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| Everyone talks about China as “king” of manufacturing and supply chain to India’s supremacy in offshoring supply and services. While China is rapidly becoming seen as up-and-coming in terms of IT offshoring, China’s offerings today are a small fraction of what they can and will be, and in direct numbers, in comparison to India. It will be many years, if ever, before China comes close to challenging India’s software development supremacy. I believe that ultimately, “hybrid” plays involving both China and India and utilizing the tremendous advantages of both, will dominate. This is already happening now, albeit in a quiet way. | |
Industry Vertical Opportunities |
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Looking beyond geography alone, Asia’s vertical markets are often borderless in their opportunities. Let us look at a few: |
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Manufacturing/Supply Chain - Manufacturing/supply chain is fundamentally driven by early stage product development and intellectual property creation driven largely by the U.S.? Japan and Korea are very active in product development and creation – however there is a tendency to keep more of their operations vertically integrated (think Samsung and the major Japanese electronics manufacturers) than their Western counterparts do. There are also supply chain centers in Greater China and Singapore, supported by development in Malaysia, and to a lesser extent Thailand and Vietnam. Semiconductor IP development is still heavily influenced by key areas in the U.S., primarily Silicon Valley, and secondarily, cities such as Austin, Boston, and Irvine.? But Taiwan is running a relatively close second, and design work is growing rapidly in China. Taiwanese ODM’s (original design manufacturers) control more than $100 billion in notebooks, PC’s, handsets, LCD screens, and peripherals, amongst others.? Another trail of U.S. semiconductor development leads from the Silicon Valley to Singapore and Malaysia, with a greater focus on back-end packaging and testing. Asia is now largest end market for semiconductors and other electronics manufacturing services. For any software that supports manufacturing, Asia is arguably one of the two most important markets in the world (along with the US). |
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| Financial Services - The biggest Asian market today for financial services is Japan. It is huge, established and mature. Korea is also significant but very self-contained. Hong Kong and Singapore are more open to offerings from other countries and are the main focus of most marketing efforts in this area. A new financial center emerging on the global market is Shanghai. It aspires to be as big as the other financial centers, and unofficially aspires to eventually replace Hong Kong as the financial services hub of Greater China. | |
| Open Source - China loves open source. As a nation, it wants to get away from proprietary standards. That makes free software a very appealing idea. China is always looking to break away from – or at least question - standards for which it must depend on others. Other regional markets are rapidly evolving to open source standards? as well. | |