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Archive for the ‘China’ Category

From an email I received y’day:

According to Zero2IPO Research Center statistics, a total of 29 domestic and foreign VC firms established 40 funds during Q2‘08. This figure represents US$3.02B of capital available for investing in Mainland China marking a record high for a single quarter.

Additionally, 159 Chinese entrepreneurial firms receiving venture capital disclosed investment totaling US$1.20B. In comparison with the same period last year, the number of deals and the disclosed investment amount increased 31.4% and 73.5% respectively.

Keeping up with the “booming…China investment market”, Zero2IPO is organizing its second China VC & PE Event in London next month. Try and be there.

I will be speaking just after the tea break on investment opportunities for European investors in China.

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Some excerpts from a great article comparing Indian and Chinese M&A, “Dancing “Dragon” and Running “Elephant” on the Stage of M&A  by Mark He at Zero2IPO Research.

*** Excerpts Begin (emphasis mine) *** 
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Excerpts from a recent article by Liam Halligan (Chief Economist at Prosperity Capital Management) in The Sunday Telegraph, “China, Brazil and India belong in the G8

*** Excerpts Begin (emphasis mine) ***

It’s become fashionable to say the G8 is pointless. Last week’s summit of the “world’s advanced industrial democracies” was certainly an anti-climax.

After all the posturing, “working lunches” and “financial stability pacts”, the impotence of the leaders gathered on the Japanese island of Hokkaido was displayed for all to see.

Western shares kept tumbling. Crude hit another record high. As the smell of meltdown turned acrid last week, the markets seemed determined to stress the G8’s irrelevance.


Since the mid-1970s, the US, UK, Germany, Italy, Japan, France and Canada have held an annual summit. Russia has recently been added – grudgingly, because four G7 members depend on its oil and gas. Even with Russia, the G8 accounts for only 14 per cent of the world’s population, and less than 60 per cent of the global economy. And that share of worldwide output can only fall as the fast-growing emerging giants continue to outpace the West.

The likes of China, Brazil and India have churned out average annual growth of 5 to 10 per cent for many years now – an expansion rate that’s set to continue.
In dollar terms, these countries are now the fourth, 10th and 12th largest economies on earth – and climbing fast.

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An interview by Cherry Zheng from last September (with a nice photograph to boot!):

*** INTERVIEW BEGINS ***

European venture capital firms universally hold a prudent attitude towards the entry into Chinese market. As a result, only a few of them entered China. On the other hand, quite a large number of them, which include Amadeus Capital Partners Limited (“Amadeus”), are always observing the Chinese market actively and forming relationships with local VCs and major corporations

Amadeus invests venture capital in new technologies from offices in London and Cambridge, UK.  Since its inception in 1997, Amadeus has backed more than 60 companies in the UK and continental Europe, covering computer hardware and software, mobile and fixed communications technologies and medical technologies. Amadeus manages a total of GBP288 million of assets, raised through five funds including two seed-stage funds.

In his role as Business Development Partner for Asia at Amadeus, Shantanu Bhagwat (“Shantanu”) has 18 years of broad international experience in the broad technology sector, in Europe as well as in Asia, where he once worked in Japan and India. Shantanu has already visited China several times and continues to find opportunities to get familiar with this country and understand the developments even better.

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My friend Ashutosh Sheshabalaya recently wrote a piece in which he underlined the important differences between India and China when it comes to approaches towards global warming and sustainable development.

In the piece he pointed out the intellectual laziness (and the mistake) of lumping India & China together in any debate about global warming and who bears responsibility for what. It is a brilliant read and one I highly recommend.

Some excerpts: EYE ON THE TIGERS  (by Ashutosh Sheshabalaya)

They are omnipresent, even if they lie shrouded backstage in discussions about climate change. At last count, there were almost two-and-a-half billion of them – Chinese and Indians.

Indeed, one of the most sterile facets of the global warming debate is to refer to China and India, rather than to Chinese and Indians. China and India may be among the world’s biggest CO2 emitters. But your everyday Wang or Rajiv hardly qualifies for such an honour. 

The reasons are clear: out of the world’s 235-plus countries, China and India’s populations outnumber the bottom 220 put together.  And their per-head/per-body contribution to global warming is vastly lower than that of the West.

In the typical Indian’s case  – commercial energy use is, crucially, also far below the global average.  In 2005, world electricity consumption was 2,400 kilowatt hours (kWh) per person. India’s was just 432 kWh, four times less than China’s 1,662 kWh.  Oil use, too, exemplifies such trends.

An Indian’s consumption of crude, at 0.8 barrels per year, pales against the world’s 4.5 barrels, and is less than half China’s 1.8. There is little point throwing more dazzling, vulgar beams of light by juxtaposing such figures against the Western world, lit up end-to-end for the Christmas and New Year festivities.

Still, what is clear is that the difference between India and China is at least as significant as that between China and the world. And here is a suggestion to move the climate change debate beyond noisy palavers (a word originally referring to the patronising monologues of European colonial adventurers in Africa).

Firstly, differentiate between India and China. Both may be rising industrial powers, but China’s economic growth-at-any-cost is rather different from that of India, and this difference goes far beyond the numbers referred to above.
Although similarly determined to remove poverty, democratic India also boasts deeply ingrained soft systems which have begun priming its voters for the trade-offs between economic growth and their longer-term costs. 

It was India – not China, or the West – which established the first Ministry for Renewable Energy. That was in the early 1990s. Since then, India’s Supreme Court – widely considered among the world’s most activist judiciaries – has set the country’s green agenda, from forcing metalworking and chemical plant closures to driving one of the world’s most ambitious environmental projects to date, namely the conversion of the New Delhi public transportation system to compressed natural gas. There are hundreds of other such examples.

The rest of the Indian system, too, has responded, at least as far as possible in what remains one of the world’s poorest countries.  Rural India now hosts 30 million high-efficiency ‘smokeless’ stoves, with a conversion efficiency four times higher than their predecessors. Indian biomass gasifiers – a key renewable energy technology – are exported across the world, even to squeaky-clean Switzerland. More broadly, even modern, industrialising India has chipped in. The country’s energy intensity has fallen from 0.3 kgs of oil equivalent per dollar GDP in 1972 to 0.19 kgs in 2003 – equal to Germany.

Against this, the near-comprehensive lack of awareness about such efforts outside India remains striking. So too does the innate assumption that clean air and climate change are concerns of enlightened shock troops from the West battling recalcitrant polluters in ChIndia’s wastelands. On November 23, without a by-your-leave, the New York Times announced that the US was “the world’s third largest wind (producing) country, after Germany and Spain.”

It also cited the Chief Executive of the European Wind Energy Association about a ‘second wave’ of “new countries with significant wind capacity” – among them, “Britain, Canada, Italy, Japan and the Netherlands. “ No numbers anywhere, nor a single mention of India. As it happens, figures from the Global Wind Energy Council show India in fourth position, with 7,093 MW of installed windpower capacity in July 2007, three times that of Britain, Canada, Italy or Japan, and double  that of China.

This is not to say that continuing industrialisation in India will not add to the world’s environmental woes. But pretending that India, and the 800 million Indians below the Davos line are doing nothing about it robs the debate of seriousness, and provides little incentive for meaningful cooperation with the West.

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Read more from Tosh here:

Of Googlies*, Cricket, India and China 

“The 3 Rounds of Globalization” 

The Gospel according to Goldman Sachs 

and finally, a related post: Globalizing Consumption, American Style… 

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Many of you must have picked up these two (separate) news-stories from a few weeks ago…

1.  Mukesh Ambani, Chairman and largest shareholder of Reliance Industries (India) reportedly became the world’s richest person – partly owing to the rally in the Indian stock market.

2. PetroChina became the world’s first trillion-dollar firm when it floated on the Shanghai stock exchange a few weeks ago.

I wonder if this just the beginning of The Great Reverse?

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A few weeks ago while I was in Japan, a mini-storm was brewing up in the blogosphere precipitated by the somewhat careless choice of words by Daniel Altman on the IHT blog.

In a piece on the occasion of Japanese Prime Minister’s visit to India, Daniel wrote:

“…Not so long ago, there were only two countries that collected client states around the world: the United States and the Soviet Union.

These days, it seems like anyone with some economic clout can join in the fun. China has Sudan, Venezuela has Bolivia, and now Japan has India.”

Predictably that kicked up a furore (and not just because of the ill-considered comparisons).

Our friends at Wikipedia describe “Client States” as:

“Client state is one of several terms used to describe the subordination of one state to a more powerful state in international affairs. It is the least specific of these terms and may be treated as a broad category which includes satellite state, puppet state, neo-colony, protectorate, vassal state and tributary state.”

Clearly this was not a flattering description.

Daniel went on to say that, “One day, India’s economy may be bigger than Japan’s. But for now, the Japanese government is happy to underwrite India’s growth, in return for a share of spoils.”

The brief post elicited several comments with readers pointing out that:

  • Japan’s increasing interest in India was also at least partly due to its growing suspicion of China
  • A $100bn investment does not make a client state make
  • On a PPP basis, India’s economy is now larger than Japan (link courtesy Suraj Swami on the IHT blog)
  • Sino-Japan economic trade and ties dwarf the relationship between Japan and India (A related piece on IHT had noted Japan’s trade with India was about $6.5 billion in 2006…about 4 percent of Japan’s trade with China)

On the Indian Economy Blog, Shefaly posted a more balanced perspective. In her post she pointed out several flaws in Daniel’s hypothesis, notably:

  • …the assumption that investing in infrastructure is going to produce spoils worth sharing, and produce them post haste
  • Daniel’s diregard of the “strategic” reasons for such a investment and the influence that sovereign states wish to exercise through such measures

Shefaly had kindly asked me for my take on all this. I decided to wait for the dust to settle down before jumping in.

Here is what I think (in “ugly” bullet points; sorry for not crafting this more elegantly – I am fast loosing whatever skills I had learnt in the diplomatic service!):

  • Whatever Mr Altman might think, India is unlikely to become anybody’s client state – ever
  • Daniel’s piece was meant to provoke – which it did. It was not meant as a serious expression of opinion – hence it is best ignored beyond a point
  • Financial aid is – almost always – linked to political objectives (however strenuously denied) and rejecting it also sends political signals
  • Japan’s increasing (and belated; in my opinion) interest in India has as much to do with geo-politics as it has to do with economics & trade
  • Japan’s investments in India – as elsewhere – are based on economic as well as political considerations and a combination of perceived political & economic benefits
  • No doubt many people see the shadow of China looming over this relationship – but clearly that is not the only factor driving trade and commerce between the two countries

I will stop here.

P.S. For more on client states, read “We are now a client state” by David Leigh and Richard Norton-Taylor that talks about how “Britain has lost its sovereignty to the United States”

Will we ever see that kind of relationship between India and Japan? I think we all know the answer.

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