This is a long overdue post but the points made are, I think, still relevant.
Earlier this year, Richard Wallace, Mike Clendenin and Sufia Tippu writing in the EE Times about India’s potential to become a “silicon superpower” concluded that: “It’s a tall order. India has the brainpower to pull it off, but China won’t easily concede its lead.”
Some excerpts from the original article:
“…Can India, like China, become the next silicon success story? This seemingly simple question has given birth to a debate that’s roared across the global electronics industry since India unveiled broad new financial incentives designed to lure chip makers to the subcontinent last month.
Some call India “the last frontier for semiconductor manufacturing,” and believe it will it be a magnet for companies like TSMC, AMD and Intel, the U.S. semiconductor giant whose fab site decisions–like the recent one to manufacture in China–can turn the fate of an industry.
“No way,” insist other industry watchers, pointing to India’s infrastructure shortcomings and late start in the chip-manufacturing sweeps. As the title of a recent JP Morgan Report puts it, “India and semiconductors: It’s too late; just don’t bother.”
Keep Reading…
August 7th, 2007
Posted by
Shantanu |
China, Globalization, India |
2 comments
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
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Shantanu |
China, Europe and Asia, Globalization, India |
2 comments
Nandini Lakshman has written a nice article in BusinessWeek on how VCs in India are broadening their scope and looking at non-obvious opportunities: “India Rides the VC Wave”
Some excerpts:
“The fishermen from the Indian village of Chidambaram live a hard life. They sleep most of the day, then spend the night out on the water. For light during those dark hours, they have long depended on wobbly kerosene lamps that were easily blown out or, worse, toppled by the wind, risking deadly fires on their boats.
But these days, the kerosene lamps have been replaced with MightyLights, $50 solar-powered fixtures. “I save 100 rupees [$2.50] a month on kerosene alone,” says K Kanimuri, a fisherman’s wife, who also uses the MightyLight in her makeshift kitchen. With her savings, she now makes and sells candles…
…MightyLight is the brainchild of New Delhi-based Cosmos Ignite Innovations, a Stanford University-incubated startup by Matthew Scott and Amit Chugh that aims to provide simple products for the world’s poorest people. And Cosmos got its start with backing from Vinod Khosla, a veteran Silicon Valley venture capitalist. Now Cosmos is in talks with other groups, including London-based 3i Group (TIGRF) and eBay (EBAY) founder Pierre Omidyar, for a second round of funding. “For us, it’s not just the light, but using a sustainable model to affect social change,” says Scott, chief executive of Cosmos.
…”The base of the pyramid is often ignored, but offers a tremendous opportunity,” says Katie Hill, the India representative of Acumen Fund, an $8 million fund backed by the Cisco Systems (CSCO) Foundation and the Rockefeller Foundation. Acumen has put $1.5 million into Ziqitza, a Mumbai-based ambulance company that offers deep discounts on its service for residents of the city’s vast slums. Shafi Matther, the founder of Ziqitza, says the funds will be used to stretch the company’s ambulance fleet of two dozen vehicles to 70 in the next two years, and roll out service across India. It is already operational in the south Indian state of Kerala.
…Or take IT-rural, set up by a group of software engineers from the south Indian state of Tamil Nadu. A clutch of U.S.-based VCs are circling the startup technology venture, which develops solutions for rural India. The company doesn’t just provide a bunch of computers and conduct basic-training classes, but has a Web site to educate farmers, giving them information about crop patterns, nature of soil, crop diseases, and remedies. IT-rural also has established backward and forward linkages, from buying the seeds to branding and retailing products.”
I am hoping to meet some of these guys during one of my future visits.
July 4th, 2007
Posted by
Shantanu |
Development Issues, Emerging Markets, India |
2 comments
Here’s how to get a cleaner, more connected world:
From a recent report in thechilli:
“…Indian mobile operator Idea Cellular, Ericsson and the GSM Association’s development fund today announced…four mobile base stations powered by locally produced biofuels
…All four locations in the state of Maharashtra are greenfield sites that have not previously had access to a mobile network and are located in areas with unreliable power supply”
As the report mentions, biodiesel is not only more environmentally friendly than conventional diesel but because it is produced locally, generates employment and reduces “the need for transportation”. Biodiesel generators are also easier to maintain and have lower opex in the long run.
So not only are these generators helping extend telecommunications coverage to rural, hard to access communities, they are also helping generate local employment and minimising the environmental impact of development.
Looks like a win-win for everyone….isnt it amazing?
July 2nd, 2007
Posted by
Shantanu |
Development Issues, India |
no comments
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
Shantanu |
China, Europe and Asia, Venture Capital in Asia |
no comments
A few weeks ago, I attended a fascinating talk at Chatham House by Professor Wing Thye Woo who teaches Economics at the University of California on “The Real Challenges to China’s Continued High Growth”
He identified three important factors which might lead to the “crash of a speeding car” aka the “Great Chinese Growth Engine”:
- Hardware failure: “right tire burst” = collapse of a crucial economic mechanism
- Software failure: “fight within car” = social disorder
- Power supply failure: “no petrol” = limits from ecological barrier or external sanctions
He also cited several interesting statistics in his presentation of which the two below particularly stood out for me:
- “Social Disorder”: 1994 had 10,000 mass incidents involving 730,000 persons? in 2004 the number had gone up to 74,000 mass incidents involving 3.7 million people.
- China’s GINI coefficient has almost doubled from .24 in ‘78 to .47 in 2005
The China Policy Institute, which made it all happen, wrote its own report on the talk which can be accessed here. The report nicely summarised the key points. I would recommend it and the slides to everyone who is watching China and its impact on the global economy.
A few excerpts:
“…China had enjoyed the highest sustained economic growth rate of any country in recorded history, he said, and it was probable that this high growth model would succeed.
But it was important to examine the factors most likely to disrupt the high growth rate from continuing…
…Professor Woo said that perhaps the greatest challenge to China’s continued high growth in China would be future global disputes over resources and the environment, following what he called the unravelling of the global consensus for free trade in the United States, which was making the atmosphere ripe for protectionism.
As China and India moved up the value chain in manufacturing complexity, he said, Western countries were being forced to make painful adjustments as more and more jobs were lost. At the same time they would be faced with demands to help pay for the environmental improvements needed in countries like China and India to curb carbon dioxide emissions, he said.
…The best way to reduce CO2 emissions was to ensure that the new power generation capacity installed in China and India made use of modern, clean coal technology, he said, but this would mean that the richer countries would have to offer to pay for this in order to enjoy the benefits.
This made the atmosphere also ripe for what he called a coming global clash over the “Global Commons” not just air but also water as well. Asia, he said, faced a looming water crisis as China made plans to divert the flow of water to rivers such as the Bramaputra and the Mekong that flowed into India and Southeast Asia…”
June 24th, 2007
Posted by
Shantanu |
China, Development Issues, Economics, Emerging Markets, Globalization |
3 comments
