01 Apr 2001
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Ed Tian: Boardroom Revolutionary

by Alejandro Reyes

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At first glance, not many would figure the bookish president and CEO of telecommunications carrier China Netcom Corporation for a revolutionary. But Edward Tian Suning is certainly making waves as head of one of the country’s new brand of state-owned enterprises (SOE). The company aims to build a nationwide high-speed, high-capacity fiber-optic network covering fifteen coastal cities and over 80 percent of the domestic data services market. With backing from shareholders, including the Ministry of Railways (fiber is being run along rail lines), the Chinese Academy of Sciences, and the Shanghai municipal government, Netcom is putting up a stiff challenge to three other government-controlled telecom network operators.

Tian, who holds a doctorate in environmental management from Texas Tech University, is bringing a new dynamism to his boardroom. He runs this fledgling SOE like a private company. “There is a clear distinction between the board of directors and the management team,” explains Tian. “I have the right to hire and fire people. I’ve hired about twelve hundred employees so far but none of them on instructions from my shareholders. I make most of the management decisions myself. That sounds very simple, but it’s actually very difficult to do in China.” In addition, the top executives have a stake in the venture through stock options — another innovation. “That’s a very significant step for a Chinese state enterprise.”

Because telecommunications is considered a strategic industry, the state entities are unlikely to sell off their shares in the near term. But Netcom could go for a listing on the stock market eventually. “We need the government’s support,” says Tian. “We want to wire the entire country, and it would be hard to do that without a strong official mandate.” He reveals that with the fiber installed in the eighteen months since Netcom was launched, shareholder value has multiplied sixfold to $2.5 billion. “China’s Internet population will grow to several hundred million in the next five to ten years. We have the opportunity to build a truly broadband network — not just the backbone, but the access, too. The Internet right now runs too slowly, which is why building a new infrastructure is so critical.”

That mission won’t be easy. For one thing, innovative and entrepreneurial business leaders like Tian are still scarce in China. “We don’t have to worry about engineering talent,” he says. “Our challenge is management.” That’s one reason why the Beijing-born CEO serves on the advisory board of the HBS Asia-Pacific Research Center. Tian has also participated in two case studies — one on Netcom and the other on AsiaInfo Holdings, China’s first Internet company, which he set up in 1993. Tian says he relishes his HBS connections. “I want to be involved so we can train a lot of people to help finish our economic revolution.”

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