Lien Chan opens fire over economy

Right. How is SMIC coming along these days? :laughing: [/quote]

Doing extremely well, actually. It is now in third place in the foundry business behind TSMC and UMC. Pretty damned good for starting from nothing just a few years ago.
eetimes.com/news/semi/showAr … =183702841

SMIC is still in the ramp-up stage and is tied up with capital expenditures inherent in building new fabs. It has easily grown several-hundred-fold in the meantime, but most importantly, the business and technology sides of things are executing perfectly.

It’s not your field, I can tell. :laughing:

HG

If you are referring to the lawsuits that TSMC continues to file, they are only testaments to the fact that SMIC is a force to be reckoned with.

No, that wasn’t what I was thinking, I was thinking far more broadly, but you raise a good point. I supppose if China swallows Taiwan it can expect to get that tech leg up it so desperately needs for free?

HG

Quite the contrary. Taiwan resisting integration will allow every other player to get a leg up, technology-wise or market-wise. TSMC’s own assessment is sufficient.

61.67.71.147/TaiwanHeadlines/ind … rdid=53026

[quote]An unnamed TSMC executive says that the growing threat of SMIC owes
more to the Taiwan government’s prohibition on Taiwanese investments to
set up chip-making factories in mainland China than with SMIC’s theft of
talent, technologies and trade secrets from TSMC.[/quote]

Zeugamite, that quote is all about TSMC wanting to set up in China.

HG

Now the real problem is that the KMT is simply no longer the sole rep for Taiwan, or likely to be ever again. [/quote]

That’s not a problem, because KMT, or indeed any party that rules Taiwan next will be forced to deal with the new reality. They can barely afford to ignore it now. Once the channels are open, you can be damned well sure there won’t be turning back – one reason why we see the pathetic last-ditched stand against the floodwaters. Those are the forces at work.

India and Vietnam, at least, are very promising indeed. Trust me, there are a considerable volume of investors that prefer these two countries to China. HG[/quote]

Of course. Mexico and Cuba are also very promising for some types of businesses, but only a fool would try to drive businesses to those places while barring investment in the bigger economy nearby.

[quote=“zeugmite”]That’s not a problem, because KMT, or indeed any party that rules Taiwan next will be forced to deal with the new reality. They can barely afford to ignore it now. Once the channels are open, you can be damned well sure there won’t be turning back.

I agree, erh, to some extent. I do think Taiwan can hold out as is though. Obviously this will mean slower growth, but it will still mean growth.

Don’t kid yourself, the investment case for India is far more appealing for many investors right now. particualrly those averse to risk. The China growth story is not set in stone and there is still plenty that needs to improve.

HG

If I had a product which was cutting edge and I thought that manufacturing it in China ran the risk of the technology being copied and then marketed against my own at a cheaper price, and that even with a higher manufacturing cost, doing it in my own country would safeguard that technology. I would do it. It’s what a lot of companies already do. Many I know have their low end products made in China and the high end still manufactured in the States or Europe.

So far I can see product quality out of China is good and improving (although a lot of the factories will secretly try to change components to a cheaper one they “think” is the same and causes a product that has been in the market for years to suddenly have mass failure), and companies have shown initiative as far as copying but I dont see much innovation, little creativity , not many companies that would have a brand that are internationally recognized. I’m sure this in part is becuase familiarity with the consumer products like in Taiwan , the USA and Japan. People are using these high tech products widely and as a part of everyday life, not just from the perspective of what product can they copy to make money. I was wondering to what extent (if any) you attribute to the Chinese culture/government for lack of progress in this area, such as an ability to think outside the box.

Poor Lien Chan. No more Japanese properties to expropriate. No more kickbacks for permitting loans to government corporations. No more upward cash flows from the hoi polloi into his deep pockets. Yes, I imagine one might think the economy must suck, when it is no longer in service to oneself. What’s he going to do when he discovers the earth orbits the sun instead of himself?

Michael

Huang Guang Chen,

India the country that was about to go nuclear with Pakistan last year. Oh yeah that’s stability alright.

Vorkosigan,

So now we see similar corruption from CSB. Is it more acceptable because CSB is a hanji TI supporter, instead of a hanji reunification supporter.

[quote]India the country that was about to go nuclear with Pakistan last year. Oh yeah that’s stability alright.
[/quote]
I missed that one last year… :astonished:

I personally think the “culture” aspect is way exaggerated. All mainland Chinese I know are very innovative, and hungrily absorbing every unique business model they can think of. I think the reason Chinese companies tend to copy rather than innovate is much more innocent: lack of experience and maturity.

This is something I’ve certainly seen in my field: how many years of experience does the oldest Chinese software developer have? How many shipped product cycles has he/she worked on? This extends out in every direction. How many years of experience does the oldest Chinese branding guy have?

In all these cases, the answer is probably, at BEST, 10-15 years of experience? So, perhaps 30-40 years of age? There just aren’t Chinese equivalents to the 55 year old gurus who’ve been immersed in the game for 30 years. And the type of implicit wisdom and domain expertise missing due to this gap can’t be ignored. I think if we come back and have this discussion in 20 years, when the current generation of 35 year olds reach 55, we’d reach vastly different conclusions.

Why would a Chinese automaker copy a Western model (as was widely reported 3-5 years ago)? Well, when was the last time that the engineers at the automaker would’ve created a modern design based on modern systems/technologies? That’s not something book knowledge can transfer. How else would you start? But 5-6 years on, domestic automakers are learning and improving day by day.

If we step away from the established product families that the West has been making for decades… let’s take a look at the products that have materialized out of nowhere in the last 5 years. Baidu is doing very well in China, beating both Yahoo and Google. Netease and Alibaba are as successful as eBay. Chinese equivalents in electronic payment, wireless content, etc, etc… All of these companies are absolutely world-class in terms of innovation and creativity from both a product and technology point of view. Chinese culture and government influence doesn’t seem to be negatively affecting competitiveness in this field!

It’s a long term process. The West is enjoying the fruits of its much earlier, and institutionalized, head-start. And Western companies that are informed/wise understand the transitory nature of this head-start, and are working with Chinese partners to make sure that they can maintain their leadership position even as China’s economy becomes more competitive.

Don’t kid yourself, the investment case for India is far more appealing for many investors right now. particualrly those averse to risk. The China growth story is not set in stone and there is still plenty that needs to improve. [/quote]
I didn’t make the above post that you’re quoting, by the way.

I don’t disagree that India is far more appealing for some investors. But at the end of the day, I think the statistics tell the story. Investment dollars are what they are, and China still has a dramatic lead. India’s economy still remains incredibly insular. And regardless, it is without a doubt “foolish” from an economic point of view to restrict investment to the obvious partner an hour away by plane.

Did you see that Bangalore, the heart of India’s IT revolution, was crippled by a one-day strike earlier this month? The cause was a “territorial dispute” with a different Indian state. I found that pretty remarkable.

[quote=“cctang”]I personally think the “culture” aspect is way exaggerated. All mainland Chinese I know are very innovative, and hungrily absorbing every unique business model they can think of. I think the reason Chinese companies tend to copy rather than innovate is much more innocent: lack of experience and maturity.
[/quote]

Sorry CCTang, I had to stop you after the first sentence. Innocent may be the right term and I have no doubt that China is going to go through the learning curve. Which will take time (which Taiwan is already 20 years ahead of China and relates to the comment , anything you can do we can do better). But innovative can have more than one connotation. In the China environment, it is lateral development, what I am talking about is vertical integration.

While you mention Yahoo and Google. Netease and Alibaba in a sentence. I wonder how many Chinese are surfing myspace or youtube, the times I have been in China my internet connection sucked to high heaven. It was so useless I thought how could an engineer actually design anything waiting as long as I did for any file to download.

[quote=“Mick”] But innovative can have more than one connotation. In the China environment, it is lateral development, what I am talking about is vertical integration.

While you mention Yahoo and Google. Netease and Alibaba in a sentence. I wonder how many Chinese are surfing myspace or youtube, the times I have been in China my internet connection sucked to high heaven. It was so useless I thought how could an engineer actually design anything waiting as long as I did for any file to download.[/quote]

I think discussing the second case is far more explanatory than the first, since the first is just your personal take on the issue.

I don’t know where you went for an internet connection, but connect speeds available to the vast majority of Chinese is very good. Most Chinese cities are thoroughly covered with fiber, inexpensive because of the high residential density. Every urban Chinese household has high-speed DSL available. Perhaps you were stuck in a hotel…? I don’t know. You should try out any of the internet cafes available on every street corner.

In terms of “how many Chinese are surfing myspace or youtube”… the answer is, not very many. There are Chinese equivalents to both (uume.com or blogcn.com, for example). I don’t know if you’re familiar with Tencent’s QQ, but that’s yet another tool that is so thoroughly integrated into every fabric of Chinese life/business… I have no idea how Western companies get by with just Yahoo or AIM.

All in all, the bottom line is, I agree that by and large Chinese companies are not yet “innovating upwards”. I disagree, however, on why Chinese companies are failing to do so… and I still believe the internet universe shows Chinese companies competing very effectively against much larger, much better capitalized international companies.

And really, none of this should be a surprise. Chinese internet usage passed American internet usage earlier this year.

OK, so this is at least the first part of the point I as making. While we may say “what one man can do, another can do” the environment is not ripe to see next generation products from China, when only a fraction are even slightly clued in on yesterdays hits.

/*edit How about the other part? such as why Chinese brand awareness has not taken off? */

Mick,

I think you misunderstood. My point was that Chinese aren’t surfing those sites because there are Chinese sites that provide the same behavior, and have been for years. Again, in terms of “next generation” Chinese sites… Tencent’s QQ product comes to mind, as well all the internet TV sites (tvants). Do you see what I’m saying?

This is just a continuation of the conversation we had above. Consumers aren’t aware of Chinese brands because Chinese businessmen weren’t aware of branding (until very recently). Again, the senior executives on the job have only been around for at the very most 10 years; they can’t possibly compare with international expertise.

But let’s look at the “new” businesses. Is the Google brand stronger in China than the Baidu brand? The answer is, no. Is the eBay brand stronger in China than Netease? Again, no.

There’s just nothing here fundamentally holding Chinese businesses back; two decades of experience is the key difference maker.

[quote=“taipeivoid”][quote]India the country that was about to go nuclear with Pakistan last year. Oh yeah that’s stability alright.
[/quote]
I missed that one last year… :astonished:[/quote]

Did you also miss the sectarian violence and periodic bombing of commuter trains?

[quote=“cctang”]Mick,

I think you misunderstood. My point was that Chinese aren’t surfing those sites because there are Chinese sites that provide the same behavior, and have been for years. Again, in terms of “next generation” Chinese sites… Tencent’s QQ product comes to mind, as well all the internet TV sites (tvants). Do you see what I’m saying?

This is just a continuation of the conversation we had above. Consumers aren’t aware of Chinese brands because Chinese businessmen weren’t aware of branding (until very recently). Again, the senior executives on the job have only been around for at the very most 10 years; they can’t possibly compare with international expertise.

But let’s look at the “new” businesses. Is the Google brand stronger in China than the Baidu brand? The answer is, no. Is the eBay brand stronger in China than Netease? Again, no.

There’s just nothing here fundamentally holding Chinese businesses back; two decades of experience is the key difference maker.[/quote]

Hi CCTang,
I get what you are saying perfectly. What you are saying is centered around a Chinese market. China is not the world, and while China has many brands doing well domestically , internationally the performance is terrible.

          Your analogy of Google and Baidu is not credible. You may as well ask why BMW doesn't sell as well as Hyundi in Korea...please. If Xbox can take "part" of the Japanese market, it is already considered a partial victory. How does Baidu compete with google on a global basis?