and effective action is needed; responders can’t afford the time to learn as they go along. Emergency preparation requires tough tradeoffs between financial cost and resource effectiveness. Capacity must be kept in reserve so it can be utilized effectively with little notice; yet governments don’t want to spend a lot on expensive resources to prepare for contingencies that might not occur.The ability to get resources to distant disasters as quickly as needed might be sacrificed for reasons of cost. Effective emergence preparedness requires: • Crisis management systems that facilitate collaboration. Organizational and communication systems should be in place before a disaster strikes, should facilitate collaboration/ cooperation among agencies, and should have flexible processes to allow for improvisation. H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 2 0 MANAGING CRISES IN CHINA KEY TAKEAWAYSH A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 2 1 OVERVIEW Corresponding with China’s economic growth has been an amazing increase in life expectancy and a significant improvement in the public health care system, with childhood vaccinations providing just one important example. However, China still faces enormous health care–related challenges. There are huge disparities in access to care and the quality of care received; the current payment system is largely out-of-pocket and many people can’t afford care; and chronic diseases and mental health issues are on the rise. The Chinese government, well aware of the situation and issues, is undertaking the largest,most ambitious health care reform program in the world.The goals of this program include providing basic health insurance coverage for at least 90% of the population by 2011 and establishing universal access to health care by 2020. Through both long-term research projects and numerous collaborative programs, Harvard has played and is continuing to play an important role in helping to shape China’s health care policies and practices. CONTEXT The panelists reviewed linkages between Harvard and China’s health care sector and discussed the monumental transformation taking place in China both in health care and in society. SPEAKERS Barry R. Bloom Harvard University Distinguished Service Professor and Joan L. and Julius H. Jacobson Professor of Public Health, Harvard School of Public Health Arthur M. Kleinman Esther and Sidney Rabb Professor of Anthropology, Faculty of Arts and Sciences; Professor of Medical Anthropology and Professor of Psychiatry, Harvard Medical School;Victor andWilliam Fung Director, Harvard University Asia Center Yuanli Liu Senior Lecturer on International Health, Harvard School of Public Health CHINA’S NEWEST REVOLUTION: HEALTH FOR ALL?Since 1949, China has made tremendous progress in improving the health of its citizens, but huge challenges remain. Prior to 1949 there was essentially no functioning health care system in China.There were widespread famine, epidemic disease, infanticide, and other catastrophic tragedies. Approximately 20 million Chinese were killed in the war with Japan between 1937 and 1945, and 200 million Chinese were displaced due toWorldWar II and the country’s civil war.While the first part of the 20th century saw dramatic improvement in life expectancy in much of the world, in China it went from 25 years in 1900 to just 28 years in 1949. During this time, there also were enormous disparities between the rich and poor, and between urban and rural. (While disparities exist today, they pale in comparison to the disparities prior to 1949.) But beginning with China’s liberation in 1949, health became a national priority. Dr. Bloom recounted a conversation with Dr. Ma, a Western physician who played a huge role in organizing public health in China.When asked how such a poor country could make health such a priority, Dr. Ma said,“I thought we fought the Revolution to serve the people.” In public health terms, serving the people means: 1) keeping people healthy and preventing disease; for example, through clean water and vaccinations; 2) providing access to affordable, high-quality health care; and 3) providing health security and equitable distribution of health services. Between 1949 and 2007, life expectancy increased from 28 years to almost 73 years.This is based on an increased standard of living, increased urbanization, and development of a public health system that focused on key basics such as childhood immunizations. China immunized hundreds of millions of children, which kept them from dying under the age of five. Harvard and China have a long, rich history of working together in the health care arena. In the aftermath of SARS, which wasn’t handled well by China, researchers at the Harvard School of Public Health did epidemiologic modeling that showed how to stop the epidemic.After presenting the findings to top people in the Ministry of Health, including China’s Minister of Health, Harvard was asked to help develop a program to avoid the outbreak of a catastrophic infectious disease.This program has involved providing high-level executive training to more than 300 leaders in China’s Central and 31 Provincial Ministries of Health.The program recently has been reoriented, with significant input from many in the Harvard medical community to provide training on managing hospitals. This post-SARS program actually built on significant linkages between Harvard and China.A 30-year research study of the respiratory function of Chinese workers in textile mills and a 20-year study on how to provide health insurance for people in rural China have had a huge influence on policy. The School of Public Health has intensive programs where students look at some aspect of the medical system and write papers about their observations, which have received much interest by China’s Ministry of Health. In addition, Harvard has held two forums involving multiple Harvard faculty members on subjects of interest to Chinese leaders, such as poverty alleviation. Dr. Kleinman, who heads Harvard’s Asia Center, said that across Harvard there are more than 50 faculty members who work principally on China, and the projects involving China at Harvard Medical School and other areas throughout Harvard are too numerous to count. “The engagement with China across our university is profound and incredibly broad.” — Arthur M. Kleinman H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 2 2 CHINA’S NEWEST REVOLUTION: HEALTH FOR ALL? KEY TAKEAWAYSChina is embarking on the most ambitious health care reform in the world. The Chinese government is aware of the health care challenges the country faces and has undertaken a remarkable health care reform process.This began in 2005 with the passage of a rural health improvement plan.That concentrated the country’s focus on improving the health care system and the health of the people in China. “This is the first time since the founding of the People’s Republic that China has begun developing a long-term strategic plan for its health sector.” — Yuanli Liu The Harmonious Society Program followed.This program set up 14 ministries and a slew of think tanks to make recommendations on health care reform. In an extraordinary act for China, a draft of the reform plan was posted on the Internet for one month and there were more than 30,000 responses.The government listened and responded by making 190 changes.The result is a serious action plan and a significant investment to address some of China’s long-term health care challenges. “The most radical, extensive,far-reaching plan for health reform of any country in the world has been committed to by the government of China . . . it is, I think, the most exciting development in health reform anywhere in the world.” — Barry R. Bloom This plan, which was announced in April 2009, has a goal of providing basic health insurance for at least 90% of the population by 2011 and establishing universal access to health care by 2020. The focus on health in China is part of the reassessment of culture, values, and norms taking place in China. In the era of Maoism, when China’s public health system was being built, the state regarded the individual as owing his or her life to the state and the party. In the current period of China’s economic reforms, there has been a shift. Now the view is that the state owes the individual a good life, or at least a chance at a good life. While tremendous progress has been made, significant challenges still remain.These include: • The system of paying for care and the cost of care. Currently, 60% of health care in China is paid for by individuals on an out-of-pocket basis.This is the least efficient,most expensive way to pay for care, and for many people makes health care unattainable. The largest complaint of the Chinese population is that they cannot afford health care, and many people forego being admitted to the hospital because they are unable to pay. Also, the cost of health care is actually the cause for about 15% of all bankruptcies in China. • Incentives. The current payment system involves government price setting for many services, such as hospitalization fees.The result is that health care providers overuse and overcharge in other areas, like drugs and tests. Drugs represent 45% of health care spending in China, compared to about 10% in the United States. (These drugs, which are often of questionable quality, are in many instances sold by doctors where they represent a significant source of revenue—and a major conflict of interest. A prime example is saline injections, which many patients now expect and demand, even though they have no medicinal value.) • Disparities.There remain significant disparities in the access to and quality of care between rich and poor, and urban and rural.The gaps are large and are increasing. • Infectious diseases. About half of all Hepatitis B cases are found in China, as are about one-third of TB cases.The mobility of the population makes it easier than ever to spread diseases, as seen through the HIV-AIDS epidemic and the spread of H1N1. • Chronic diseases. As China’s economy has developed, a consequence has been increased rates of chronic diseases, which are responsible for more than 80% of all deaths. The increase in chronic disease—including diabetes and cardiovascular diseases—is related to people living longer, high pollution, and behaviors such as smoking. • Mental health issues. As China has become more prosperous, there have been increases in all categories of mental disorders, anxiety disorders, depression, suicide, substance abuse, and STD rates. H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 2 3 CHINA’S NEWEST REVOLUTION: HEALTH FOR ALL? KEY TAKEAWAYSAlong with this shift in the roles of the state and the individual, individual attitudes, behaviors, and morals have changed.There is a rise in materialism and cynicism, and a breakdown in Confucian values.There is a rise in nationalism, deepening corruption, an almost caste-like distinction between rural and urban, a distrust of physicians, institutions, and agencies, and a concern with public ethics. There also is a high divorce rate, a high suicide rate, and a sexual revolution is underway. A boom in self-help books and in psychotherapy also is taking place. It is in this environment that health care reform is happening.The process of reforming health care is about more than just health care; it is part of a society undergoing transformation. People are thinking of themselves and their lives differently and have different expectations of the government. Other Important Points • One child. The changes going on in China include a reassessment of the country’s one-child strategy. • Health data. In previous years, the quality of health data in China was questionable, but new data systems have been put in place and significantly improved the data being collected. • Qualified health minister. China’s current health minister is an internationally regarded physician who doesn’t seem to be very political.This reflects a trend of filling key positions with technically competent people. H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 2 4 CHINA’S NEWEST REVOLUTION: HEALTH FOR ALL? KEY TAKEAWAYSH A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 2 5 OVERVIEW Technological innovations are changing and will continue to change every aspect of how we live, work, and learn. They are changing how people communicate and how we spend our time. Among the most exciting innovations are those in areas of mobility, cloud computing, social networking, platforms,location-based services, and visual search. Increasingly, China is playing a key role in today’s technology innovations. CONTEXT ProfessorYoffie discussed the innovations in technology that are having a huge impact on how we do things, including in education. SPEAKER David B.Yoffie Max and Doris Starr Professor of International Business Administration; Senior Associate Dean and Chair of Executive Education, Harvard Business School INNOVATIONS CHANGING THE WORLD: NEW TECHNOLOGIES, HARVARD, AND CHINAThe iPad will ultimately be a highly disruptive device with the potential to change how media are disseminated and consumed; this includes potentially changing how textbooks are delivered.These and other emerging technologies will impact how students study and how professors do research.The traditional ways of disseminating knowledge through books and articles will need to evolve. Cloud computing is changing how information and applications are stored and delivered. Through the remote delivery of computing power, storage, and applications, cloud computing is quickly changing how information is delivered. From a corporate standpoint,the economics of cloud computing are remarkable. Information delivered through huge data centers built by companies such as Amazon and Google cuts costs by a factor of seven.This fundamentally alters the IT cost equation for all companies, regardless of size.Applications that have historically been hosted on inhouse servers—from customer relationship management (CRM) to enterprise resource planning (ERP)—are now moving to outsourced cloud-hosted servers and data centers. A leading example is Salesforce.com. “The economics of cloud computing are extraordinarily compelling . . . no matter what size company you are, can you imagine the possibility of cutting your [IT] cost by a factor of seven?” — David B. Yoffie On the consumer side, cloud computing is and will be everywhere: in music, video, applications, and photos. It is likely that within 18 months, instead of our personal computers storing our music, our libraries will be moved to the cloud. User concerns about security are the largest drawback to cloud computing.This is a critical issue that needs to be addressed on an ongoing basis. Innovations occur when platforms are developed on which applications reside. In addition to changing how data is delivered, cloud computing also is becoming a “platform.”This means it is the basis for providing a set of applications that deliver ongoing value. HBS is creating the future by leveraging the Harvard Center Shanghai facility and emerging technologies. Harvard University and Harvard Business School have an explicit strategy of becoming truly global institutions. Establishing the Harvard Center Shanghai facility builds on Harvard’s long-standing involvement in Asia. It creates an opportunity for deeper engagement and collaboration with the country that is the fastest- growing producer of technology in the world. HBS views this as an opportunity to accelerate innovation in management,technology, and collaboration on the technological shifts that are changing the way we work, study, and socially interact. Powerful mobile computing is changing how people use technology. The massive shift of Internet use to handheld devices is fundamentally changing technology and the way it is used. The shift away from PC-centric computing to handheld computing is made possible by Moore’s law, which holds that chip processing power will double roughly every 18- 24 months, and the costs will be halved. (The law has held since Gordon Moore conceived of it in 1964. Today an Intel chip the size of a fingernail has 2.9 billion transistors and does a teraflop of processing per second.) “This creates the opportunity to put a supercomputer into your hand.” — David B. Yoffie This geometric increase in processing power has led to the development of powerful handheld devices. For example, the 2009 iPhone has identical technical specifications to the iMac, the most powerful desktop computer in 2001.Today, handheld devices allow us to do things on a mobile basis that we previously couldn’t do. Beyond just phones are other types of mobile devices. eReader devices such as Amazon’s Kindle and Apple’s iPad are creating a rapidly growing eBook market. Now available in a hundred countries, eBooks grew 100% in 2009 alone. At Amazon, for books available in electronic form, 50% of the books’ sales are in eBook form.This past Christmas, the company sold more eBooks than hard copy books. H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 2 6 INNOVATIONS CHANGING THE WORLD: NEW TECHNOLOGIES, HARVARD, AND CHINA KEY TAKEAWAYS• Location-based services. These services, such as YELP and Urbanspoon, identify your location and offer information about local restaurants, hotels, and other services.An application called Foursquare allows a person to see where his or her friends are. Location-based services also can provide navigation and will ultimately deliver advertising on a location basis. • Visual search. An example of visual search is a new phonebased application offered by Google called Google Goggles. It uses pictures to search the web and immediately provide information. For example, if you take a picture of a restaurant, it will give you reviews of the restaurant before you walk in.Visual search has the potential to significantly impact how students learn and interact with their professors, challenging traditional methods of engagement. Other Important Points • Predicting the future. It is impossible to predict the future. Experts in 1960 offered numerous predictions about life in 2000 that failed to come to fruition. One prediction some experts got right was the linkage of computers (essentially the Internet).The one prediction that fell short was a prediction of 200,000 computers in the United States.The actual number is around 300 million. • Internet tra ic. Cisco projects that Internet traffic will grow 66 times by 2013, a compounded annual growth rate of 130%. • Generational Internet use. In the United States, the portion of senior citizens who use email (91%) is comparable to the baby boomers (90%), though 70% of boomers shop online versus just 56% of seniors. • Texting volume. The average U.S. teenager sends almost 2,300 text messages per month. In China, during the week of the Chinese NewYear, 13 billion texts were sent. • People will pay. Some people have the perception that everything on the Internet is free, but that is not the case. The success of iTunes, where songs are sold for $0.99, shows that people will pay when something is priced correctly. The iPhone is a platform.There are now 140,000 applications for the iPhone, which have been downloaded more than 3 billion times; 1 billion downloads were made just in the fourth quarter of 2009. Facebook is a platform for which 350,000 applications have been written and downloaded half a billion times. In addition, people are looking at the following as potential platforms: • Cars. Ford plans to incorporate iPhone applications in their next generation of vehicles. • Television.TV will be a huge platform of the future, serving as a basis for social media, social interaction, and social networks. • Cities. NewYork City has decided to become a platform. The city held a competition, inviting the public to develop applications using raw municipal data. One of the winners created an application that allows you to hold up your phone; it automatically figures out where you are and gives you directions to the next subway stop. “Learning how to play with all these platforms may be absolutely critical to the long-run success of any company, because these platforms are becoming ubiquitous. It's a new way of thinking about the interaction between a supplier and a customer.” — David B. Yoffie Social networks are altering social patterns and how people spend their time. Social networks have global reach, with more than 830 million users. Facebook (the dominant player outside of China) andYouTube have replaced old Internet companies such asYahoo and Microsoft. Facebook users spend 90 billion minutes per month on the site. In China,Tencent has been a successful social networking company. Future innovations are being shaped by the integration of mobility, social networking, and cloud computing. Among the many future innovations that are coming, two types of innovations stand out: H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 2 7 INNOVATIONS CHANGING THE WORLD: NEW TECHNOLOGIES, HARVARD, AND CHINA KEY TAKEAWAYSH A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 2 8 OVERVIEW The links between Harvard and Shanghai go way back and have dramatically accelerated in the past decade—even in just the past four years—through a series of programs conducted in partnership with Chinese universities. HBS has written dozens of new cases, hired new Mandarin-speaking faculty, and added new courses, all to address the tremendous interest in China. HBS’s focus on China is not just because of China’s huge population, but because of the enormous opportunities in the country in industries such as software development. China is no longer just a manufacturing center. It has a highly literate, educated workforce and is in the process of climbing the IT value chain.While little known in theWest, China is giving birth to a new generation of formidable technology companies. CONTEXT Professor McFarlan discussed what HBS is doing in China and reflected on why it is so important for HBS to have a significant presence in the country. SPEAKER F.Warren McFarlan Albert H. Gordon Professor of Business Administration, Emeritus, Harvard Business School CLOSING REMARKS• Tsinghua. HBS has a six-week program with Tsinghua University and China Europe International Business School (CEIBS).This program consists of two weeks in Tsinghua, two weeks at CEIBS, and two weeks in Boston. Another program between HBS and Tsinghua, focused on private equity and venture capital, is about to be launched. • CEIBS. In addition to the program with Tsinghua, CEIBS and HBS have a program for CEOs of companies ranging from $500 million to a few billion dollars. Almost none of these CEOs speak English, yet they are being exposed to HBS cases. • Beijing University. HBS is partnering with Beijing University on two programs: Driving Corporate Performance and Designing and Executing Strategy. • Fudan University. HBS has partnered with Fudan University on three programs: growing professional service firms, creating value through service excellence, and strategy and profitable growth. “None of this existed 10 years ago and almost none of it existed four years ago.” — F. Warren McFarlan Continuing China’s economic growth requires moving up the IT value chain. China’s economic growth over the past 30 years will be extremely difficult to replicate. Increasing per- capita GNP requires different strategies. In particular, it requires increasing productivity by leveraging IT. But leveraging IT— by climbing the IT value chain—doesn’t mean just purchasing hardware and software. Leveraging IT to increase productivity is about services, operating differently, and engaging in change management. China is where the United States was 30 years ago, and they don’t realize how difficult it is to climb the IT value chain.Yet, this is where the key to continued economic growth resides. Harvard Business School’s efforts to re-engage in China began in earnest in the late 1990s. The history of Harvard Business School in Shanghai reaches back to HBS’s second MBA class, which had two individuals from Shanghai. By the mid-1920s,the first Harvard Business School Club of Shanghai was formed, which lasted until 1944. Following a 30-year disruption due to political factors, conversations about re-engaging with China began again in 1978 when four HBS faculty members, including Professor McFarlan,traveled to China.While the interest in China was high, no specific plans took place. Then, in 1997, recognition that HBS was underinvested in Asia led to the decision to establish a research center in Hong Kong.This Center has produced cases and done extensive research. At about the same time that HBS decided to establish a presence in Asia, the school was approached regarding teaching Tsinghua University how to conduct executive education.This eventually led to a one-week, dual-language program, co-taught by the two schools, called Managing in the Age of Internet.This initial partnership led to the development of the more expansive program that exists today. HBS programs in China have grown rapidly in recent years, several built on alliances with Chinese universities. Interest at HBS regarding China is incredibly high.There is now a second-year course called Doing Business in China.There are dozens of cases about China, 11 technical notes, and multiple books. HBS has five faculty members who are fluent in Mandarin, and 30 HBS faculty members will work, visit, teach, and do research in China this year. Sixty Harvard MBA students have PRC passports. The Harvard Center Shanghai makes new types of programs possible. In 2010, the Center will host 15 weeks of programs, none of which existed four years ago.HBS’s programs in China are largely based on partnerships with the leading universities in the country.These include: H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 2 9 CLOSING REMARKS KEY TAKEAWAYSTo the surprise of many, China is an emerging IT superpower. The conventional wisdom is that China is a center of lowcost manufacturing and India is the center of IT globalization. Certainly, India has been where the action is, but a new story is emerging.As China consciously seeks to move up the IT value chain, it is rapidly becoming a formidable player in the world of IT. China’s population is literate and educated. (Literacy rates are 93-95%, which are far higher than India’s.) China’s telecommunications infrastructure and bandwidth are massive and growing; there are almost 800 million cell phones in the country. Already,leading technology companies like IBM,Microsoft, and Hewlett Packard have established strong presences in the country. “It is an information-enabled society with massive investments in [technological] infrastructure.” — F. Warren McFarlan H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 3 0 CLOSING REMARKS KEY TAKEAWAYSH A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 3 1 OVERVIEW Harvard and China have a long, rich history of partnership and collaboration.Today, collaborative- learning programs exist in each of Harvard’s schools and departments.As the world of higher education becomes increasingly global,the level of collaboration between Harvard and China will only deepen.The Harvard Center Shanghai represents another important step in this collaboration, providing unparalleled opportunities. CONTEXT President Faust talked about the relationship between Harvard and China in the context of the global expansion of higher education. SPEAKER Drew Gilpin Faust Lincoln Professor of History, Faculty of Arts and Sciences and President of Harvard University CLOSING REMARKSAt Harvard, East Asian studies has become a hallmark of the university.The Harvard-Yenching Library has more than one million volumes, making it the largest university East Asian collection outside of Asia.Today, more than 370 courses are offered in East Asian studies in a wide range of subjects, such as history and literature;courses are taught in sevenAsian languages, with more than 600 students enrolled. Opening the Harvard Center Shanghai provides an opportunity for Harvard to reaffirm and enhance its commitment to China. The privilege of universities is to take the long view, as the Harvard Center Shanghai does, and to invest in projects that draw on relationships and knowledge to seize a better future. Harvard’s wide array of projects and partners in China and across Asia are a testament to this long view and to planting seeds for the future. Examples include: • Harvard Business School has published more than 300 cases, articles, and books on China. HBS also is coordinating student immersion experiences in China. • At Harvard’s Fairbanks Center, faculty are working with two Chinese university partners to create a free, online biographical database for China. Collaboration over nearly a decade has created a geographic database of anything that can be mapped covering 17 centuries of Chinese history. • Harvard Medical School has partnerships in China for clinical education and research. • Harvard’s Graduate School of Design has programs and exchanges with China. • Harvard Law School maintains a broad range of involvement with Chinese legal development on everything from trade to intellectual property to legal education. The collaboration that has produced the Harvard Center Shanghai creates unparalleled opportunities. The Harvard Center Shanghai is a space that was designed for academic collaboration. It will be a hub for learning, seminars, executive training, and collaborative programs between Harvard faculty and Chinese universities, organizations, and government. The facility will provide new opportunities for Harvard alumni and for current students who participate in internship programs. This facility results from a tremendous amount of collaboration: between Harvard and multiple alumni; between Harvard and Chinese government officials; and among multiple areas within Harvard (Harvard Business School, the Faculty of Arts and Sciences, the Harvard China Fund, the Office of the Provost, and the Vice Provost for International Affairs).These efforts are consistent with President Faust’s vision of “one university.” There is a long history of collaboration between Harvard and China. Harvard’s first instructor in Chinese arrived in Cambridge (after a journey of nine months) and began teaching Chinese to undergraduates in 1879. Shortly after that, Chinese students began arriving at Harvard and were soon studying in every department and school. By 1908,they had formed a Chinese club. Between 1909 and 1929, about 250 Chinese students graduated from Harvard.These individuals made remarkable contributions in China, with almost half of them becoming professors and more than one dozen becoming university presidents. During this time, a graduate of Harvard Law School helped establish China’s first modern law school, ushering in a century of collaboration between Harvard and China’s legal system. In 1911, graduates of Harvard Medical School created the firstWestern medical school in China.This was the first of many connections in public health and medicine between Harvard and China. H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 3 2 CLOSING REMARKS KEY TAKEAWAYSContrary to predictions of protectionism among nations or schools,the stakes and the players are not national;they are global.As the new Harvard Center Shanghai demonstrates, we are increasingly in a world of universities without borders. Universities exchange faculty and students as never before, and engage in international collaboration and problem solving. Higher education is developing a global meritocracy: underway are a great brain race and a global exchange of ideas.The expanding quality and quantity of universities in Asia and elsewhere open unimagined new possibilities for understanding and discovery.This is a race where everyone wins. “Increasingly we are in a world of universities without borders.” — Drew Gilpin Faust By teaching creative and critical thinking, universities prepare students for an uncertain world. We live in uncertain times.We can prepare but we can’t predict. In such an environment, students need to learn to think creativity and critically;to improvise;to manage amid uncertainty.The intense interactive case study method used at Harvard Business School and Harvard Law School has never been more important.Through this method education unfolds from a vivid debate. Teaching the case method in China is just one more way in which Harvard and China are collaborating. For the past five years, at the request of the Chinese Ministry of Education, HBS faculty have worked with more than 200 top Chinese faculty and deans in case method and participantcentered learning programs. • The Harvard School of Public Health worked with the Chinese government over the past four years on an analysis and plan to provide health insurance to 90% of the Chinese population. • The Harvard China Project based at Harvard’s School of Engineering andApplied Sciences is studying air pollution and greenhouse gases.This project draws on faculty from several Harvard departments and Chinese universities. • Harvard’s Kennedy School is involved in multiple collaborations with Chinese partners on clean energy and advanced training programs in policy and crisis management. • The Harvard China Fund, a university-wide academic venture fund, has made dozens of faculty grants for research partnerships and has placed more than 100 undergraduates in summer internships in China. These endeavors are a sampling of the collaborative tradition between Harvard and partners in China.These partnerships will share ideas and generate new ones. Higher education is increasingly global, which benefits all participants. We live in a moment of furious transformation, particularly in higher education. Nowhere is that transformation happening faster than in Asia. In China,the transformation is analogous to the “big bang.” “In a single decade, along with the world’s fastest-growing economy, China has created the most rapid expansion of higher education in human history.” — Drew Gilpin Faust This is a moment of tremendous opportunity. It is no coincidence that the second major expansion of Asian studies occurred at Harvard in the 20 years afterWorldWar II, when the number of undergraduates in American colleges increased by 500% and the number of graduate students rose almost 900%. China now faces similar opportunities. H A R VA R D A N D C H I N A : A R E S E A R C H SY M P O S I U M | 3 3 CLOSING REMARKS KEY TAKEAWAYSWWW.HBS.EDU