Question: Which among the following companies — Microsoft, Intel, IBM or Samsung — had the highest profits in the quarter ending June 30, 2002?. The answer cuts to the heart of what is a major technological shift. But more on than a little later.
Let us first go back in time. A few centuries ago, countries like India and China were the cynosure of all eyes. They had wealth, history, culture, religion everything that successful civilisations were about. The Europeans were fascinated by these lands, and sent first their explorers, then their traders, and finally their armies. China closed itself to the world. Many of the other nations, including India, came under foreign rule. Power shifted to Europe, especially Great Britain. Much of the East become a colony of the West.
As technological changes powered much of the 20th century, the US has gained ascendancy, along with Western Europe. Japan, for a brief period, threatened to become the most powerful financial and trading nation, but that has now hanged as it has gotten caught within its own internal problems. The past couple years have seen the stock market bubble burst, none more so than on the Nasdaq, which is down to levels not seen for nearly five years. It is as if, for the stock markets, the technology and Internet boom never happened. The final nail in the coffin has been the accounting scandals which have roiled American capitalism.
Amidst all this, the Eastern nations have had their share of problems, especially the Asian financial crisis in the second half of the 1990s. Nations have emerged with varying degrees of resilience from those events. The last decade also saw India and China open up their markets, with China powering ahead much more rapidly.
An example of Chinas growing prowess in the Asian region is the recent announcement that for the first time, Japans exports to China have reached half the levels of the US. With nearly half the worlds population, the East has always been a attractive market for the rest of the world. But the insular ways of many of the nations always held them back. Now, however, things are changing, as countries seek to combine the head of China and heart of India to engineer a shift in the technology epicenter.
To get an indication of where the technological wind is blowing, consider the following:
Back to the question I had asked at the start. The answer is South Koreas Samsung with profits of USD 1.63 billion for the quarter, more than Microsoft, Intel and IBM.
South Korean companies have, in fact, been leading the charge worldwide. Companies like Samsung, LG and Hyundai are symbolic of the transformation is a country which just five years was at the heart of the Asian economic crisis.
Tomorrow: The East (continued)