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

Feeling the heat in China…

Last week, I shared a panel at the China Venture Capital Forum at the Hilton in London with Gerry Montanus from Atlas, Jean-Bernard Schmidt from Sofinnova, Andy Tsao from SVB Global and Kevin Wang from Natixis, moderated by Max Burger-Calderon from Apax.

The panel was part of the day long discussions and panels about the Venture Capital environment in China…The buzz was unmistakeable, the energy and optimism was evident…the ambience very very close to what I sensed the day before at EuroMoney’s India conference.

I heard some startling stats:

  • 50% of VC-backed companies in China exited via an IPO last year (the comparitive figures for US and Europe are closer to 10% and 20% respectively)
  • The median return in VC in China is now ahead of the global top quartile (- I think this is what I heard but I am not entirely sure)

There was the inevitable talk of the market being overheated…so, whats new?

On my panel, we discussed entry strategies for getting into China and everyone agreed that as a VC market, it is coming to a point where it cannot be ignored. Gerry and Jean-Bernard shared Atlas’ and Sofinnova’s approach to the region and how they had slowly begun to dip their toes in the water.

Everyone complained about valuations…except the entrepreneurs.

For young Chinese men and women with ideas, these are heady times.

July 1st, 2007 Posted by | China, Europe and Asia, Venture Capital in Asia | no comments

Globalization: A Lost Opportunity?

Under a nicely provocative headline titled “UK businesses signing their death warrants with their ignorance“, the chilli recently quoted from Grant Thornton’s International Business Report, while commenting on UK SMEs and globalization.

Amongst other things, it noted that:

“…less than half of UK businesses (46 percent) believed that globalization presented an opportunity to their country” compared to “82 percent of Indian businesses who believed that globalization presented a significant opportunity for their country…”

The story also mentioned: “UK business owners felt that (the economic expansion of the BRIC countries) over the past few years (has) had very little impact on their own companies”

A few other startling findings:

  • 79% of UK businesses are ignoring opportunities to import from China
  • 90% have no plans to export to India and
  • 87% have no plans to export to China

…all of which suggests to me a great opportunity (and a market) waiting to be tapped.

May 10th, 2007 Posted by | China, Emerging Markets, Europe and Asia, Globalization, India | 4 comments

Why Asia, Why Now?…

Last Thursday, I made a brief presentation at the InvestorNet ICT Round Table in Copenhagen on “Why Asia and Why now?”.

The audience was a mix of European VCs (primarily from Scandinavia) and the discussion centred on what is happening in Asia and how that affects Europe’s lead in innovation and competitive edge…You can see the slides here 

The failing Incubator model…?
At the same event in the afternoon, I heard a very interesting talk by Sam K Steffensen of 5te – an incubator situated in the IT University in Copenhagen. Sam was refreshingly direct and deliberately provocative…He said that the traditional incubation model is not working and people (and policy-makers) have not woken up to the possibilities (and the reality) of an inter-connected world…

Sam went on to criticise the environment for innovation in Europe and said that if you are a start-up, it does not help to be in Europe…(I almost had a sense of deja-vu: “No longer catching up with Silicon Valley…“)

March 15th, 2007 Posted by | Conferences and Panels, Europe and Asia, Globalization, My Presentations | 5 comments

Sleepless in Davos…

WEF_Davos   Some sobering remarks and thoughts from a recent TIME magazine article on the WEF in Davos (“Lovely While It Lasts”, Pg 36, TIME Europe, Feb 5, ’07)…

Zhu Min, Vice President, Bank of China:

  • “I am more and more convinced that we’ll have a much tougher situation in the coming years” (talking about the $1 trillion in reserves held by China’s central bank to which another $200billion will be added this year)

China and India together account for about 40% of the world’s population but only 6% of the world’s economic output. By contrast, the US, Japan and Western Europe make up 15% of the global population but account for 80% of its output…(as a consequence…)

  • “…There is a great gap and it is going to be bridged over the next 20 years…we are going to see fundamental changes in the center of gravity and the center of power” Jacob A. Frenkel, Vice Chairman, AIG

German Chancellor Angela Merkel:

  • “…for the past 200 years, we got used to a Eurocentric view of the world but today we can see that this type of overview is over…”

Laura D. Tyson (ex-Dean, LBS and now Prof at Haas Business School)

  • “I do worry how the U.S. will respond to the fact that its hyper-power status in terms of finance and wealth has to be reduced over  the next 25 years”. She has reason to worry: most Americans (… and I would add Europeans – SB) have no idea so elemental a shift of power is now under way.

and finally,

  • All the panelists said that they were concerned that the big questions relating to globalization, including the huge power shifts under way from the developed economies to the developing ones, were not being well explained in the West”

Worrying…

January 31st, 2007 Posted by | China, Emerging Markets, Europe and Asia, Globalization, India, USA and Asia | no comments

Bleeding-edge Tech + Grassroots Applications = High-impact Innovation

I was very fortunate to be part of the UKTI Delegation at the “Mind to Market” conference that concluded in New Delhi yesterday (6th Dec).

India is “hot” these days and so is innovation and entrepreneurship. But this was not always so. As good friend, Shai Vyakarnam mentioned in his talk, an event like this would have been unthinkable even as recently as five years ago.

Innovation may have been stifled during the license-permit raj but entrepreneurship never died in India.

Keep Reading…

December 7th, 2006 Posted by | Delegations, Emerging Markets, Entrepreneurship, Europe and Asia, India | 2 comments

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