Chinese threat looming large over global IT sector

[echarcha]

MUMBAI: The Chinese are coming, this time in the software sector. Make no mistakes, the threat is real and the nerds who thronged the NASSCOM annual event sat up and took notice.

World famed techno gurus were told in no uncertain terms to get their act together before they lost out to the competition in the international arena of software programming.

A strong note was struck by Professor Sumantra Ghoshal who wondered aloud during his inaugural address whether China would repeat its success in small goods and toys in the field of software.

Professor Ghoshal asked the denizens of the IT jungle not to be complacent as China was gearing itself for a major thrust in software programming. The Chinese government has signed a contract with a major U.S. University to train software personnel and are taking the whole issue seriously. In a few years time China will be ready for action in the same segment of software that India now dominates. The message was repeated in different ways and at various forums at the meet.

The Union minister for IT, Pramod Mahajan sounded the bugle call for an alert on China on the software front when he urged Indian industry to get out of the protectionist psyche. If we are not able to face competition from China in the domestic market how can we compete against them in the international market, he asked.

Shyamal Ghosh, chairman, telecom commission also recorded the fact that China was way ahead in tackling telecom, cellular and other related services and also has a lot of bandwidth. All of which are a lesson for India which is battling with a teledensity of three per cent. The China lesson was strong and clear.

More at: http://www.timesofindia.com/today/10mbom10.htm

[gandesh]

don't worry sutradhar ji this is all crap... the chinks are basically very dumb people... software is not something they can do... all they can successfully do is copy western products... when it comes to innovation they are damp squibs.... if u want an example for this just check any US college... all chinks registered in IT courses are dumbskulls who can't even be compared to indians... so don't worry be happy this time their yellow ass has been kicked for good by indians.... :D

[manohar]

This is just the harmful kind of complacency that India can ill-afford, and worse of all it is based on a false premise. The Chinese students are no worse than Indian students. Just compare the number of professors in the US from China and India. The Chinese are actually very smart people. If they are behind the Indians in the IT sector, then that is because of India's so-called 'english avdantage'. This is something the Chinese will overcome very soon. In every industrial sector the Chinese are ahead of us. Let's not add IT sector to that list by our foolishness.

[Ghasiyara]

All of you can accuse me of not being original but here's an excerpt from an article by Rajeev Srinivasan.....


Today it is true that cheap Chinese products at the low end consumer market have flooded the market around the world, not only in India, their factories may be more productive than India's and may enjoy economies of scale. Their infrastructure being better, they may be able to get goods to market faster. They also have the advantage of free slave labour in some cases: can't beat the cost when political prisoners are forced to be factory labourers. Even when it is paid labour, because of universal primary education, the workforce is likely to be fully literate unlike in India.

But they may not be using proper accounting practices and so in fact may be underestimating their costs: after all, many of the SOEs (State-owned enterprises) in China are, just like our Nehruvian albatrosses, huge money-losers that have lost their capital base many times over. It is entirely possible that some of these products are genuine money-losers, but that it is all being absorbed by the state-owned banks. The banks may come crashing down one of these days; after all they currently have non-performing assets at alarming fractions of their assets. As for silicon vally, three largest groups in the Valley, Americans, ethnic Indians and Chinese, brought their peculiar national strengths together to create the Valley's ethos.

The Indians brought their characteristic strength: abstract ideas, such as the zero, the astonishing Paninian concept that the infinite variety of expression in a language could be modeled concisely in a small set of rules, Hindu and Buddhist philosophy, yoga, quadratic equations, infinity itself.

The Chinese brought their strength: concrete implementation, such as the Great Wall, the printing press, the magnetic compass, paper, gunpowder.

The Americans brought their strength: the selling of dreams, and the marshaling of large groups of people and large amounts of money for massive projects. Essentially what Hollywood does, or venture capitalists do or McDonald's does.

In the first twenty-five years of the Valley's history, when hardware was king, it was the Chinese who prospered as compared to the Indians. Chinese entrepreneurs made fortunes on the PC boom, partly by shifting manufacturing overseas to Taiwan, Malaysia, etc. They have proven to be adept at large-scale manufacturing. In fact, I think most PCs in the world are now made in East and Southeast Asia.

However, the situation changed when the realm of discourse went from hardware to software. As the Internet boom took off, we started hearing more and more about Indian entrepreneurs; hardly a handful of Chinese have made a big impact in this area. This leads to an interesting conjecture: Chinese are, and will be, stuck in the low-value-added task of building the hardware.

The real intellectual property and creativity are in software, the realm of pure ideas, where Indians excel. That which will grease the wheels of industry in the future is abstraction. Therefore, I see a triad emerging in the computer industry: design and marketing in the US, software and intellectual property in India, hardware in greater China.

In this scenario, India's facility with intellectual property -- and the success in software is certain to spill over into other areas -- will mean that it will be the one that leads in the sunrise industries. While the sunset industries, like shipbuilding, bulk chemicals, heavy industry, and so forth will migrate to China. This is as per the theory of comparative advantage, where a nation that is good at building x will sell x to another nation which makes y and needs x.

If this is the case, we should be happy to leave the sunset industries to China. Let them make the dry cells today and the gas turbines tomorrow; fans with built-in inverters today and aircraft engines tomorrow. But none of this will be as exciting as bio-informatics, nanotechnology, genetic engineering, etc where India will excel.

I believe this is likely to be the case, and I blame the language for it. The Chinese language is well-suited for creating pattern-matching circuits in the brain. That is, from childhood what you are looking for is patterns in the written pictograph. But it becomes very cumbersome to express new ideas in this kind of a language, because you have to invent a new picture to convey the idea. And get lots of people to agree on the meaning of that picture.

This is why the Japanese too, despite their simplified pictographs, have seldom been able to come up with fundamentally new concepts. They have used their traditional strengths, the ability to package and present, their ability to focus minutely, to become the world's most innovative users of new ideas created elsewhere. It remains to be seen if the Chinese will be able to do this as well. Their current output is much more crude, although it is true that in the past they have created ceramics and art of great beauty.

In contrast, alphabetical languages are much easier to handle: they are inherently more suited for abstract thinking. Indian languages are all alphabetical, and it is possible that the alphabet itself was invented in India. If my hypothesis is correct, then it all comes back to language. And remarkably, in the Vedic tradition, the Word, Vak, was the second creation, after Agni, Fire. The second most useful invention or discovery made by humans: communication.



For the full article, here's the link -
http://www.rediff.com/news/2001/jan/15rajeev.htm

The chinese are already into the IT and successful too, just like the Indians. But why worry??

[gandesh]

wow! do i see eNRI defending india n indians for once??? wonder which direction did the sun rise today?? :D

I am not defending anyone, just saying that the fittest will survive - some chinese some Indians some others. Does race really matter ?? So, why worry.

[echarcha]

China is spreading its wings into all kinds of businesses very rapidly.

A couple of years ago my friend had come to visit the USA on business. He was into manufacturing of export purpose leather garments for past several years. His market was primarily USA and some European countries.

Leather garment manufacturing in India requires the import of finer leather from Europe and Eastern Europe. Then imported chemicals have to be used to give it the international quality finesse. Then it is finally ready for stictching.

Since last year he has stopped his business completely. Why? Single reason: CHINA!

The Chinese government stepped in and created special leather export processing zones and helped to set up large number of leather processing facilities.

The end result? Cheaper and better leather goods! Problem with Indian leather industry? Disorganised, almost no help from the government except tax deductions for export and massive corruption and red-tape hurdles.

So a leather jacket which was exported by my friend for US$ 80 with a 10% profit margin, was now available for US$70 from China. Guess which vendor the the retailers chose? :(

Corruption in exports you might ask? Well, even for export, the Customs officials who seal your container demand bribe. The dock warehouse incharge also expects bribe. (All docks in India are under government control.)

The forms which have to be filled are numerous for every shipment. So at every step of approval there is bribe demanded. Atleast this is the scenario in the leather garments export industry - which is now almost defunct.

Whether it is software or other industry, India can become very complacent and inefficient in no time. The main point here is that we should not rest on our old laurels and become complacent. Else the well known and proven Peter Principle - "every employee reaches his/her level of super incompetence" - will catch up real soon :(

Because of the corruption, absence of govt support, unstable/changing govts. and stupid labor laws, India can never catch up with the rest of developing third world, let alone become a supereconomic power.

Face it, the truth is bitter!!!

[late_latif]

nice post, Ghasiyara.