Silicon Valley comes to China to spur tech innovation
Yeah, that's probably going to take a while...
China’s attempts to rebrand itself as a technology innovator received a boost last week when US lender Silicon Valley Bank (SVB) announced a joint venture with Shanghai Pudong Development Bank (SPDB) which will provide capital to budding tech entrepreneurs.
The 50:50 partnership is the first to win approval by China’s Banking Regulatory Commission since 1997, and has been made possible thanks to a hefty one billion yuan investment by the two parties, according to local news service Xinhua.
Former SPDB vice president, Fu Jianhua, will serve as chairman of the new SPD Silicon Valley Bank, while Ken Wilcox, chairman of the SVB, serves as its president.
It is set to focus on lending to tech businesses in the Shanghai region to begin with, before turning attention to helping out tech innovators in other Chinese cities, according to the report.
The announcement can be seen as part of the government’s attempts to turn China into an “innovation-oriented country” by 2020, as it promised earlier this year.
The global reputation of Chinese tech companies is that historically they have prospered by copying the designs of western rivals, whether by ‘localising’ them – for example Baidu vs Google or Sina Weibo vs Twitter – or covertly stealing their IP.
Whether this is a fully justified stereotype is open to debate, but the analysts seem to think that China’s progress towards an innovation-driven technology industry will take decades and require a move away from the classic risk averse, consensus-driven philosophy of typical local companies today.
Another barrier that could stand in the way of web start-ups in the region is the high cost associated with self-regulation of user-generated content as required by China’s strict censorship regime. ®
Re: USA are committing an Expensive Suicide
I whole-heartedly agree with you, in sentiment at least. It would be really nice to see massive banks like this one being more socially responsible and preferring to invest in companies and ventures that are from the same community, region, or country that the bank is based in as a way to support the people that helped them prosper in the first place, but unfortunately that doesn't seem to be how many commercial organizations seem to operate. Instead, banks (and most commercial enterprises in general) look for the quickest and easiest way to make money possible, and probably don't think for even a split-second about any of the long-term consequences that their actions may cause beyond making that short-term gain. Therefore, if the fast and easy dollar (or yuan) is currently in China, they'll invest in China for the short-term gain, even if it means that they are ultimately undermining the future of the U.S. economy or its standing on the world stage in the process.
I would say that this kind of behavior is penny smart and pound foolish, but with Wall Street and company share holders being obsessed with quarterly results, and sometimes even daily results (or with micro-trading, time-slices even smaller than that!), the behavior for companies to always find the fast buck no matter where it may be is being encouraged and rewarded by the system at large. By the time everyone involved realizes what a collective mistake that they are all making by greedily grabbing up all of the fast easy pennies in China instead of seeking the longer-term harder-earned pounds in the West, they will all cash out and run, leaving the rest of us to have to pick up the shambles and deal with the consequences.
Unfortunately, this problem is a really tough nut to crack, as on one hand you want government regulation and oversight of large corporations and financial institutions to make sure that they are positively contributing to their host countries and not just leaching off of them by evading paying taxes by using tax shelters, using out-sourcing instead of local labor, investing in other countries that aren't in the host's country's best interest, etc., but at the same time you don't want to regulate these corporations so much that you make them uncompetitive in the world market, thus forcing them either to go out of business or move to a new state or country that offers them less regulation and more incentives. Because of this conundrum, it is not exactly easy to set this off-kilter system on to a less self-destructive course. I wish that I could offer up a solution, but I am a computer programmer and not an economist, so any solution that I can come up with to solve this problem would probably be extremely ignorant and over-simplified. Hopefully there are some more enlightened readers here at The Reg that could offer much better insight into how we could get ourselves out of this potential mess.
USA are committing an Expensive Suicide
With the USA economy being progressively wiped out by China and India, you would think that the last thing the USA wanted to do was to accelerate the process.
Just leave the cash in the Gucci bag on your way out
How much of the billion is already in the hands of local officials?