Name: CTA’s Gary Shapiro on what rising tensions between China and U.S. could mean for tech and innovation
Uploaded: 2023-03-30
Duration: 10 min 10 s
Description: “We can’t be so reliant on just one country no matter who the country is,” the Consumer Technology Association CEO told Fortune. “So there’s an effort towards reshoring and a lot of executives are thinking about that.”

“We can’t be so reliant on just one country no matter who the country is,” the Consumer Technology Association CEO told Fortune. “So there’s an effort towards reshoring and a lot of executives are thinking about that.”

CTA’s Gary Shapiro on what rising tensions between China and U.S. could mean for tech and innovation

Tech

“We can’t be so reliant on just one country no matter who the country is,” the Consumer Technology Association CEO told Fortune.

CTA’s Gary Shapiro on rising tensions between China & U.S

Gary, thanks so much for joining us today. Thank you. It's an honor to be here before such an important group. Um I have a few questions for you, but I want to start pretty broad. Um curious if you can just share uh from your point of view from where you sit. What's the state of the state on the tech industry in the US? We've obviously seen extreme highs, extreme lows. Um Everybody is dealing with the fallout of Silicon Valley Bank at the moment but, but talk to us a little bit about just um what you're seeing from your perspective. Good, bad, ugly. Well, the tech industry had a great run, especially during COVID when everyone had to stay home and use technology just to get basic work done in the white collar world. Um But the way the system works in the United States, the free market system is there's ups and downs the advantage of it down and we're definitely in a little bit of a down now is it's an opportunity for entrepreneurs and innovators to emerge to start new businesses. But between inflation, high interest rates, a little bit of a slowdown and then the Silicon Valley bank uh going under and being bought. Uh you know, there's some concerns at the, at the end of how are we going to finance these things will systems emerge to replace that important bank so we can get the money to start up so they can run their operations. And I think with the continuity that you know, another bank buying them, I think will be ok. And I also think that yes, there are layoffs with a lot of people are hired. I think it's a rejiggering of what kind of skills are needed by people. But with literally tens, if not hundreds of thousands of people that are once working for big tech companies unemployed, that's an opportunity for a lot of innovators and entrepreneurs to emerge. Yeah. And at the same time, obviously a lot of innovation, especially on the generative A I side and, and in other areas. So what do you think we're going to see bubbling up during this current period which is obviously tougher economically on a lot of companies? Well, definitely there are some areas of, of very rapid growth. Uh You mentioned A I, obviously that's the big one. There's all sorts of different ways of approaching business that some people think it's bigger than the internet itself. And it's going to be have a really positive impact in all sorts of areas from health care to uh the way kids learn education, self directing there's so many different things, but like everything in technology, it's a tool. And if you go back to the invention of or the taming of fire to the wheel, to the printing press, to the airplane, to the telecommunications and computers and the internet, they're all tools and they could be used to help mankind or they could be used for less, more nefarious purposes. And that's uh that will be the struggle we'll see in countries around the world as we figure out how to create the lane so that companies can innovate and do great things and solve some of the most fundamental problems in the world. I mean, today, I was on a phone call with people related to the United Nations who were talking about how technology is solving so many of the world's most fundamental problems and helping us achieve the goals that the UN has. And I think that's the positive thing that we're all working towards, which will make a difference. So speaking of the United Nations, um obviously, we've, we've seen ups and downs on the geopolitical side when it comes to tech innovation, collaboration, um partnerships across borders and, and there are rising tensions again, including between the US and China. So what do you, I mean, first of all, give us a little bit of an assessment on that. You talk to a lot of tech CEO S, what are you hearing? What are the primary concerns? And then I'm wondering also how do you see that hindering or helping maybe um some of the acceleration of, of these technologies as the competition heats up. I think there's two categories of people in the United States if you will, that are focused on these issues, one of the politicians in Washington and there's definitely a bipartisan agreement that we have to do something uh given the experience of supply chain issues and, and the different points of view that China and the US have, we have to, we can't be so reliant on just one country no matter who the country is. So there's an effort towards restoring and a lot of executives are thinking about that. I saw a recent survey that 70% of, of affected companies are, are planning on ways to deal with this restoring effort. Um The question is how long it will take, how quickly it can happen? Um And what's the realistic timetable? And I think a realistic timetable is probably more 20 to 30 years in three or four years, which perhaps some policymakers envision the CEO S themselves I think are, are they're more realistic. Um They view the some of the world tensions as things outside their control. I mean, there's a fundamental view a lot of us have that you get through free trade, you get greater understanding and, and sharing, you're less likely to have conflict. Uh That's something which, you know, I hope we balance out a little bit with the, the rush to judgment of, of saying that, you know, it's not, you know, political leaders make decisions and the rest of the country sometimes pay. And I don't think there's any animosity uh towards Chinese as individuals. Uh It's a very productive company country. We rely on it. I think the lesson of COVID, we probably rely too much on it. We saw shortages of products which affected everything from health care to technology companies and things like that. So there's a lot of reality and there's the political world and those are two different and then there's the free marketplace of companies wanting to do business with each other. And I think smart business leaders will figure out how to do that if it has to happen in a third country like Vietnam or, or elsewhere in Asia or even in North America or Europe. I think we'll figure it out. But single source supply has never been a good decision for companies because it gets you maybe a lower price in the short run. But in the long run, it could be deadly to the future of any company. So supply chain issues aside, um China clearly presents and and has for a long time, a very, very large market for American tech companies and and for other tech companies elsewhere. So what are you hearing on, on that front? How are American tech CEO S looking at just the market opportunity? In China, given some of the recent tension. Well, definitely the the global political tensions make it much more difficult in terms of the calculus because that's outside of the control and there's not much you can do about it. So it's almost a digital decision. Do you do it or do you not the economic um things, the manufacturing cost, the supply chain, those are all measurable risks. I mean, some things you don't anticipate. Like I think that the cost and shipping costs between the US and China a couple of years ago was on nobody's radar screen that it would go up so much. And that was a real big factor issues like tariffs, which we've been working to try to get the US to reduce between the US and China. That's become a clearly political issue and it's not likely they will be reduced even though they would help us fight inflation. But definitely the geopolitical issues if there's action against Taiwan and things like that, that's like it's economic nuclear terror as far as probably many, many American companies and politicians are concerned. Ok, back to, to innovation and just the, the rapid pace that we've seen um the the acceleration of, of both innovation and um digital transformation. I know these are all buzzwords but they're real. We're actually seeing this in action. We've seen it in action over the last few years. Do you think that um given the, the, the economic slowdown Now, where do you see things going in terms of that innovation and the adoption of technologies um obviously a slowdown in spend. But do you think that we can use the momentum during COVID to keep that digitization effort up and, and how are companies looking at that? Well, I think there are certain areas which are rapid growth like cyber security. Obviously, that's a global problem that every government has to deal with and faces. Uh Certainly there's the generative A I where we've already seen almost $3 billion invested very quickly. Uh Cloud computing is still very important, very hot efforts to deal with climate technology are very, very significant. Um in many different ways, Digital twins is something and it's an opportunity to, to move product quicker to market by really having artificial intelligence and computers work together and create simulations and figure out what works. And it's just not for products and technologies, it's for health care and drugs in so many areas, even prosthetics, for example, will benefit from a lot of these technologies like 3D printing combined with artificial intelligence. So we're going to solve a lot of individual problems in the world through technology. There's a huge amount of opportunity there. But certainly these, these changes in the economy, the changes in politics, there, there's some storm clouds, we'll just have to, to work through. But in the long run, I think humanity will be better off business opportunities will be created kids will be educated better, we'll live healthier longer lives. And I think this is a worldwide effort to meet some of those very important lofty goals of, of keeping air, clean water, clean, having an environment, making sure people aren't hungry, things like that. And technology is going to solve a lot of these problems. Tell us a little bit about CE S um next year. Is it going to be different? Do you already have a sense of what the big trends are going to be? How early on do you plan it? Well, we plan years ahead of time in terms of reserving all the different major locations in Las Vegas since January. But the CE S 2023 was an exceptional event. Almost 100 and 20,000 people. Uh Well, over 2000 exhibitors and more than one out of three people were from outside the United States to global event. And there was a lot of focus on artificial intelligence. The the automobile mobility market is huge. Uh Obviously so many other areas are hot, robotics, food. And we we'll have some big announcements and some big names and some big things because people still one thing we learned in COVID, people want to get together and innovate occurs much more easily when people are face to face with that five cent environment. So you could create the relationships and the magic occurs of different industries getting together and stimulating each other. And that's why events like CS and, and frankly, the Fortune conferences are so important. Thank you so much, Gary. I appreciate you taking your time and talking to us, sharing your views with us. Thank you and, and great luck with the conference. Thank you.