Globalizing the Knowledge Economy: An Interview with SCT's Frank Tait

by James L. Morrison

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In recent years, the rapid development of technology has irreversibly impacted the Western world's economies, educational systems, and societies in general. In the industrial age, information was late or inaccessible to most citizens; now, in the information age, almost all citizens have easy access to mass amounts of information at their fingertips. Indeed, the West has evolved from an agrarian, to an industrial, to a knowledge economy--the third step in a country's modern economic development.

Or is it? China is racing toward a knowledge-based economy, skipping virtually everything in between. Certainly a knowledge-based economy promises many changes for Chinese society. Will these changes affect the Chinese workforce? Of course. Will they revolutionalize Chinese education? Probably. Will they bring democracy to the East? Only time will tell. Recently, I spoke with Frank Tait, Senior Vice President for Global Marketing for SCT, a leading U.S. information technology corporation, about his experiences in China as a part of SCT's China initiative.

James Morrison (JM): Why has SCT established a China initiative?

Frank Tait (FT): SCT has grown successfully in the Americas, Europe, and other countries. Now we see tremendous opportunities to expand in China as the economy and business climate change there.

China is aggressively de-regulating businesses, and it is rapidly expanding its Internet infrastructure. The Ministry of Information Industry, the powerful regulator of China's Internet, expects e-commerce volume to reach 10 billion yuan (1.2 billion dollars) in 2002, up from an expected 800 million yuan this year ("Nine in 10," 2000). Moreover, the number of China's Internet users has witnessed a growth rate of 100% every six months for the last two years, increasing from 620,000 in 1997 to 8.9 million by 1999 (Zhao, 2000). Many call this rapid expansion the "dotcom-ing of China." The New York Times recently reported that about 400 Chinese businesses have been de-regulated. This frees them from government ownership and opens them to private ownership and public trading. Of these 400, 200 or so have covered their costs and turned a profit in their first year of operation.

As a result of this de-regulation, the Chinese government predicts that its workforce will decrease by 20 million in the next five years. Because the government requires certification of all workers through the Ministry of Personnel and Ministry of Labor, it must enable these 20 million people to be retrained or to move into occupations in private business. As one might expect, this situation creates a tremendous demand for education.

The Ministry of Education is focusing on "creating a better learning climate for people throughout China," according to Minister of Education Chen Zhili.  China set the target of eliminating young and adult illiteracy and spreading nine-year compulsory education by the end of the Ninth Five-Year Plan (1996-2000).  By the end of this year, more than 95% of people aged 15 to 50 will be literate, and over 85% of the total population will have had nine-year compulsory education ("Progress Made," 2000).

JM: How can a U.S. technology company such as SCT help the Chinese facilitate distance learning?

FT: What we are doing is twofold. Tsinghua University has already established much of what SCT provides schools in the Western world such as global-based systems and Web access for admissions, registration, and bill paying. SCT is providing integration technology by hooking up portals, distance learning tools, and administrative systems. Also, we're taking WebCT tools into China as a vehicle for creating courses for the university, the Ministry of Education and the Ministry of Labor.

Tsinghua University, the leading technological and engineering university in China, educates the majority of scientists and engineers in China. It also operates the China Education and Research Network (CERN) for the Chinese government, which interconnects colleges and universities using the Internet. Our integration tools will allow the Tsinghua system to go "many-to-many." This means that students in a university in a western province will be able to register for a class on their administrative system and then take the course off of the ASP site, a Web site that Tsing TongFang is bringing up to host distance education classes for multiple universities. Our technology will make sure that all of the affected systems communicate. It will ensure that all the demographic, academic and financial record passing and authentication happens and that the ASP site receives revenue from the receiving schools for sharing the courses.

JM: The Internet opens societies to the world. How will this initiative impact Chinese society?

FT: Many people who work in China see parallels to Europe, with the differences between Eastern Europe and Western Europe. The eastern, more urban parts of China contain highly literate and skilled populations. The western areas are primarily agricultural and the people there are less literate. This area accounts for 56% of China's land area, and has a population of 285 million people, or 23% of the national total. Nine out of 10 of the county's poorest 80 million people live in the western region. China's Ministry of Education sees distance learning as a means of easing the shortage of teachers in the western area of China (Mooney, 2000), and plans to spend 360 million yuan (43 million US dollars) on developing distance education in its western section ("China to Promote," 2000).

In order for China to grow, it has to bring knowledge and technology into the western provinces. But it's a two-edged sword. The Internet allows free sharing of information, which leads to greater education. With education comes knowledge and free thinking, challenging the status quo.

This situation is positive for the world in general; the more knowledgeable the Chinese people, the more interested they are in governing models. Many Chinese are now investing in corporations (there are more stockholders in China than there are Communist Party members). A whole new class of people has a vested interest in how China is moving forward, and they are concerned about the openness of trade and creating wealth. These people recognize that education is at the core of these concerns; that education teaches how to invest and operate businesses wisely and helps create an environment in which they can support their families.

JM: How are Chinese people addressing the problem of technology illiteracy in this movement toward Internet education?

FT: The Chinese recognize that education is a main component of competing in the 21st century. From what I've seen in the urban areas, the people are technologically savvy. When we were touring Tsinghu University, we walked through a building that was being renovated. There were workers with hammers pounding out concrete walls and such. Behind a plastic curtain on the left was the hub of the China Education and Research Network (CERN)--basically the Internet for China. On the right, behind another plastic curtain, was a computer lab with about 50 PCs. There was a list of people waiting to use those 50 computers to get on the Internet. The graduate students who were assisting us told us that those computers are busy all hours of the day. Also, driving around the city, I noticed that most billboards have Web addresses on them. For instance, China Telecom advertises not just their cell phone service, but also their ISP.

SCT is working with several Chinese electric and gas utilities to enhance their customer management infrastructure in these areas. We expect to have our SCT Banner customer management system for Utilities implemented within the year. China will have to put the power infrastructure in place before the computers and telephones can even get there and SCT is pleased to be a part of the solution.

JM: But what is happening in the rural part of China? 

FT: We'll see on our next visit.

JM: Are the Chinese looking to technology as a way of logging in to the 21st Century economy?

FT: Absolutely. A large part of the Chinese economy is moving away from the agrarian economy, bypassing the industrial economy, and heading right for the knowledge economy. The amount of investment in infrastructure construction in China is phenomenal. I saw more cranes, more buildings going up, and buildings coming down there than I have ever seen. And these buildings are being wired with category five wires. It's like walking into a modern U.S. office building or university, where power and network connections are in the walls. Cellular and wireless systems are being put into place everywhere. I was able to use my cell phone from the Great Wall of China to check in with my family.

As the Chinese economy changes, America may lose skilled workers to China because of the economic opportunities there. The Chinese government is heavily recruiting students studying in foreign universities to return to China. They are offering free housing and annual bonuses to entice students with critical skill sets to return. As I understand it, in China, highly skilled professionals such as database administrators or programmers make four times the national average salary. This situation will have some interesting economic implications. Just like in the US, there will be a shortage of technology workers, which will create higher demand and higher wages for them.

JM: How does working with a Chinese company differ from working with American companies?

FT: Doing business successfully in China requires "Guanxi"--sincerity in relationships. We are fortunate to have Dr. Luo Yuanzheng of Beijing University advising us. He is Vice President of the International Economist Association (IEA) in Paris and works with the Economist Consulting Group in San Francisco. Many call him the "Father of Modern Chinese Economy." Since he is also a part of the state government in China, he provides insight into the implications of what we're doing. We're having frequent conference calls with our friends at Tsinghua Tongfang to make sure we really understand their needs and that the solutions we come up with actually solve those needs. We find that Chinese culture is one of family. People in China are open, honest, forthright, and clear in sharing their problems and plans. When you enter into a business relationship, you become like family, having discussions as you would have with family members. These relationships are not like the hands-off, vendor/supplier relationships that exist in the U.S. Chinese businesses are more like family-owned businesses, both caring and demanding.

JM: Building an administrative system to operate in multiple languages is a daunting task. What is SCT's strategy for achieving this?

FT: This is not the first time we have tackled this issue. We already have Banner systems that have been translated to French and Greek. We are able to support multiple languages because our Banner2000 systems are based on Oracle tools that already provide multiple language support. So we are able to leverage Oracle's investment in supporting multiple languages. We also use their language translation utility to help move our software to other languages. In addition, SCT has a language center in the Netherlands. Our staff there provides additional language translation services.

JM: What are the next steps in SCT's implementation of its China initiative?

FT: We're currently setting up our SCT-Asia operations. We've named our Vice President for Market Development for Asia, Mike Chapman, who is responsible for getting our operations up and running. We've recently opened our headquarters in China and are budgeting for the proper level of investments for next year. We're translating our solutions into Mandarin and are preparing to hire Chinese Nationals for service and support functions as trainers, consultants, help-desk people, sales people, and administrators.

JM: What do you hope to learn through this venture?

FT: I'm learning a lot. I could spend my life studying China; it's an absolutely fascinating country and culture. The openness and honesty of the people make them a pleasure to work with. I hope to go back there many more times and take my family. Also, I intend to learn the language. Many of my colleagues from SCT are speaking at industry conferences about relationships and how software systems for colleges and universities need to be focused on supporting relationships. Relationships are central to the Chinese culture and our initiative in China will help SCT bring advanced relationship management systems more quickly to US higher education. We all can learn from this rich culture.

JM: Will SCT's existing clients benefit from this new market by forming partnerships around content and their common administrative and learning systems infrastructure?

FT: Yes. For example, a school in Beijing could form an alliance with an institution in the United States to make its distance education courses available to US students, and vice versa. SCT's systems are designed to enable this type of connection. Our connected learning solution lets administrative systems from one school link to distance education courses at another school.

JM: How does SCT play a role in relation to a demand for education in China?

FT: SCT is working with a company in China called Tsinghua Tongfang, a three-year-old for-profit subsidiary of Tsinghua University in Beijing. Tsinghua Tongfang has a contract with the Ministry of Education and Ministry of Personnel to put up an ASP-based distance-learning site. This site will allow workers to do self-based re-training.

This contract is in part a response to the cost of delivering basic education. There are as many universities in China as there are in the US. The Ministry of Education and Ministry of Personnel expect to support over 240 million students with distance education. Students pay to go to these universities, but the government pays most of the subsidy. As the population and the number of those eager to retrain and/or obtain degrees in business and technical fields grow, universities cannot meet the demand for education with the traditional classroom model; they have to put a distance model into place. This model allows shared content, meaning the government can create one class that is shared by multiple universities. Recently, the Ministry of Education decided that, besides the first batch of four universities, another 27 universities throughout the country would be able to open their own on-line courses (Zheng, 2000).

JM: This certainly is an exciting adventure, Frank, and we wish you success.


China to Promote Distance Education in Western Regions. (2000, July 13). People's Daily, p.? 

Mooney, Paul. China Plans to Expand Distance Education in Western Regions. (2000, July 13) Chronicle of Higher Education, p.?

Nine in Ten Chinese Dotcoms May Go Bankrupt This Year (2000, September 4). Lateline.News, p.?

Ning, Cui. Progress Made on Education. (2000, February 28). China Daily, p.?

Shaoquin, Zhao. Internet Boom: Gold in Pockets. (2000, March 29). China Daily, p.?

Ying, Zheng. (2000, August 21). China Daily, p.?