China 3.0: The Shift Toward Advanced Industries and Implications for the West

Ravi

Faculty member Ravi Madhavan

China is facing massive pressures – internal and external – regarding environmental issues, resource availability, social and economic inequality and more. In many ways, the People’s Republic is facing an imperative to change its economic model and advance not only its methods of production, but what it’s producing. Two examples are China’s foray into nuclear energy and its imminent entry into the commercial aerospace sector.

If Mao’s China was China 1.0 and today’s low-cost manufacturing powerhouse is China 2.0, this new China will be China 3.0. As Chinese policy-makers confront the prospect of slowing growth and the middle-income trap, more business leaders and policy makers are noting everything China buys is becoming more expensive and everything China sells is becoming cheaper. This is one reason why the imperative to master advanced industries is gaining strength: the promise of higher value addition combined with the desire to demonstrate national capability. These developments are significant in their respective industries, but in a more fundamental sense, they are symbolic of a new emerging China – one that is focused on mastering advanced industries that embody complex technology and systems integration. Continue reading

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A Multi-Faceted Puzzle: Facebook’s Acquisition of WhatsApp

Ravi

As one of WhatsApp’s 450 million users, I am a fan of the service. Especially when traveling overseas, it’s the perfect way to keep in touch with family and friends without paying outrageous texting charges. The product itself is well engineered: fast, reliable, and without wasteful “eye candy.” Yet, the price tag of $19 billion (in stock, cash and restricted stock units) for Facebook’s acquisition of WhatsApp remains an eye-popping number.

Facebook’s purchase underscores WhatsApp’s phenomenal growth during the past five years (growing faster than Skype, Twitter, Gmail and Facebook itself.) Yet, the fact remains that this is the highest amount ever paid for a startup, representing about $4 for each WhatsApp user (most of whom don’t pay any subscription fee), and $345 million per employee. In their presentation to analysts and investors, which was very light on detail, both Mark Zuckerberg and Jan Koum stressed their belief that growth through providing utility to users comes first, and that monetization will follow. Analyses and opinions about the wisdom of the deal are flying fast and furious – including that, globally, WhatsApp faces tough competition from the likes of similar applications, WeChat and Line – and I’m sure it will take some time for the dust to clear. Continue reading

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