Enter the Dragon

Beijing
is a revelation: a Western city in an Asian country with a billion people.
All-glass skyscrapers, 10-lane freeways, automation. Underground supermalls. And
all the electronics, "branded" apparel and other products. In the West
or in the PRC, products say: Made in China.

And yet, there’s the animosity toward the biggest consumer of Chinese
products: the US. The few young people I came across were furious about the
April 1 collision between a US spyplane and fighter-pilot Wang Wei, who died.
They said the US plane should have been shot down–or the Americans jailed. A
28-year-old Stanford graduate from Shanghai promised attacks on US websites.

These aren’t empty threats: in the first week of May, hacker attacks
defiled US sites, and the whitehouse.gov and CIA.gov sites went down under
denial-of-service attacks. These en masse attacks could well be state endorsed,
though China responds to hackers as it did at Tiananmen ’89. Two brothers who
hacked into a bank’s system and transferred $31,000 to their own accounts were
sentenced to death. Over 50 were arrested for hacking into the railway’s
system to upgrade tickets. (And so effective is censorship, many Chinese still
reportedly insist that Tiananmen never happened, that it’s foreign media
fiction.)

The Chinese threat for India is, of course, not about hacker attacks. First,
it’s about the area where the Chinese rule: manufacturing. Everything today is
Made in China. From batteries to TVs and motorbikes, we’re under post-QR
pressure.

For Indian infotech, the threat is the one area where the Chinese aren’t
yet visible. That’s our coveted area of future world domination: software and
services.

But they’re moving ahead. Their economy grew faster than expected in Q1
2001, at 8.1%, riding domestic demand, and they’re projecting 7.7% for
2001.What slowdown?

While we discuss the China threat, the Chinese are quietly moving ahead.
Manufacturers like Sony are shifting base to China, and not just for low-end
items. Software billing rates are overtaking India.

I found Beijing stifling, but the citizens don’t seem to think so. Despite
the language gap, China is the world’s manufacturer. Next stop: software and
services. India’s language edge may stay awhile, but China has a bigger edge:
a huge home market. That’s a better base for growth than fickle exports. Add
to that Western systems, time-consciousness, and hard work, and our neighbors,
another ‘developing’ country with a billion people, make up our biggest
competitive threat in the new economy.