Asia’s growing IT software market

The China market is growing at a very fast rate, as many companies decide to move their manufacturing businesses into China. But China isn't all about factories and cheap labour. China's Information Technology market is beginning to warm up, showing first signs of giving their Indian neighbors a competition.

China Law blog wrote an article recently termed "China as a software center - give it ten more years" pointing to a Businessweek interview with Augmentum's CEO :

China may be world's manufacturing power, but it's hardly renowned as a software center-which Liu is determined to change. "The world is going to need [software center] alternatives to India" he says. For one thing, wages are rising in India. And it just isn't smart for companies to rely too heavily on one country. "Only China has enough human resources, enough human capital, to be able to make a difference," Liu argues. "China is the only place."

The CEO thinks China still has a long way to go to come anywhere close to India :

While it's easy to build up a manufacturing base, creating a knowledge industry takes a lot more time, he says. "Software experience is nothing that you can get very quickly," Liu points out. "You can rebuild a TV factory that you had in Japan, because most of the work is automated, and workers can be trained very quickly. However, software is a knowledge effort and it takes time for team members to form."

How long will it take for China to get the experience necessary to be a player in the software industry? Liu doesn't think the Indians have reason to fret in the short term. "Within five years, it's unlikely," he says.

(Added a while later) To give a few examples China Law Blog writes about "China web apps - Sillicon Valley 2.0 " pointing to another intresting post from Read/Write - "Top Web Apps in China " naming a few characteristics :

• Big companies still dominate the market.
• Chinese startups often copy the Sillicon Valley model.
• Regulation is potential risk for Chinese startups.
• Foreign companies find it difficult to compete.

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Danwei, the China English blogging website has a business podcast "China businesscast" discussing IT ventures in the Chinese market. The latest two were about tongtong.com and qunar.com ("go where" in Chinese) with a long series of questions and answers on the background, how they got started, how they operate etc. Podcast has started off with a review of Lenovo's operations.

In my own personal experience, I've already had a couple of offers to join up friends of friends who are building Chinese software and web applications in China. The China dream is captivating and the idea is quite simple. It starts off by working for a couple of months in a descent Israeli/western high-tech firm, earning about 5000US$ a month, or taking a loan for the same amount - this allows a good starting point to get the new idea going. All is needed, the entrepreneurs say, is some fast cash and a ticket to China where a local office and a team of 15-30 developers can be hired for peanuts. A few more bucks here and there for marketing, translations, culture advisors and in two months you've got a good basic showcase for investors. While the company's Chinese team is working on the next version you head out back to the west - Israel, Europe or the US - and receive unbelievable funding just for mentioning the "Chinese market" word combo.

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The other Asian markets are reacting as well, and the focus that China has received over the past few years has also influenced businesses in other neighboring countries - Vietnam, with the strongest potential for growth, as well as the long-time IT leaders - Japan, Korea, Taiwan. In the recent couple of months I've read about various Asian plans regarding IT leadership.

An impressive example is Singapore's Intelligent Nation 2015 masterplan (termed iN2015, found through Quickonlinetips) :

Intelligent Nation 2015 (iN2015) is Singapore's 10-year masterplan to help us realise the potential of infocomm over the next decade. Led by the Infocomm Development Authority of Singapore (IDA), iN2015 is a multi-agency effort that is the result of private, public and people sector co-creation.

The masterplan's IT related goals are very ambitious (watch video here) :

• To be #1 in the world in harnessing infocomm to add value to the economy and society
• To realise a 2 - fold increase in the value-add of the infocomm industry to S$26 billion
• To realise a 3 - fold increase in infocomm export revenue to S$60 billion

Singapore has already shown that it means business and that it had the ability to perform and realize goals of similar nature set before.

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Exciting things are happening in Asia. Focus centered around China, already well-aware of India and being quite familiar with the stronger Asian economies - it'll be fascinating to see those markets grow and gain IT dominance in comparison with other parts of the world.