Is it a bubble or is it not? That seems to be a very good question as more and more people pile money into different parts of the world.
My gut feeling is that China may be a bubble whereas India is not. I have no experience in making such calls so feel free to ridicule me. My logic? India's growth is based on (somewhat) more sound economic principles whereas China feels to me like a house of cards being built up by the government and well-connected industries.
I've also been reading about funds heading into Israel and parts of eastern Europe. If things settle in the Middle East, I can see a lot of excitement in that area as well.
SiliconBeat: Wilson Sonsini: VCs going to China & India at unprecedented rate
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4 comments:
I understand why you think China may be a bubble as I too am always skeptical of centrally planned economies. However, a huge portion of the growth in China these days is coming from the private sector and so long as it is allowed to flourish (and, so far, all indications are that it will be), I do not see China bursting.
I agree that a lot of the growth seems to be coming from the private sector. But while it may be great to have some energetic private enterprises flourishing in China, the question that vexes me (for which I have no good answer) is, is there a solid enough economic foundation (IPR laws, transparency laws, a sustainable banking system, proper rules and regulations around contracts etc) to maintain and expand the economy and therefore allow these companies to flourish in a sustainable manner?
Penguin makes a very good point about the key issue in China being transparency. I would add that the business culture in China is very different from that in the U.S. and I don't think most American investors fully grasp that.
India is ripe for VC investments. The traditional Indian community is afraid of mid-long term investment risks and is shy of investing in early stage startups.
India is mature, IP/copyright friendly, with abundance of engineering and design talent and with a mature regulatory and legal framework.
This development is long time due, and certainly welcome.
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