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America's Three Crowning Jewels

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America's Three Crowning Jewels

Source:CW

The USA is showing signs of decline, but it still has a few cards up its sleeve that are helping it maintain its elevated political and economic status around the globe.

America's Three Crowning Jewels

By Ting-feng Wu, Hsiang-Yi Chang
From CommonWealth Magazine (vol. 485 )

The United States' massive trade deficit, which ballooned to US$418.6 billion in the first nine months of 2011, stands out as just another indication of the declining global competitiveness of the world's biggest economy.

But as former labor secretary Robert Reich, who now teaches public policy at the University of California, Berkeley, has observed, America still has some real bright spots. Its higher education system is one of the country's few sectors that run a trade surplus, and the best minds in the world are still congregating in the USA.

The world's elite brains are clustered in two main enclaves – the Silicon Valley technology hub on the West Coast and the Wall Street financial center on the East Coast – and their entrenched positions as talent magnets will be hard to uproot in the near future.

Challenging Career Ceilings

Indian engineers are well known for their strength in the software sector. One of them, Poonam Patel, worked for a major software provider in her home country before being tugged to the U.S. by her husband to study. After graduating, she went to work in Silicon Valley.

Patel, who has a young child, freely admits having had trouble getting accustomed to the American lifestyle that required her to shuttle her child around and buy groceries a week at a time. Her packed schedule left her feeling like her candle was burning at both ends.

Patel and her husband had thoughts of returning to their homeland, but she says with a shrug that she eventually decided to bring her parents to the U.S. to help take care of the children.

As with Patel, most engineers who have immigrated to the U.S. insist they are not irrevocably tied to their new country, but they find it extremely difficult to pull themselves away from their American lives and head home.

"Looking at it, Taiwan's software companies are so small. If I go back, how closely will my pay match what I'm getting now?" remarks Jolin, a Taiwanese engineer currently working in the U.S., with a touch of frustration. "It's not that I don't want to go back, but only (the U.S.) can provide this kind of stage. Also, California has a good living environment. Even if you have money in Taiwan, you can't buy the fresh air you find here." 

On the East Coast in New York, Mr. Yeh, who works in the bond department at one of the world's top five investment banks, finds it hard to not become fully absorbed in the challenge of living at "the heart of an era."

Having lived through the crisis of a threatened U.S. default, the Taiwan native cannot forget his sense of anxiety at the time.

"I was ready to board an airplane back to Taiwan to go on an extended vacation. Our flight was being called for boarding when I got a text message telling me to immediately head back to the office," Yeh says with a wry smile. "Can you believe that? And that kind of thing has happened many times."

One of the reasons the U.S. stands out as a repository of global talent (See Table) is its extremely competitive environment that challenges career ceilings.

"The head office has asked me if I was interested in being transferred to Asia, but to me, I'm still young, and gaining experience is more important than anything else. I always tell myself that maybe I'll get fired tomorrow, but every day I stay on is another day to learn, testing the limits of my own abilities on the stage of the world's financial center," Yeh says.

Global Technology Pilgrimage

Silicon Valley remains the globe's Mecca for technology professionals, a place to which people are still flocking in droves.

Mark Lee, who arrived in the U.S. from Taiwan at the age of 13, has already launched his second software development company, instant-access computing specialist Splashtop Inc.

When asked where he was planning to head next, this young entrepreneur says without hesitating, "I'll still choose here. Silicon Valley is the most up on where the market is going. Google and Facebook are both here. Silicon Valley is America's center of dreams, because there are so many examples of success."

Silicon Valley turns over generations rapidly, with a new group of entrepreneurs ascending roughly every decade. The winner's circle has no boundaries, but there are certain unwritten rules.

"Setting up a company is really different in the U.S. and Taiwan. In the U.S., the emphasis is on high value-added and on high gross margins. If the gross margin is low, your market value will still be low even if you have really high revenues. That's the limitation of manufacturing," observes Taiwan native and entrepreneur Lee Chen. 

A graduate of National Chiao Tung University, Chen has 20 years of experience in starting ventures in Silicon Valley. Seven years ago, he launched networking solutions company A10 Networks, Inc.

"My products sell very well in the U.S. and Japan. Those aren't price-based markets, so I'm not at all worried about Chinese competitors," Chen says.

Many countries and cities have tried to replicate Silicon Valley, but none have really succeeded in matching its special qualities. So what is its secret?

Chinese native Cheng Liu, founder and CEO of Eureka Therapeutics Inc., a company dedicated to increasing the efficacy and specificity of antibody drugs, thinks he knows.

Standing in front of the company's offices, Liu points to two buildings at the end of the street less than 500 meters away that house two pharmaceutical giants, Roche on the left and Pfizer on the right. They are part of a larger cluster in the Bay Area, which is home to more than 1,000 biotechnology companies, the highest concentration of any location in the world.

"The Bay Area is the 'birthplace of biotechnology.' When you go out to eat, it's very easy to run into people you know," Liu says.

Silicon Valley and the Bay Area, located near each other in northern California, offer two complete entrepreneurial clusters unseen anywhere else in the world that have gradually overlapped and expanded into an unrivaled innovation network. In the past, the high-tech sector followed a straightforward division of labor – R&D in Silicon Valley, manufacturing in Taiwan and in China. But Silicon Valley's business ecosystem is in the process of changing, beginning to adopt the biotechnology sector model, where companies outsource R&D and share intellectual property profits with their outsourcing partners.

A Recession-proof Formula: Innovation

"Business has never been better," says Johnny Lu, chairman of the Lucoral & Lupearl Group, with excitement, a wide smile etched on his glowing face. The company only became famous in Taiwan as the designer of U.S. first lady's Michelle Obama's signature pearls, but it had been the world's biggest supplier of pearls and coral since the 1990s. 

Lu was born on the outlying island of Penghu into a family that made its living selling coral and then switched to selling pearls. In 1984, Lu went to New York to open the U.S. market for his family's products, and he's been there ever since.

During that time, Lu has seen the American economy suffer frequent ups and downs and he has faced fierce competition from Japan and China, but his business in the United States continues to grow to this day.

Lu shows off a pile of thank you letters from Ronald Reagan, George W. Bush, Obama and even Vatican leaders. "Everybody pays a lot of money to the hottest movie stars and singers to endorse their products, but that's totally outdated," he says proudly. "I use charitable donations to get these highly respected leaders to endorse us and enhance our products' value-added."

Lu observed early on in the wake of the terrorist attacks on Sept. 11, 2001 and repeated economic storms that American society needs to focus on values such as religious harmony, racial equality, and compassion for the disadvantaged. As a result, he invested a considerable amount of effort and money in charitable activities in churches and in areas with high numbers of minorities or low-income people, not only bolstering his brand's image, but also building connections with usually inaccessible religious and political leaders.     

"In the U.S., the people who have to worry about the state of the economy are those who cannot innovate or differentiate themselves," Lu says, but he still feels bullish about his adopted country. "Adversity will stimulate the creativity of businesses, which will become the engine of America's next wave of growth."

Translated from the Chinese by Luke Sabatier

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