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Walking down a side street in Shanghai’s French Concession, a partially preserved corner of that city’s gloried and turbulent past, visitors come upon an ivy-covered house that served as the headquarters for the Shanghai branch of the Communist Party in the 1940s. Here the spartan quarters of Mao’s second in command, Zhou Enlai, are carefully preserved, the narrow beds and wooden desks evoking a simpler, revolutionary China.

A short ride away, across the murky waters of the Huangpu River, monuments to the new China are being erected in what was farmland less than two decades ago. The Pudong New Area, with its clusters of highrise office towers and multi-story shopping malls, is emblematic of the rush to wealth and economic power that now drives China.

These were among the images from a visit to China by a delegation of scholars from the Walter H. Shorenstein Asia-Pacific Research Center from April 8–14, 2007. Though time was short, the group managed to visit Shanghai, Hangzhou, and Beijing.

Fulfilling Shorenstein APARC’s mission to carry its work “into Asia,” the delegation met senior officials from government and business and held wide-ranging exchanges with Chinese scholars and policymakers at leading universities and research institutions. The conversation ranged from China’s development strategy to the current state of relations between China and its longtime rival and neighbor, Japan.

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The delegation was led by Shorenstein APARC director and professor of sociology Gi-Wook Shin and by professor of political science Jean C. Oi, who has launched the center’s new China studies program. The group included Shorenstein distinguished fellow Ambassador Michael H. Armacost, associate director for research Daniel C. Sneider, and senior program and outreach coordinator Neeley Main. In Beijing, Freeman Spogli Institute director Coit D. Blacker joined the delegation, as did Shorenstein APARC’s Scott Rozelle.

The trip started in Shanghai, a dynamic center of finance and industry that has drawn in many Stanford graduates. State-owned enterprises such as Baosteel, one of the world’s largest steel producers, are in the midst of becoming players in the global marketplace. From Baosteel’s sprawling complex of docks, blast furnaces, and rolling mills along an estuary of the Yangtze River, products are now being dispatched around the world. In a meeting, the leadership of the Baosteel Group expressed an eagerness to tap into the educational and training opportunities offered at Stanford University.

Shanghai is not only the business capital but also a political center, rivaling Beijing. The Shanghai Institute for International Studies is an unofficial foreign relations arm of the Shanghai government. Shanghai Institute scholars are also players in national policy debate on many key issues facing China, such as relations with Taiwan, with Japan, and even with the Korean peninsula.

The scholars presented their views on a wide range of issues, from the preparations for the 17th Congress of the Communist Party this coming fall to emerging structures of regional integration in East Asia. Professor Xu Mingqi, who is also a senior leader of the Shanghai Academy of Social Sciences, explained that China’s development strategy is shifting toward a more balanced approach. Whereas local government officials previously were pressed to meet targets for GDP growth, foreign investment, and export volume, now they must also raise employment levels, close the growing income gap, and provide social security.

Hangzhou, considered one of the most beautiful cities in China, is a two-hour drive south of Shanghai. The modern roadway passed a tableau of the suburbanization of this part of China’s countryside, with multi-story brick homes mushrooming amidst the fields. The delegation arrived at Zhejiang University, considered among the best of China’s provincial higher educational institutions and growing rapidly in size and scope.

The Shorenstein APARC delegation met with faculty members from Zhejiang’s social science departments, who briefed the delegation on their research work in areas such as distance education, international relations, Chinese history, even a school of Korean studies. Zhejiang is also the site of a new research institution, the Zhejiang Institute for Innovation (ZII), founded by Stanford engineering graduate Min Zhu, a Silicon Valley entrepreneur who is determined to bring the lessons of Stanford and the valley to his home province and his undergraduate alma mater. ZII aims to foster applied research that can tie the university to the vibrant entrepreneurial culture of Zhejiang province. Shorenstein APARC researchers may soon be carrying out fieldwork in this laboratory of change, based at ZII.

Beijing, however, is still the place that matters most in China, not only in the realm of government but also when it comes to academic scholarship. The delegation met with two of Shorenstein APARC’s longtime corporate affiliates in China—PetroChina, the state-owned oil and gas giant, and the People’s Bank of China. Shorenstein APARC dined with a lively group of Chinese journalists, organized by former Stanford Knight fellow Hu Shuli, the editor of Caijing Magazine, considered China’s leading independent business publication.

The substantive task was to forge new ties with key research institutions. The current state of China’s development strategy was again on the agenda when the delegation met with senior officials from the National Development and Reform Commission (NDRC), formerly China’s State Planning Commission. Alongside the NDRC, the delegation met as well with the leadership of an offshoot of China’s State Council, the China Development Research Foundation, which is doing important work in promoting good governance in areas such as poverty alleviation, nutrition, and budgeting. Those conversations were echoed later in our meetings with scholars from Peking University’s School of Government.

Shorenstein APARC’s own China program, as Oi explained, is focused on understanding the tensions that arise as China grapples with the consequences of its rapid economic development. Out of the meetings in Beijing, an ongoing dialogue has begun, to be advanced this summer with a visit from a NDRC delegation and in the fall with an international conference at Stanford on China’s Growing Pains.

The delegation also engaged in frank and useful exchanges on a variety of international relations issues. We had an extended meeting with scholars and leaders of the China Reform Forum (CRF), a think-tank associated with the Communist Party’s Central Party School, the premier institution for training party leaders and officials. The CRF is credited with authoring important concepts such as the foreign policy doctrine of China’s “Peaceful Rise.” These discussions were followed by a visit and exchange with scholars from Peking University’s widely respected School of International Studies.

The scholars shared analysis of the current state of the North Korean nuclear negotiations, as well as evaluating the outcome of Chinese Premier Wen Jibao’s visit that week to Japan. Over dinner with CRF Vice Chairman Ding Kuisong, the conversation turned to the American presidential politics and the future direction of U.S. foreign policy.

Professors Blacker, Shin, and Oi also met with senior officials of Peking University, as part of an ongoing dialogue about cooperation between these two premier institutions of higher education.

 

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In this session of the Shorenstein APARC Corporate Affiliate Visiting Fellows Research Presentations, the following will be presented:

Mari Ichinomoto, "The Method for Attracting Semiconductor Industries with Fabless Policies in Japan"

Recently most local governments in Japan are exploring overseas firms who have interests to expand their business in Japan. But now other Asian countries are becoming tougher competitors. What can the local governments do to achieve their mission? Is there a good way to compete against other countries in order to achieve their goal?

Takao Isozaki, "Organization Change - Preparation for DBJ's Privatization"

The Development Bank of Japan (DBJ), one of the Japanese governmental financial institutions, will be fully privatized for 5 to 7 years. Isozaki’s research examines what kind of aspects DBJ's workers should take into account as preparation for its privatization process.

Hisashi Kanazashi, "Comparison and Analysis of US-Japan Policies for Innovation"

After catching up with developed countries and experiencing the collapse of the bubble economy, Japan has struggled to recover. The key word during the struggle was “innovation”, and the Japanese government has pushed many reforms to encourage it. However, is the reform for innovation in Japan sufficient? The goal of Kanazashi’s research is to examine it by analyzing the recent trend of start-ups and comparing policies in the United States and in Japan.

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Corporate Affiliate Visiting Fellow
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Mari Ichinomoto is a corporate affiliate visiting fellow at Shorenstein APARC for 2007-08 and 2008-09. She is also an official of the Industrial Recruitment and Location Division, Kumamoto Prefectural Government in Japan, with a mission to promote overseas direct investment into the country. Prior to this position, she was sent to Kumamoto trade promotion office in Singapore as a representative of the Kumamoto Prefectural Government dealing with trade promotion between Asia and Kumamoto. She graduated in foreign studies from Kitakyushu University.

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Mari Ichinomoto Corporate Affiliate Visiting Fellow, Kumamoto Prefecture Speaker
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Takao Isozaki is a corporate affiliate visiting fellow at Shorenstein APARC for 2007-08. Prior to joining Shorenstein APARC, he worked at the Development Bank of Japan (DBJ) for seventeen years. Isozaki's experiences at DBJ included policy-based financing, finance planning and coordination, and human resources management. He was also assigned for a time at the Ministry of Economy, Trade & Industry.

Isozaki's latest position at the DBJ was as director in the credit analysis department. he completed his undergraduate studies in law at Tokyo University.

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Takao Isozaki Corporate Affiliate Visiting Fellow, Development Bank of Japan Speaker
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Corporate Affiliate Visiting Fellow
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Hisashi Kanazashi is a corporate affiliate visiting fellow at Shorenstein APARC for 2007-08. Prior to joining Shorenstein APARC, he held positions at the Ministry of Economy, Trade and Industry (METI), government of Japan, for about ten years, where he took charge of policymaking. His latest position at METI was as deputy directory in Small and Medium Enterprise Agency. He did his undergraduate study at Tokyo University, in the faculty of Engineering Science.

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Hisashi Kanazashi Corporate Affiliate Visiting Fellow, Ministry of Economy, Trade & Industry, Japan Speaker
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In this session of Shorenstein APARC Corporate Affiliate Visiting Fellows Research Presentations, the following will be presented:

Soichi Yushina, "The Role of Intellectual Property in the Innovation System"

Some Japanese working in the intellectual property field believe that in Silicon Valley (1) worker mobility is very fast and (2) trade secret is not protected sufficiently. Yushina’s research will try to answer if this is true or a myth?

Xuteng Hu, "Corporate Governance of China's Overseas Listed State-Controlled Companies"

Corporate governance is always the most complicated and difficult issue in both theoretical research and practical management of modern companies in the world. Corporate governance has become a hot issue in economic community, especially after Enron's bankruptcy. Hu's research focuses on the corporate governance of these companies and their operation, taking into account the rules on their relationship with parent companies, appointment of executives, formation of board of directors and supervisor board, information disclosure, and protection of medium and small investors' interests.

Noriaki Komori, "Key Success Factors for Online Commerce"

Amazon.com is the largest pure-online commerce company. In researching what the key success factors are, Komori describes their customer centric culture and technology to develop their system.

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Soichi Yushina is a corporate affiliate visiting fellow at Shorenstein APARC for 2007-2008.

Yushina joined Japan Patent Office (JPO), government of Japan in 1993 and has been specializing in Intellectual Property (IP) field since then. At JPO, Yushina built his expertise as patent examiner through examination of vast number of applications in chemical field. He has experience in policymaking, law reforming and other legislative works. In 2001, he had assignment at Ministry of Economy, Trade and Industry, where he took part in developing National IP Strategy and IP-related law reforming. In 2004, he was assigned to a position at National Center for Industrial Property Information and Training, where he contributed to development of human resource program in the IP field. His last post was deputy director of Examination Promotion Office in JPO. Yushina received his BS and MS in Engineering of applied chemistry from Sophia University.

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Soichi Yushina Corporate Affiliate Visiting Fellow, Japan Patent Office Speaker
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Dr. Xuteng Hu is a corporate affiliate visiting fellow at Shorenstein APARC for 2007-08. He is also currently the vice president of Petrochemical Research Institute, PetroChina.

Dr. Hu has been studying in Tsinghua University for nine years, majoring in Chemical Engineering. He also received a dual baccalaureate in Mathematics. After receiving his Ph.D., he joined the China National Petroleum Corporation (CNPC). As a main executant of CNPC, he took part in the reorganization of China's petroleum and petrochemical industries between CNPC and SINOPEC in 1998.

Additionally, as PetroChina was established in 1999, he was chosen to participate in the IPO of PetroChina. He was the main constitutor in planning Chemicals & Marketing Business, which is one of the four main businesses of PetroChina. Following this, he was appointed the president assistant of Fushun Petrochemical Company in 2001. In 2003, he was promoted to his present position in charge of constructing the R&D system of Refining & Chemicals. Presently, he is also the deputy secretary-general and executive member of the council of Chemical Industry and Engineering Society of China (CIESC) and the deputy director of natural gas committee of the Chinese Petroleum Society (CPS).

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Xuteng Hu Corporate Affiliate Visiting Fellow, PetroChina Company Speaker
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Corporate Affiliate Visiting Fellow
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Noriaki Komori is a corporate affiliate visiting fellow at Shorenstein APARC for 2007-08. Prior to joining Shorenstein APARC, he has been with Sumitomo Corporation for twelve years. He currently serves as a person in charge for marketing for an online commerce web site. Komori completed his undergraduate study at Kobe University where he majored in Electrical and Electronics Engineering.

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Noriaki Komori Corporate Affiliate Visiting Fellow, Sumitomo Corporation Speaker
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Venture capitalist, attorney and educator Michael Korver opened SPRIE's spring seminar series on new post-bubble patterns of entrepreneurship in Japan. Korver, a managing partner in Japan's Global Venture Capital, spoke on how he has seen venture capital evolve there in light of his own firm's experiences.

Korver argued that despite a number of problems surrounding the venture capital situation in Japan--a surplus of capital overwhelmingly from large entities in the financial services sector, low perceptions of entrepreneurial activity, and a lack of "high growth expectation" entrepreneurial activity--Tokyo offers a number of advantages to entrepreneurs, perhaps the most significant being Japan's early-adopter, high-consumption domestic market.

"Tokyo is... the perfect incubator for new businesses, ...but the Japanese leaders do not understand that the future of Japan... is absolutely dependent on creating entrepreneurial innovation."
-Michael Korver

He conceded that things have gotten worse since 2006: the backlash from the Livedoor/Takafumi Horie scandal and the resulting drop in the stock market, a 20% withholding tax on investment in Japan from foreign sources and the Ministry of Finance's regulation of industries that use limited partnerships like the venture capital industry have all added up to a drying-up of VC investments and a drop in IPOs in Japan.

Nonetheless, Korver will continue to have Tokyo as his base of operations. "Tokyo is... the perfect incubator for new businesses, ...but the Japanese leaders do not understand that the future of Japan... is absolutely dependent on creating entrepreneurial innovation."

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After the end of the bubble economy in Japan in the early 1990s, policymakers legislated an ambitious program to reform corporate governance, finance, and education. One aim was to improve the climate for fostering successful start-ups.

The Stanford Program on Regions of Innovation and Entrepreneurship's spring seminar series will focus on the efficacy of these reforms and ask the question: Is a new habitat for entrepreneurship and innovation being created in Japan?

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About the talk
Japan is at a critical turning point in 2008, with two opposing groups and views. One is the view that Japan, with its current social, political and economic system, will have difficulty renewing itself, while the other view is that the past success formula of a closed corporate innovation system supported by engineers and "hardware driven" technology is still viable.

With the accelerating pace of globalization and ICT, what will become of Japan, its private sector and public sector? Will its once-leading clean and green technologies survive and make an impact on the resolution of global issues? What are the potential areas for collaboration with the innovative and dynamic Silicon Valley?

About the speaker
As professor of business strategy and innovation at the Graduate School of International Corporate Strategy at Hitotsubashi University, Dr. Yoko Ishikura teaches the Competitiveness and Problem Solving courses, is responsible for the Executive Opinion Survey in Japan for the Global Competitiveness Report of the World Economic Forum, and is a member of the Council for Science & Technology Policy at the Japanese Cabinet Office.

She was a board member of Japan Post and Vodafone KK and is currently a member of the board at Mitsui OSK Lines and the advisory board of All Nippon Airways and is a frequent speaker/moderator at various international forums and seminars, including the Global Innovation Ecosystem Conference, the World Economic Forum and the World Knowledge Forum, among others.

She received an MBA from the Darden School, University of Virginia and DBA from Harvard Business School. She worked at McKinsey Inc. Japan in the late 1980s. Her “Act Globally, Think Locally” was one of the breakthrough ideas for 2007 in the Harvard Business Review.

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Yoko Ishikura Professor Speaker Hitotsubashi University
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Kicking off SPRIE's seminar series on the emerging environment for entrepreneurship in Japan, this presentation will focus on the changing pattern of venture capital (VC) investments there. Michael Korver will address issues related to venture capital, entrepreneurship and innovation in Japan in the context of the experiences of Global Venture Capital and its partners during the last twelve years.

Recently, Japan has seen a rapid evolution of financing for new firms, including rapid changes to its VC industry. Mr. Korver's firm is in the vanguard of that evolution. He will discuss aspects of Japanese VC companies from their earliest inception to the latest trends--from bank subsidiaries to independent funds--and he will share his observations about entrepreneurial startups in Japan.

About the speaker

Michael Korver is a co-founding partner of Global Venture Capital (GVC). He was born and raised in Tokyo and first developed his insider's perspective on Asian business from his experience as an analyst at the Nomura Research Institute in Tokyo from 1983 until 1986, and as an international transactions lawyer with Richards & O'Neil in New York and Tokyo from 1987 until 1993.

Since 1993 Korver has worked as an international business consultant, corporate lawyer, venture capitalist and entrepreneur in Tokyo. He has founded or co-founded several companies and has served on the boards of a number of them. From 1999 until 2002 he was in charge of legal and business affairs at The News Corporation Limited Japan, the Japanese operations of the international media conglomerate. Korver currently serves as professor in the MBA program at the Graduate School of International Corporate Strategy of Hitotsubashi University where he teaches courses in entrepreneurship and venture capital.

Korver received the BA, the MA in Economics and the JD all from the University of California at Berkeley. He is licensed to practice law in the States of New York and California.

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Michael Korver Managing Partner Speaker Global Venture Capital
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