China vs. India in Economic Combat

Ex-venture guy Howard Anderson recently opined that the next decade’s most important economic tussle will be between India and China (and China will win). Here are some choice quotes from his speech:

  • There are very few truisms, but one I’ll take to the grave is that IBM is always wrong.
  • Most VCs going to China will get clobbered. They will be robbed blind. And they know it … it’s the cost of joining the club.
  • China will care about intellectual property when it has some intellectual property of its own.
  • One way you know you’ve succeeded is when you get sued for antitrust.
  • China is building 40 airports, but we’ve built one — Denver — in the past 20 years. And some people are still waiting for their luggage.

[via Dan Primack]


  1. Were I as wrong as IBM, I could live a wealthy man.
    China will care about intellectual property when it grants the right of it’s citizens to own private property. (And until China does so, it will succeed only in a brute force type of way [but not in a Hong Kong type of way].)
    The airport argument is just plain silly. We’ve already built our infrastructure. China has barely started.
    The problem with both India and China are corrupt governments and overladen bureaucracies. India, though, at least has the concept of private property and entrepreneurship embedded within its culture. Were China to become even quazi-democratic, which, by implication, means it allows private property and ALL its attendent benefits (while China may allow some private property, it does so with such controls as to render the ownership moot) then it will become a powerhouse, regardless of how many airports its built. (In fact privately built airports might be a good sign.)

  2. Venkatesh says:

    I would say this, India has great ability to shoot itself in the foot and it never misses.
    India is looking at “Quota System” in Private sector in the coming years. Its allready there in Education, so the government will decide which tribal group or which caste of people IBM should hire for its chip research !! Caste and not education wil be the criteria.
    Infrastructure is a joke, try driving down from Bangalare aiport to Electronic city (supposed hub of all IT companies). In case you can make it in under 1 1/2 hours it would be a miracle.

  3. 1. IBM has sometimes been right.
    2. It’s a good thing the VCs going to China know they will get clobbered because they most certainly will. However, I would use the word eviscerated.
    3. China will care about intellectual property when it has some intellectual property of its own OR when it makes economic sense for them to do so, which it is starting to.
    4. One way you know you’ve succeeded is when you get sued for antitrust. True, but what does this have to do with India or China?
    5. China is not only building 40 airports, it is building high speed trains, massive bridges, huge stadiums, etc. The building is absolutely unbelievable.
    China will beat out India.

  4. 1. IBM has sometimes been right.
    When in the last 15 years?

  5. Michael Robinson says:

    me: “When in the last 15 years?”
    They sold their laptop division to Lenovo.

  6. Venkatesh:
    “Quota System” in India is a legislative response to historical social injustices. Government can scrap “Quota System” when 85% of marriages in India are inter-religious or inter-caste.

  7. IBM realised that innovation is not their strength any more and get re designed in to a consulting firm. Which funnels all the rest of operations.
    India lacks infrastructure. But every country does at some point of time. I dont want to comment on whether China will beat India or India will beat China. But there is a positive sign in the country. They are building infrastructure in a faster pace than ever ,Roads from one end to the other.
    Lots of VC investments. I always belive VCs always see 10 years before the market. If I that assumption is true. A lot of development is in the line due to surging investments.
    Rising high standard of living and educated young crowd is another forte. India will be the youngest country in the world in 5 to 10 years. Spending is slowly getting in to the culture of youngsters. Not many people care about savings any more.

  8. “They sold their laptop division to Lenovo.”
    Everytime they sell something they claim vapor profits while the comapny they sold the products to makes money. We could add Rolm, PWC.
    IBM has placed a hail mary bet on India and they will lose again. Apple just pulled out of India. Why, they thought it was cheaper and found out it isn’t.
    IBM will lose to the Indian companies that will hire the same smart cheap Indians, without IBM’s huge overhead, like Palmisanno’s 10,000 grand a da pension.
    It is also a losing bet becuase while Sam thinks IBM is one big homogenous family, there is nothing but hatrid and competition between countries competing for jobs.

  9. Hmm, let’s see. IBM has a market cap of $121B, revenues of $89B, EBITDA of $17B and a net income of $8B.
    Is IBM somewhat inneficient? Yes; Microosft has a net income 50% higher on revenues 50% lower. However, anyone who dismisses IBM’s financials is being deliberately ignorant.
    IBM has been dismissed repeatedly and has managed to reorganize. Less anyone thinks I’m a naive IBM booster the ONLY product I liked from the company were its Thinkpad notebooks which made up a tiny, tiny fraction of its income.

  10. “However, anyone who dismisses IBM’s financials is being deliberately ignorant.”
    Is HP going to blow buy them this year or next? Deliberately ignorant? Just how long do you hold IBM before it starts to go up? I think holding or buying IBM is deliberatley ignorant. All of their work force is now in India with no institutional memory.The US work force is demoralized by losing helathcare and pension. Oh yeah, don’t forget all the “expert” analysts with a super buy. If hte stock is going down with all the buy recommendations, it has very little upside.
    Why don’t you look at the Sprint deal. GM split the IT work. JP Morgan kicked them out. IBM has a strategy. They promise 10% percent savings. Then they fire the workers they take over, and give you LESS than you were getting. Any information you request and all you get is a 3 day turnaround on a proposal, long after you needed the information.
    To belive IBM is going anywhere is to believe their latest strategy of going after small business is going to work.
    IBM has no more pension to steal, no more healthcare to take away, and little left to sell. So where is the upside?