Qi Lu Joins Baidu: The End of the Myth of the Chinese Tech Executive in America

Tang Jun, Kai-Fu Lee, Ya-Qin Zhang, Qi Lu — one by one, the ethnic Chinese executives who were once fixtures in the media have all joined Chinese companies.

Another Chinese tech legend who built a career in the United States has come home.

At Baidu Group's press briefing this Wednesday, Qi Lu sat side by side with Robin Li to take questions from reporters. Li said all of Baidu's businesses would now be in Lu's hands, while he himself would handle strategy, company culture, and talent.

Lu's title at Baidu is Group President and Chief Operating Officer, reporting directly to Group CEO Robin Li. Every other business head at Baidu now reports to Lu.

Last September, Lu, who at the time ran Office and Bing, resigned citing health reasons. Reports followed one after another that he would join Uber as CTO, or join Tencent to run AI and maps; Didi was said to have called him too.

Now the matter is settled. Lu, who once ran one of the four big business groups inside a Microsoft worth nearly $500 billion, has chosen to become the No. 2 at Baidu, a company worth $60 billion. If Li does what he says he will do and steps back from day-to-day management, Lu will be the man actually running Baidu.

With that, the story of Chinese managers making their careers inside America's tech giants — a story that began in the 1990s — has been told to the end.

The first of them to become famous was Tang Jun, the "emperor of hired executives." He rose to president of Microsoft China in 2002 and left two years later. Tang wrote several self-help books, citing Microsoft awards that did not exist, and faded from public view after a scandal broke over his fabricated academic credentials.

Next came the "mentor to the young," Kai-Fu Lee, who went from Microsoft to Google, then left Google to found Sinovation Ventures. He too published a string of self-help books, and he is still active today.

After him came Lee's successor, Ya-Qin Zhang, who joined Baidu in 2014 and was the company's No. 2 before its 2015 reorganization. Zhang wrote fewer books than the other two.

Qi Lu is not like any of them. He has never written a book about success and has no active Weibo account. He first made his name managing engineering teams at Yahoo, where he worked on Hadoop, a major big-data tool. In eight years at Microsoft he reported to the CEO the whole time, which makes him the most successful ethnic Chinese executive any American tech company has had.

Of all these Chinese executives who became public names, every one but Harry Shum, the other Microsoft executive, has gone back to a Chinese company.

No One Could Get Around Microsoft

Microsoft is probably the tech company the Chinese met earliest and knew best.

China opened to the outside world in earnest in the 1990s, just as Microsoft entered its most glorious years. Windows 95 let people who could not make sense of line after line of commands on a screen learn to use a computer much faster. Personal computers, exactly as Microsoft had imagined at its founding, moved into every home and every office. For a while, "computer" meant a machine running Windows and Office.

In 2000, Microsoft became the world's most valuable company, worth $530 billion, and its founder, Bill Gates, had already become the youngest man ever to top the world's rich list, back in 1994.

Today's Gates is an elderly philanthropist with his mind on Asia, Africa, and Latin America, guest-editing a magazine now and then, publishing book lists, warning about the threat of artificial intelligence. Twenty years ago he was probably the hardest-nosed businessman in the world. In internal meetings his stock line was "that's the dumbest idea I've ever heard," and his marketing strategy toward the outside world was called FUD — fear, uncertainty, and doubt.

Twenty years ago Microsoft really was an empire, and its rivals were afraid of it. Yahoo went into the internet business partly because it did not want to compete with Microsoft, and Nokia put together the Symbian alliance to challenge Microsoft — and even so, its CEO, Jorma Ollila, had to call Gates himself to smooth things over.

None of that image reached China at the time. In China, Gates was mostly "the world's youngest richest man," a myth about money. The stories that ran again and again in the back pages of newspapers went like this: Gates earns $250 a second, so if he dropped $100 he would not bother to pick it up; turn all of Gates's money into one-dollar coins, lay them end to end between the Earth and the Moon, and you could make the trip and come back 14 times...

After Microsoft China was set up in 1995, its managers became part of that money myth too. It was a pure marketing and sales operation, there to sell products developed in the United States.

Because it could never solve the piracy problem, Microsoft China did badly. Its revenue in 2001 was still less than 1% of Microsoft's worldwide total.

When a sales arm cannot make money, the people running it get replaced, so Microsoft China went through presidents quickly. That did not stop the press from calling each new one an "emperor of hired executives" or an "empress of hired executives." Tang Jun, Du Jiabin, and Gao Qunyao all carried the title.

The most famous of them was still Tang Jun. The absurd stories he told, and the media passed on, are too many to count. He said his own idea, "Make Others Great," had become one of Microsoft's seven acknowledged core values, and that Gates created a new job just to keep him, putting him in charge of four markets: China, India, Brazil, and Russia.

By Kai-Fu Lee's account, Tang's actual rank in office was four levels below Corporate Vice President (CVP), the lowest of Microsoft's vice-president grades.

Microsoft's vice-president ranks were tangled. Before 2011, the titles outsiders could even see ran to three levels: Executive Vice President (EVP), Senior Vice President (SVP), and Corporate Vice President (CVP). Outsiders had a hard time working out what was what. The China operation made it worse by calling whoever ran it a "senior vice president" in its own publicity.

In February 2004, Sohu's special news page on Tang Jun leaving Microsoft for Shanda still carried these two poll questions:

1. Do you think Tang Jun's resignation is a loss for Microsoft? (Yes / No)

2. Why did Tang Jun take the job as Shanda's CEO? (He has management experience at multinational companies / He knows the software and gaming industries well / He is bullish on the future of online gaming)

Even after the fake-credentials scandal broke, Tang Jun was still saying that "if you can fool everyone, that is success."

But the myth attached to the job of Microsoft China president did not outlast Tang Jun. What replaced it was Microsoft Research Asia. From then on, attention at home shifted to the career ceiling facing Chinese executives inside American tech companies.

Microsoft Research Asia began as Microsoft Research China. It was the second basic-research institute Microsoft opened outside the United States, the only one in Asia, and the company's largest research operation outside its home country. Its fields included natural user interfaces, machine learning, and visual computing. Much of the later work on Bing and XiaoIce was done in China.

The first head of Microsoft Research Asia was Kai-Fu Lee. What made him famous was that Google hired him away to build Google China, and Microsoft sued him. That was one of the worst stretches of the Microsoft-Google feud. Steve Ballmer had already sworn and thrown a chair in a conference room on learning that a subordinate had left for Google. When Lee resigned, the anger boiled over and Microsoft went to court.

At Google, Lee spoke often at universities, preaching the company's "don't be evil" motto. A run of public events afterwards — Google's war with Baidu, Google's withdrawal from China — helped fix his standing as the "mentor to the young."

In the second half of 2009, Lee left Google China, took some staff with him, and founded Sinovation Ventures, in time for the boom in Chinese internet investment. Sinovation missed the hottest startups of the era — it never incubated $10 billion companies the way Y Combinator, the Silicon Valley outfit it was modeled on, incubated Airbnb, Dropbox, and Stripe — but it did incubate a series of mid-sized startups, Zhihu and Wandoujia among them.

While these two legendary executives were making their names, Gates picked up a number of quotations of doubtful authenticity. Kai-Fu Lee said, for one, that he urged Gates in 2002 to buy Google and was turned down, and passed on a line in which Gates said Microsoft had been "f**ked by the Chinese government". Gates later denied saying anything of the kind.

The man who took over from Kai-Fu Lee as head of Microsoft Research Asia was Ya-Qin Zhang. This young executive, out of the gifted-youth program at the University of Science and Technology of China, later spent a stretch in Microsoft's global business, working on the Windows CE project. But contrary to the public résumé that called him the man in charge, Microsoft's own press releases said Windows CE was run by a more senior executive, Pieter Knook.

In 2006, Zhang came back to China to set up the Microsoft Asia-Pacific R&D Group, and Microsoft Research Asia, where he had worked before, became part of it.

Zhang never wrote a book about success himself. He only lent his name, alongside one of Microsoft's technical evangelists, to a book about cloud computing. Chapter titles like "The Rise of the Cloud and China's Opportunity" and "The Cloud Revolution Creates a New Miracle for China's Economy" make it plain enough that the book was mostly there to help government relations as Microsoft's cloud business entered China.

In 2014, Zhang joined Baidu. Search "Ya-Qin Zhang + ethnic Chinese" today and you can still turn up plenty of pieces from 2014 with headlines like Why Did Ya-Qin Zhang, Microsoft's Most Influential Chinese Executive, Leave?, Ya-Qin Zhang: Microsoft's First Chinese Global Vice President, and Microsoft's Highest-Ranking Chinese Executive Jumps to Baidu... By then, of course, two Chinese executives at Microsoft already outranked him.

The last legend to come out of Microsoft Research Asia was its third director, Harry Shum, who took over in 2004. Shum also entered university at 13, went on to a doctorate in engineering in the United States, and became an IEEE Fellow early. After Satya Nadella took over in 2013, Shum was promoted to Executive Vice President, took charge of the whole research organization from Craig Mundie, one of Microsoft's early executives, and joined the top leadership.

Neither Shum nor Lu ever put out a book about success or a memoir, and neither is likely to be as well known in China as the three before them. But both reached Microsoft's core leadership, with only the CEO above them.

The change came in 2016.

Last September, Microsoft set up an artificial-intelligence division under Shum. Lu announced his departure at the same time, and his replacement was an executive of Indian descent.

We do not know how the two things are connected. But Lu was very interested in XiaoIce, Microsoft's in-house AI project, and he hosted the launch of XiaoIce 3.0 in Beijing himself. At the briefing this week announcing his move to Baidu, Lu said AI would be his focus from here on.

In the End, the Ones Doing Best at America's Big Tech Companies Seem to Be Indians

In 2013, when Ballmer left early and Microsoft had to choose a CEO, it chose Satya Nadella, who grew up in India and came to the United States after finishing his undergraduate degree.

Bing was later folded into the Office division, the most profitable part of Microsoft. Lu ran that as well, but there was no higher job left for him at Microsoft.

As Nadella and Sundar Pichai took over as CEOs of Microsoft and Google one after the other, commentators and the general public came around to a common view: at America's big companies, Indians do better and produce more CEOs.

Take Nadella and Pichai specifically, and each really was the better CEO choice for Microsoft and Google at the time.

Pichai started with Chrome and then genuinely folded Android — until then a separate thing, apart from the other divisions in culture and structure — into Google.

Nadella took over the cloud business in 2011 and made it grow fast. Once he became Microsoft's CEO he had a clear aim: make cloud computing the strategic core of Microsoft and stop pushing the value of the operating system.

That made Microsoft the competitor closest to Amazon in cloud-computing results.

Step outside tech and Indian CEOs really are more common in America — more common even than Europeans.

In 2011, TIME magazine noted in an article called India's Leading Export: CEOs that among the 500 companies then in the S&P 500 index, Indians were the largest group of CEOs other than Americans.

The same view turned up in headlines at The Wall Street Journal and Bloomberg: Why So Many Indians Succeed in America, Why Microsoft and Everyone Else Loves Indian CEOs

Rajeev Suri at Nokia, Shantanu Narayen at Adobe, Ajaypal Singh Banga at Mastercard, Indra Nooyi at PepsiCo... the CEOs of these well-known companies are Indian too.

Another report, published in 2015 by APEX Recruiter, found that 75 of America's 500 largest companies had a CEO who was a foreign national or of foreign descent. Of those 75, the largest group was Indian, followed by British and Canadian. Hong Kong and Taiwan had one CEO each. No one from mainland China made the list.

Among the ten most valuable companies in the world today, it is the same picture: white executives control most of them, and there are more executives of Indian descent than of Chinese descent.

These companies have 109 directors and 118 core executives between them. Three of the directors are of Indian descent and one is of Chinese descent — that one is Andrea Jung, chair of Apple's compensation committee, who was born and raised in Canada. Among the core executives, four are of Indian descent and one is of Chinese descent: Harry Shum.

More a Result of Foreign Companies' Decline in China

The Financial Times, the British paper, argues that Indian immigrants in America are numerous, well educated, and fluent in English. Having all three at once gives Indians an advantage over other immigrant groups.

According to 2013 figures from the US Department of Labor, 76% of employed Indian Americans aged 25 and over held a college degree, against 56.8% of Chinese Americans.

So Indians have done well in American corporate life. The 2014 US census found that Indian Americans earned an average of $91,195 a year, above the $84,300 for Chinese Americans and nearly double the $50,740 for white Americans.

That Indians have more often risen to prominence in tech has a lot to do with the first engineers among them who moved to California years ago. Microsoft's CEO, Nadella, is a first-generation Indian immigrant himself.

Citing Kauffman Foundation data, the Financial Times argues that Indians began to establish themselves in Silicon Valley and at West Coast tech companies from the 1980s, when the first wave of foreign elites with engineering degrees from famous universities arrived in America.

Later, between 2006 and 2012, roughly 4 in every 10 companies in Silicon Valley had a founder or co-founder who was an immigrant. Of the companies immigrants founded, about a third were started by Indians. The next-largest group was Chinese, at 5%.

The other side of it is that the opportunities open to Chinese tech workers in China are far better than what Indian tech workers can find in India, or even by staying in America.

The Wall Street Journal reported that by 2014, pay for director-level management jobs in China had reached $131,000 a year — nearly the same as Japan and four times India. A separate survey of tech companies by the HR consultancy Aon Hewitt found that Chinese companies paid only about a fifth less than the American average.

Without having to get over a language or a culture, Chinese tech workers can already make plenty of money in the Chinese market and build a product that reaches hundreds of millions of people.

Beyond pay and jobs, China's tech industry has taken a different road from the rest of the world. American internet companies can win almost any market on earth and still cannot get into China. At the same time, the internet companies that succeeded in the Chinese market — Tencent, Alibaba, and Baidu among them — have not managed to get their products into markets abroad either.

In recent years, growth by foreign companies in China's overall business-investment climate has slowed.

According to China's Ministry of Commerce, foreign investment actually used by China has fallen in stages since its 2008 high. Year-on-year growth in the past three years was only 5.19%, 1.7%, and 5.61%.

Uber was already very successful, and it ran far more efficiently in China than Google China did in its day, yet it too left the Chinese market in the end. The only American tech giant still growing in China is Apple, and nearly all of its research and development happens in Silicon Valley. Young people today find it harder than they did one or two decades ago to get their hands on products from overseas tech companies, internet services above all.

Foreign firms are also no longer the first choice for most Chinese university graduates.

Only three of the top ten on Zhaopin's 2016 list of the companies students watch most closely were foreign. And its five best employers of the year, in order, were Tencent, China Merchants Bank, BMW China, Alibaba, and China Life Insurance. Only BMW was foreign.

Even the heroes of the inspirational stuff in airport bookstores and in the "100,000+ views" articles passed around on Moments have changed, from Warren Buffett and Bill Gates to Jack Ma, Allen Zhang, and Lei Jun.

Cover image credit: Wikipedia, cheekr, Wired