Category: Emerging Markets

Writes Salon:

Mainland China is the piracy capital of the world. China’s imitation industry feeds not just its own economy, but those of other nations as well; 46 percent of the pirated goods sold in America come from China, according to the International Intellectual Property Alliance (IIPA). The Quality Brands Protection Committee (QBPC), an anti-piracy body under the auspices of the China Association of Enterprises with Foreign Investment, claims that government statistics show that counterfeits outnumber genuine products in the Chinese market by 2 to 1. Pirated audiovisual materials occupy 95 percent of the market in large cities, and the proportion approaches 100 percent in the rural interior.

Enforcement efforts are made even more futile by popular acceptance of piracy. Rising incomes have created an enthusiasm for foreign goods and brands, but Chinese consumers have become so accustomed to cheap, pirated goods that they are unwilling to pay full prices for the real thing. Traditional Chinese moral relativism combines with a modern sense of short-term opportunity cost and self-interest to justify what everyone knows to be wrong and illegal.

A MAIT Presentation (ZIP file) gives a detailed overview of the IT scene in India. Summary of stats for 2001-02 (year ended March):

– PC sales: 1.67 million (down 11% year-on-year)
– Of these: 1.3 million were bought by businesses, of which 47% by SMEs
– First-time buyers: 71%
– Assembled PC share: 46% (down from 53%)
– Top 4 metros account for 56% (down from 68%), next 4 for 14% (vs 20%)
– Projected PC sales for 2002-03: 1.9 million (up 12%)

– Notebooks: 45K, Servers: 51K
– Printers 836K, of which: Dotmatrix 345K, Inkjet 428K, Laserjet 61K
– Network cards: 1 million, Hubs: 206K, Modems: 470K
– Internet accounts: 1.3 million

An excerpt from the press release on the surprise package in India: “One of the most notable findings of the study this year has been the increased consumption of IT products in smaller towns and cities. 30% of total PC sales was accounted for by Class B and C class cities – a phenomenal growth of 106%. ”

A Business Week story on Asia’s 25 Leaders. 11 from Japan, 4 from South Korea, , 3 from China, 2 from India, Indonesia and Taiwan, 1 from Bangladesh.

Ghana’s Digital Dilemma:

In the West African country of Ghana, one of the world’s poorest places, the busy signal is a reminder of the unfulfilled promise of the Information Age. Making a telephone call here requires persistence. Roughly half don’t go through because of system failures, but that’s only the start of Ghana’s telephone woes. The country has a mere 240,000 phone lines – for a population of 20 million spread across an area the size of Britain. Moreover, telephone bills are inaccurate, overcharges common, and the installation of a new line can cost a business more than $1,000, the rough equivalent of the annual office rent. Lines are frequently stolen, sometimes with the connivance of employees of Ghana Telecom, the national carrier. Phones go dead, and remain unrepaired, for months. Some businesses hire staff for the chief purpose of dialing numbers until calls go through.

How can we make a difference to countries like Ghana via technology?

Abdul Kalam will be India’s next President. His vision for development is applicable to not just India, but emerging markets in general.

– Three Visions for India
– Developed Nation: The Vision

Said Kalam:

I was in Hyderabad giving this lecture, when a 14-year-old girl asked me for my autograph. I asked her what her goal in life is. She replied, “I want to live in a developed India.”

That’s the dream we all have to work towards making a reality. And as we create products and services for India, let us remember that there are 4 billion people like us. The opportunities to build businesses by solving problems for the bottom of the pyramid are immense.

Dan Gillmor’s conversation with conversation with Yossi Vardi, Israel’s most famous technologist. Vardi created ICQ. He says: “For something to provide a wonderful user experience, you need a touch of . A great user experience has to do with some kind of rarity or uniqueness.”

From another report by Gillmor on Jordan:

Jordanian leaders want to embed technology into the fabric of education and the economy, to help provide essential skills and tools to the emerging generation of adults in a nation where the majority of people are under the age of 18.

The ambitious goals include wiring up every school and university in Jordan with true broadband Internet access. By the end of 2004, leaders hope to have spurred the creation of 30,000 new jobs, $150 million in new foreign direct investment and annual technology exports of $550 million. This might sound modest elsewhere, but for a nation with a per capita annual income of under $2,000, it would be an impressive achievement.

This is the kind of vision emerging markets need – how to get a computer on every desktop and in every home. This investment and enablement via technology is, according to me, the primary requirement for progress.

James Wolfensohn of the World Bank: “When you talk about the use of technology to bridge the digital divide, China probably will be in 10 years the No. 1 example. But it will be closely followed by India. The interesting thing is that on the Voices of the Poor study, where we interviewed 60,000 poor people in 60 countries, we had a number of the very poorest come to the bank for the launching of the book, and I asked them what was the number one thing they wanted. They said technology and information, they didn’t say food, they didn’t say charity, they said technology and information. Poor people know as well as anybody else that what keeps them poor is lack of competitiveness and lack of knowledge.” So true!.

That is why the most important thing to focus on in briding the digital divide is to takes Bill Gates’ earlier vision of “a computer on every desk and in every home” a reality in every emerging market of the world. This means computers at USD 100 and software for USD 5 per month.

IDC’s John Gantz, chief research officer and senior vice-president, in an interview in The Far Eastern Economic Review replies to a question on “What will Asian IT companies be focusing on in 2007?”:

I think they’ll be most active in the simpler things–they’ll be making servers, not just PCs, but they’ll be making low-end servers, they’ll be making appliance servers, they’ll be making all the chips . . . I think they’ll still be doing that, but at the same time building up indigenous software and services organizations along the way Israel has done. I don’t think they’ll be exporting intellectual property, exporting a lot of software packages or multinational services firms unless they acquire their way in. But every other geography is looking to Asia to grow . . . it’s like the last great frontier for IT vendors and it’s the indigenous vendors who have the best shot at taking advantage of that. So I think Asians should be looking at Asia first and Europe or the U.S. second. There’s a whole regional second tier that we think is going to build up . . . Globalization has gone pretty far. Now it’s time for regionalization to happen.

Agree with him on most points except the part about Asian cos. not exporting IP. This is in fact the real opportunity. Asia has about 70% of the world’s SMEs. Let’s start creating solutions for these companies. Its a big market, running into millions of companies. Over time, move upwards to disruptively target the bigger enterprises. Unfortunately, most Asian companies are only looking at outsourced manufacturing and services — that mentality needs to change.

China Software Market Statistics (packaged software, 2001):

1. IBM – USD 111 million – 6.8% market share
2. Microsoft – USD 84 million – 5.2%
3. Oracle – USD 58 million – 3.6%

Writes Cnet: “According to IDC, China’s software industry was valued at $1.62 billion last year. By 2006, it is expected to increase to $7.8 billion at a compound annual growth rate of 36.9 percent from 2001.”

Reuters on the growing Digital Divide:

Yoshio Utsumi, secretary-general of the Geneva-based International Telecommunications Union said “information poverty” remained a reality for much of the world. More than 80 countries had fewer than 10 telephone lines for every 100 inhabitants. And in three out of five countries, fewer than one out of 100 people used the Internet, he said.

“Information has become the key to competitive advantage for both business and modern states,” he said. “Anyone can work and provide a product to the global market, even from a remote corner of the world, if the means of communication are readily and cheaply available.”

I wrote about The Digital Divide recently in Tech Samachar. Emergic is all about bridging it.