Why No Company Can Ignore China

Life teems with conundrums. LinkedIn’s decision to extend its business in China will provoke questions from people wondering whether that’s the right thing to do.

I’m not pretending for a moment that everything is perfect in China – far from it. But no country has a monopoly on virtue and in the U.S., where we are justifiably proud of our history of free elections and an untrammelled press, we often fail to appreciate the enormous challenges and accomplishments of China. Chinese political and business leaders are among the first to recognize the scale of their dilemma: 800 million people still living in poverty; complete dependence on imported oil; profound water shortages; a demographic time bomb that will haunt the country in coming years; sprawling state-controlled companies; pollution levels that are a threat to its citizenry (though it’s rarely ever mentioned that New Delhi has far worse pollution than Beijing); corruption in higher places and a hidebound educational system considered way too rigid.

All this makes China’s achievements almost incomprehensible – particularly for people who have never visited the country. No country has ever achieved what the Chinese have been able to do since Deng Xiaoping helped his country emerge from decades of barbarity. In less than three decades around 400M Chinese have entered the middle class and China, or at least its metropolitan areas, have gone from two wheels to four wheels in less than a generation. (In 2000 auto sales in China were 2M. Last year they were 22M – dwarfing the 15.6M sold in the U.S.). Thousands of miles of highways and railways have been built. Dozens of brand new runways have been rolled out. Hundred of millions of square feet of factory capacity have treated the rest of the world to lower prices. And now China’s technology industry is growing stronger by the week. Three of the ten most valuable Internet companies in the world are now Chinese.

LinkedIn’s decision to extend its “economic graph” to China will help bring people closer and eventually make tens of millions of people more productive and successful. The more we talk, confer, collaborate and work together the better we will understand each other. This will extend from the mundane (the Chinese are perplexed, for example, by our habit of drinking iced-water even when we have stomach aches, or calling our bosses by their first names) to deep and broad collaboration between individuals, organizations and countries. We will soon be each other's largest trading partners and the ties furnished by education, science, the arts and commerce should help the peoples of both countries appreciate the others’ finer points. While much about China is flawed, just as the U.S. seems flawed through a Chinese lens, rising prosperity and closer ties are a boon. Today, no company can pretend to serve the world and do good unless it embraces China.

Sequoia Capital entered China in 2005 is a minority shareholder in LinkedIn China, a joint venture with LinkedIn, and I have represented Sequoia on LinkedIn’s Board of Directors since 2011. Mark Kvamme was Sequoia Capital’s Director from 2003-2011.

Photo: tyler_haglund/Flickr, used under a Creative Commons license.