Postcards from the Edge : China and India

BRICin it

claireoh — Tue, 21 Apr 2009 02:59:00 GMT

I am engrossed in The White Tiger at the moment. Awesome read. The BRIC countries are so vast and so diverse, still growing at quite a pace: India forecasting around 5.5% growth.

In London last Wednesday the theme was India: the opportunity for UK companies in India and Indian innovation that can benefit from UK investment – great brainstorming meetings with UK Trade and Investment and Cartezia.

I am tasked with getting more involved with UK India Business Angels network (and UKIBC) and ping between a rush at the opportunity and a sigh at the size of the task, simultaneously. So much to do.

There’s a delegation of Indian companies to London in May/June courtesy of Envestors – as UK investors seek to invest in high growth companies. We are also working on a plan to take an outbound delegation to India with UKTI as more and more companies look to Asia to source skills and reduce operating costs.

At dinner last Tuesday night I received fascinating insight into business dealings in India at Tamarind as I met some great people I am now lucky to call friends: businessmen from families in India that have built empires – Gaurav the latest in seven generations of wealthy entrepreneurs and part of a self-confessed elite.

Based in Delhi, Gaurav is charming, ambitious and articulate. He is an unabashed capitalist and leader of the family business: sugar. Both he and Ajay (running a retail business with a sideline in helping entrepreneurs – he heads up the London chapter of EO) contest that wealthy businessmen in India are not doing enough to facilitate the next generation. I had thought philanthropy was more more widespread and naturally occurring but these guys set me straight. Only after some time did Gaurav mention that they have set up five schools, three girls scholarship programs, sports programs and education projects. Modesty prevails.

So what about India and tech start-ups? The guys say it will be some time yet (years) before wealthy local families invest in Venture (be it ICT, Cleantech, Hi Tech). Property and Retail dominate – like so many other countries, be they established or emerging. When in Ireland (as I am this week) they talk about apartments and land, not cool technology and spinouts from DCU and Trinity College.

The other factor is inward investment versus the desire to legislate for indigenous industry. While outsourcing continues to grow, so does the creation of start-ups and SMEs. Emerging markets seem to reach a kind of tipping point where some of the brains employed in BPO are now considering taking their idea, their IP, and turning it into a real business.

BizSpark downloads may reflect that trend and TiE India are doing a great job. I think Bangalore is the largest chapter.

I am seeing Jim O’Neill (Mr Bric) from Goldman Sachs for lunch on Thursday. He says the BRIC has emerged and now it is the turn of the next category – the N-11. From what I see, he might be right. Who am I to question? In the meantime we shall aim to prop up the economy by eating fine Italian cuisine in Mayfair on Thursday.

Sparking Small Businesses

claireoh — Mon, 12 Jan 2009 16:44:00 GMT

November saw the launch of the eagerly awaited new program for start-ups - BizSpark is now widely available across US and Canada, Western Europe, Central & Eastern Europe, UK, Germany, France; major markets in Asia Pacific from Indonesia and Malaysia to Australia; and Latin America.

Leading up to Christmas, there was a great turnout at LeWeb in Paris and the TiE summit in Bangalore. Microsoft India managed to get Ravi Venkatesan and C K Prahalad to open the proceedings and TiE Bangalore (with over 1,000 members) firmly reinforced their centre’s position as “the Silicon Valley of India”. Over the three days over 1,700 start-ups attended and there is still a great buzz in the media about this new program.

Middle Eastern countries will launch in February with Turkey ahead of the game launching early December at the Microsoft Turkey Developer Summit with 500+ developer attendees. They got some great coverage (I do not understand Turkish but Mehmet in the team tells me it is positive!)… Turkey also feature very high up in the league table of downloads of Microsoft’s program for student programmers, DreamSpark, announced by BillG in February 08. It is clear that the next generation of software companies will not just come from China and India.

I am really looking forward to seeing the reaction to this new program for start-ups in Jordan, Lebanon, Egypt, Morocco, Tunisia, Saudi, Gulf, Pakistan and through Africa in Nigeria, Senegal, Kenya and South Africa.

Happy New Year!

Indian Summer

claireoh — Sun, 31 Aug 2008 22:07:00 GMT

August in London was quite a contrast to the climate around our team meetings and conferences in San Fran and Atlanta, but despite most of Europe being on holiday it proved a good time to explore partnerships with organisations such as EBRD and IMG and explore things further with HSBC and BT.

We also finalised a partnership with UK India Business Council this week which sees us collaborate to nurture the next generation of entrepreneurs and increase the IP and capital flow between UK and India. We'll announce our partnership at their event at Mansion House on Monday 1 September.

UKIBC, under Sharon Bamford's leadership and championed by a great board of advisors including Vijay Mallya and Karan Billamoria, has done a great amount to increase the impact of Indo-British relations.

After the British and Indian governments launched the India-UK Joint Economic and Trade Committee (JETCO) in 2006, the House of Commons Trade and Industry Select Committee recognised the group (then IBPN) as the ‘de facto’ chamber of commerce for UK and India. IBPN evolved into UKIBC and in January 2007 Gordon Brown announced that the Government would significantly boost the annual funding to £1 million with a strategic partnership implemented through UK Trade and Investment.

Our team will identify the next generation of high growth start-ups and entrepreneurs, as we aim to broker greater access to mentoring and support from organisations such as TiE and access to capital from UK India Business Angels Network. Our Enterprise team in the UK will also help customers leverage Indian technology skills with partners such as TCS.

Flaming June

claireoh — Mon, 07 Jul 2008 14:38:08 GMT

After our Brussels summit it was time to get a bit closer to home for the BBAA conference in Brands Hatch (via Barcelona). The sun was still shining at that point. At the awards dinner the night before, I bumped into the very charismatic Richard Farleigh.

Back in London, I caught up with Ian Robertson from NCGE who told me they have 10,200 graduate entrepreneurs registered now. Flying Start helps university grads inventing products and services take them to market and start a business on the back of those ideas. We're hoping to announce a Flying Start for Software Entrepreneurs soon. We also talked about Ian's business dealings in China and I'm helping him find some partners out there.

I also spent some quality time with (Dr) Sally Ernst from Sinocode. They have 90 developers in Beijing and we are looking at ways to help more Euro-based software companies leverage their skills. They already do quite a bit of work for MCS on Sharepoint and for UK customers. Apart from doing business, Sally and I have become good friends. Sal told me about her involvement with the MIT Entrepreneurs Organisation. The EO as it's known is a club for successful ($1m+) entrepreneurs. That rules me out then. I spend too much on shoes. Sal does too but she managed to sell WebCentral in Australia when it had a turnover of $40m+ and now goes between London, China and Oz.

At the team meeting in Amsterdam last week it was time to catch up and see what everyone else was up to. My colleague Andreas just got back from China - he said the smog is really something. Andreas is very very tall. As are most Dutch people it seems. (Good blog from Matt in Beijing by the way). We talked about our team charter for the (fiscal) year ahead. We were brainstorming how to more innovative and effective! You have to constantly challenge yourself if you're going to make a difference at a corporate. That conversation reminded me to send them a copy of Tom Peters Re-Imagine Manifesto. Reading some of the entries on Change This is enlightening too. Better than reading the newspaper at the mo, which I find full of doom and gloom....

No time for that here. After stopping off in Dublin to see Enterprise Ireland again, I was back in Brussels for the JA-YE Europe Entrepreneurship Forum at the EU Parliament. What a great day. I was judging the student team entries for the JA-YE Enterprise Challenge (Microsoft Innovation) award with fellow judges Andy Reinhardt from Business Week, Brian Lang, VP at Mastercard, and Peter Baur from the Commission. Have a look at the pics here. Some of the ideas were really great. Many with an environmental angle - like the intelligent waste solution from the guys in Romania. Next Stop - California!

PM Visits

claireoh — Fri, 25 Jan 2008 02:45:00 GMT

Ah........I was wondering why there were so many people with little blue and yellow lapel pins milling around the entrance of the BA lounge at Seattle airport last Friday. Some of them had those earpieces you see in the movies - I'm guessing bodyguards. It transpires that the PM of Finland was in town.

The same week Gordon Brown was in China accompanied by Richard Branson and CBI boss Richard Lambert among others. I hear Peter Jones went along but can't find any evidence of this on his website. Though it does make for interesting reading.

Also on the UK trade mission to China was Ian Robertson from NCGE who signed an agreement with a Chinese educational institution. NCGE and Kaufmann are heavily involved in Global Enterprise Week (launched in London before Christmas) and the Chinese are planning on taking part.

Good news that the Chinese sovereign fund is heading to London but not sure what percentage of this will make it into the venture market and with UK start-ups (rather than buyouts). Microsoft's presence in China is on the increase having ramped up investment in 2002. Then BillG visited last July.

Intel Capital are already investing there as you'd expect. This is an interesting site about venture funds in China. And good blog from Richard Spencer in Bejing.

Gordon Brown then went on to India where the emphasis was on providing assistance for the rural poor and technology plays a role in this. A contrast to his first visit to India this time last year as Chancellor, with Karan Billamoria (Cobra Beer) who had just published his book.

Interesting commentary from Peter Foster before he left Delhi for NZ a few months ago. One bullish bunch is TiE - now the largest entrepreneur organisation worldwide apparently.

Anyway I'm off to watch Michael Portillo and Diane Abbott on the This Week couch.

Diane has just said "It's the age of the blog" as Andrew Neil serialises what he calls "a tough week for Gordon" but I was pleased to see the markets recover somewhat today...feeling relatively upbeat until Gerry Robinson came on and talked about an impending global recession........time for bed I think....

Emerging Markets and UK Trade

claireoh — Fri, 11 Jan 2008 18:35:00 GMT

Greetings from a grey (but great) Palo Alto. Having been awake since 3:30am, with CNN on in the background (those Viagra jingles can be very distracting) and my cup of Zen tea in hand (how apt), I thought I'd share my findings from the excellent briefing by UK Trade & Investment on Emerging Markets in London on Wednesday. Sir Digby headlined the session, delivering the first such speech after six months in the role of Trade Minister to a select gathering of City folks and international businesspeople.

Of course this meeting gave a UK perspective but also a very compelling update of how we are all faring on the world stage. Lord Jones started by reminding us that "Governments don't create wealth - you do" and said he thought he was being successful as a change agent at UKTI though he was finding that change wasn't "everybody's cup of tea". He inherited a "great group going the right direction" but there was so much more to do and complacency wasn't an option 18 months into the five-year strategy. He travels more than I do: In six months he's done six long haul, six short haul to Europe and six visits to regional development agencies. He joked that his wife Pat thought he had left her - he just hadn't told her yet.

In the last fiscal, UKTI spent £280m of taxpayers money. £65m went to four key trade services generating £1.13bn for the economy. Financial Services and Professional Services remain the strongest performing sectors while Creative Industries is showing signs of being a player in the near future: UK has 1% of the world population engaged in this sector but generated 16% of related worldwide GDP. UKTI recently published the ICT strategy and it does make for good bedtime reading if you're contemplating an export strategy.

Of the so-called BRIC countries, it goes without saying that India and China attracted a lot of attention at Wednesday's session. The UK India Business Council set up by Lord Karan Billamoria (founder of Cobra Beer) is seen by Dibgy as a "great engine for real wealth creation; they only got £1m from UKTI after they got it off the ground". (Along with TiE, Microsoft is working with UKIBC to build more business bridges between Indian entrepreneurs and the UK investor community for instance). Digby met with the head of Tata (who bought Corus) on his recent visit who mentioned they would have to re-purpose c400 jobs at the north Wales facility to India over the next four years - but they would retain the UK workforce so there is no impact on the local or national economy. This re-emphasises he said why "Britain has nothing to fear from Globalisation - if we do two things: (1) Skill our People and (2) Continue to invest in markets around the world".

Jim O'Neill, Head of Global Economic Research at Goldman Sachs, and disappointingly a Man Utd fan, coined the term BRIC and believes "they should not be regarded as emerging or developing any longer" saying that if it weren't for these countries the world economy would be in a lot more trouble after the US downturn. The G7 really is out of date and is becoming "almost an embarrassment". Having said that the US still accounts for 30% of world GDP and the BRIC nearly 14% but the G7 share declined to around 55%. China's share grew to make it bigger than the UK and Jim thinks it will soon be #3 overtaking Germany (behind US at #1 and Japan at #2). Domestic demand in China was greater than that off all the Eurozone countries put together. What's most interesting in Jim's presentation is the view now versus the [possible] view in 2050:

% WW GDP 2006	% WW GDP 2050
US	China
Japan	US
Germany	India
China	Brazil
UK	Russia
France	Japan
Italy	UK
Canada	Germany
Brazil	France
Russia	Canada
India	Italy

Andrew Cahn, Chief Executive of UKTI said they have 17 priority markets and in each of these business councils play a vital role "creating business where UKTI can then add resource and animate the opportunity". He mentioned they Govt had been conducting a study to see how the [decentralised] model of regional development can drive export strategies for local business and inward investment to that region. "There are two options: better co-ordination or a single entity". Speaking of "converting innovation into jobs and profit", he said there are 60 large-scale projects underway linking R&D to international trade through academic partnerships.

A lot has happened in the last fifty years - in the 1950's Asia accounted for 18% of world GDP. Today it is 30%. The UK is now the largest investor in China and in the past few years 69 Indian and 52 Chinese companies invested in the UK.

So outside of BRIC and the G7 which other markets are going to feature in the next fifty? Jim O'Neill (calling them the N-11 or 'next eleven' with large populations) highlighted some interesting candidates: "Look out for Bangladesh and Vietnam (7.6% GDP growth) - particularly for low-cost production; Mexico probably has as big a potential as Russia; Nigeria is seeing 5.6% GDP growth and if it fulfilled its potential it could be just outside the Top 10 (above); if the leadership changes mindset in Iran it could become a player; Egypt is growing 4.2% and Korea has such a high GES (Growth Environment Score) it shouldn't feature on the 'emerging' list anymore". Others in the N-11 were Pakistan, Turkey, Philippines and Indonesia.

The 4 growth levers that helped form this picture are:

1. Openness

2. Education

3. Stable macro-economic policies

4. Strong and stable - but not necessarily democratic - political system

Digby touched on the fine line between politics and business in his speech, talking about the delicate area of defence equipment - what he called the "jewel in the crown" and he plans on spending time in the Middle East to help create the right environment for this trade (led by the UKTI Defence and Security Group). When he fielded objections recently during the visit of King Abdullah of Saudi Arabia he replied "They will buy the defence equipment anyway - if not from us from someone else (like the French) so we may as well do it and have some influence and become a leading example, a force for good". I like this sentiment. Better to be at the table and enlighten folks than not.

In his summation, Andrew Cahn rather profoundly said "trade produces peace through interdependence". Jim mentioned the "politicially awful but commercially great" situation in Russia and said in emerging markets we have "nothing to fear and everything to gain" from getting involved.