China Is No Silicon Valley

February 25, 2013, 4:49 p.m. ET

China Is No Silicon Valley

Duncan Clark is the chairman of BDA China, an investment-advisory firm specializing in China’s technology, Internet and e-commerce sectors.


ON WHETHER CHINA CAN BECOME THE NEXT SILICON VALLEY:Innovation is born, not made. It isn’t something that you can fast-forward. When you do try to fast-forward it, you get copying.

This is China’s challenge. There’s a clear desire to move up the value chain from the “Made in China, Designed in California,” to flipping that around.

One thing we do see in China today is capital. It’s abundant. The problem is, there are so many so-called venture-capital and private-equity firms today that there really isn’t much discipline in this process. Everybody’s focused on the IPO, and the IPO route at the moment is very backlogged. Both domestically and internationally, listing China stocks right now is a bit of a challenge. So the model is there for the capital but not in terms of the ecosystem that we see in Silicon Valley.

You have large companies in China today like Tencent [Holdings Ltd.], Taobao, which is the consumer e-commerce play of Alibaba [Group], and Baidu [Inc.]. These companies are very dominant in their respective fields.

What we don’t see these companies doing is buying other companies. So an important distinction between China and Silicon Valley is the M&A route generally isn’t there—partly because for the entrepreneur in China, it’s all about the IPO.

This has created companies that shouldn’t have tried to go public or shouldn’t have actually gone public when they did.

ON WHETHER CHINA’S BIG INTERNET COMPANIES CAN SUCCESSFULLY GO GLOBAL : China is such a big and competitive market that there’s little incentive to do so. The government wants Chinese companies to go global. But it would take a lot to have a material impact on their revenues.

We don’t see Chinese [service] companies going head-on into the U.S. or Europe, frankly, because why should they? There are other opportunities.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: