 Welcome to Think Tech Hawaii's Law Across the Sea program. My name is Mark Schlaufe, and I am the host of Law Across the Sea. Today my Law Across the Sea program is titled Beyond the Great Wall, and my guests are Larry Foster and Russell Liu. Both Larry and Russell have lived and worked and traveled in the People's Republic of China for many years. While also maintaining their personal and professional ties to Hawaii, both are lawyers. Larry is the former dean of William S. Richardson School of Law, where he still teaches law. Russell practices law in Hawaii and the U.S. In 2007, both Larry and Russell were living and working in the People's Republic of China, and we collaborated on an article titled Behind the Great Wall, which appeared in the Hawaii Bar Journal. China was mysterious in developing at that time. In our article for the Hawaii Bar Journal, we discussed Larry's and Russell's personal and professional lives in China, what it's like to be a foreigner and lawyer living and working in China. The relationships between the people of the United States and China, Hawaii's role in those relationships and China's future. More than 10 years later, we've got together again to continue that discussion. Gentlemen, welcome. Good to see you both. Welcome. Glad to be here, Mark. Here's the Hawaii Bar Journal article, or the book that contained the article. You guys look the same 10 years later. What has changed in your lives? Larry, what has changed with respect to China in your lives? Where are you now with China? Well, I have a, if you want a different relationship with China now, I'm no longer living there. My wife and I lived in China until 2013 when we moved back to Hawaii. In Shanghai, is where you live now? In Shanghai. And then still go back at least once a year to China to see friends and do some activities there. And any work in China or with respect to China? Yes, so the work I'm doing now in China, most recently, just actually the last year and a half or so, I've been doing training programs in China for Chinese lawyers. I do a day-long program on legal reasoning and writing and a day-long program on fundamentals of contract drafting. OK. Russell, what about you? Well, I'm still in China. I'm just 15 years going strong. As you know, I live there most of the time, full-time. I teach law, but I also work in Beijing and practice law. And I actually are doing more work for Chinese clients that are going outbound, outside making investments around the world. And I see that that's an area that's growing. I'm also seeing that with the middle class in China, there's new opportunities for American lawyers, entertainment, media law, which I'm getting involved into. And now I'm affiliated with the law firm with their office in Minneapolis, Minnesota. Well, what's the law firm? It's called Kingsfield Law. And the lawyers are actually really not, in a sense, always have a global perspective and experiences around the world. So it's a very niche in that area in technology. So you still practice and you still live a lot of your time in China? I still practice and live in China. And the reason why is you have to be there if you're going to still practice the law. The culture is still a mystery at many times, learning the culture. It's a thousand-thousand-year-old culture. And it's so important for me to be there. OK. Now, in the 10 years since we collaborated on that article, you were in Shanghai, that's your base, Beijing, Larry. What's changed in the Shanghai and China? And I'll ask you the same question about Beijing and China in a minute. Yeah. I'll start off primarily with Shanghai. One of the things that marks China is rapid change. So the Shanghai, well, let me back up a bit. My wife and I have been going to China, or to mainland China. Myself since the early 80s, my wife in 1978. So we've seen dramatic changes in China over the decades. But just in the time that we were in Shanghai, I think we moved out there in around 2006, came back in 2013, roughly an 80-year period, dramatic changes in Shanghai. One example on the infrastructure, when we arrived in Shanghai, they were just opening the second subway line, line number two. By the time we left, they were constructing lines 17, 18, and 19. So just amazing infrastructure. The new buildings, office towers, condominiums, all of this stuff, high-speed rail. Just astonishing infrastructure projects taking place in China. And has that continued till today? Or is it slowing down? It really continues. They've, all the major cities in China are big on infrastructure projects, primarily funded through the national government. But subways, the linking up of the country by high-speed rail is astonishing. It used to be you could take an overnight train from Shanghai to Beijing. It would take nine, 10 hours. Now it's four and a half hours to do. So yeah, it's just, it's amazing, the transformation. My own thought was all the architectural changes in Shanghai, especially across the river, where they're just building tremendous towers and that type of thing. Russell, Beijing. Is the changes or the same, the same growth? What's going on? I think, I quote Larry's comments because the changes in Beijing are still astounding. I'm seeing a Beijing proper really expanding. Some of the rural areas now are part of the city. And when I was first there, they had two or three lines. Now we've got like 20 lines. It's the largest subway in the world. Beijing has overtaken New York in many of the places. Really? It's the largest subway. They're building also subways that are extending because Beijing is actually the land size is expanding because the Olympics, Summer Olympics in a few years. So they're moving a lot of businesses outward from the city. And people are moving outward because the subways are fantastic. For example, when I first arrived there, they had the three-ring row. Now they're up to six, seven. And the travel time, if you took a bus from the third-ring road where I used to live to the other side of town would take you to an after three hours. That's within the metropolitan area of what's called Beijing. And so the old metropolitan area, so now that only takes me over 40 minutes by subway. So a lot of changes to the infrastructure. So what I'm hearing is things haven't changed in the development. Things are still progressing. Is that true for China in general, both of you? Absolutely. Yeah. Across the country. In fact, I'm waiting to catch the high-speed train. They're supposed to do a linkage from Beijing to go to all of Hong Kong. There's a new route that's supposed to take from Beijing and New York. And doesn't stop at the border. The border is going to come out in Hong Kong. That's where you exit. The Chinese authority. So the economic development, the building, the construction, architecture, that type of thing, it's still going strong 10 years after we first talked about it. And at that time, I think Larry, in our article, you were talking about the optimism and the positive nature and the dynamic nature of the Chinese and being in China. Do you still feel the same way when you go back there or when you live there? Yeah. Things have slowed down a little bit, at least in Shanghai. I'm not sure about Beijing. Part of it has to do with the government there in China. Part of it has to do with it, there's just much less foreign direct investment coming into China. It was the foreign direct investment that drove all of this amazing growth in China. That has slowed down a great deal. So now the projects you see are the result of more, if you will, internal funding as opposed to a foreign direct investment. So that is a change. That's different. Okay. That's a good point. Okay. Russell. Sure. I echo that with Larry's talking about because China made a conscious change. They changed from an economy with low-end manufacturing. Now they're looking to move up the value chain, the supply chain. So it's higher end technology. So I see it in Beijing, the Silicon Valley, or Zheng Lansun. I see a lot of startup companies, a lot of technology is used by everyday people. For example, WeChat, and you pay your money using your phones. You don't carry cash. I carry maybe 200 renminbi just in case anybody never use it. Everything I do is real-time. So as I recall, China was all cash when I was there. That's a change. Yeah, now it's all a phone. It's tremendous because it has brought, I think, a lot of good things to parts of China that would not experience that. For example, if you're in Xinjiang, which is a far northwest, you want to buy something. You can get on your smartphone, you can get on Alibaba's site, and you can order something, and through WeChat, Alipay, you pay it. And because of the development of the logistical system in China, high-speed rail, you'll get it in the next day or two. So it's brought prosperity, I believe, to places other than Beijing. Okay. And that's pretty common within the populace, would you say, or are we only talking within the cities? Or is this... Throughout China, the use of e-commerce, or the use of mobile phones is something that sets China apart. In the United States, we went through hard-line phones and then slowly get into cell phones and stuff like that. China today, the last figure I saw, was almost 900 million internet users in China. So that's way more than half the population are using their phones as cash to purchase items online. E-commerce is huge in China. Just to add to that, for example, the biggest day in China is put on Alibaba, the retail e-commerce. It's called November 11, 1111, singles day. And on that day in 24-hour period, everything is done through e-commerce and to their site. And they raked in last year $25.3 billion in that 24-hour period, more than Amazon and eBay could do in a year. So it's tremendous e-commerce. So as you can see, it changes in society. The everyday people have changed. Okay. Now, I want to ask you one thing that maybe... I'm not sure if it has changed. How about the air pollution? I mean, when I was there with Larry 10 years ago, I think you had some sort of an app or something that could tell you what the air pollution was. Air quality. Air quality. Please, excuse me. AQI. AQI. AQI. Quality index. Yes. China talked a lot about curing that. What's happened? So they've actually made some improvements on that. And there have been a number of studies that have been done on that. And it's an ongoing process. It's huge and expensive, as we know in the U.S., to do this. But by and large, the air quality is getting better now. And Shanghai. Shanghai, Beijing, a lot of other places. I'll talk about Beijing. Yeah. I had to. Because everybody talks about Beijing. Yeah. To the credit, really, of the Chinese government, it has changed. It's gotten better. And a couple, five years ago, I went to an event, Mayor Garcetti of Los Angeles came out and Jerry Brown, and they're selling the technology to the Chinese for air quality and doing startup joint ventures. And it's amazing because last year, 2017, in October, it was the last coal burning plant in the city that was closed down. And they have a program with huge fines. They actually do inspections. And I live in Beijing, and I'll tell you, it's the first time in all these years I notice a change. In the winter, it's usually the worst time when the pollution would settle in. There were so many great days, skies are blue, you didn't have pollution. But I still carry my mask around, just in case. But I think over time, I think that it's getting better and better. The city is actually expanding out. It's getting better, but environmental issues are still the number one concern of the people in China. OK. So there are paying attention to it and trying to do something. Oh, very, very much so. OK. And when we come back from our break, I want to ask a little bit more about what lives are like for the people there who've been able to notice any changes. So we're going to take a short break, and then we'll come right back. Hey, Stan the Energyman here on Think Tech, Hawaii. And they won't let me do political commentary, so I'm stuck doing energy stuff. But I really like energy stuff. So I'm going to keep on doing it. So join me every Friday on Stan the Energyman at lunchtime, at noon, on my lunch hour. We're going to talk about everything energy, especially if it begins with the word hydrogen. We're going to definitely be talking about it. We'll talk about how we can make Hawaii cleaner, how we can make the world a better place, just basically save the planet. Even Miss America can't even talk about stuff like that anymore. We got it nailed down here. So we'll see you on Friday at noon with Stan the Energyman. Aloha. Aloha. I'm Dave Stevens, host of the Cyber Underground. This is where we discuss everything that relates to computers that just kind of scare you out of your mind. So come join us every week here on thinktechawaii.com, 1 p.m. on Friday afternoons. And then you can go see all our episodes on YouTube. Just look up the Cyber Underground on YouTube. All our shows will show up, and please follow us. We're always giving you current, relevant information to protect you. Keep in you safe. Aloha. We are back with Larry Foster, Russell Liu, and we are going beyond the Great Wall and talking about what's happened in the past 10 years since our first collaboration on Hawaii Bar article concerning China. Gentlemen, all right, we are back. What's life like? What is life like first for Chinese? Has it changed in the past 10 years of things? How are things? Larry. Yeah. So, life of the Chinese, well, the, I can't remember when this ended, but they essentially brought 300 million people out of poverty and created a middle class. And now the plan is to bring another 300 million people out of poverty. So the biggest change in China, in the start of while we were there, was the development of a middle class in China. That's important for an internal economy. You can't rely totally on foreign direct investment. And that's intentional. That's intentional. So, they've been very successful on that side. There's some concern whether or not they can maintain it with the decline in foreign direct investment. There's been some concern about that. So the day-to-day lives of the people are pretty good. There are some major concerns by the people, if you will. And one of those is, I'll call it a government clampdown on what we would consider basic civil liberties. So that is of growing concern to people in China. The internet is getting harder and harder to access. The speeds are much, much slower on the internet these days. The government censorship has increased, Russell maybe can talk about the university side a little bit, that universities are told to stop doing all this western stuff, look inward, don't look outward. Corporations now have to have party members on their board of directors to make decisions that are more party-centered than business-centered. So there's some disturbing things that are taking place right now in China. And that bothers Chinese as well. Oh, absolutely. And so I see it sounds like economics may have improved, but there is a governmental side that says, hey, we're going to be a little stricter, Russell, is that... I can add to that actually, but because I'm there mostly full-time, and I'm in the Chinese world more these days, I think it's always been there where there's a relationship between the government and the citizens. I found, being on the university actually, freedoms are a little different. There's access to Facebook, YouTube, at the university, they don't have that problem. So far. Well, so far, but that so far has been a long far. But it's like this, it's sort of like this, I look at China like this. The U.S. is a 10-lane freeway, China is a 50-lane freeway. So it's a lot of room to maneuver within the lanes, but you can't touch certain areas. There's sensitive topics, the 3Ts, Tibet, Tiananmen, and Taiwan. And when something flares up like the relationship with the U.S. and Taiwan, I think the government becomes more sensitive, how the information is managed. I think what Larry has said has been true for American businesses, there was a change in the cybersecurity law where the government has access into your service. But I think that that's still evolving, a lot of that law is evolving. And I think we see the changes. But again, what I see being there is an ordinary American citizen teaching, working there. I'm sorry, is this a change in the past 10 years? Is this more restrictive than 10 years ago? Larry's nodding, yes. Honestly, for me, I don't feel that impact. I know that I'm there, I know that there is some form of censorship. But I think that what's happening is that as the Internet is there, many Chinese see what's going on outside, they have VPNs, and there's a lot more voices being said over the Internet. So I think the government is sensitive to that because ordinary citizens will see something and they will get on the Internet and they will put comments. And so there's an internal security issue that the government is concerned about. But Larry is saying that's increased. Oh, absolutely. Yeah. It used to be very easy to get a free VPN, virtual private network that allowed you to boycott or bypass the Great Chinese firewall. Now you have to have a very sophisticated program that you have to load if you're traveling in China. You have to load it in the U.S. because you can't download it in China. Within China, they're trying to stamp out all these little smaller virtual public network things. The universities are a bit of an exception. They allow some leeway there. That's interesting. But the general population, no. But they just load their laptop when they're traveling in Europe with a VPN, pay the money and do it. Bypass the restrictions. But even when I'm outside the university, I have a VPN and it works beautifully. I've never, ever had anything shut down. The only time where I see in Beijing where it's more sensitive is, for example, the National People Congress convenes. They are worried about some domestic disturbances. That's when I see the VPN clamp down. But it's funny. But the Chinese, yes, some of the free VPNs are shut down. But it's amazing because my students find VPNs and they still have access to it off campus. And so I don't think you can really root that out. But it's still there. There is access. Okay. What's the deal with the foreign direct investment? That that's something that's changed in the 10 years since we collaborated on this article. Why? What's happened? I think what has happened is that a lot of U.S. companies first started out 80s and 90s to come in, set up operations in China. And remember at that time, the goods that came in to set up, P&G is one of them. A lot of consumer goods, a lot of lower end things, your briefcases, your clothing all made in China. They were made in Guangdong in that region. But what has happened is that the cost of labor has gone up. So there was a shift that was happening already in play. And the second thing I think Larry has reached a good point is that when the emergence of a society that has money, they want nicer things. They want better things. So the business will have to change, you see. So they want smartphones, they want everything what they see other people have around the world. And so it becomes expensive to manufacture. And that, and so the Chinese have now put a conscious effort to get rid of the low end things and say that can go to Southeast Asia. But we're going to keep it up. Vietnam or some places like that. And for direct investment, for example, Apple hires Foxconn and Taiwanese company and they have a huge campus. And on that campus, they have two million workers. And they make everything from iPhones for iPhones. They contract things from HP and 20 different companies. They make things there. So they're trying to do things that are more higher end technology. And that follows what you were saying, Larry, about the economy and the lives of the people. So yes. So as Russell was saying, when U.S. foreign investment was first coming into China, the U.S. companies were coming out there sort of outsourcing. And because they could get projects, products made a lot cheaper in China, shipping back to the U.S. and sell them. With the rise of the middle class, now you have a whole middle class that can buy these goods. So now American companies have shifted dramatically just in the time that we were living in Shanghai to coming into China to develop for China have plants to sell inside China, not to ship back to the U.S. But related to the high technology stuff, too, is that there's a big concern now for foreign investors to invest in the tech sector because the Chinese want your technology. And there's a lot of ways they get that legally or illegally. Well, isn't that what our president is saying, too? I'd rather not address that. That's a far more complicated issue. But American business is quite concerned about technology, the theft of their technology in China. But let me just add to that. I think that foreign direction doesn't matter if you go to China, you go to El Salvador, if you go anywhere around the world, Africa. The developing country wants to take it. And as a business company, you know that's going to happen. My job as being a lawyer there for a number of years is drafting and negotiating what technology goes, what stays, licensing agreements, timing your technology so that the technology that goes there, it's old technology, not new technology, knowing what technology you can't take out to U.S. That's all part of the understanding. And it's part of the business model because if you're going to set up and sell the retail in China, okay, you will probably lose some of that technology. And we know what reverse engineering is. That's known as you go in. That's what you're telling me. You know as you go in. And that's the role of the lawyers to advise your client and to negotiate, structure it. And you would say, don't set up a joint venture, set up a wholly foreign-owned entity because you can control your IP, license agreements. For example, if you're manufacturing something, I'll tell the client, okay, this is what you do. You're sensitive stuff, you bring it to assemble. That's what Apple does at Foxconn. None of the sense of technology is made there. It's brought in from South Korea or Taiwan. Second of all is that you would have four different factories. And none of the factories knew what the other factories were doing. They would not even know that. So the IP could not go between the different factories. So that tells me that you've learned a lot since you've been in China. And I'd like to, as we close here, I'd like to ask each of you to tell me, what have you learned about life and law from your time in China? I'll let you know. You're Dean Emeritus. What have I learned about life and law in China? Yeah. I think my biggest takeaway from China, I've been saying good things and I've been saying negative things about China today, and I do all the time. There's huge pluses and huge minuses. But if you just talk to the Chinese people, the Chinese people are great people. They share many of the same values that we have. They worry about their kids, the future of their children. I think we worry about environmental issues, educational issues and all of that. And they're just great, great people. People are all the same where we are. That's what you're telling me. When you get up to the government level, then it gets more complicated on both sides of the Pacific Ocean. Well, I guess one thing that I've got to say is that I think in the book, I think the same thought that I have when I first arrived in China, they have this word called kui, kui means I can do it. You can do anything you want and it doesn't bother you. I mean, when I was there 15 years ago— Regardless of what the law says. Regardless of what the law says, regardless of the hardships. Optimism people. There's just optimism people that really still keeps me there because I grow with it and I'm optimist about the future. And they've experienced many changes, a lot of good, some bad. But, however, overall, I think that what they want to be are like citizens, like around the world, like the U.S. They share the same value, education, medicine and better life. Thank you, gentlemen. I appreciate you talking with us after 10 years and ending on an optimistic note, positive note about people and China. Thank you very much. Looking forward to our next 10 years. Thank you, Mark. Thank you.