While rising wages and tightening credit lines have led some manufacturers to move outside southern China, others are choosing stay and move up the value chain to remain competitive. Josh Noble visits two factories that have been operating in Guangdong for over 30 years to find out how they are shifting up market [video].
J&J is seeding small, high-risk ventures through RedScript Ventures, a two-year-old accelerator program.
A huge health-care company like Johnson & Johnson requires a steady stream of innovation, but that’s getting harder and harder to create. So the 125-year-old company is getting more aggressive at mining ideas from outside. It’s seeking out very early ventures that it once would have considered far too risky and seeding them with money or dishing out advice on how to nudge untested ideas out of the laboratory.
Some experts say J&J’s relationship to innovation is the right model for a large company. “It lets the marketplace do what it does best, which is have an explosion of different kinds of companies in various fields,” says Richard Foster, lead director of the board at Innosight, a consulting firm that has done work for J&J. “These companies will need major infusions of capital, or a global distribution chain. At that point, J&J says, ‘We are very effective in rolling innovations out—very quickly and cost efficiently [Source].’”
Social networking grew up in 2011, becoming more of a fundamental underpinning of the Web.
We’ve been living in the age of social media for a long time, but 2011 was the year that all the information we share online began to accrete into something greater than the sum of its parts. It is creating a layer of intelligence that anyone can mine in Web searches and that content creators can use to hone their services.
But all the while, our growing reliance on the Web is animating a debate about the potentially catastrophic effects of a cyberwar—an attack, or series of attacks, meant to disable consumer or military resources online. A top computer scientist recently suggested that the U.S. consider striking first against enemies who would be hard to pin down if they struck first. It’s a reminder of the limits of social networking: even as companies like Facebook map more and more of the online world, some sectors will remain in the shadows [Source].
Did someone say economic slump? Not in Silicon Valley. The initial public offerings of LinkedIn (LNKD) and Groupon (GRPN) brought billion-dollar paydays* to venture capital firms New Enterprise Associates, Sequoia Capital, and Greylock Partners, while Kleiner Perkins Caufield & is expected to profit handsomely from Zynga’s IPO on Dec. 16.
For venture firms that missed out on those high fliers, plenty of money was made in vacation-rental site HomeAway (AWAY), which helped Redpoint Ventures crack the year’s top 10. Khosla Ventures was the only investor to make a splash unrelated to the Web with its majority ownership of KiOR (KIOR), a biofuel maker that is valued at over $1 billion even though the company has yet to generate a penny of revenue [Source].
In some parts of the new digital world, it is obvious who is in charge. Google rules in search; Facebook in social networking; Amazon in retail. These territories are still being fought over: Microsoft’s Bing is attacking Google in search, Google is attacking Facebook in social, and so forth. But these are all large, relatively mature fields.
During 2012 the more interesting battles will be those taking place on the smaller, lesser-known territories on the fringes of the technology world, in areas such as mobile payments, location and augmented reality.
They may seem marginal fields now, but it is worth remembering that social networking went from obscurity a decade ago to being used by hundreds of millions of people today, accounting for more time online than any other activity, according to a survey of American internet users by Nielsen, a market-research firm. Like search, social and online retail, these promising new territories have the potential to transform people’s lives, but have yet to be conquered [Source].
Power is fast shifting from end users and software developers to operating system vendors.
The PC is dead. Rising numbers of mobile, lightweight, cloud-centric devices don’t merely represent a change in form factor. Rather, we’re seeing an unprecedented shift of power from end users and software developers on the one hand, to operating system vendors on the other—and even those who keep their PCs are being swept along. This is a little for the better, and much for the worse [Source].
The transformation is one from product to service. The platforms we used to purchase every few years—like operating systems—have become ongoing relationships with vendors, both for end users and software developers. Jonathan Zittrain wrote about this impending shift, driven by a desire for better security and more convenience, in my 2008 book The Future of the Internet—and How to Stop It.
So, was he right? Ten years ago Jim O’Neill of Goldman Sachs looked at four growth economies – Brazil, China, India and Russia – put their first letters into an acronym, and the Brics (as a concept) were born.
So how have they fared? What if you invested in the Brics ten years ago – where would you be now? Chart of the week finds out. There are a myriad of ways of looking at this, but beyondbrics is going to be hard-headed and stick to equities and GDP.
A quick look at the MSCI indices for the four Brics since 2001 shows that they have comfortably outperformed the S&P 500. If you invested $100 at the time of O’Neill’s report in November 2001 in each of the four Brics, you would now have $674 from Brazil, $451 from China, $459 from India and $414 from Russia. Your 100 S&P bucks? Worth $112 [Read more].
Is Hong Kong losing its allure as a launching pad for foreign brands looking to tap into the Chinese market?
The decision by Gap to set up shops in Shanghai and Beijing in 2010 before making its debut in Hong Kong last week certainly seems to suggest that some foreign businesses have no qualms about bypassing Hong Kong and taking a more direct route into the mainland’s estimated $2,100bn retail market.
There are obvious reasons why brands would jump straight into the mainland. Apart from the sheer size of the market, mainland China’s top cities increasingly offer high-quality shopping centres and department stores where western brands feel at home.
Meanwhile, the cost of doing business in Hong Kong could be prohibitive. Retail rent is now the second-highest in the world and fast-approaching levels charged on Fifth Avenue [Source].
Once an unlikely rival for HP and Apple, Chinese computer maker Lenovo has grown and adapted as quickly as its homeland. Now, with a savvy blend of East and West, it’s poised to be China’s first global brand.
Lenovo is a company the likes of which we’ve never seen. It is a product of Communist China (the government still owns 36% of its parent, Legend Holdings); it is heavily influenced by the democratized West; it boasts an international workforce of 27,000 employees and customers in more than 160 countries.
“This is Lenovo’s moment,” says Lenovo CEO Yang Yuanqing, 47, a former salesman who once delivered computers by bicycle and is now China’s highest-paid chief executive. (His 2011 salary: $12 million.) Yang calls Lenovo’s strategy “protect and attack,” three words you hear repeatedly at the company’s headquarters in Beijing and its offices in Raleigh, North Carolina, where Yang spends a third of his time.
Lenovo seeks to protect its core business–the China and enterprise (large-scale commercial and public-sector) markets, which generated about 70% of its $21 billion in revenue last year. On the attack side, he’s pumping Lenovo’s profits–$273 million in 2010–into emerging markets, new product categories (tablets, smartphones, smart TVs), and, of course, the U.S [Source].
At 69, Sir Howard Stringer’s time as CEO of the unwieldy electronics giant is running out. Can he and heir apparent Kazuo Hirai turn it around?
Sony has been trying to adapt to the Internet Age for at least a decade, yet remains a gargantuan and unwieldy manufacturer, with 168,200 employees, 41 factories, and more than 2,000 products from headphones to medical printers to Hollywood-grade 3D movie production equipment [Source].
Consumers should expect to hear more about Sony Entertainment Network, the company’s most ambitious effort yet to connect all of its devices with all of its content. In addition to movies and music delivered through the disaggregated magic of the cloud, Hirai, who’s overseeing the project, is pushing his team to create additional services and exclusive content. That could include everything from Sony-produced TV shows to extended scenes from movies such as The Amazing Spider-Man and Arthur Christmas.
“The plan is to bring everything under the Sony Entertainment Network umbrella,”
Hirai says, including the PlayStation Network and its 45 million unique users. He adds that only now has hardware become powerful enough to deliver Sony content across all four screens of TVs, smartphones, tablets, and computers [Source].
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