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Ambassador Sheinwald discusses how he envisages international relations will form in the near and far future. He places particular emphasis on the growing importance of the US-China relationship. At the same time, Ambassador Sheinwald explores the EU as a key global power and its necessary cooperation with the US.

Synopsis

Ambassador Sheinwald clearly feels that the international stage is moving. In fact, for him, the change in the international order is accelerating due to the global financial crisis. In this sense, Ambassador Sheinwald explains that the UK has long supported expanding decision-making international institutions such as the UN Security Council. However, the UK still sees the value in intimate, power-focused bodies such as the G8. Ambassador Sheinwald discusses the fact that there is increasingly a sense that a ‘G2’ is developing between the US and China. To Ambassador Sheinwald, this model would not literally work as he argues China needs, at this stage in its development, a multilateral setting to grow into the active and cooperative power we would all like to see it become. At the same time, Ambassador Sheinwald believes that the partnership between the US and China is important in paving a solution to the current economic state and shaping the future global economy. In fact, the UK and the EU welcome this new cooperation between the two powers. Ambassador Sheinwald feels the US and the EU can harness China’s shared global interest on issues such as climate change, in which the EU has played a front role, to develop at stable global relationship. Moreover, he believes that if the US and EU can cooperate to form low carbon economies, it could incentivize China and India to act similarly. However, Ambassador Sheinwald stresses that for non-economic issues the US and China’s relationship is still important but slow moving, and he expresses the belief that it will take decades for any real ‘G2’ to emerge.

In the meantime, Ambassador Sheinwald argues that while the US looks round the world for support on key issues, it will find that the EU shares the most values and has the capacity to promote them. He cites the enormous investments between the two in comparison to the US and China to show the scale of the US and the EU’s relationship. Ambassador Sheinwald argues that financially the US and EU need regulatory cooperation, using a scientific basis, to set global standards. He stresses as well that the EU is a major global power on its own. It is increasingly seen as an honest, multilateral broker and plays a crucial in global economic recovery. Moreover, it has strong interest in fighting world terrorism. In comparison to other partners, the US can find similar values, intelligence, and capacity in the EU. In addition, the US can see more stability in Europe’s own backyard than perhaps 20 years ago. Looking to the future, Ambassador Sheinwald hopes that the Lisbon Treaty would help the EU organize itself further. Further stressing the importance of the US-EU partnership, Ambassador Sheinwald explains “nothing is more likely to be as dependable a foundation.”

In taking the time to answer questions, Ambassador Sheinwald discusses a number of issues. One partiuclar area of focus much emphasized was Europe's role in the conflict in Afghanistan. In addition, he addresses the issue of Britain and the US's relationship with China. Moreover, he also explains that he hopes that as developed countries deal with increasing security threats, their resolve in keeping their borders open will remain strong. Finally, Ambassador Sheinwald stresses the need to employ methods of sustainable, intelligent, and low carbon growth.

About the Speaker

Nigel Sheinwald joined the British Diplomatic Service in 1976 and has served in Washington (twice), Brussels (twice) and Moscow and in a wide range of policy jobs in London. 

He took up his position as British Ambassador to the United States in October 2007.  In that role he leads the Embassy in Washington and nine Consulates-General around the United States.   He had an earlier posting to Washington in 1983-87 as First Secretary (Political) in the Embassy. 

Before becoming Ambassador in Washington, Sir Nigel served as Foreign Policy and Defence Adviser to the Prime Minister from 2003-2007.

Sir Nigel was the UK Ambassador and Permanent Representative to the European Union in Brussels from 2000-2003.  Before that he was Europe Director in the FCO (1998-2000).  He had an earlier posting in the UK Representation in 1993-95 as Head of its Political and Institutional Section.  He began his career in EU work as Deputy Head of the FCO's European Union Department in 1989-92. 

Sir Nigel's first foreign posting was in Moscow in 1978-79.  He was also Head of the Foreign Office's Anglo-Soviet Section in 1981-83.

Sir Nigel has had a wide variety of other appointments in the FCO in London.  From 1995-98, he was the FCO Press Secretary and Head of News Department.  He was Deputy Head of the Foreign Office's Policy Planning Staff in 1987-1989, responsible for transatlantic relations and other issues.  He also worked in London on the Japan Desk (1976-77) and on Zimbabwe (1979-81), including the Lancaster House Conference.

Sir Nigel was born in 1953 and educated at Harrow County Grammar School and Balliol College, Oxford.  He is married with three sons.

This event is jointly sponsored by the Office for International Visitors at the Bechtel International Center, the Forum on Contemporary Europe, and the British Consulate General in San Francisco.

CISAC Conference Room

Sir Nigel Sheinwald British Ambassador to the United States Speaker
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In this session of the Shorenstein APARC Corporate Affiliate Visiting Fellows Research Presentations, the following will be presented:

Hiroyuki Koyano, "The Strategy for Accerlation of Patent Examination - Focusing on Human Resource Management"

The number of patent application filings has increased across the world as a result of the globalization of the world economy. In addition, technology has become more complex and the demands for a quality patent has grown. Working against this trend, the period of patent examination has become longer, so patent offices have adopted plans to remedy the situation and accelerate patent examination. Hiroyuki Koyano attempts to compare the United States Patent and Trademark Office’s (USPTO) plans with those of JPO’s and analyze the problems focusing mainly on human resource management.

Mitsue Kurihara, "The Recent M&A Boom in Japan"

Mergers and Acquisitons in Japan have been booming since the late 1990s. What initially started as a method for industrial rehabilitation, today, M&A is put to use by many companies as part of their corporate strategy. Utilizing her experiences as an advisor for M&A, Kurihara researches the remarkable trend in the boom of Japanese M&A over the last ten years, as well as the future of Japanese M&A market in terms of where it should be headed.

Bhavna Sharma, “Polymorphisms in Breast Cancer Mutation Carriers: Comparative Studies in Caucasian and Hong Kong Population”

Breast cancer rates differ significantly in Asia compared to the United States and other western countries.  Lifestyle and genetic differences between these populations are probably causes of this variation.  Sharma presents findings from her study that hypothesized that the genetic breast cancer risk factors that differ between BRCA1/2 mutation carriers in Asia and the U.S. may result in a different magnitude of breast cancer risk among Asians versus Caucasians who carry BRCA1/2 mutations.

Philippines Conference Room

Hiroyuki Koyano Corporate Affiliate Visiting Fellow, Japan Patent Office Speaker
Mitsue Kurihara Corporate Affiliate Visiting Fellow, Development Bank of Japan Speaker
Bhavna Sharma Corporate Affiliate Visiting Fellow, Reliance Industries, India Speaker
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This presentation will discuss the current clinical diagnostic business scenario and the business opportunities available with a focus on the U.S. market.

 

About the speaker:

Sivaraman Vasudevan is a corporate affiliate visiting fellow at Shorenstein APARC for 2008-09.  Prior to joining Shorenstein APARC, he has been working for Reliance Life Sciences in Bangalore, India as Regional Head in charge of sales opoerations for Eastern and Southern parts of India.  His job responsibilities include developing business plans, implementing strategies and achieving sales targets.  Additionally, he is part of an elite corporate team in developing national and regional marketing strategies. 

Daniel and Nancy Okimoto Conference Room

Sivaraman Vasudevan Speaker
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As fallout from accelerating climate change and the economic meltdown reveals, today's gravest threats are transnational, demanding unprecedented cooperation among competing nations to find lasting solutions. The policies and strategies developed for the balance-of-power rivalries of the 20th century no longer apply in this one, according to the authors of Power & Responsibility, a book launched March 17 at Stanford.

"Transnational threats create security interdependence between the most powerful states and the weaker states," author Stephen J. Stedman said during the panel discussion hosted by the Freeman Spogli Institute for International Studies. "The United States can't defend itself against any threat without sustained international cooperation from others."

Stedman, a faculty member at Stanford's Center for International Security and Cooperation (CISAC), Bruce Jones of New York University and Carlos Pascual from the Brookings Institution, said their book seeks to promote the concept of "responsible sovereignty" to rebuild international order and strengthen international institutions such as the United Nations. In other words, the authors argue, their notion of sovereignty demands responsibility from states in addition to according privilege. Furthermore, nations should be held responsible for the harmful international effects of their domestic policies-whether it's producing massive amounts of carbon dioxide or failing to secure national borders and financial institutions, thus enabling terrorist groups to attack targets thousands of miles away.

The book's publication follows a policy oriented Plan for Action booklet released last November on the heels of the U.S. presidential election. Timed to coincide with the start of the Obama administration, the 360-page book, published by Brookings Institution Press, highlights seven issues that demand transnational solutions: nuclear proliferation, climate change, bio-security, civil violence and regional conflicts, terrorism and economic security. According to Stedman, the book was received positively during recent launches in Europe, Asia and Washington, D.C. and, earlier this month, the authors presented their findings to senior White House officials.

While U.S. power is in decline, Jones said, it is the only nation with the military, diplomatic, economic and political power needed to take a global lead in tackling transnational threats. The world's rising powers-China, India and Brazil-recognize that the alternative to U.S. leadership is "entropy and chaos," he said, and that every state stands to benefit more from the former as long as it is geared to structured cooperation.

"This is not a love fest of great powers," Jones continued. "There are real interests here and there [would] be tough and sustained negotiations." But the alternatives-maintaining the status quo where global decisions are made by the outmoded G-7 group of industrialized nations, or establishing a "league of democracies" that would exclude critical players such as China-are simply unworkable. "We recognize that our model is tough but we think it's the most likely to have impact on the threats that face us," Jones said.

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Amandeep Singh Gill is a visiting fellow at CISAC. He is a member of the Indian Foreign Service and has served in the Indian Mission to the United Nations in Geneva, the Indian Embassy in Tehran and the High Commission of India in Colombo. At headquarters in New Delhi, he has served twice in the Disarmament and International Security Affairs Division of the Ministry of External Affairs from 1998 to 2001 and again from 2006 to 2008 at critical junctures in India’s nuclear diplomacy. He was a member of the Indian delegation to the Conference on Disarmament during the negotiations on the Comprehensive Nuclear Test Ban Treaty. He has also served as an expert on the UN Secretary General’s panels of experts on Small Arms and Light Weapons and on Missiles.

His research priorities include disarmament, arms control and non proliferation, Asian regional security and human security issues.  He is currently working on the interaction of nuclear policies of major states, particularly in Asia.

Before joining the Indian Foreign Service, Amandeep Gill worked as a telecommunications engineer. He retains an abiding interest in the interaction of science, security and politics. He is founder of a non-profit called Farmers First Foundation that seeks to reclaim agriculture for the farmers and demonstrate the viability of integrated agriculture in harmony with nature.

David Holloway is the Raymond A. Spruance Professor of International History, a professor of political science, and an FSI senior fellow. He was co-director of CISAC from 1991 to 1997, and director of FSI from 1998 to 2003. His research focuses on the international history of nuclear weapons, on science and technology in the Soviet Union, and on the relationship between international history and international relations theory. His book Stalin and the Bomb: The Soviet Union and Atomic Energy, 1939-1956 (Yale University Press, 1994) was chosen by the New York Times Book Review as one of the 11 best books of 1994, and it won the Vucinich and Shulman prizes of the American Association for the Advancement of Slavic Studies. It has been translated into six languages, most recently into Czech in 2008. Holloway also wrote The Soviet Union and the Arms Race (1983) and co-authored The Reagan Strategic Defense Initiative: Technical, Political and Arms Control Assessment (1984). He has contributed to the Bulletin of the Atomic Scientists, Foreign Affairs, and other scholarly journals.

Since joining the Stanford faculty in 1986 -- first as a professor of political science and later (in 1996) as a professor of history as well -- Holloway has served as chair and co-chair of the International Relations Program (1989-1991), and as associate dean in the School of Humanities and Sciences (1997-1998). Before coming to Stanford, he taught at the University of Lancaster (1967-1970) and the University of Edinburgh (1970-1986). Born in Dublin, Ireland, he received his undergraduate degree in modern languages and literature, and his PhD in social and political sciences, both from Cambridge University.

If you would like to be added to the email announcement list, please visit https://mailman.stanford.edu/mailman/listinfo/socialscienceseminar

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Amandeep Singh Gill CISAC Visiting Scholar Speaker

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Senior Fellow Emeritus at the Freeman Spogli Institute of International Studies
Raymond A. Spruance Professor of International History
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David Holloway is the Raymond A. Spruance Professor of International History, a professor of political science, and an FSI senior fellow. He was co-director of CISAC from 1991 to 1997, and director of FSI from 1998 to 2003. His research focuses on the international history of nuclear weapons, on science and technology in the Soviet Union, and on the relationship between international history and international relations theory. His book Stalin and the Bomb: The Soviet Union and Atomic Energy, 1939-1956 (Yale University Press, 1994) was chosen by the New York Times Book Review as one of the 11 best books of 1994, and it won the Vucinich and Shulman prizes of the American Association for the Advancement of Slavic Studies. It has been translated into seven languages, most recently into Chinese. The Chinese translation is due to be published later in 2018. Holloway also wrote The Soviet Union and the Arms Race (1983) and co-authored The Reagan Strategic Defense Initiative: Technical, Political and Arms Control Assessment (1984). He has contributed to the Bulletin of the Atomic Scientists, Foreign Affairs, and other scholarly journals.

Since joining the Stanford faculty in 1986 -- first as a professor of political science and later (in 1996) as a professor of history as well -- Holloway has served as chair and co-chair of the International Relations Program (1989-1991), and as associate dean in the School of Humanities and Sciences (1997-1998). Before coming to Stanford, he taught at the University of Lancaster (1967-1970) and the University of Edinburgh (1970-1986). Born in Dublin, Ireland, he received his undergraduate degree in modern languages and literature, and his PhD in social and political sciences, both from Cambridge University.

Faculty member at the Center for International Security and Cooperation
Affiliated faculty at the Center on Democracy, Development, and the Rule of Law
Affiliated faculty at The Europe Center
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David Holloway Raymond A. Spruance Professor of International History and FSI Senior Fellow; CISAC Faculty Member; Forum on Contemporary Europe Research Affiliate; CDDRL Affiliated Faculty Commentator
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Long-term demand for nuclear fuel is high as demonstrated by the continued rise in activities such as uranium mining and milling, enrichment, and fuel fabrication. At a recent international conference in Beijing on nuclear energy, IAEA officials stated that the global financial crisis is unlikely to deter the increasing long-term demand for new nuclear power plants. In order to limit the proliferation risk, the IAEA suggested the concept of multinational nuclear arrangements and member countries followed up with various related proposals. A few projects at the front-end of the nuclear fuel cycle are reviewed in the context of such multinational arrangements. Policies of two uranium-producing countries, Mongolia (a new supplier) and Kazakhstan (a relatively new supplier) are compared. The development at the front end of the nuclear fuel cycle is reviewed in the context of collaboration of supplier countries and countries with strong technological capability and demand such as Russia, France, China, Japan, and India. 

Undraa Agvaanluvsan is a visiting professor at CISAC. Her research covers the technical and policy aspects of the uranium and nuclear energy industry. Mongolia, her homeland, has a large reserve of natural uranium that it wants to develop for economic and strategic purposes. Similar to other developing nations, Mongolia also is considering nuclear power to help reduce domestic pollution and meet growing demand for electricity. In this context, Agvaanluvsan is analyzing Mongolia's uranium mining and processing policies to compare this emerging industry with parallel developments in Kazakhstan and countries in southern Africa. She also is comparing Mongolia's potential role as a uranium supplier to that of Canada's and Australia's.

Agvaanluvsan received her bachelor's (1994) and master's (1995) degrees in physics from the National University of Mongolia. From 1996-97, she studied high energy physics at the International Centre for Theoretical Physics in Trieste, Italy. Agvaanluvsan earned her doctorate in 2002 from North Carolina State University in Raleigh, North Carolina, studying nuclear reactions and quantum chaos in nuclei. Following completion of her doctorate, she conducted postdoctoral research work in the Nuclear Experimental Physics group at Lawrence Livermore National Laboratory.

In addition to Agvannluvsan's scientific and policy analysis work, in 2008 she served as an adviser to Mongolia's Minister of Foreign Affairs. Agvaanluvsan also is director of the recently established Mongolian-American (MonAme) Scientific Research Center in Ulaanbaatar, which focuses on energy, the environment and mineral processing technologies. In September 2008, she helped organize MonAme's first international meeting, the "Ulaanbaatar Conference on Nuclear Physics and Applications," in Mongolia's capital.

Reuben W. Hills Conference Room

Undraa Agvaanluvsan CISAC Visiting Professor Speaker
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Abstract: China's three human spaceflights (2003, 2005, and 2008) and 2007 anti-satellite test have put the world on notice that a new geography is emerging in 21st Century space competition, which also includes several other leading Asian countries: India, Japan, and South Korea. North Korea is also desperately trying to enter the club of space-faring nations.  Why are Asian states today so interested in space?  What are their evolving capabilities, in both the civilian and military sectors? And how are these countries' activities likely to affect the interests of the United States?  This presentation will cover each of these issues, as well as emerging Obama administration space policies, particularly in regard to China.  (Dr. Moltz recently returned from research trips to South Korea and Japan, where he conducted extensive interviews with space officials and analysts. His talk is based on a book manuscript he is currently writing.)

James Clay Moltz holds a joint appointment as an associate professor in the Department of National Security Affairs and in the Space Systems Academic Group at the Naval Postgraduate School.  >From 1993 to 2007, he worked at the Monterey Institute of International Studies' Center for Nonproliferation Studies, where he served as deputy director from 2003-07.  Dr. Moltz is the author (most recently) of The Politics of Space Security: Strategic Restraint and the Pursuit of National Interests (Stanford University Press, 2008).  He received his Ph.D. and M.A. in Political Science from the University of California at Berkeley and holds an M.A. in Russian and East European Studies and a B.A. in International Relations (with Distinction) from Stanford University. Dr. Moltz serves as a consultant to the NASA Ames Research Center, where he chairs the Space Futures Analysis Group.

If you would like to be added to the email announcement list, please visit https://mailman.stanford.edu/mailman/listinfo/stsseminar 

Reuben W. Hills Conference Room

Clay Moltz Associate Professor, Naval Postgraduate School Speaker
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In 2008, the iconic doomsday clock of the Bulletin of the Atomic Scientists was set at five minutes to midnight-two minutes closer to Armageddon than in 1962, when John F. Kennedy and Nikita Khrushchev went eyeball to eyeball over missiles in Cuba! We still live in an echo chamber of fear, after eight years in which the Bush administration and its harshest critics reinforced each other's worst fears about the Bomb. And yet, there have been no mushroom clouds or acts of nuclear terrorism since the Soviet Union dissolved, let alone since 9/11.

Our worst fears still could be realized at any time, but Michael Krepon argues that the United States has never possessed more tools and capacity to reduce nuclear dangers than it does today - from containment and deterrence to diplomacy, military strength, and arms control. The bloated nuclear arsenals of the Cold War years have been greatly reduced, nuclear weapon testing has almost ended, and all but eight countries have pledged not to acquire the Bomb. Major powers have less use for the Bomb than at any time in the past. Thus, despite wars, crises, and Murphy's Law, the dark shadows cast by nuclear weapons can continue to recede.

Krepon believes that positive trends can continue, even in the face of the twin threats of nuclear terrorism and proliferation that have been exacerbated by the Bush administration's pursuit of a war of choice in Iraq based on false assumptions. Krepon advocates a "back to basics" approach to reducing nuclear dangers, reversing the Bush administration's denigration of diplomacy, deterrence, containment, and arms control. As he sees it, "The United States has stumbled before, but America has also made it through hard times and rebounded. With wisdom, persistence, and luck, another dark passage can be successfully navigated."

Michael Krepon is Co-founder of the Henry L. Stimson Center and the author or editor of thirteen books and over 350 articles. Prior to co-founding the Stimson Center, Krepon worked at the Carnegie Endowment for International Peace, the US Arms Control and Disarmament Agency during the Carter administration, and in the US House of Representatives, assisting Congressman Norm Dicks. He received an MA from the School of Advanced International Studies, Johns Hopkins University and a BA from Franklin & Marshall College. He also studied Arabic at the American University in Cairo, Egypt.

Krepon divides his time between Stimson's South Asia and Space Security projects. The South Asia project concentrates on escalation control, nuclear risk reduction, confidence building, and peace making between India and Pakistan. This project entails field work, publications, and Washington-based programming, including a visiting fellowship program. The Space Security project seeks to promote a Code of Conduct for responsible space-faring nations and works toward stronger international norms for the peaceful uses of outer space.

Krepon also teaches in the Politics Department at the University of Virginia.

Reuben W. Hills Conference Room

Michael Krepon Co-founder, Henry L. Stimson Center Speaker
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Venture capital (VC) investment provides a unique mechanism for gauging the technological and entrepreneurial sophistication of a national economy. It is no surprise, then, that the two giants of Asia—China and India—have rapidly become important destinations for VC investment. The latest data available from Ernst & Young reveals an astonishing development: China received more VC investment than any nation except the United States. India, though lagging behind China, still received $862 million. To compare, over $30 billion in VC money was invested in the United States in 2007; $823 million was invested in Canada. Clearly, China and India are becoming nodes for the global VC practice. Many of the largest and most prestigious Silicon Valley VC firms have established significant presences in both nations.

China and India differ in many ways, but with respect to the development of VC they share important characteristics. Until late 2008, both nations had rapidly growing consumer economies. The Chinese and Indian governments and populations both agree that education—and particularly engineering—is critical to their future. Both China and India are leaders in sending their graduate students abroad, which has created a pool of well-trained nationals overseas who can advise their peers at home, or even return home themselves to set up new ventures. Many of these Chinese and Indian nationals have worked in U.S. sciences and engineering-based firms. Such professional experience, especially during the last two decades, has laid the basis for successful technology-based entrepreneurship, and the growth in VC that accompanies it.

When VC investing is viewed globally, U.S. dominance is unquestioned. In the United States, 30–35 percent of all VC-financed firms are located in the San Francisco Bay area. Another 10–12 percent are located in the Boston and New York areas, respectively. In India and China, VC investments are similarly concentrated, and generally occur in locations with the greatest concentrations of highly educated persons. As Table 1 indicates, the investment concentration is remarkable. Forty percent of all the VC-funded firms are located in Beijing, 26 percent are in Shanghai, and the Southern Chinese triangle of Shenzhen, Guangzhou, and Hong Kong accounts for another 14 percent. VC investment in China is even more concentrated than in the United States.

Table 1 VC Investments in China and India by City, 2004–2007
(more than 5 investments per city)

Chinese City    Number of Firms    Percent    Indian City    Number of Firms    Percent
Beijing                   213                  40          Bangalore           55                    38
Shanghai               137                  26          Mumbai              31                    21
Shenzhen                36                    7          Chennai             21                     14
Hong Kong              19                    4          New Delhi           16                    11
Guangzhou             16                    3           Hyderabad          11                     8
Hangzhou               13                    2           Pune                   8                      5
Nanjing                  11                    2             n/a       
Suzhou                    9                    2             n/a       
Wuhan                     7                    1             n/a       
Others                   66                   13           Others                4                      3
Unknown                  1                    0          Unknown             0                       0
Total                      528               100            Total                146                  100
Binational                9                    2          Binational             45                    31


VC-backed startups in India, though more diffuse in terms of the top six, are more concentrated overall. Three city regions—Bangalore (38 percent), Mumbai (21 percent), and Chennai (14 percent)—attract the largest investment. However, when including Delhi (11 percent), Hyderabad (8 percent), and Pune (5 percent), these six cities account for an even greater percentage of overall VC investment. The most technology-oriented cities in both nations, Beijing and Bangalore, have received approximately 40 percent of all VC investment. The second largest recipients are Shanghai and Mumbai, which are also the financial capitals.

In China, an enormous economy growing at nearly 10 percent per year even as it emerges from a socialist past, there are significant opportunities in infrastructure development and in supplying the burgeoning underserved consumer market. In a recent Ernst & Young report, Fan Zhang, one of the founding managing partners of Sequoia Capital China, was quoted as saying that “one of the factors that attracted Sequoia Capital to China is the country’s booming consumer market that provides an opportunity to create companies to define certain sectors and fill the need for strong brands, not only in technology but also tech-related consumer services and more traditional industries.”

Zhang is correct—VC investing in China does not directly compete with U.S. firms seeking VC investment. Table 2 shows the fields that VC firms are targeting in China. The table is divided into two binary categories—whether the firm receiving the investment targets the domestic or the global market across a variety of industries, and whether a given firm is in a high technology or non-high technology sector. Chinese firms, even those in technology-based fields, overwhelmingly target the domestic market (87 percent). The Internet has given rise to the largest number of VC startups, nearly all of which are focused on the Sinophone market. Two other key areas—software (10 percent) and mobile phone applications (10 percent)—also cater almost exclusively to the Chinese market. This domestic focus suggests that it will be quite some time before VC-backed Chinese firms threaten counterpart firms in the United States. A possible exception may be semiconductor design, where there are some Chinese startups. Though few Chinese VC-financed firms are likely to be directly competitive with U.S. firms in global markets, many of these Chinese firms compete ferociously against U.S. multinationals trying to make their own inroads into the Chinese domestic market.

Table 2 VC Investments in China and India by Sector and Market, 2004–2007

                                         India                               China
Sector                      Domestic*    Global         Domestic **    Global

Semiconductors               0               7                  22                20
Internet                        16               3                144                  2
Software                         2             14                  55                  4
Communications              1               4                  23                  9
Services                          4             53                  28                  9
Mobile phone                   7              5                   51                  1
Media                             2              0                    35                 0
Healthcare                      1               4                   26                 4
Retail                             1               1                   19                  0
Miscellaneous                  2               0                  20                  2
Components                    0               0                   2                   1
Energy                            0               0                   6                   8
Environment                    0               0                   5                   1
Manufacturing                  0               0                 25                  6
Total                              34             91                461                67

 

* Domestic firms are identified as those that made no apparent attempt to serve overseas markets.

The profile of Indian firms differs from those in China. First, Indian firms are internationally oriented (73 percent); only 27 percent focus on the domestic market. With respect to sector concentration, VC investing in India favors the services sector (46 percent) and software (13 percent). This is not surprising, given India’s well-known comparative advantage in these arenas. Unlike most VC-backed companies in China, many Indian firms may well create competition for U.S. service firms, despite the less developed nature of the Indian economy as a whole.

China and India continue to attract significant VC investment, albeit in different sectors. Today, China is second only to the United States in terms of VC investing, and this is unlikely to change. In China, the preponderance of VC investment is geared to the rapidly growing internal market. The size and unique nature of this market offers entrepreneurs lucrative opportunities to provide “knock-off” U.S. Internet sites for the Chinese market. There are Chinese interpretations of Yahoo!, Google, eBay, Facebook, and Monster.com that service Chinese customers. These firms are self-limited by the language; as such, they do not threaten companies overseas. Moreover, these Chinese companies do not own unique or global class technology that could challenge larger multinational players. It is unclear whether this situation will change over time.

Indian firms differ from Chinese firms in their strong outward orientation. In percentage terms, more Indian than Chinese firms operate in hard-core technology fields. Thus, while China currently enjoys greater VC investment, it is possible that Indian firms may ultimately play a bigger role in the global economy.

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