Should the U.S. encourage Asian investment in our emerging high tech companies? This controversial question is very important to us at the MIT Enterprise Forum since we have chosen to co-host the Asian Investment Conference (5-7 June) which will bring key Asian venture capitalists and other corporate representatives to Boston to meet high potential technology companies.
Let me share some thoughts on this subject with you. I do not believe that foreign equity positions in U.S. firms at this time or in the foreseeable future constitutes a major threat to us. This could change if the dollar were to fall precipitously or the trade deficit were to significantly increase. I do believe that the key challenges we face from Asian, particularly the Japanese, competition are the strength of their educational system and the motivation of their workforce.
When I saw the movie Stand and Deliver about a U.S. high school math teacher trying to inspire his students, I was struck by the norm that if a student so much as carried books he or she was scorned by his or her classmates. I am afraid to say that this attitude extends to a wide segment of our society including some of our upper class suburban schools. The lowly status of the teaching profession and the poor compensation and lack of recognition afforded teachers should be of concern to us all.
In terms of motivation of the workforce, there is little question that the Asians work harder and longer than we do and that there is less alienation of labor from management. I was told a story about a company that brought a large group of Japanese workers here to work on a special project. On the first Saturday they were here, they nearly broke down the door to the plant trying to get in and work. If we are really concerned about foreign competition then we should be equally concerned about insuring quality education and creating a motivated workforce.
I am definitely not a "doom and gloomer." We have great strength and significant competitive advantages not the least of which is our entrepreneurial spirit and leadership in innovation. We also have a more enlightened view of the role of women who as a result are contributing mightily to our economic muscle.
Another aspect of Asian investment is the globalization of the capital markets, a phenomena driven home by the events of October 19, 1987. Capital flows by high tech means including satellites to opportunities all over the world. Companies, too, are becoming international entities searching for money, manufacturing, productive workforces, markets and technology wherever they are available. As these trends continue, it will become more and more difficult to identify companies and their ownership with individual nations.
Certainly, there must be some caveats to all this. On the macro level, steps to insure the adequate protection of proprietary technology, national security and free markets must be taken. On the micro level, due diligence is required by both partners in foreign investment.
No matter what your views, we invite you to join us at the Asian Investment Conference to learn more about this vital area of concern to us all especially in the New England entrepreneurial community.
Reprinted with permission from The MIT Enterprise Forum, Inc. of Cambridge. The article first appeared in the "Forum Reporter," Volume 7, No. 6, February 1989.
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