Chinese IP wins Olympic gold
04 August 2008
I’m a sucker for the big project. While more balanced people baulk at billions spent on mega projects, I revel in the grandeur and pioneering spirit that drives them. And there are fewer bigger projects than the Olympics, which opens in Beijing this week.
Some of these mega projects meet human needs. The Three Gorges Dam across China’s Yangtze River will cost an estimated US$25bn when it is completed in 2011 and will protect millions from flooding and provide untold megawatts of hydroelectricity. For all that this is an example of a project meeting the needs of human progress, it is engineering on a visionary scale. Another example is Hong Kong International Airport, costing around $20bn when the first phase was opened in 1998. A huge project that has, I am sure, contributed to the fusion between China and the rest of the world. I am sure there are many other examples that would dwarf these two, the rebuilding of New Orleans (if you count that as a single project) will probably count as one of the biggest projects ever.
But the sort of project I was referring to at the beginning of this article, the sort which polarises public opinion, is the sort that is not essential. The sort of project that, rather than fulfilling a purpose, sets the imagination racing. Perhaps the best example of this happened in the UK at the end of the 1990s, when successive British Governments put their weight (and their taxpayers money) behind the Millennium Dome – built on the Greenwich Meridian and the true centrepiece of the world’s recognition of the turning of the millennium. However, as the cost spiralled into the hundreds of millions of pounds, more people than not started questioning how many hospitals and schools could be bought for the same cost.
But I believed then, and still do, that such projects help make our cities interesting and worth visiting. The legacy of such projects cannot be translated into revenue in the short term, but the long-term addition of a notable tourist attraction can only help in long-term revenue generation for that city or country and this includes inwards investment as well as just tourism. Would Rome be as attractive without the Coliseum? London without Buckingham Palace? New York without the Statue of Liberty?
Which brings me back round to the Greatest Show On Earth - the Olympics, now under starters orders in Bejing. While all of the above applies, there is another legacy that the Olympics may leave beyond some magnificent stadiums and world class sporting facilities. That legacy is a leap in the maturing process of the electronics industry in China.
A couple of month’s ago I had a very interesting conversation with Professor Chan of SMT, one of China’s larger contract manufacturers. Contrary to the Chinese stereotype of being reserved and cautious with information, Professor Chan very loquaciously painted a picture of a Chinese electronics industry struggling to meet the excessive demands of its internal market, of a financial system that was both over protective and inhibiting for those looking to invest, and most significantly of an industry with huge energy that was straining at the leash to progress.
However, Professor Chan did say that progress is not something that can be brought in overnight. China, he said, could not compress 200 years worth of infrastructure and development in electronics into a decade or so. So while China is now churning out four million technology graduates every year, it still lacks all of the intellectual property it needs. The automotive industry, for example, is set to be one of China’s largest, but it is still a few years away from releasing its first ‘western-spec’ mid-range saloon.
These few years will pass swiftly and the Olympics will surely have helped that process along its way. The reason for this is that it is generally accepted that the top 500 companies in the world account for about 85% of the total revenue. An astonishing fact, but one that is widely accepted. With total construction costs for the Olympics alone, as stated above, running into the billions of dollars and all the potential associated benefits, you can be sure that all these leading global companies will want a slice of an exceedingly big cake.
These global companies are just that – global. There is no significance to where they are based or registered, what they want is to make as much money as possible, wherever that money is to be made. What has been proven is that selling into China is not that easy and many manufacturers have found the best way, sometimes the only way, is to form some sort of joint venture with either a new or existing Chinese company.
The logic goes therefore that any company wanting to cash in on the Olympic bandwagon must take their IP to China. So even though the Chinese market appears to be the one with most potential (I read this week that China overtook the US as the country with the biggest number of internet users) it could be that the Olympics has further enabled China to come up to speed with electronics design.
Writing this just a few days before the games actually start, I suspect that the Olympic contribution to the electronics industry is likely to be well down the list of conversation topics. I am also hoping that ‘smog’, ‘human rights’ and ‘drug cheats’ are also not on that list – as a sports fan I am quite happy to watch the Olympics for sport and sport alone.
On another matter, we have recently updated our diary with many of the upcoming events. Admittedly not many of these can rival the Greatest Show on Earth for spectacle, but there are a whole host of events that are slightly more targeted to the electronics manufacturing community. Although these are scattered round the world, there are also a number of web-based seminars and workshops that are gradually becoming more popular and these, obviously, are available wherever you are. It may, however, mean getting up in the middle of the night to view them live!
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