November 27, 2013

Tech Summit Aims to Connect Leaders From China and Washington State

I attended the Seattle Biz-Tech Summit on October 19, 2013 in Bellevue, Washington. Produced by Kirkland, Wash.-based Nan Hai USA Co. Inc., the conference attracted leaders from companies operating in China and Washington state, respectively, from the information and communication technology, clean tech, and biotech sectors. This blog post will focus on a panel I attended entitled "Commercial Gateway to China: An update on US/China Trade and Investment." (This is a picture of me standing in front of the China Telecom Americas exhibit at the Seattle Biz-Tech Summit.)

In an interview by Dahlia Peterson of contextChina, Nancy Yang, Nan Hai's senior manager, explained that "the aim of the summit is to provide a 'dynamic platform for both large companies and SMEs (Small and Medium Enterprises) to develop business opportunities, learn about cutting-edge innovations, identify emerging markets, expand their business, and showcase their products and services to hundreds upon hundreds of summit attendees.'"

In her article published by contextChina on October 30, 2013, Wen Liu notes that the participants of the "Commercial Gateway to China" panel consisted of "some of the most experienced business leaders in the region, including Sidney Rittenberg, China business consultant and life-long China watcher; Robert Kapp, consultant and founding executive director of the Washington State China Relations Council; Ben Zhang, CEO of Greater China Industries; and Karl Kou, vice president of Huawei USA. Serving as moderator was Mark Wen, a commercial strategy manager at the Port of Seattle and president of the Washington State China Chamber of Commerce."

Sidney Rittenberg began, as Ms. Liu writes, by "sharing with an audience of American and Chinese business people his wisdom in achieving success in China. To understand China, he said, one has to look at the country from its own context, not try to apply the formulas that work in the American economic paradigm to the Chinese paradigm. When doing business in China, one should stay out of politics completely, he advised. 'When you are in another country,' he said, 'you are expected to obey that country's laws even if you think they are horrible laws.' Rittenberg also believed that Google made a tragic mistake by pulling out of China, as it could have had an enormously positive influence in Chinese society if the company had stayed." Having done business worldwide, I can attest to the importance of respecting each country's customs or laws no matter how odd or unjust they may appear to me.

Ms. Liu says that "an audience member, the owner of a small tech company operating in China, voiced the worries of many companies when he said, 'IP protection is still what keeps me up at night.'" That audience member was me (see photo on the right).

Robert Kapp responded that intellectual property problem is unresolved and it may never get fully resolved. "The standard answer, he said," notes Ms. Liu, "is that as China rises up the technology and scientific sophistication ladder, and as the Chinese create more and more intellectual property, they would want IP protection themselves. Before that, however, American companies would do well, 'to be very, very, very thorough in protecting the access to that mixture that constitutes intellectual property,' he said."

The Seattle Biz-Tech Summit was interesting and relevant to the objectives of my company, ROI3, Inc., as my colleagues and I prepare to fully introduce our suite of digitally-animated mLearning apps and content for smartphone and tablet users in China. I look forward to attending the next conference scheduled for September 27, 2014.

Here is a news report from China about the conference:

Aaron Rose serves as President and CEO of ROI3, Inc., a Seattle, Wash.-based company that empowers people in emerging economies through innovative, technology-based solutions. He is also the editor of Solutions for a Sustainable World.

November 14, 2013

PATH does not Consider China a Recipient, but a Partner

The focus of the previous post on this blog is on the role China plays in the strategy of ROI3, Inc. In doing some research for the post, I found some notes that I took while attending an event at The Bureau of Asian Research (NBR) on March 15, 2013 entitled "China's Evolving Health Industry Investments" featuring Jiankang (Jack) Zhang, PATH’s China Country Program Leader. While the event occurred eight months ago, there are a few points that remain relevant and worth sharing in this post. [Photo of Jack Zhang: PATH/Mike Wang]

Program for Appropriate Technology in Health (PATH)

"PATH's mission is to improve the health of people around the world by advancing technologies, strengthening systems, and encouraging healthy behaviors," according to its website. The Seattle, Wash.-based international nonprofit organization, which was founded in 1977, says that it "transforms global health through innovation. We take an entrepreneurial approach to developing and delivering high-impact, low-cost solutions, from lifesaving vaccines and devices to collaborative programs with communities. Through our work in more than 70 countries, PATH and our partners empower people to achieve their full potential."

In 2011, according to its Consolidated Financial Statements, PATH's total revenue was $283,838,000. Their funding derives from foundations; the United States government; other governments, other nonprofit organizations, and multilateral agencies such as the World Health Organization (WHO); individuals; and interest from investments 75.5 million people worldwide benefited from PATH's work in 2011 including 4.8 million mothers, newborns, and infants; 8.3 million children and adolescents; and 5.4 million people living with HIV/AIDS or tuberculosis.

Specific to China, PATH, since 1979, "has worked with Chinese government agencies, nongovernmental organizations, research institutes, and manufacturers to improve health. Our team in China has focused particularly on addressing reproductive health and infectious diseases." Coordinated from the organization's office in Beijing since 2003, PATH's strategy for success includes:
  • Developing and expanding public-private partnership models for health product development that take into account health needs, the best interests of donors, PATH's core competencies, the interests of Chinese public agencies, and synergies with Chinese public and private companies;
  • Identifying opportunities vertically and horizontally to build on this model to meet the multiple health needs of vulnerable populations in and outside of China; and
  • Promoting global access and supply of affordable, accessible, and sustainable health products in China, and through China to other low-resource settings.
PATH in China explains how "PATH views collaboration as the key to providing innovative, sustainable, affordable, and culturally appropriate health solutions for low-resource settings. We conduct rigorous monitoring and evaluation to ensure the efficiency and effectiveness of our work. PATH's strategy in China includes:
  • Developing and expanding public-private product development partnerships that align with donor interests, PATH’s core competencies, the interests of China’s public health agencies, and the needs and perspectives of Chinese companies;
  • Identifying opportunities to build on these partnerships to meet multiple health needs of vulnerable populations inside and outside of China; and
  • Promoting sustainable access to supplies of affordable health products in China and through China to other low-resource settings.
PATH's specific initiatives in China include work in vaccine research, development, and introduction; Woman's Condom product development and promotion; and new diagnostic tools for tuberculosis (TB). A sampling of PATH's projects includes the advancing rotavirus vaccine development; assessing Chinese vaccine manufacturers, the Japanese Encephalitis project; polio vaccine development and scale-up project (PVD); Protection Options for Women (POW); the tuberculosis new diagnostic demonstration project; the Woman's Condom project; and the Safe Water Project.

"China's Evolving Health Industry Investments"

As PATH's country program leader in China, Jiankang (Jack) Zhang is responsible for program development, project management, office management, and liaising with local and international collaborators, including local health authorities, public and private institutions, and other nongovernmental organizations in China.

During his presentation, Mr. Zhang said that the Chinese government is encouraging more private investments in the pharmaceutical and biotechnology sectors. He noted, however, intellectual property protection remains a significant concern by private enterprises, particularly companies based outside of China.

In Mr. Zhang's interview with NBR's Claire Topal and Karuna Luthra on May 25, 2011 entitled "A Pivotal Moment for China and Vaccine Manufacturing," it is noted, "The World Health Organization (WHO) announced on March 1, 2011, that the national regulatory authority of China—the State Food and Drug Administration (SFDA), along with affiliated institutions—now meets WHO indicators for a functional vaccine regulatory system. This means that Chinese-made vaccines are now eligible to apply for WHO pre-qualification."
WHO prequalification ensures that vaccines used in national immunization services in different countries are safe and effective for target populations at the recommended schedules, and that they meet particular operational specifications.
During the 2011 interview, Mr. Zhang said, "WHO's clearance opens the door for [Chinese vaccine manufacturers] to apply for WHO vaccine pre-qualification—a regulatory status that opens the door for United Nations agencies and governments to begin ordering the vaccine— with the aim of becoming eligible for vaccine procurement by the United Nations Children’s Fund (UNICEF)."

Responding to a question, during the 2011 interview, on the implications of the announcement for China's role as an international partner in global health, Mr. Zhang explained, "The Chinese health authority considers the WHO clearance a significant step in China's efforts to contribute to global health, notably to African countries where China has already donated to infrastructure, health systems, and anti-malaria treatment and control programs. The addition of vaccines to this portfolio is truly exciting for the Chinese government."

However, according to Mr. Zhang, "Obtaining a WHO pre-qualification certificate is complex and can be difficult to maintain. Ultimately, in my opinion, the biggest challenge for China won't be in building infrastructure, but instead in sustaining the commitment of public agencies and encouraging manufacturing executives to strictly comply with WHO requirements and the new Good Manufacturing Practice code."
The new Good Manufacturing Practice (GMP) code, adopted by the SFDA and effective March 1, 2011, aligns with WHO GMP standards, containing stricter requirements for the production of pharmaceuticals (including vaccines). The SFDA has asked that all newly-built pharmaceutical manufacturing enterprises should comply with the new GMP code. Existing factories, which produce sterile drugs, including blood products, vaccines, and injections, are mandated to reach the new code before the end of 2013. The deadline for other plants is Dec 31, 2015. Companies that cannot meet the new requirements before these deadlines will be forbidden from continuing to produce drugs. See SDA website,
While Chinese companies may apply for WHO pre-qualification to manufacture vaccines for the African market, Mr. Zhang remarked during his presentation on March 15th that most vaccines used in Africa are manufactured in India. Despite the lack of Chinese-manufactured vaccines in Africa, he emphasized that the 4th International Roundable on China-Africa Healthcare Cooperation, which is scheduled for May 2013 in Gaborone, Botswana, will attract senior government officials and company executives from China and throughout Africa alike. (The World Bank published an article on December 10, 2009 about the initial China-Africa Healthcare Roundtable that was held in Beijing from December 4-5, 2009. This article by UNAIDS dated May 7, 2013 provides a summary of the aforementioned conference held in Botswana.) (Photo: UNAIDS)

Upon the conclusion of Mr. Zhang's presentation, I asked for an update on how China's vaccine manufacturers were complying with WHO requirements including the GMP. He replied that while Chinese-made vaccines are now eligible to apply for WHO pre-qualification, not a single manufacturer has yet be approved for pre-qualification.

While polio was eradicated in China, Mr. Zhang noted tuberculosis remains a problem. PATH produced a document, Collaborating to Control Tuberculosis, about its work to combat TB in China that says, "China has the most MDR-TB (management of multi-drug resistant TB) cases in the world and the second largest number of overall TB cases. The World Health Organization classifies China as a high-burden country. There are an estimated 120,000 new cases of MDR-TB each year in China, accounting for 24 percent of the global total."

Furthermore, according to the TB document, "With funding from the Bill & Melinda Gates Foundation, PATH is responding to the challenge. In collaboration with the Foundation for Innovative New Diagnostics and the Hong Kong Supranational Reference Laboratory, PATH assists the Chinese National TB Reference Laboratory with determining the operational feasibility, cost-effectiveness, and impact of new TB diagnostics in order to help the Chinese Ministry of Health decide whether to introduce and scale up these technologies."

Regarding his organization's operations in China, Mr. Zhang remarked that "PATH does not consider China a recipient, but a partner."

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 12, 2013

Understanding China - Its Role in Global Business

In addition to making a presentation to Seattle University's Global Business Club on October 31, 2013, I was invited by David Reid, Ph.D., Professor of Global Business Strategy at Seattle University's Albers School of Business and Economics, to speak in a class he teaches entitled "Understanding China - Its Role in Global Business" on November 4, 2013. In his course syllabus, Dr. Reid explains that "this course is geared to students who want to learn about the reality of China as a business opportunity as well as a threat, together with China's state of market development." This post will highlight a few points from my presentation and subsequent discussion with the students.

The focus of my presentation was to present the role China plays in the strategy of my company, ROI3, Inc. While my colleagues and I see opportunities to develop digitally-animated apps and content for smartphones and tablet computers worldwide, China serves as our initial market. As indicated in my post, "ROI3, Inc. - Tools for Empowerment," China had over 300 million 3G subscribers as of May 2013, according to a Tech in Asia article. China will see smartphone shipments exceed 460 million units by 2017 and is expected to have 440 million 4G users by 2017. By 2020, China will be the largest market of smartphone users utilizing the latest mobile broadband technology.

I addressed the many challenges my colleagues and I face in the world's second largest economy. One challenge is the fragmented revenue channels for app developers. While the business-to-consumer (B2C) market offers significant revenue growth, there are multiple B2C channels including AppChina, Baidu App Store, Google Play, HiMarket, Taobao App Market, and Tencent's App Store just to name a few. Furthermore, in-app advertising serves as an integral component of our B2C monetization strategy. (Masanari Arai, founder and CEO of Kii Corporation, a Tokyo, Japan based company that promotes itself as "the only mobile backend-as-a-service (MBaaS) provider that helps developers turn their apps into full-fledged, global businesses," wrote an insightful blog post on November 9, 2013 for VentureBeat explaining China’s mobile app ecosystem.)

In addition to the B2C opportunities, I explained ROI3's business-to-business (B2B) revenue model that resides in enterprise customization and direct licensing. We also see opportunities to monetize our apps via mobile network operators or equipment manufacturers as a value-added service for original equipment manufacturers.

When talking about the specific components of ROI3's apps, I highlighted the following five features: (1) security, (2) simple, user intuitive user interface, (3) engaging graphics through digital animation, (4) social interaction among users, and (5) reward system (gamificiation). While other apps in the China marketplace may provide similar content in the area of English language learning or health, my colleagues and I feel our competitive advantage lies in the technology of the app's back-end infrastructure and front-end user interface, thereby creating an engaging and unique experience for our subscribers.

I wish to express my sincerest appreciation to Dr. Reid for providing me with the opportunity to speak and to the students for their well-constructed questions and critical feedback.

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 3, 2013

How to be a Successful International Entrepreneur

I had the pleasure of making a presentation entitled "How to be a Successful International Entrepreneur" to the Global Business Club at Seattle University on October 31, 2013. While I made several points during my presentation, there are a few worth mentioning in this post.

The title of my session should be "How to Not be a Failing International Entrepreneur." Too many people have a glamorous view of entrepreneurship, which may include the financial reward, schedule flexibility, and the (perceived) power of having an executive title such as President, Chief Executive Officer or Chairman of the Board. They forget (or do not realize) that most businesses fail within their first two years of operations nor do entrepreneurs anticipate the personal sacrifices involved. Such sacrifices include limited or no income or time spent with friends and family. Working long hours (often 110-120 hours a week) is the normal course of entrepreneurship.

Sensitivity to cultures is essential to any business operating outside of its home country. Each culture has a uniqueness about it and the more an entrepreneur understands the nuances of their customer, the greater chance of their business succeeding. Business is about people and entrepreneurs must understand their customers' culture. This point is supported by an interview of Frits van Paasschen, Chief Executive Officer of Starwood Hotels & Resorts, dated October 25, 2013. Scott Mayerowitz of the Associated Press notes that Mr. van Paasschen "moved the company's entire leadership team to Shanghai for a month in 2011 and to Dubai for a month earlier this year. He plans another month overseas in 2015. He wants his staff to better understand the cultures they are opening hotels in."

"Hire people who are smarter than you," a friend once advised me. One point that I make regularly is the importance of collaborating with talented people. I always equate building and running a business to producing a movie. While I may be a talented producer (business strategist), to produce a successful movie requires talented actors, screenwriters, stagehands, and lighting, set, costume, and sound designers, just to name a few. The same principle apply to creating a successful business and if your company's budget is limited, then it is essential to hire people who possess a multitude of valuable skills.

While many entrepreneurs attest to the value of understanding their company's financials, I am routinely surprised by the large number of business owners who do not. Let me repeat an important point I made during my presentation: UNDERSTAND YOUR FINANCIALS. Understand your company's sales, research and development, and general and administrative expenses. Understand your cash inflows and outflows. Understand your cost of goods sold on a per unit basis. Understand your amortization and depreciation schedule.

Photo of me presenting to
Seattle University's Global
Business Club:
Mohammed Alturki
A student asked, "How do I determine when to expand into different international markets?" "I do not know" was my simple response. "There is a danger in being opportunistic," a mentor explained to me early in my career. Every business has to balance its focus of developing products or services for their key market while exploring new opportunities of expanding the company's offering or entering new markets. Expanding too soon could drain valuable financial and human resources. My colleagues and I at ROI3, Inc. routinely address the benefits and consequences of expanding our line of mobile apps or entering new markets. Ultimately, there is no magic formula of when to expand.

I wish to express my gratitude to Mohammed Alturki, President of the Global Business Club, Quan Le, Faculty Advisor to the Global Business Club, and all the club members who made this experience an enjoyable one for me. Thank you.

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.