Hawaii is an interesting place.  I spent a couple of weeks there over the holidays this year.  Once again, I noticed how the place has achieved cultural diversity, without complete homogenization.  Of course, I’m generalizing and painting in broad brush strokes, but after spending a fair bit of time in both Japan and China, it’s interesting to see a completely different take on crossing cultural boundaries.  Japanese, Chinese, Koreans, Filipinos, Europeans, Mainlanders and other Pacific Islanders all generally get along and work together to keep the place going.  (No snotty comments about the state being in the third world, although I was surprised to be caught in an island-wide blackout).

In my humble opinion, it’s not so much of a “melting pot,” as many of the cultures maintain their traditions, but it’s more of a cooperation thing.  Of course, Hawaii’s situation is forced by being a popular island chain in the middle of the Pacific ocean.  The people there have to get along.  One can’t help but speculate, however, whether this is a model for how the world could evolve as distance becomes relatively meaningless and teams are regularly formed from resources distributed around the world.  It’s sure a happier model than the world imagined in Blade Runner.

Happy End to 2008!

Technorati Tags:  China, China Outsourcing

According to a story in Reuters India, Tata Consultancy Services Limited (TCS) will add more than 3500 people to its current China based staff of 1300 over the next four years.

“TCS, India’s largest IT firm, also said it expects Asian revenues will grow next year despite the economic slowdown and retrenchments by the region’s banks, due to its large pipeline of existing projects.”

The story reports that TCS currently has centers in Tianjin, Beijing, Shanghai and Hangzhou, with some sort of operation in Shenzhen.

Since TCS already employs more than a thousand people in China, one hopes that the company understands how to recruit, motivate and retain top talent there.  However, given the challenges that other big Indian firms have encountered in the Middle Kingdom, along with the very viable alternatives to work for an MNC, or a Chinese outsourcing firm, I’m skeptical that TCS is really able to recruit the “A” players in China.

Technorati Tags:  China, China Outsourcing

Apparently the People’s Liberation Army Navy (that’s exactly the way they wrote it in the International Herald Tribune story) will project its power globally.

“The Chinese government confirmed Thursday that it would send naval ships to the Gulf of Aden to help in the fight against piracy there. The mission, which is expected to begin in about two weeks, would be first modern deployment of Chinese warships outside the Pacific.”

It’s nice to see that China is stepping in to participate in the international effort to keep the area open for shipping traffic.  This is an important step in the country’s emergence as a superpower.  Perhaps the U.S. can view this as progress towards a time when we don’t have to be the world’s only “policeman.”  It’s also worth noting that China chose to make this foray to Africa.  Clearly the government is willing to take the measures necessary to protect its interests in the region.

Technorati Tags:  China

I made a set of predictions for 2008, just before we entered the new year.  Unfortunately, it’s time to see how I did.  In the interest of keeping your attention, I’ll list abbreviated versions here.  The original post has them in their full glory.

At the time, I came up with 8 predictions, so we’ll allocate a maximum of 12.5 points to each one, if I absolutely nailed the prediction.

• A true leader will emerge to set the tone for the industry.  Review:  Vanceinfo continued to grow, as did several of my other candidates, but nobody has really emerged as the undisputed leader.  Score:  0
• Some companies will get serious about winning western business.  Review:  iSoftStone really stepped up with their appointment of Bruce Ferland as president of North American and European Operations.  Many of the other companies actually scaled back their efforts in the U.S.  Score:  6
• Consolidation.  Review:  There were no big moves among the tier-one players, although I heard that there was some M&A with smaller companies.  For this one to matter, I really needed a couple of the big names to come together.  Score:  0
• New Players.  Review:  They’re not really new, in terms of being founded in 2008, but both XBOSoft and Long Circle made great strides this year.  Score:  5
• More IPO’s.  Review:  Nope.  Given the post offering performance of Longtop Financial (LFT) and VanceInfo (NYSE: VIT), I guess that this one is no surprise.  Score:  0
• Disappointing Performance post IPO.  Review:  See above  Score:  12.5
• The Yuan will appreciate.  Review:  According to the website that I use for currency conversions, the RMB/US$ ratio on 2008.01.01 was 7.29.  On 2008.12.15, the ratio was 6.85.  It’s not huge appreciation, but the dollar is weaker relative to the yuan, and I need all of the points that I can get.  Score:  10
• Product safety concerns will not spill over into software outourcing.  Review:  Well, the lead paint on toys thing didn’t really have much impact.  Neither did the melamine in milk.  I think that I’m good on this one.  Score:  12.5

Let’s see, if my cell phone calculator is correct that gives me a total score of 46.

Not so good, hunh?  I both underestimated the severity of the global slowdown, and overestimated the progress that Chinese vendors would make this year.  Sigh…

I’ll resist the urge to make predictions for 2009.  With the current global economic uncertainty, about all that I can say is, “We’ll see.”

Technorati Tags:  China, China Outsourcing

The 50 person Seattle based wireless data company apparently views China as the “next frontier” for their business.  Their business name in China will be Ai Bi Ke Communications Technology Co.   From their press release:

“China is the next frontier for the connected services and telematics markets. We believe that the country is well positioned for continued long-term growth,” said Kamyar Moinzadeh, president and CEO of Airbiquity. “The Chinese market understands the need to integrate a host of features and functions into their telematics programs to differentiate their products. Airbiquity’s technology, already in more than 10 million cars, is the ideal choice for full-scale connected services deployments in China.”

Airbiquity plans to offer full local support to customers and users in China.  They’ve even established an office in Chengdu.  This story mostly caught my attention because Airbiquity started talking with Chinese outsourcing companies a couple years ago.  The press release doesn’t give enough information to figure out whether they’re doing this on some sort of Build-Operate-Transfer model, or whether they really are setting out on their own.

Technorati Tags:  China, China Outsourcing

Yesterday, my neighbor asked me whether the economy in China was hurting my outsourcing consulting practice.  My neighbor is a great guy.  He was born and raised in what’s now the Silicon Valley.  His family made their fortune developing, residential properties, which is still his profession.  He has absolutely no business ties to either outsourcing, or China.  I’m sharing this simply to highlight that the economy in China is the subject of what passes for “over the fence” conversations in the Silicon Valley.

Unfortunately, the news doesn’t seem to be good.  I’m hearing that the combination of weakening demand, both domestically and from the west, is starting to impact a number of the outsourcing players.  Last week a former client let me know that they are planning to shrink their team in China.  He recognizes that their resources in Shanghai are a variable cost, and he’s adjusting to accommodate reduced revenue at his U.S. based firm.

Last Friday, VanceInfo (NYSE: VIT) established a new 52-week low when it traded at US$4.28.  As regular readers might remember, VanceInfo’s IPO price was US$8.50, and their stock reached a 52-week high of US$13.98 in May.

Then, this morning, I see this article (sorry, subscription may be required) in the Wall Street Journal:  “Slowdown In China Gets Worse, Increasing Global Woes“.  According to the WSJ:

“Sudden declines in China’s imports and exports show the country’s economic slowdown is entering a new and more serious phase, exacerbating the global slump while jolting Chinese companies and workers used to years of soaring sales and salaries.”

The story continues:

“China’s customs agency said Wednesday that November’s exports fell 2.2% from a year earlier, the first decline since June 2001. That marked a major shift from a 19.2% gain in October and a nearly 26% rise in 2007.

Imports suffered an even steeper drop, down 17.9% in November from a year earlier. They had risen 15.6% in October and more than 20% last year. The import figure signals weakness in domestic consumption, bad news for companies that export to China, and also falling demand for manufacturing components — which spells trouble for China’s future exports as well.”

Yeah, it’s definitely happening fast, and it’s hurting my business.

Technorati Tags:  China, China Outsourcing

I attended an interesting event this week.  The China Wuxi (Silicon Valley) Symposium on Software and Outsourcing was organized by representatives from Wuxi, China, in conjunction with CSPA, SDForum, and Global Sourcing Alliance.  Prior to the meeting, I didn’t know much about Wuxi, especially as a software outsourcing destination.  After listening to the presentations, I’m left thinking that I missed the boat on this one.

The folks from Wuxi did a great job of presenting their city and describing the benefits of locating operations there.  This was in stark contrast to some of the meetings with regional delegations that I’ve been subjected to.  I was at one meeting a few years ago where the whole presentation was a video of a regional fly-over (so fast you almost couldn’t follow it) set to music so loud that it nearly made my ears bleed.  The “speaker” didn’t say a single word.  He just stood there while the video played.  The representatives that put on the Wuxi event were completely at the opposite end of the spectrum.  They really did a good job.

Anyway, here are a few bits that I picked up about Wuxi:

• Wuxi is about 90 minutes from Shanghai/Pudong International Airport (one speaker suggested that it takes about as long to get to Wuxi from the airport as it does to get to Santa Clara from San Francisco International Airport — perhaps when the traffic is really nasty on 101…).
• U.S. companies have set up 854 projects in Wuxi, with US$3.22B of committed capital investments.
• The U.S. is Wuxi’s largest export market and its third largest source of imports.
• During 2007, over 21,000 companies in Wuxi traded with the U.S.  This represented a total trade volume of US$7.02B and was a 34.6% increase over the previous year.
• Per-capita income in Wuxi is US$9K.
• The area is approved to create the “Wuxi Taihu Protection Zone — China’s Service Outsourcing Demonstration Zone” and is committed to establishing a software / IT outsourcing industry in the the zone.
• The region’s population is approximately 4.6B.
• Wuxi was ranked as the #4 “Best Business City in China” by Forbes for 2007.
• The area currently has an objective of employing 200K people in their outsourcing service industry by 2010.
• Universities and training institutes produce nearly 200K graduates per year within commuting distance (I suspect that they include Shanghai in this), so the resource base is strong and growing fast.
• They offer significant incentives to outsourcing companies that help achieve this employment goal.
• They’ve established multiple software & science parks to house the new industry.

In my humble opinion, Wuxi is a natural expansion area, especially if your primary resource base is in Shanghai.  You should pressure your vendors to take a look at the region.

Technorati Tags:  China, China Outsourcing