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Hennessy ponders the local and the global

Stanford conference draws scholars and executives, including China's richest man

When Stanford University opened its doors 120 years ago, "there were not enough qualified high school students in the state of California to fill the then-two universities -- Berkeley and Stanford," Stanford President John Hennessy said Friday (Dec. 10).

Oh, how times have changed.

In remarks kicking off a Stanford conference about competitiveness and sustainability, Hennessy reflected on local history, and its global consequences.

Speaking to Chinese and American business leaders and scholars -- including China's richest man Zong Qinghou -- he pondered Stanford's past as a horse farm and said "every startup in the Valley" now thinks globally from its earliest days.

When Hennessy came to Stanford in 1977, "You could drive down El Camino Real and still see fruit orchards," he said.

"The corporate location of Google was a family farm run by a group of Japanese-Americans who had immigrated here."

Not many years later, a chip company Hennessy co-founded here "is entirely global" -- with engineering in China, Taiwan and India; manufacturing primarily in China and Taiwan; direct customers mainly in China and secondary customers -- including Cisco, Dell, and HP -- across the globe.

"This is the future," he said.

Beverage company chairman Zong Qinghou -- named China's richest man by Forbes this year -- said he tries to keep "a half step ahead" of competitors in his soft drink, bottled water and fruit drink business, the largest in China.

"Now I mix milk with fruit and put in vitamins, so you can drink this beverage for breakfast. It tastes very good, so I'm ahead of competitors -- even some American companies," said Zong, founder and chairman of Hangzhou Wahaha Group.

"They try to catch up but they don't know my recipe.

"You don't need to be too far ahead of them -- just a half a step. If you're too ahead of others, you probably will fail."

Zong, who said he has built factories in poor areas of China to boost local economies, said sustainable development demands "everybody's wisdom, effort and dialogue."

Chinese labor costs are no longer low enough to give companies there a competitive edge, so companies must focus on "higher-value sectors," said Liang Qichun, head of branding for consumer electronics company TCL.

Following a string of suicides at Chinese electronics manufacturer and Apple Inc. supplier Foxconn, "the local government has forced all companies, including us, to increase the minimum labor wage by 20 percent to 25 percent, and this is only the start," Liang said.

"We clearly understand that (labor) cost is no longer the key competitive edge. To succeed in the global market we have to be more innovative," he said.

The world's fifth-largest color TV manufacturer, TCL aspires to move from the motto "Made in China" to "Created in China," he said.

TCL has paid increasing attention to environmentally friendly products such as high-efficiency air conditioners and LCD televisions with natural light technology, Liang said.

It has established "large-scale appliance recycling facilities in Tianjin and Huizhou" and, in the future, expects to "bring back used home appliances from Europe, the U.S. and other countries for recycling."

Business will be the most important sector in achieving sustainability around the globe, said Barton H. "Buzz" Thompson, director of Stanford's Woods Institute for the Environment.

The Woods Institute has forged a cross-disciplinary approach within Stanford to develop solutions such as "green chemicals" that function like other chemicals but without the environmental harm; new water technologies that recycle water for urban re-use while also producing more energy than the reclamation technique uses; and new tools to better predict water shortages, Thompson said.

The institute has numerous partnerships in China on projects such as working toward a national forest conservation system; researching the impact of climate change on Chinese agriculture and trying to better understand water reliability and sustainability in China, he said.

New international environmental standards, such as REACH in the European Union or the Equator Principles in the banking sector, pose challenges for business leadership, said James O. Leckie, director of Stanford's Center for Sustainable Development & Global Competitiveness.

"Today we see a trend of the most competitive and successful global corporations embracing sustainable development, even finding ways to incorporate it in their business models," Leckie said.

The center co-sponsored Friday's conference along with the information technology research company International Data Group.

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