Last month I led a panel discussion at the Washington Council on International Trade’s annual trade conference.  Brad Smith, Microsoft’s General Counsel, gave a great speech at that event and today I just learned that the full transcript of that speech is online. Mr. Smith spoke on what it takes to compete internationally and he stressed the benefits that come from diversity:

Around the world one hears a lot of bravado. Certainly as somebody who attended both political conventions this year, one even hears a certain amount of hyperbole about what makes our country or another country great. But as I look around the world, I actually believe that there is one objective, statistically verifiable, factor that makes the United States of America unique. In a world in which we have less than 5 percent of the planet’s population, we have a population that reflects the 95 percent of the rest of the world more so than any other country.

If there is a language spoken somewhere else in the world, it is almost certainly spoken here in the United States. If there is a group of people that is talented in another part of the world, we probably have a population that has come from that place, oftentimes quite recently.

And it’s not just that they come to our country. One of the things that stands out in our region is that they come to our state.

I know, because every day I go to work at a company that employs people who come here from 157 countries. And every time I get in the elevator in my building, I have no idea what language I’m going to hear spoken.

If there’s one thing I’ve concluded, even when it comes to technology, where engineering is vital and products are the life’s blood of what you create, it’s still the case that technology is fundamentally a people business. And I believe that every business in this country has fast become a people business.

It’s all about whether we can create the products that the world wants, and whether we can offer the services that the world needs. One thing we should stop and really reflect upon is that when it comes to those challenges – as a company, as a state, as a country – diversity is our strength. It gives us the ability to understand customers around the world in a manner that is unmatched.

We really need to think about how to nurture that strength and develop that strength, to recognize, for example, that when there are 588 million people that live south of our border who speak Spanish and Portuguese, the fact that we have people who speak those languages is a national asset.

If we can focus not just on public policy but private sector and the civil society efforts on nurturing this diversity, we can turn this into a greater competitive advantage each and every year.

I am always talking about (though with less eloquence) how diversity is one of the United States’ greatest strengths and on how we have just about every country beat on this by a fairly wide margin.  Whenever someone (usually this is someone who has spent a few weeks in China) talks about how China is going to “take over the world,” I always voice my skepticism and I then usually talk about diversity, education, transparency, political stability, and innovation.

But for purposes of our discussion now, I ask just one question.  Is China diverse enough to really succeed in a globalized economy?  And by “really succeed” I mean becoming a country with a strong middle class and a country that competes in high tech and other added value industries.

This post was written by Matthew Dresden. Matthew handles China matters out of our U.S. office and this is his first post for the blog. Matthew speaks and reads Mandarin and has lived in both Beijing and in Shanghai (but is too politic to tell us which he prefers).

Here’s Matthew’s post:

There has been a spate of recent stories in the media about the large numbers of Chinese students applying to U.S. colleges who have doctored their records. A paragraph from an article in the New York Times neatly sums up the issue:

Colleges, eager to bolster their diversity and expand their international appeal, have rushed to recruit in China, where fierce competition for seats at Chinese universities and an aggressive admissions-agent industry feed a frenzy to land spots on American campuses. College officials and consultants say they are seeing widespread fabrication on applications, whether that means a personal essay written by an agent or an English proficiency score that doesn’t jibe with a student’s speaking ability. American colleges, new to the Chinese market, struggle to distinguish between good applicants and those who are too good to be true.

What’s fascinating is how Americans who never deal with China are shocked by the extent of the cheating: more than 90 percent of applications contain some kind of fabrication, according to education consultancy Zinch China. Meanwhile, Americans who regularly do business with China simply say that the other 10 percent are merely the ones who haven’t been caught.

How is this relevant to your business?

If you’re starting a business relationship in China, you should assume that 90 percent of what your Chinese counter-party tells you is false. This is not to say that 90 percent of people in China are liars, or even that 90 percent of what your Chinese counter-party tells you is actually false, but rather that you should proceed as if that is the case. It’s a simple matter of incentives. There is an extremely high probability that your Chinese partner will try to cheat you, because the chance they will get caught before you pay them is small, and even when you do find out, the chance you can do anything about it (legally or otherwise) is even smaller.

This is why we stress repeatedly on this blog that if you do business in China, you need a contract written in Chinese that is enforceable in a Chinese court. Ask yourself this: how many American companies would cheat, if there was a really, really good chance they could get away with it? A lot more than most of us might like to admit. Americans commonly use the Wild West as a metaphor for modern China; we might also do well to remember how many hucksters, swindlers, charlatans, and mountebanks roamed the American West.

The director of the international division of Beijing’s high-profile Peking University High School writes in the Chronicle of Higher Education about how U.S. colleges should interview Chinese high school students to accurately gauge their abilities:

[The interview] ought to be focused, detailed, and deliberate. Here are some examples of good interview questions that look for empathy, imagination, and resilience:

Pick a novel or a movie, and discuss the characters. Which character did you identify with? Why? Which part of the book or movie made you sad? Made you angry? Why? What experiences have you had that remind you of events in the book or movie?

Pick a memorable experience, and explain why it was so memorable. Tell the story. Explain your feelings during the experience. Why did you have these feelings? Do you know anyone either real or fictional who has had a similar experience? Did they behave the same as you did? Do you think their feelings were the same as yours?

When was the last time you were angry or sad?

What made you angry or sad? How did you get over your anger or sadness? What do you think will happen the next time you encounter the same situation?

Persist in asking “why?” Look for sincerity, for logic, and for clarity of thought.

What Jiang describes is due diligence, pure and simple and tailored to the specific situation, just as it should be. And it is precisely what many American universities have not done. As a recent report on American Public Media’s Marketplace made clear, many American universities, desperate for students who will pay full tuition, have been contracting with Chinese placement agencies to deliver students. If a student gets admitted to an American school, the placement agencies get paid the equivalent of $6,000, usually by the students’ parents; the American universities pocket the hefty tuition. Needless to say, the American universities have been shocked – shocked! – to discover that the Chinese agencies were falsifying students’ applications on a massive scale.

Employers ought to be similarly skeptical when hiring employees from China. Don’t take resumes or transcripts for granted; check references and confirm employment histories. This means contacting schools and employers in China. Most of all, it means conducting a meaningful interview.

Let’s be clear: the truth about cheating in China is considerably more complex than anything captured by a single statistic. Some bloggers (either more cynical or more realistic, depending on your perspective) take these stories as an example that “lying” simply doesn’t mean the same thing in China as it does in America, or that Chinese are amoral and have no common values. I like sweeping generalizations as much as the next guy, but this seems a bit harsh, to say the least. My personal view is that these stories have less to do with China and more to do with human nature. When the rewards are high and the consequences of getting caught are minimal, people will cheat. Heck, people will cheat even when the risks are high, as evidenced by recent front-page stories about cheating right here in America, both by students and by schools.

The admissions departments of American universities are learning a lesson that businesses dealing with China have already learned the hard way – or will soon enough. If a deal (or a person) sounds too good to be true, it (or he or she) probably is.