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Chinese and Indian Entrepreneurs Are Eating America's Lunch

26 points by emilepetrone 16y ago

tokenadult 16y ago
This is the usual theme of any article written by Vivek Wadhwa, and I don't want to be dismissive of the idea that young people in China and in India are entrepreneurial and awesomely well prepared educationally to take on a lot of challenging technical problems. One response that the United States will eventually have to develop to this competitive environment in world trade is to build up the skill sets of young people growing up in the United States, for which school reform is still urgently needed, and to increase the entrepreneurial orientation of young people born and brought up in the United States. (I am trying to do my part, as the homeschooling parent of four children who have lived in the United States and overseas, to ensure that my children get sound primary and secondary educations and are entrepreneurial in their thinking.) That said, another response that the United States never forgets to use in such challenges is being open to immigration and to foreign investment. If young people in another country stand out and succeed, they are always welcome to move to the United States and set up businesses here. And foreign entrepreneurs are always welcome to sell their products and services here and to set up branch offices or the main corporation headquarters here. The openness of the United States population to immigration and the openness of the United States economy to international trade allows Americans to gain most of the benefits of these trends, even if American-born persons aren't the chief drivers of these trends. The countries whose lunch is really being eaten are those like North Korea, closed both to immigration and to trade, and oppressed by dictatorial governments.
- deleted 16y ago
  [deleted]
- bluishgreen 16y ago
  "The openness of the United States population to immigration.." What did you mean, that the people are open to immigration? Then maybe. But if you are talking about govt. policy, this is not correct. The united states is not at all open to immigration.
  - anamax 16y ago
    > The united states is not at all open to immigration. It's not open to all immigration, which is different. IMHO, it would be much easier to get founder's visas and the like if they weren't tied (by their advocates) to allowing mass immigration of low-income folk.
  - tokenadult 16y ago
    The united states is not at all open to immigration. Well, since I'm living with a counterexample right in my own home, I'd certainly expect you to come forward with more evidence than that to back up such a broad assertion. First of all, what example do you have in mind of a country that is much more open to immigration than the United States is? What are the rules on immigration in that country? More to the point of the submitted article, which is an interesting restatement of the usual views of Vivek Wadhwa, where is the evidence that the United States lacks for visas to be offered to highly inventive, entrepreneurial people from China or from India? What country in the world does better than the United States in bringing in immigrants with those characteristics? (Yes, I used to be an immigration lawyer, although I have not practiced in that area of law in recent years.)
  - chc 16y ago
    US immigration policy isn't perfect, but it's far more liberal than most countries I know of. And I haven't looked at the numbers to verify this, but my general sense of the world would lead me to believe that the US gets a lot more applicants than any other single country, which makes its situation more difficult than theirs.
TheBlack_knight 16y ago
Economic expansion is not a zero sum game. If China and India are training future engineers and scientist then great for them. We can hope to learn from them in the future and use there ideas in our own way. The article says something to the tune of: Indian companies taking knowledge from U.S. outsourcers and using that knowledge to start domestic firms. If Cina and India become leaders in the future for innovation the USA and the rest of the world will benefit in the same way. This question has been answered several hundred years ago by David Ricardo, but others as well. This is not some crazy economic theory that is debatable today, its taken as fact by almost all economists. Economics makes takes no notice of national boundaries, they have no meaning. I would encourage everyone to learn about some basic international economic theory, trade theory specifically. Knowledge shows that this article is total BS. Xenophobia will not take us to the land of milk and honey.
- Umalu 16y ago
  I agree. We do not compete as "Americans" vs. "Indians" or "Chinese." We compete as firms and products vs. each other. I guess it is not surprising that an article in Foreign Policy would see the world exclusively in the form of nation vs. nation, as that is surely how its diplomatic audience sees it.
- mbesto 16y ago
  I agree with your point that economics knows no national boundaries. > _international economic theory, trade theory specifically_ Do you have any good resources for this? Preferably free? Trying to expand my brain here ;)
  - tokenadult 16y ago
    Do you have any good resources for this? Preferably free? Trying to expand my brain here ;) http://iang.org/free_banking/david.html http://iang.org/free_banking/david.html http://www.netmba.com/econ/micro/comparative-advantage/ http://www.netmba.com/econ/micro/comparative-advantage/ http://www.econlib.org/library/Topics/Details/comparativeadvantage.html http://www.econlib.org/library/Topics/Details/comparativeadv... http://www.econ.umn.edu/~lepetyuk/Econ1101/lecture12.pdf http://www.econ.umn.edu/~lepetyuk/Econ1101/lecture12.pdf http://www.flatworldknowledge.com/pub/international-trade-theory-and/199668 http://www.flatworldknowledge.com/pub/international-trade-th... Searches on "international trade comparative advantage" will turn up some more links, as will combinations of other search terms with the two words "comparative advantage." I hope these links get you started in your admirable efforts at self-education.
Miller450 16y ago
In America, we need to start making structural changes to the system like eliminating bad teachers: http://papers.nber.org/papers/w16606 http://papers.nber.org/papers/w16606 Doing so could produce $100 trillion dollars in gain for the U.S. (according to the paper above from HN yesterday). Here's a positive view on U.S education standing: "The amazing truth about PISA scores: USA beats Western Europe, ties with Asia." http://super-economy.blogspot.com/2010/12/amazing-truth-about-pisa-scores-usa.html http://super-economy.blogspot.com/2010/12/amazing-truth-abou... I agree and am happy with the growth and flourishing of the entrepreneurial communities in foreign nations. But the picture is sometimes too rosy. I'm no expert, but this article poses some useful questions about China and India's future: http://www.bloomberg.com/news/2010-12-28/advanced-economies-losing-ground-to-emerging-asia-census-shows.html http://www.bloomberg.com/news/2010-12-28/advanced-economies-... The bearish view from the article: "Some demographers say China and India are decades away from becoming advanced economies. “Both countries are still very, very poor,” said Jane De Lung, president of the Princeton, New Jersey-based Population Resource Center. “China is growing by leaps and bounds, but the majority of the Chinese still live in very poor and poverty- stricken areas. You don’t have widespread economic growth outside the cities in either country.”" Ultimately, the U.S., China, and India each have their own strengths and can hopefully cooperate in a way where it's not one versus the other, but rather, together helping move innovation and the world economy forward.
- donteflon 16y ago
  US PISA ranks for 2009: Maths - 30th, Sciences - 23rd, Reading 17th. http://en.wikipedia.org/wiki/Programme_for_International_Student_Assessment#2009 http://en.wikipedia.org/wiki/Programme_for_International_Stu...
flacon 16y ago
From what I can see, a lot of the startups in China are just copying ideas and products that have gained traction here in the US. Look at youku.com and tudou.com, major video sharing sites in China, they seem very similar to youtube.com in layout, social network etc. Then look at baidu.com, the major search engine in China. Wow does that homepage remind you of some other search site? Hmmmm. I am not trying to say that Chinese startups don't have good ideas. But why do they have to blatantly copy US startups that are successful? Obviously, startups inspire each other, but I will posit that what is lacking in China to a certain extent is: 1. Creativity, which leads to a strong tendency to generate knock-offs of Western companies or products. This includes both software and hardware. 2. Openess or ability for people with good ideas to step forward and actuate them. The Chinese educational system is segmented and once you are on a certain path there is not really the ability to change or reinvent oneself as easily as in the West. Look at Twitter, Apple, and many of the other companies at the forefront of tech and business. The leaders and visionaries behind these companies were not necessarily formally trained in what they are doing cause who can be trained to be a trendsetter! No way. There can only be the right environment for innovation which needs creativity, access to resources, and lots of hard work. I speak as someone trained in the US in philosophy and politics but learned software development as an afterthought and am building companies and products. Someone like me could not exist in China and to a lesser extent in India due to their narrow-minded educational systems. I wish founders and developers across the world the best of luck in their endeavors, but know that me and my non-traditional founder compatriots here in the US will compete with you and compete hard!
- slyall 16y ago
  > I am not trying to say that Chinese startups don't have good ideas. But why do they have to blatantly copy US startups that are successful? Because the US startup had a good idea but made it US-only and/or English-only. It's like 20 years ago when Detroit was complaining that it didn't sell many cars in Japan, one factor (there were many others) was that Japanese drive one the left-hand-side of the road and the US car-makers didn't make right-hand-drive models. With physical businesses (like zipcar or netflix) it's hard to build infrastructure everywhere at once but don't comlain if you ignore 6.5 billion customers ( 1 billion of whom are "rich" ) to concentrate on 310 million and somebody else decides copy you.
ajays 16y ago
In the 80s it was "the Japanese are eating our lunch". Now it's "the Indians and Chinese are eating our lunch". In the 30s, it'll be "the Africans are eating our lunch". Every couple of decades the scare brigade starts clamoring in the US. The US survived the Europeans, the Japanese, etc. eating its lunch; it will survive the Chinese and Indians too. The US has something that none of its competitors do: a free and open society, where entrepreneurs can flourish. I have Chinese friends who went back to China and started companies in China; but they made sure that they had kids here first, so that the kids could be American citizens when they grow up. Were it not for the PRC's protectionist policies, many (most?) of the Chinese "success stories" would not have happened. This is not to say that the US doesn't need to do more. We need to spend more on our universities, our schools and our infrastructure. We need more stress on science and math, and less arguing about "intelligent design". Keep the friggin religion out of our schools, let the kids learn.
- omouse 16y ago
  The US has something that none of its competitors do: a free and open society, where entrepreneurs can flourish. I'm impressed that you can say that when the US operates Guantanamo Bay and is actively trying to prosecute Julian Assange of the Wikileaks organization. Not to mention the DMCA, the Patriot Act and all these other laws/organizations designed to constrain the rights of its citizens. Were it not for the PRC's protectionist policies, many (most?) of the Chinese "success stories" would not have happened. Those policies work. It sounds like the US should put them into place since they work.
  - ajays 16y ago
    The US has 308 million people. A society this big will have outliers; Gitmo being one of them. And last I checked, Assange was _not_ in the US. And the ones who are 'actively trying to prosecute Assange' are the _Swedes_ and the Brits; not the US. The protectionist policies absolutely don't work beyond a small point. If they worked, then Baidu would be the number 1 search engine in Japan, Korea, Russia, etc. Is it? A (protectionist) wall may keep the outsiders out; but it also keeps the insiders in....
krakensden 16y ago
Between China and India there are over two billion people. If there weren't successful businesses and new inventions coming from them in the future, I would be deeply saddened.
binaryfinery 16y ago
Could we do something about this? Yes. Will "we", and by "we" I mean the government run by rich folks? Never. But as the rich destroy the social fabric of the USA, they will get their due. The USA is as small to India and China as Britain is to the USA. Britain ruled the world just 70 years ago. It lost its wealth in a massive transfer to the USA industrial machine in WWII. The USA is managing to transfer its wealth quite happily without a war. The difference is, the rich Brits fit in quite well in the USA. Good luck with that in China, rich americans! What can we do? Protectionism. The rich can show you all sorts of reasons why this doesn't work. Just add "for the rich" on the end of everything they say and its true: "protectionism doesn't work for the rich". I'm not sure we can manage IT protectionism (unfortunately, since this is what I do), but we can manage protectionism for manufactured goods. That's basically our only hope. If we can get a manufacturing industry going again, we can have a genuine middle class, not funded by debt. That, in turn, can fund education and innovation. Or we can do what Britain did: "We don't need manufacturing because we have our science, services and financial services". But manufacturing funded our R&D. "Well we don't need science, because we have services and financial services". But our services can be run from India. "Well we dont need a service industry because we have the city of london." So know if you live outside of the spending radii if the 20yr olds earning $5m then you're fucked. Hooker or coke-dealer is the most promising profession for a young brit.
linuxhansl 16y ago
While this is of course sensational all I hear and read supports this. (California department of corrections outspending department of education, etc, etc). I think the problem in most of the western world is more general. We cultured societies of "individualists" the flipside of egoists. Most people just do not care what happens one or two generations down the road, they want their services, their money NOW.

26 points by emilepetrone 16y ago

This is the usual theme of any article written by Vivek Wadhwa, and I don't want to be dismissive of the idea that young people in China and in India are entrepreneurial and awesomely well prepared educationally to take on a lot of challenging technical problems. One response that the United States will eventually have to develop to this competitive environment in world trade is to build up the skill sets of young people growing up in the United States, for which school reform is still urgently needed, and to increase the entrepreneurial orientation of young people born and brought up in the United States. (I am trying to do my part, as the homeschooling parent of four children who have lived in the United States and overseas, to ensure that my children get sound primary and secondary educations and are entrepreneurial in their thinking.) That said, another response that the United States never forgets to use in such challenges is being open to immigration and to foreign investment. If young people in another country stand out and succeed, they are always welcome to move to the United States and set up businesses here. And foreign entrepreneurs are always welcome to sell their products and services here and to set up branch offices or the main corporation headquarters here. The openness of the United States population to immigration and the openness of the United States economy to international trade allows Americans to gain most of the benefits of these trends, even if American-born persons aren't the chief drivers of these trends. The countries whose lunch is really being eaten are those like North Korea, closed both to immigration and to trade, and oppressed by dictatorial governments.

deleted 16y ago
[deleted]
bluishgreen 16y ago
"The openness of the United States population to immigration.." What did you mean, that the people are open to immigration? Then maybe. But if you are talking about govt. policy, this is not correct. The united states is not at all open to immigration.
- anamax 16y ago
  > The united states is not at all open to immigration. It's not open to all immigration, which is different. IMHO, it would be much easier to get founder's visas and the like if they weren't tied (by their advocates) to allowing mass immigration of low-income folk.
- tokenadult 16y ago
  The united states is not at all open to immigration. Well, since I'm living with a counterexample right in my own home, I'd certainly expect you to come forward with more evidence than that to back up such a broad assertion. First of all, what example do you have in mind of a country that is much more open to immigration than the United States is? What are the rules on immigration in that country? More to the point of the submitted article, which is an interesting restatement of the usual views of Vivek Wadhwa, where is the evidence that the United States lacks for visas to be offered to highly inventive, entrepreneurial people from China or from India? What country in the world does better than the United States in bringing in immigrants with those characteristics? (Yes, I used to be an immigration lawyer, although I have not practiced in that area of law in recent years.)
- chc 16y ago
  US immigration policy isn't perfect, but it's far more liberal than most countries I know of. And I haven't looked at the numbers to verify this, but my general sense of the world would lead me to believe that the US gets a lot more applicants than any other single country, which makes its situation more difficult than theirs.

TheBlack_knight 16y ago

Economic expansion is not a zero sum game. If China and India are training future engineers and scientist then great for them. We can hope to learn from them in the future and use there ideas in our own way. The article says something to the tune of: Indian companies taking knowledge from U.S. outsourcers and using that knowledge to start domestic firms. If Cina and India become leaders in the future for innovation the USA and the rest of the world will benefit in the same way. This question has been answered several hundred years ago by David Ricardo, but others as well. This is not some crazy economic theory that is debatable today, its taken as fact by almost all economists. Economics makes takes no notice of national boundaries, they have no meaning. I would encourage everyone to learn about some basic international economic theory, trade theory specifically. Knowledge shows that this article is total BS. Xenophobia will not take us to the land of milk and honey.

Umalu 16y ago
I agree. We do not compete as "Americans" vs. "Indians" or "Chinese." We compete as firms and products vs. each other. I guess it is not surprising that an article in Foreign Policy would see the world exclusively in the form of nation vs. nation, as that is surely how its diplomatic audience sees it.
mbesto 16y ago
I agree with your point that economics knows no national boundaries. > _international economic theory, trade theory specifically_ Do you have any good resources for this? Preferably free? Trying to expand my brain here ;)
- tokenadult 16y ago
  Do you have any good resources for this? Preferably free? Trying to expand my brain here ;) http://iang.org/free_banking/david.html http://iang.org/free_banking/david.html http://www.netmba.com/econ/micro/comparative-advantage/ http://www.netmba.com/econ/micro/comparative-advantage/ http://www.econlib.org/library/Topics/Details/comparativeadvantage.html http://www.econlib.org/library/Topics/Details/comparativeadv... http://www.econ.umn.edu/~lepetyuk/Econ1101/lecture12.pdf http://www.econ.umn.edu/~lepetyuk/Econ1101/lecture12.pdf http://www.flatworldknowledge.com/pub/international-trade-theory-and/199668 http://www.flatworldknowledge.com/pub/international-trade-th... Searches on "international trade comparative advantage" will turn up some more links, as will combinations of other search terms with the two words "comparative advantage." I hope these links get you started in your admirable efforts at self-education.

Miller450 16y ago

In America, we need to start making structural changes to the system like eliminating bad teachers: http://papers.nber.org/papers/w16606 http://papers.nber.org/papers/w16606 Doing so could produce $100 trillion dollars in gain for the U.S. (according to the paper above from HN yesterday). Here's a positive view on U.S education standing: "The amazing truth about PISA scores: USA beats Western Europe, ties with Asia." http://super-economy.blogspot.com/2010/12/amazing-truth-about-pisa-scores-usa.html http://super-economy.blogspot.com/2010/12/amazing-truth-abou... I agree and am happy with the growth and flourishing of the entrepreneurial communities in foreign nations. But the picture is sometimes too rosy. I'm no expert, but this article poses some useful questions about China and India's future: http://www.bloomberg.com/news/2010-12-28/advanced-economies-losing-ground-to-emerging-asia-census-shows.html http://www.bloomberg.com/news/2010-12-28/advanced-economies-... The bearish view from the article: "Some demographers say China and India are decades away from becoming advanced economies. “Both countries are still very, very poor,” said Jane De Lung, president of the Princeton, New Jersey-based Population Resource Center. “China is growing by leaps and bounds, but the majority of the Chinese still live in very poor and poverty- stricken areas. You don’t have widespread economic growth outside the cities in either country.”" Ultimately, the U.S., China, and India each have their own strengths and can hopefully cooperate in a way where it's not one versus the other, but rather, together helping move innovation and the world economy forward.

donteflon 16y ago
US PISA ranks for 2009: Maths - 30th, Sciences - 23rd, Reading 17th. http://en.wikipedia.org/wiki/Programme_for_International_Student_Assessment#2009 http://en.wikipedia.org/wiki/Programme_for_International_Stu...

flacon 16y ago

From what I can see, a lot of the startups in China are just copying ideas and products that have gained traction here in the US. Look at youku.com and tudou.com, major video sharing sites in China, they seem very similar to youtube.com in layout, social network etc. Then look at baidu.com, the major search engine in China. Wow does that homepage remind you of some other search site? Hmmmm. I am not trying to say that Chinese startups don't have good ideas. But why do they have to blatantly copy US startups that are successful? Obviously, startups inspire each other, but I will posit that what is lacking in China to a certain extent is: 1. Creativity, which leads to a strong tendency to generate knock-offs of Western companies or products. This includes both software and hardware. 2. Openess or ability for people with good ideas to step forward and actuate them. The Chinese educational system is segmented and once you are on a certain path there is not really the ability to change or reinvent oneself as easily as in the West. Look at Twitter, Apple, and many of the other companies at the forefront of tech and business. The leaders and visionaries behind these companies were not necessarily formally trained in what they are doing cause who can be trained to be a trendsetter! No way. There can only be the right environment for innovation which needs creativity, access to resources, and lots of hard work. I speak as someone trained in the US in philosophy and politics but learned software development as an afterthought and am building companies and products. Someone like me could not exist in China and to a lesser extent in India due to their narrow-minded educational systems. I wish founders and developers across the world the best of luck in their endeavors, but know that me and my non-traditional founder compatriots here in the US will compete with you and compete hard!

slyall 16y ago
> I am not trying to say that Chinese startups don't have good ideas. But why do they have to blatantly copy US startups that are successful? Because the US startup had a good idea but made it US-only and/or English-only. It's like 20 years ago when Detroit was complaining that it didn't sell many cars in Japan, one factor (there were many others) was that Japanese drive one the left-hand-side of the road and the US car-makers didn't make right-hand-drive models. With physical businesses (like zipcar or netflix) it's hard to build infrastructure everywhere at once but don't comlain if you ignore 6.5 billion customers ( 1 billion of whom are "rich" ) to concentrate on 310 million and somebody else decides copy you.

ajays 16y ago

In the 80s it was "the Japanese are eating our lunch". Now it's "the Indians and Chinese are eating our lunch". In the 30s, it'll be "the Africans are eating our lunch". Every couple of decades the scare brigade starts clamoring in the US. The US survived the Europeans, the Japanese, etc. eating its lunch; it will survive the Chinese and Indians too. The US has something that none of its competitors do: a free and open society, where entrepreneurs can flourish. I have Chinese friends who went back to China and started companies in China; but they made sure that they had kids here first, so that the kids could be American citizens when they grow up. Were it not for the PRC's protectionist policies, many (most?) of the Chinese "success stories" would not have happened. This is not to say that the US doesn't need to do more. We need to spend more on our universities, our schools and our infrastructure. We need more stress on science and math, and less arguing about "intelligent design". Keep the friggin religion out of our schools, let the kids learn.

omouse 16y ago
The US has something that none of its competitors do: a free and open society, where entrepreneurs can flourish. I'm impressed that you can say that when the US operates Guantanamo Bay and is actively trying to prosecute Julian Assange of the Wikileaks organization. Not to mention the DMCA, the Patriot Act and all these other laws/organizations designed to constrain the rights of its citizens. Were it not for the PRC's protectionist policies, many (most?) of the Chinese "success stories" would not have happened. Those policies work. It sounds like the US should put them into place since they work.
- ajays 16y ago
  The US has 308 million people. A society this big will have outliers; Gitmo being one of them. And last I checked, Assange was _not_ in the US. And the ones who are 'actively trying to prosecute Assange' are the _Swedes_ and the Brits; not the US. The protectionist policies absolutely don't work beyond a small point. If they worked, then Baidu would be the number 1 search engine in Japan, Korea, Russia, etc. Is it? A (protectionist) wall may keep the outsiders out; but it also keeps the insiders in....

krakensden 16y ago

Between China and India there are over two billion people. If there weren't successful businesses and new inventions coming from them in the future, I would be deeply saddened.

binaryfinery 16y ago

Could we do something about this? Yes. Will "we", and by "we" I mean the government run by rich folks? Never. But as the rich destroy the social fabric of the USA, they will get their due. The USA is as small to India and China as Britain is to the USA. Britain ruled the world just 70 years ago. It lost its wealth in a massive transfer to the USA industrial machine in WWII. The USA is managing to transfer its wealth quite happily without a war. The difference is, the rich Brits fit in quite well in the USA. Good luck with that in China, rich americans! What can we do? Protectionism. The rich can show you all sorts of reasons why this doesn't work. Just add "for the rich" on the end of everything they say and its true: "protectionism doesn't work for the rich". I'm not sure we can manage IT protectionism (unfortunately, since this is what I do), but we can manage protectionism for manufactured goods. That's basically our only hope. If we can get a manufacturing industry going again, we can have a genuine middle class, not funded by debt. That, in turn, can fund education and innovation. Or we can do what Britain did: "We don't need manufacturing because we have our science, services and financial services". But manufacturing funded our R&D. "Well we don't need science, because we have services and financial services". But our services can be run from India. "Well we dont need a service industry because we have the city of london." So know if you live outside of the spending radii if the 20yr olds earning $5m then you're fucked. Hooker or coke-dealer is the most promising profession for a young brit.

linuxhansl 16y ago

While this is of course sensational all I hear and read supports this. (California department of corrections outspending department of education, etc, etc). I think the problem in most of the western world is more general. We cultured societies of "individualists" the flipside of egoists. Most people just do not care what happens one or two generations down the road, they want their services, their money NOW.