Global Themes

On Globalization & Venture Capital

As EU sleeps, China and India get to work

A few weeks back, I came across the second part of Eye on the Tigers series in which Tosh talks about the strikingly different approaches to development/globalization being followed by India and China and how awareness about these changes continues to be very low in Europe.

He starts his analysis by noting that in spite of Indian companies now controlling “three European
Icons” (Arcelor, REpower and Whyte & Mackay), “awareness about India among Europe’s policymakers is feeble”.

But the really interesting bit (IMHO), is the part where Tosh analyses the differences between the Chinese and the Indian approaches to development.

In his own words:

“As perplexing at the Brussels Asia-Europe conference was a pictorial tsunami of Chinese technology parks – sprouting by day, sometimes by night. There was no analysis, for instance, of why China chose an Indian majority partner for its first offshore IT park, or the absence of windows at Intel’s high-security Bangalore operation.

Missing too were numbers, such as the American stock-market capitalisation of the large Indian software firms, each of which outranks ‘giant’US rivals Accenture and EDS, and have revenues higher than China’s entire offshore IT industry.

Though globalisation is principally about India and China, blurring the differences is unwise.

China is driving up the value chain, very visibly, from low-cost, ultra large-scale foreign-invested manufacturing. Its technology parks may well be needed in the future; but they could also share the fate of Malaysia’s much-hyped ‘Multimedia Super Corridor’.

India is driving in the opposite direction – down the value chain from technology services. This ride is carefully calibrated to global market forces. In effect, India is harnessing its technology/management skills to add value to emerging frontiers in manufacturing –such as rapid prototyping and mass customisation.

On the flip side, unlike the US, Europe’s rich but fragmented patchwork of SMEs offers would-be buyers easy targets to ‘plug and play’ in tomorrow’s global supply chains.

… waiting in the wings are others like Tanti (Suzlon’s CEO). India’s bottom-heavy but world-class stock markets already boast 150 companies with over $1 billion valuations.

This is the global/European face of tomorrow’s India Inc., bankrolled byAmerican capital and soldiered by Indian-American managerial Merlins co-opted from McKinsey, Bain and the like.

Such wholly-new trends surely require some assessment….”

Sadly, “the state-of-play within the European Commission, its listening posts and sounding boards, is that of Rip Van Winkle waking up and seeing a new emperor’s new clothes.

I am very interested in comments – particularly from those with insight into (or experience of) policy-making in Europe and UK.

July 25th, 2007 Posted by | China, Europe and Asia, Globalization, India | 2 comments

2 Comments »

  1. [...] A few weeks back, I came across the second part of Eye on the Tigers series in which Tosh talks about the strikingly different approaches to development/globalization being followed by India and China and how awareness about these … …more [...]

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  2. Shantanu: The policy making process in the EC is very inward-looking, their methods archaic, their ability to ask the right questions dubious, their funding mechanisms fragmented, their bureaucracy discouraging of anyone but the sturdiest to engage in any advisory work with them (Who wants to wait 1 year to receive money for projects completed? I do not wish to, but I am waiting…). The result is a patchwork of external experts, who identify profitable niches and continue to mine those ‘accounts’ while leaving aside the big picture to someone else.

    I think the insistence on some kind of ‘constitution’ on this supra-national organisation (what SHOULD be the right word to describe the EU) is self-defeating as the primacy effect is fighting against the new entrants as you might have seen in Poland’s fight for more votes recently.

    So nothing in your post surprises me. I know of few Indians, for instance, advising the EC. As migrants, we work where most value is likely to be created and where results are preferably visible. The EC is not that place in my experience.

    Comment by Shefaly Yogendra | July 27, 2007

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