‘China is winning the tech race’

With the technology-driven transformation of the global economy, India and China have emerged as major players. While Chinese exports are far larger in manufacturing, India takes the lead in business services. Though India is held to be about a decade behind China in most aspects of technology, there are areas where the gap is closing. What are the advantages China has over India in the tech arena? Do societies need to take cultural leaps to adapt to emerging technologies? DNA examines the issue in a three-part series starting today.

 As a journalist who has been reporting on technology and emerging economies for two decades, Rebecca A Fannin often gets a preview to the future. It is with that insight, born of tracking tech start-ups from Silicon Valley to Bangalore to Beijing, that Fannin asserts, in her book Silicon Dragon, that China is “winning the tech race”. In an interview with Venkatesan Vembu in Hong Kong, Fannin, now international editor of the Asian Venture Capital Journal, points to the tec(h)tonic shift.

You say China is winning the race for the global hi-tech leadership. Is that an audacious claim?
It’s early days, but the trend is there. In another decade it will be more pronounced. In the short term, things have been overheated in China. But this slowdown in Chinese manufacturing isn’t going to affect the innovation cycle. We might see investors being more cautious about pouring money into start-ups: China has been the fastest growing venture capital market in the world for a couple of years now. We will also see some consolidation. It will be healthy for the industry in the long run.  

Has China moved beyond ‘copycat entrepreneurship’?
Yes. The ‘copycat entrepreneurs’ are pretty well known: they have copied everything from Google to Facebook to MySpace to YouTube to Amazon. Those were the early entrepreneurs. Today, we are seeing a whole new breed of innovators. The copycats tended to be Chinese who were educated in the West and returned to China from the mid-1990s. Since 2005, we have seen a new trend of home-grown entrepreneurs who got their education and experience in China, who are being funded by local venture capital funds. They tend to make up their own models.

Silicon Valley was an incubator of ideas. Do you see that happening in China?
There is a similar buzz. It’s hypercompetitive in China: people throw things out there and see what works, and if it doesn’t work, they try something else. It’s very innovative. On the other hand, when someone comes up with a good idea, it’s immediately copied by 10 other wannabes. But that only makes innovators try harder to get in there for a once-in-a-lifetime opportunity to create something.

China’s manufacturing success was government-driven. Can innovation be ‘mandated’ in the same way?
Tech innovation isn’t government-driven in China. Sure, the government is trying to encourage it and has spotlighted a couple of sectors where it would like to see more development. But this innovative spirit that’s risen up in China is a private enterprise kind of thing. There is not much government involvement.

What are the distinguishing characteristics of Chinese tech entrepreneurs?
Geeks are geeks the world over. I’ve met some of them in Beijing and Shanghai. There are some real mavericks out there, some really strong personalities like Jack Ma (of online auction platform Alibaba) and Robin Li (of the Chinese search engine Baidu). There are people like Jeff Chan (of Maxthon, a made-in-China browser), who is a geeky software engineer, but when you get him talking, there is a spiritual side to him.

Like entrepreneurs the world over, they are all creative and imaginative and passionate. They are driven not by money: many of them have taken the money from their first start-up and ploughed it into their second start-up or even a third. Some of them have gone on to become venture capitalists.

You say the next Steve Jobs or Bill Gates will come from China. Have you sighted him or her yet?
That’s actually what one of the venture capitalists I interviewed says. I think it’s still early days, but it could happen. In terms of personality traits, there are people like that in China. There is Joe Chen of Oak Pacific Interactive (a Beijing-based Web 2.0 company). He has got this incredible innovative, imaginative mind, and he always speaks in analogies. Ask him a question, he’ll tell you a story…

Do you see any game-changing ‘disruptive technology’ coming out of China?
We still haven’t seen anything like an iPod come out of China. But talk to venture capital investors and ask them where they are putting their money and they’ll tell you that the kind of disruptive technology we are seeing in China today is amazing. These are not well known, and it’s not like there are dozens of them. True innovation doesn’t happen so often.

So, will Indian techies be working for Chinese giants in the next five years?
What I see in India today is pretty similar to what I see in China. Except that in India it tends to be more service-oriented, very internet or web-oriented, not so much the leading-edge technology. And a lot of Indian start-ups are servicing exports as outsourcing companies.