Was delighted to be interviewed by the Economic Times in my trip to India. Original Article here

Tan Yinglan HEAD (PROJECTS) National Research Foundation, PMO, Singapore

An honest broker is what Singapore aspires to be as it steps up efforts to foster greater interaction between Chinese and Indian entrepreneurs, says Tan Yinglan, a scholar on Chinese entrepreneurship who is part of the government’s drive to promote innovation in the city-state.

“We specialise in helping Indian firms work with China, and vice versa. The analogy is that India and Chinaare two big elephants and we are like a little mouse around these two elephants. We will make ourselves useful in places where the elephants cannot reach,” says Tan, 30, who is the head of projects at the National Research Foundation in the Singapore prime minister’s office.

The capital surplus in China and the infrastructure needs of India is a “marriage made in heaven”, he says. Educated at the Harvard, Stanford and Carnegie Mellon universities, Tan is the author of Chinnovation: How Chinese Innovators are Changing the World, a book that aims to dispel the myth that China is mostly about cheap imitation.

“The Chinese do innovate, but they do it differently,” he says. While investors in the US will invest in two men, an idea and a garage, Chinese investors rarely fund pre-revenue companies. Entrepreneurs are, therefore, forced to build new and innovative business models. This could even mean honing in on an opponent’s weakness and follow the exact opposite business model.

He cited the example of Chinese vintner Grace Vineyard that opened wine parlours in small cities such as Shanxi and Ningxia. Instead of serving wine at restaurants, it sold the beverage instead to luxury hotel chain Shangri-La and Cathay Pacific’s firstclass travellers.

“The Chinese are very good at Sun Tzu’s Art of War,” says Tan, whose upbringing on the cosmopolitan nation has helped him acquire an equally keen understanding of Indians, many of whom he counts amongst his closest friends. It is exactly this unique perspective that Tan hopes his country will wield to good effect as both the Asian giants establish a bridgehead in Singapore to further a delicate courtship in the years ahead.

“While the cost of doing business in China is very low and a single dollar goes much further, the government too is very supportive by giving land and grants,” says Tan, who in an earlier avatar led earlystage investments at 3i Venturelab China, a joint venture between private equity firm 3i and Insead, one of the world’s leading business schools.

Aconfluence of these factors helps Chinese startups become profitable much faster and with much less venture capital. The largely homogenous nature of the Chinese market can be an advantage too, compared to India where tax regimes and cultural patterns differ across state borders. “But in the last 3-5 years, costs have really gone up and Chinese entrepreneurs have no choice but to look outside for more opportunities,” he says.

He pinpoints two main factors that contribute to the difference in scale between Chinese and Indian start-ups. In the war for talent, India is losing out more than China as a lot of well-educated Indians who go overseas to universities like Stanford and Harvard as well as Silicon Valley, remain there.

Also, there is a lot that the Indian government needs to do to offset the imbalance created by heterogeneous markets. “The government can help by taking a leaf from the Chinese who have invested huge amounts in infrastructure: they have built roads, railways, fast trains and a very good air transport network helping to open up a distribution channel.” There is also the role played by local capital in driving entrepreneurship in China.

“Renminbi-funded companies make up nearly 60% of startups in China, while the same number for India is 1-2%. But China’s link with the US and Europe is much weaker than for India,” says Tan, who believes the US continues to be the engine of innovation globally. On the other hand, the room for growth in India, compared to China, is much higher. “Internet usage is going up along with the GDP per capita. India is using only half of her potential.

So, there is lot to go.” This underscores the need for both countries to overcome suspicions to foster more business interaction. “I see a lot of Indians holding senior management positions in China, and when I ask them why they aren’t developing ties with India, they say there is no cultural arbitrage.”

The Chinese must learn English and more Indians must become familiar with the Chinese language, he says, adding that it is imperative that India send large numbers of business executives to China so that they gain a deeper understanding of their neighbour.

Each side has to understand the cultural heritage of the other for business to grow. Chinese companies, Tan says, can invest in Indian venture-backed firms or Chinese limited partners can invest in Indian venture funds. “Singapore is an effective bridge for both these activities, and can also be a hub for cultural exchanges. But first, there has to be a business need.”

 

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