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Strategic market analysis
Amsterdam, April 2010
Hogeschool van Amsterdam
Team 9:
Aryan Shor
Ömer Aydemir
Cihan Kalayci
Management summary
The purpose of this report is to show the opportunities for IBM in Russia, India and China.
Bellow the opportunities of this three BRIC countries for IBM.
Strategic opportunities of China
China has several regions with IT centers where almost 2000 foreign companies are located. It
is known that China has a growing software market, with nearly 50% growth in 2009. Because of
this growth, many companies need services and software that support them. IBM can offer these
companies their services and software support.
Financial software and business software such as CRM, ERP, EAM and SCM aren’t used very
much in China. This is as an opportunity for IBM not only to develop them for Chinese
companies but also for education and training purposes.
Strategic opportunities of India
The IT industry of India is growing rapidly in the last years. The demand for hardware and IT
services is growing because more and more international companies set up their offices in India.
Each of these companies need servers and hardware to do business in India. IBM could offer
these companies their services.
An important second language in India, English is widely used in business and industry. India
has many high educated, quality English speaking employees. This makes it easy for IBM to set
up business in India or to find the right employees or to cooperate with other companies.
In India are many software companies established High quality programmers can be hired for
25%-50% of the cost of the same software programmers in the West. India is an attractive
destination for IBM to outsource their services because of the low costs. This is also important to
follow developments in the IT industry of India.
Strategic opportunities of Russia
The Government has launched a number of promising IT major projects. One of them is: the
Russian Venture Company will invest over 1.2bln dollar into hi-tech industry until 2011. Other
major project is: to open seven technology parks (technoparks) in 2008.
IBM can take advantage of these governmental projects.
The government has US $350bn in reserve to apply IT to improving areas such as education,
healthcare, defense and the power sector. Beside this in Russia it’s not a bad thing to have good
connections with the government.
Russia's educational system has produced nearly 100% literacy. About 7 million students
attended Russia's 1,090 institutions of higher education in 2006. Great emphasis is placed
among others on science and technology in education. Russia has more academic graduates
than any other country in Europe. IBM doesn’t need to search for the right employees if they
want to start business in Russia.
Accelerating growth in computer sales and internet usage in recent years is also a big
opportunity for IBM. IBM can take advantage of these developments.
2
Introduction
The assignment was to make a strategic analyses for China, India and Russia for the benefit of
IBM.
Our main question is ‘’Which of these countries offers the best opportunities in IT for IBM ? ‘’
To answer this question we will do an intensive field –and desk-research. For the field research
we will interview 5 persons who have experience with doing business in the RIC countries.
We will also analyse the countries with the DESTEP method and the IT industry to describe the
best strategic opportunities for IBM in China, Russia and India.
3
INDEX
1.
1.1
1.2
1.3
1.4
1.5
REPUBLIC OF CHINA
Demographic factors
Economic factors
Technological factors
Political factors
Opportunities of China
blz. 5
blz. 5
blz. 5
blz. 6
blz. 7
blz. 8
2.
2.1
2.2
2.3
2.3
REPUBLIC OF INDIA
Demographic factors
Economic factors
Technological factors
Opportunities of India
blz. 9
blz. 9
blz. 9
blz. 10
blz. 12
3.
3.1
3.2
3.4
3.5
3.6
3.7
RUSSIAN FEDERATION
Introduction
Demographic factors
Economic factors
Technological factors
Political factors
Opportunities of Russia
blz. 14
blz. 14
blz. 14
blz. 15
blz. 16
blz. 17
blz. 18
4.
4.1
4.2
4.3
STRATEGIC OPPORTUNITIES
Opportunities of China
Opportunities of India
Opportunities of Russia
blz. 19
blz. 19
blz. 19
blz. 19
MABA-MATRIX
ATTACHMENT: sources
ATTACHMENT: interviews
blz. 21
blz. 22
blz. 23
4
1.
REPUBLIC OF CHINA
1.1
Demographic factors
Population July 2009 (est.)
1,338,612,968
Age structure 2009 (est.)
0-14 years: 19.8% (male 140,877,745/female 124,290,090)
15-64 years: 72.1% (male 495,724,889/female 469,182,087)
65 years and over: 8.1% (male 51,774,115/female 56,764,042)
Population growth rate 2009 (est.)
0.655%
Education of expenditures 1999
1.9% of GDP
Education in the People's Republic of China is a state-run system of public education run by the
Ministry of Education. All citizens must attend school for at least nine years. The government
provides primary education for six years, starting at age six or seven, followed by six years of
secondary education for ages 12 to 18. The percentage of China's college-age population in
higher education has increased from 1.4% in 1978 to roughly 20% in 2005. Every year 450,000
engineering students graduate from college, 50,000 graduate with masters degrees, and 8,000
graduate with Ph.Ds. In 2002, the literacy rate in China was 90.8%; 95.1% of males and 86.5%
of females
Chinese Education statistics in 2002
Average years of schooling of adults
6.4
[45th of 100]
Duration of compulsory education
9 years
[78th of 171]
Duration of education > Primary level
6
[59th of 181]
Duration of education > Secondary level
6
[93rd of 181]
Education enrolment by level > Tertiary level
15,186,217
[2nd of 150]
Education, primary completion rate
103
[6th of 148]
Literacy > Male
92.9%
Literacy > Total population
86%
[92nd of 160]
Public spending on education, total > % of government expenditure
12.97 %
[47th of 103]
Universities > Top 100
4
[7th of 22]
Universities > Top 500
8
[12th of 38]
1. 2
[81st of 156]
Economic factors
China's economy during the past 30 years has changed from a centrally planned system that
was largely closed to international trade to a more market-oriented economy that has a rapidly
growing private sector and is a major player in the global economy. China is the third largest
economy in the world. Only the US and Japan are doing at the moment better. A substantial
https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html
http://www.nationmaster.com/country/ch-china/edu-education
5
GDP and an increasing growth rate have made China's private sector economy a major factor in
the world market. With a nominal GDP of US$4.4 trillion in 2008 it is the second largest in the
world after that of the United States with a GDP of $7.8 trillion. Despite the enormous
economical growth, China is still a developing country. This means that a land as China is
struggling with a lot of problems.
Some facts from the Chinese Economy (2008-2009).
GDP (purchasing power parity)
GDP real growth rate
GDP per capita
Unemployment rate
Inflation rate (consumer prices)
Exports
Imports
2008 (est.)
$8.088 trillion
9%
$6,100
4.2%
5.9%
$1.429 trillion
$1.131 trillion
2009 (est.)
$8.791 trillion
8.7%
$6,500
4.3%
-0.8%
$1.194 trillion
$921.5 billion
Export partners 2008
US 17.7%, Hong Kong 13.3%, Japan 8.1%, South Korea 5.2%, Germany 4.1%
Import partners 2008
Japan 13.3%, South Korea 9.9%, Taiwan 9.2%, US 7.2%, Germany 4.9%
GDP - composition by sector 2009 (est.)
agriculture: 10.9%, industry: 48.6%, services: 40.5%.
1.3
Technological factors
IT sector in China
China has a rapidly growing market of software and has more internet users than any other
nation. Since 1997 till 2005, annual revenue in software and IT services has risen by 42 percent
a year, on average, reaching almost $7 billion in 2004.
Different regions in China are becoming major centers for IT outsourcing, including the Jiangsu
province and the city of Dalian (in Liaoning province). Especially the specialized business parks
make these regions attractive by offering favorable tax benefits and other establishment benefits
for companies. Both regions have many local universities therefore the population is relatively
highly educated and speaks good English. Jiangsu Province is a popular destination for foreign
investment and has a good infrastructure.
Market size
In the Jiangsu Province are the cities of Nanjing, Wuxi, Suzhou and Changzhou one cluster in
the area of ICT where more than 1,900 domestic and foreign companies are located. The total
sales of software and information services in 2007 were 8 billion U.S. dollars. In Dalian,
companies are located in the High-Tech Industrial Development Zone (HTIDZ) with over 680
companies in the software and information services.
https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html
http://en.wikipedia.org/wiki/Economy_of_the_People's_Republic_of_China
6
Market development
Especially in Jiangsu remains the IT sector to grow despite the economic crisis. The first five
months of 2009, there was nearly 50 percent growth in the sector. Dalian is hoped to achieve in
2009 a growth of 35 percent(the output in 2007 was 2.5 billion U.S. dollars).
Investments
In the HTDIZ in Dalian, 40 percent of the companies are created through foreign investment. In
Jiangsu nearly the half of the companies are completely financed by foreign investment or have
a joint venture with a Chinese partner. Both regions would like to see more investors coming
from countries other than Japan or South Korea. This because of to be independent of these
countries. Although the economic crisis will affect the industry, international companies are doing
different investments.
Government Support
Both in Jiangsu Province and Dalian City, the IT sector is highly supported by local government.
This is done by offering tax and import duty benefits. In Jiangsu, companies can also use the
grants for further education and training purposes
1.4
Political factors
Below are the most problematic factors identified for doing business in China. The list of
problems are from a total list of 15 factors. Respondents were asked to select the five most
problematic factors for doing business in their country/economy and to rank them between 1
(most problematic) and 5. The table below shows the top 10 problems that the responses
weighted according to their rankings of China.
Problems
% of Responses
1. Access to financing
16.8
2. Inefficient government bureaucracy
11.1
3. Tax regulations
9.6
4. Policy instability
9.3
5. Inadequate supply of infrastructure
8.5
6. Corruption
7.4
7. Inadequately educated workforce
7.3
8. Tax rates
7.1
9. Inflation
5.8
10. Restrictive labor regulations
5.4
As you can see that access to financing, inefficient government bureacracy, tax regulations and
policy instability are the most problematic factors for doing business in China.
http://www.business-in-asia.com/asia/problems_asia.html
7
1.5
Opportunities of China
Growing IT and software sector
China has several regions with IT centers where almost 2000 foreign companies are located. It
is known that China has a growing software market, with nearly 50% growth in 2009. Because of
this growth, many companies need services and software that support them. IBM can offer these
companies their services and software support.
Foreign investments
There are over 680 companies in the software and information services located in the High-Tech
Industrial Development Zone. Many companies have a joint venture with Chinese partners and
many foreign companies invest in these regions. These IT centers are also supported by the
government by tax and import duty benefit. This is a positive development for IBM because there
are many attractive companies to work with.
Usage of software
Financial software and business software such as CRM, ERP, EAM and SCM aren’t used very
much in china. This is as an opportunity for IBM not only to develop them for Chinese companies
but also for education and training purposes.
Economic growth
China is one of the fastest growing economies of the world. It has a good education system
which give the Chinese people the opportunity to do a good study and develop themselves. For
IBM is this an opportunity because they can use these high skilled employees with a low cost.
http://www.evd.nl/zoeken/showbouwsteen.asp?bstnum=245889
http://www.enterprise-ireland.com/Contact/Overseas+Offices/China_Software_IT+Sector.htm
8
2.
REPUBLIC OF INDIA
2.1
Demographic factors
Population: 1,166,079,217 ( 2009 est.)
Growth rate: 1.548% ( 2009 est)
Life expectancy : 69.89 years
 Male 67.46 years
 Female 72.61 year
( 2009 est )
Age structure:
0-14 years: 31.1% (male 190,075,426/female 172,799,553)
15-64 years: 63.6% (male 381,446,079/female 359,802,209)
65 years and over: 5.3% (male 29,364,920/female 32,591,030) (2009 est.)
Urbanization:
urban population: 29% of total population (2008)
rate of urbanization: 2.4% annual rate of change (2005-10 est.)1
2.2
Economic factors
The economy of India is the twelfth largest economy in the world by nominal value and the fourth
largest by purchasing power parity(PPP). In 2009 , the growth rate of the Indian GDP was
6.2 %.
Since 1991, the government liberalized the economy of India and opened the markets for
international investment and competition. The economy began to grow rapidly and became an
emerging economic power with vast human resources and a huge knowledge base. India is
expected to be one of the leading economies of the world in 2020.
The economic reforms accelerated the economic growth rate of India to more than 7% per year.
Because of the financial crisis, the economic growth of India slowed down to 6.1% in 2009, but
it’s still the second highest growth in the major economies of the world.
India has a large service industry which accounts for almost 65% of the country’s GDP. The
industrial sector accounts for 20% and the agricultural sector 18%. Agriculture is the main
occupation of India and represents 52% of the employment. Forestry, fishing and logging
accounts for 25% of the GDP. Due to improvement in irrigation, technology and agricultural
practices, the average yield increased. The service sector is the fastest growing sector of India
represents 35% and the industrial sector around 15%.
Since the economic reforms, India’s trade has grown rapidly. It accounted for 1.5% of the world
trade in 2007. In 2006, the total merchandise export and import was around $300 billion and the
services trade valued $143 billion. India's trade has reached a still relatively moderate share of
24% GDP in 2006, up from 6% in 1985.
http://en.wikipedia.org/wiki/Demographics_of_India
http://en.wikipedia.org/wiki/Economy_of_India
9
GDP (purchasing power parity)
GDP real growth rate
GDP per capita
Exports
Imports
2008
$3.344 trillion
7.4%
$2,900
$200.9 billion
$322.3 billion
2009 (est.)
$3.561 trillion
6.5%
$3,100
$165 billion
$253.9 billion
GDP - composition by sector:
agriculture: 15.8%
industry: 25.8%
services: 58.4% (2009)
Exports - partners:
UAE 12.3%, US 11.7%, China 5.4%, Singapore 4.5% (2008)
Imports - partners:
China 10.8%, Saudi Arabia 6.9%, US 6.7%, UAE 6.7%, Iran 4.2% (2008)
2.3
Technological factors
The Indian IT industry has grown tremendously in the last 10-15 years due to the initiatives of
the government, companies and the Indian graduates who developed themselves to
technological skilled good English speaking employees.
According to NASSCOM, the revenue of the information technology sector in India has grown
from 1.2 per cent of the gross domestic product (GDP) in FY 1997-98 to an estimated 5.8 per
cent in FY 2008-09. India's IT growth in the world is primarily dominated by IT software and
services such as Custom Application Development and Maintenance (CADM), System
Integration, IT Consulting, Application Management, Software testing, and Web services.
Each year India produces for about 500.000 engineers that are good quality English speaking
professionals. These graduates from the Indian Institutes of technology are well known for their
technical skills. The successful IT business in India not only improved the economy of the
country but also resulted in close relations with other world economies like the US and the EU.
As per NASSCOM's latest findings:


Indian IT-BPO sector grew by 12 per cent in FY 2009 to reach US$ 71.7 billion in
aggregate revenue (including hardware). Of this, the software and services segment
accounted for US$ 59.6 billion.
IT-BPO exports (including hardware exports) grew by 16 per cent from US$ 40.9 billion in
FY 2007-08 to US$ 47.3 billion in FY 2008-09.
Nowadays, the IT industry in India accounts for 40% of the GDP and export earnings. It provides
also employment for a large number of the tertiary sector workforce. More than 2 million people
work in the sector, making it one of the biggest job creators and a stimulator of the Indian
Economy. India developed a number of outsourcing companies specializing in customer support
https://www.cia.gov/library/publications/the-world-factbook/geos/in.html
10
by internet or telephone connections in the last few years.
In 2009, the revenues from outsourcing were almost 60 billion dollars and it is expected to be
225 billion dollars in 2020.
Government support


The government set up the National Taskforce on Information Technology and Software
Development with the objective of framing a long term National IT Policy for the country.
Enactment of the Information Technology Act, which provides a legal framework to
facilitate electronic commerce and electronic transactions.
India's IT industry (USD bn) (Source:NASSCOM)
Particulars
IT Services
FY 2006
17.8
FY 2007
23.7
- Exports
13.13
18.1
- Domestic
4.5
5.6
ITES-BPO
7.2
9.5
- Exports
6.3
8.3
- Domestic
0.9
1.2
Engineering services, R&D and Software products
5.3
6.5
- Exports
4.0
4.9
- Domestic
1.3
1.6
Hardware
Total IT industry
7.00
37.4
8.2
47.8
- Exports
24.1
31.9
- Domestic
13.22
15.9
Leading IT cities in India
Today, Bangalore is known as the IT capital of India, it contributes 33% of the Indian IT exports.
Other important IT destinations are below.
http://www.ibef.org/artdispview.aspx?in=38&art_id=25188&cat_id=121&page=1
http://www.ibef.org/artdispview.aspx?in=38&art_id=25188&cat_id=121&page=2
11
Top 7 IT destinations in India
Ranking
1
City / Region
Bangalore
2
Chennai
3
Hyderabad
4
NCR
5
Kolkata
6
7
Pune
Mumbai
Description
Popularly known as the capital of the Silicon valley of India is currently
leading in Information Technology Industries in India.
It is also called as India's second silicon valley. The TIDEL park situated
here is one of the largest in Asia.
Hyderabad which has good infrastructure and good government support is
also a good technology base in India
The National Capital Region of India comprising Delhi, Gurgaon,
Faridabad, Noida, Greater Noida and Ghaziabad are having ambitious
projects and are trying to do every possible thing for this purpose.
Kolkata which is slowly becoming a major IT hub in near future. Some of
the well known technological corporations are situated.
The booming city is the home to a good number of Software companies.
This is one city that has seen tremendous growth in IT and BPO industry.
TCS,Patni, WNS and other companies are headquartered here
According to NASSCOM, software and services exports (including exports of IT services,
business process outsourcing (BPO), engineering services and research and development
(R&D) and software products) reached US$ 47 billion in FY 2008-09, contributing nearly 78 per
cent to the total software and services revenue of US$ 59.6 billion.
India is expected to continue its position as the most preferred destination for companies to
offshore their back office and IT functions. It also keeps its low-costs advantage and the
availability of educated and skilled people.
2.4
Opportunities of India
There are some opportunities for IBM in India. The most imported opportunity are listed below.
Growing IT industry in India
The IT industry of India is growing rapidly in the last years. The demand for hardware and IT
services is growing because more and more international companies set up their offices in India.
Each of these companies need servers and hardware to do business in India. IBM could offer
these companies their services.
Electronic Hardware Technology Parks
The Indian government set up electronic hardware technology parks in leading IT cities like
Bangalore and Chennai. The reason to set up these parks is to encourage the investment in the
IT sector. There are companies that offer customer support by internet. It is well known that India
has many high educated, quality English speaking employees who are working in those
companies. These employees need a server where they can connect to. IBM can set up those
kind of servers and can offer other services that companies need.
Export data services
Many of the Bangalore companies are growing and adding employees quickly. The reason there
is such a global demand for this kind of work is because companies want to have their
documents in a digital format. This conversion may include scanning the document into the
computer and then going one-step further and tagging and indexing them in HTML SGML or
12
XML so that it can be put on the Internet and easily retrieved. The entrepreneurs who are willing
to joint venture with Indian partners to start up a business like this will not only make money but
will be doing a great service for India by providing high quality skilled jobs.
The companies which are focusing on this opportunity have to have good online services
because their whole business is online. They need to have good servers and good applications.
IBM can make use of this opportunity because it offers the services these companies need.
Software companies
In Pune, there are many software companies established. The potential is to develop quality
software using the extremely intelligent labor force in India at a lower cost. High quality
programmers can be hired for 25%-50% of the cost of the same software programmers in the
West.
India is an attractive destination for IBM to outsource their services because of the low costs.
This is also important to follow developments in the IT industry of India.
13
3.
RUSSIAN FEDERATION
3.1
Introduction
IBM has been present in Russia and the Commonwealth of Independent States for 35 years.
IBM Russia/CIS plays an important role in IBM’s Growth Markets organization providing a
rapidly-growing source of revenue and skills for the IBM Company.
In Russia/CIS IBM is a leading provider of high-value solutions and services delivering
integration and innovation to their clients. Many of Russia’s government organizations and
private sector companies rely on IBM to provide the infrastructure to manage data and run
critical applications.
IBM is currently present in 14 cities in the Russian Federation with offices in many of them
including Moscow and St Petersburg where IBM has their biggest operations. In the CIS
countries IBM has a subsidiary office in Ukraine and representative offices in Kazakhstan and
Uzbekistan. IBM has over 1200 employees and work with over 1400 business partners in the
region.
IBM Russia also plays a significant role in IBM’s globally integrated operations by being home to
the Russian Development Laboratory since 2006. This facility, which was opened by IBM
Chairman and CEO Sam Palmisano, taps into some of the best Russian technical talent which
works side-by-side with IBM’s global teams on the development of IBM’s next generation
technologies.
3.2 Demographic factors
Population July 2009 (est.)
140,041,247
Age structure 2009 (est.)
0-14 years: 14.8% (male 10,644,833/female 10,095,011)
15-64 years: 71.5% (male 48,004,040/female 52,142,313)
65 years and over: 13.7% (male 5,880,877/female 13,274,173) (2009 est.)
Population growth rate 2009 (est.)
-0.467%
Education of expenditures 2005
3.8% of GDP
Russia's educational system has produced nearly 100% literacy. About 7 million students
attended Russia's 1,090 institutions of higher education in 2006. Great emphasis is placed on
science and technology in education, Russian medical, mathematical, scientific, and space and
aviation research is still generally of a high order. 16.0% of population over 15 years of age (17.6
million) have tertiary (undergraduate level or higher) education; 47.7% have completed
secondary education (10 or 11 years); 26.5% have completed middle school (8 or 9 years) and
8.1% have elementary education.
https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html
http://www.state.gov/r/pa/ei/bgn/3183.htm
http://en.wikipedia.org/wiki/Education_in_Russia
14
Highest rates of tertiary education, 24.7% are recorded among women aged 35–39 years
(compared to 19.5% for men of the same age bracket). Russia has more academic graduates
than any other country in Europe.
3.3 Economic factors
Russia has undergone significant changes since the collapse of the Soviet Union, moving from a
globally-isolated, centrally-planned economy to a more market-based and globally-integrated
economy. In 2009 Russia became the world's largest exporter of oil and natural gas and is also
the third largest exporter of steel and primary aluminum. The Russian economy had averaged
7% growth since the 1998 Russian financial crisis. The economy of Russia is the eleventh
largest economy in the world by nominal value and the eighth largest by purchasing power parity
(PPP). Russia has an abundance of natural gas oil, coal, and precious metals. It is also rich in
agriculture.
Some facts from the Russian Economy (2008-2009).
GDP (purchasing power parity)
GDP real growth rate
GDP per capita
Unemployment rate
Inflation rate (consumer prices)
Exports
Imports
2008
$2.298 trillion
5.6%
$16,300
6.5%
14.1% (est.)
$471.6 billion
$291.9 billion (est.)
2009 (est.)
$2.103 trillion
- 8,5%
$15,200
8,9%
11.9%
$295.6 billion
$196.8 billion
Export partners 2008
Netherlands 11.2%, Italy 8.1%, Germany 8%, Turkey 6%, Ukraine 5.1%, Poland 4.5%, China 4.3%.
Import partners 2008
Germany 13.5%, China 13.2%, Japan 6.5%, Ukraine 6%, US 4.5%, Italy 4.3%.
GDP - composition by sector 2009 (est.)
agriculture: 5.2%, industry: 37%, services: 57.9%.
Russia ranking statistics








Largest country in the world
2nd: Oil exports – 243,1M t in 2008
2nd: Rail network (85 thousand km)
3rd: Reserves of foreign exchange and gold: US$ 384 bn, (as of 6 March 2009)
9th: FDI confidence index (AT Kearney)
60th: FedEx “access” index (openness to trade)
52nd UN Trade and Development Index
51st: WEF Competitiveness ranking
https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html
http://www.pwc.com/ru/en/doing-business-in-russia/index.jhtml
http://en.wikipedia.org/wiki/Economy_of_Russia
15



120th: Ease of doing business (IFC)
161st: Trading across borders (IFC)
62th: AT Kearney Globalization Index
3.4 Technological factors
The IT market is one of the most dynamic sectors of the Russian economy. The positive trends
driving the IT market are likely to remain constant and give Russia the potential of being one of
the fastest growing IT markets in the world. Russian software exports have risen from just $120
million in 2000 to $1.5 billion in 2006. Since the year 2000 the IT market has demonstrated
growth rates of 30-40 percent a year, growing by 54% in 2006 alone.
Sectors
The biggest sector in terms of revenue is system and network integration, which accounts for
28.3% of the total market revenues. Meanwhile the fastest growing segment of the IT market is
offshore programming. The industry of software development outsourcing crossed the mark of
$1 billion of total revenues in 2005 and reached $1.8 billion in 2006. Currently Russia controls 3
percent of the offshore software development market and is the third leading country (after India
and China) among software exporters. Such growth of software outsourcing in Russia is caused
by a number of factors which make Russia a IT key market:
1). One of them is the supporting role of the Russian Government. The Government has
launched the following initiatives to support hi-tech:
>
Russian Venture Company to invest over 1.2bln dollar into hi-tech industry until 2011
>
Special economic zones
>
A number of tax remissions to be shortly
>
Seven technology parks to open in 2008: -------------------------- Moscow
>
E-Government:
Biometric passports
Novosibirsk
State automated system “Electronic”
Customs automation
State automated system ”Justice”
National electronics Library
State Statistics System
State Car Insurance System
Installation of Linux-based freeware
Nizhny Novgorod
Kaluga
Tumen
Republic of Tatarstan
St. Petersburg Regions
2). Another factor stimulating the IT sector growth in Russia is the presence of global technology
corporations such as Intel, Motorola, Sun Microsystems and others, which have intensified their
software development activities and opened their R&D centers in Russia.
3). Accelerating growth in computer sales in 2007 and immense potential for IT investments by
Russia’s traditional industries. It is estimated that the government has as much as US$350bn in
reserves for investment to apply IT to improving areas such as education, healthcare, defense
and the power sector
4). Accelerating growth in Internet usage.
http://www.sras.org/files/textedit/2005_russian_computer_outsoursing.pdf?20841
http://en.wikipedia.org/wiki/Economy_of_Russia
http://www1.american.edu/initeb/sw5840a/geographics.htm
http://www.armd.ru/common/img/uploaded/2008_october.pdf
http://www.internetworldstats.com/euro/ru.htm
16
Year
2000
2007
2008
2009
Internet Users
3,100,000
29,400,000
38,000,000
45,250,000
Population
145,149,035
141,377,752
140,702,094
140,041,247
% of Pop.
2.1 %
20.8 %
27.0 %
32.3 %
Source
ITU
POF
POF
ITU
The three main IT cities
In Russia, the three main cities with concentrations of IT programming activity are Moscow, St.
Petersburg, and Novosibirsk. Since Moscow is the capital of Russia, software companies mainly
focus on the domestic market given the close proximity of the government. St. Petersburg has
the best geographic location of the three as it is located close to several Scandinavian borders
and has very little domestic market. Apart from these Moscow and St. Petersburg offer the best
infrastructure, ease of access for visiting customers, and numerous universities conducive to
high availability of local talent for hire. Finally, Novosibirsk is in the heart of Siberia. Built to be a
dedicated scientific town, its remote geographic location and telecommunications difficulties are
hard to overcome.
3.5 Political factors
Besides cultural differences and language barriers there are other factors which also can be
problematic for doing business in Russia. The WEF has made a Global Competitiveness Project
in which among other things respondents were asked to select the five most problematic factors
for doing business in their country and rank them between 1 (most problematic) and 5. The bars
in the figure show the responses weighted according to their ranking for Russia.
As you can see corruption, tax regulations, access to financing and inefficient bureaucracy are
the most problematic factors for doing business in Russia.
http://www.sseru.org/index.php?tpl=second&mid=4;20;99&pid=84&lang=en
http://www.reportlinker.com/p0178056/Russia-Information-Technology-Report-Q1-2010.html
17
3.6
Opportunities of Russia
-
Russia has one of the fastest growing IT markets in the world.
-
Supporting role of the Russian government
-
The Government has launched a number of promising IT major projects.
-
The government has as much as US$350bn in reserves for investment to apply IT to
improving areas such as education, healthcare, defense and the power sector.
-
Russia’s three main IT cities (Moscow, St. Petersburg and Novosibirsk).
-
Russia's educational system has produced nearly 100% literacy. About 7 million students
attended Russia's 1,090 institutions of higher education in 2006. Great emphasis is
placed among others on science and technology in education. Russia has more
academic graduates than any other country in Europe.
-
Accelerating growth in computer sales and internet usage.
18
4.
STRATEGIC OPPORTUNITIES
4.1
Strategic opportunities of China
China has several regions with IT centers where almost 2000 foreign companies are located. It
is known that China has a growing software market, with nearly 50% growth in 2009. Because of
this growth, many companies need services and software that support them. IBM can offer these
companies their services and software support.
Financial software and business software such as CRM, ERP, EAM and SCM aren’t used very
much in China. This is as an opportunity for IBM not only to develop them for Chinese
companies but also for education and training purposes.
China is one of the fastest growing economies of the world. It has a good education system
which give the Chinese people the opportunity to do a good study and develop themselves. For
IBM is this an opportunity because they can use these high skilled employees with a low cost.
4.2
Strategic opportunities of India
The IT industry of India is growing rapidly in the last years. The demand for hardware and IT
services is growing because more and more international companies set up their offices in India.
Each of these companies need servers and hardware to do business in India. IBM could offer
these companies their services.
An important second language in India, English is widely used in business and industry. India
has many high educated, quality English speaking employees. This makes it easy for IBM to set
up business in India or to find the right employees or to cooperate with other companies.
In India there is a strong demand for export data services. Which scans documents into the
computer and then going one-step further and tagging and indexing them in HTML SGML or
XML so that it can be put on the Internet and easily retrieved. IBM can make use of this
opportunity because they offer the services these companies need.
In Pune, there are many software companies established. The potential is to develop quality
software using the extremely intelligent labor force in India at a lower cost. High quality
programmers can be hired for 25%-50% of the cost of the same software programmers in the
West.
India is an attractive destination for IBM to outsource their services because of the low costs.
This is also important to follow developments in the IT industry of India.
4.3
Strategic opportunities of Russia
The Government has launched a number of promising IT major projects. One of them is: the
Russian Venture Company will invest over 1.2bln dollar into hi-tech industry until 2011. Other
major project is: to open seven technology parks (technoparks) in 2008.
IBM can take advantage of these governmental projects.
The government has US $350bn in reserve to apply IT to improving areas such as education,
healthcare, defense and the power sector. Beside this in Russia it’s not a bad thing to have good
connections with the government.
19
Russia's educational system has produced nearly 100% literacy. About 7 million students
attended Russia's 1,090 institutions of higher education in 2006. Great emphasis is placed
among others on science and technology in education. Russia has more academic graduates
than any other country in Europe. IBM doesn’t need to search for the right employees if they
want to start business in Russia.
Accelerating growth in computer sales and internet usage in recent years is also a big
opportunity for IBM. IBM can take advantage of these developments.
20
5.
MABA-MATRIX
Competition (horizontally)
Weight
Economic growth
Wages
Infrastrucure
Subsidies
Total
0,25
0,25
0,25
0,25
1
Market attractiveness
(vertically)
Weight
Market growth
Market size
Highly educated labor force
IT sector
Total
0,25
0,25
0,25
0,25
1
Value
Russia
3
3
5
3
India
4
4
2
3
China
5
4
4
2
Value
Russia
3
3
5
4
Score
Russia
0,75
0,75
1,25
0,75
3,50
India
1
1
0,50
0,75
3,25
China
1,25
1
1
0,50
3,75
India
1
1
1
1,25
4,25
China
1,25
1,25
0,75
1
4,25
Score
India
4
4
4
5
China
5
5
3
4
Russia
0,75
0,75
1,25
1
3,75
21
ATTACHMENT: sources
https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html
http://www.nationmaster.com/country/ch-china/edu-education
https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html
http://en.wikipedia.org/wiki/Economy_of_the_People's_Republic_of_China
http://www.business-in-asia.com/asia/problems_asia.html
http://www.evd.nl/zoeken/showbouwsteen.asp?bstnum=245889
http://www.enterprise-ireland.com/Contact/Overseas+Offices/China_Software_IT+Sector.htm
http://en.wikipedia.org/wiki/Demographics_of_India
http://en.wikipedia.org/wiki/Economy_of_India
https://www.cia.gov/library/publications/the-world-factbook/geos/in.html
http://www.ibef.org/artdispview.aspx?in=38&art_id=25188&cat_id=121&page=1
http://www.ibef.org/artdispview.aspx?in=38&art_id=25188&cat_id=121&page=2
https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html
http://www.state.gov/r/pa/ei/bgn/3183.htm
http://en.wikipedia.org/wiki/Education_in_Russia
https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html
http://www.pwc.com/ru/en/doing-business-in-russia/index.jhtml
http://en.wikipedia.org/wiki/Economy_of_Russia
http://www.sras.org/files/textedit/2005_russian_computer_outsoursing.pdf?20841
http://en.wikipedia.org/wiki/Economy_of_Russia
http://www1.american.edu/initeb/sw5840a/geographics.htm
http://www.armd.ru/common/img/uploaded/2008_october.pdf
http://www.internetworldstats.com/euro/ru.htm
http://www.sseru.org/index.php?tpl=second&mid=4;20;99&pid=84&lang=en
http://www.reportlinker.com/p0178056/Russia-Information-Technology-Report-Q1-2010.html
22
ATTACHMENT: interviews
Diepte interview 1
Naam interviewer: Ömer Aydemir
Gegevens van de geïnterviewde
Naam:Senol Onat
Leeftijd: 24
Werkzaam bij: Eigen bloemenzaken
Functie: Eigenaar
1.
Welke connectie heeft u met het land ( China, India of Rusland) ?
China
Wij bloemisten gebruiken veel producten om van een bloem een mooie bos bloemen te
maken. Hiervoor hebben wij verschillende hulpmiddelen voor. Enkele keer per jaar
importeer ik een zeecontainer met verschillende producten; van een bloemenschaar tot
lintjes.
2.
Wat kunt u vertellen over de zakelijke markt in het land?
Ik kan je vertellen dat ze in China alles hebben. Je kunt het niet zo gek bedenken of je
kunt het daar wel op een beurs vinden. En als je het niet kunt vinden, dan geef je hun
een voorbeeld en ze maken het voor je.
3.
Welke (culturele) verschillen zijn er in de manier waarop de mensen zaken doen in
het land in vergelijking tot zakendoen in Nederland?
Bij hun is zakendoen op een andere manier. Bij hun is het ook dat ze je een goede
persoon moeten vinden. Zo gunnen ze je meer. Natuurlijk doen ze ook zaken met
mensen die ze niet mogen door een opmerking of gedrag van een persoon. Maar als
ze je mogen krijg je wel goed product geleverd en ze sturen ook dozen monsters mee
met nieuwe producten die je kunt uitproberen en aan de man te brengen.
Op de veiling zijn er maar heel weinig mensen die zich hiermee bezig houden, ik verkoop
mijn producten in Nederland op de veiling, maar ook in Duitsland waar mijn oom
verantwoordelijk is.
4.
Welke misvattingen bestaan er over het land?
Ik denk dat mensen uit het buitenland denken dat chinezen een beetje hard overkomen (
door gevechtsporten etc), maar dit is zeker niet waar. Het zijn hele aardige en
behulpzame mensen. Wel moet je altijd uitkijken er zijn ook rotte appels.
23
5.
Welke ontwikkelingen doen zich voor in het land?
Voorzover ik het weet, ontwikkeld China zich in alle industrieën, voorheen was het heel
veel plastic producten. Tegenwoordig wordt deze productgroep breder heb ik gemerkt. Ik
begon eerst met importen van lintjes, maar hier is later ook de bloemschaar bijgekomen
die toch grotendeels uit ijzer bestaat.
6.
Wat zou u zelf willen nog willen vertellen over het land?
Wees vriendelijk tegenover deze mensen, sla hun aanbieding niet af, doe alsof je net
als hun bent en laat hun voelen alsof je elkaar al jaren kent.
Diepte interview 2
Naam interviewer: Aryan Shor
Gegevens van de geïnterviewde
Naam: Rahul Vegada
Leeftijd: 22
Werkzaam bij: Barcelona Vibes
Functie: Stagiair
1.
Welke connectie heeft u met het land ( China, India of Rusland) ?
Ik kom uit India.
2.
Wat kunt u vertellen over de zakelijke markt in het land?
De zakelijke markt is de afgelopen jaren erg gegroeid en blijft voorlopig ook nog wel groeien
denk ik. Er komen meer buitenlandse bedrijven die in India investeren en ook ontstaan er
Indiase bedrijven die het erg goed doen. Laatst las ik dat binnen 1 jaar het aantal miljonairs in
India was verdubbeld.
3.
Welke (culturele) verschillen zijn er in de manier waarop de mensen zaken doen in
het land in vergelijking tot zakendoen in Nederland?
Er zijn erg veel culturele verschillen, over het algemeen hoeft men geen zorgen te maken over
de taal, want er wordt in het Engels gecommuniceerd. Ik weet dat men in India privé en zakelijk
niet erg makkelijk gescheiden houdt. Men moet elkaar ook wel mogen, de manier waarop men
zich presenteert is daarom ook erg belangrijk. Voorbeeld: Als een vrouw in Nederland in een wat
korter rokje loopt, wat alsnog wel zakelijk kan zijn, wordt dat als normaal gezien. In India lopen
de meeste vrouwen in het zaken leven in een broekpak of zelfs gewoon een saree.
24
4.
Welke misvattingen bestaan er over het land?
Er bestaan heel erg veel misvattingen over het land, alleen is dit niet bepaald op te noemen. Het
is namelijk zo dat India een land is met enorm veel verschillende subculturen. Wat normaal is in
het zuiden zou in het noorden absoluut niet kunnen. De grootste misvatting is dan denk ik dat
India over een kam valt te scheren, men moet eerst oriënteren waar men heen gaat en
vervolgens naar de cultuur en gewoontes van dat gebied kijken.
5.
Welke ontwikkelingen doen zich voor in het land?
Dit is een moeilijke vraag, India ontwikkelt zich namelijk erg snel. Ik ben er twee jaar geleden
heen geweest, maar als ik er nu heen ga zal ik zien dat er alweer veel veranderd is. Wat ik wel
kan zeggen is dat steeds meer jongeren op het platteland een ‘baan’ krijgen bij een organisatie.
Zij hoeven zich dus niet alleen op het landbouw te richten. Echter blijven de armen arm en
worden de rijken rijker, hier zou India zich juist in moeten ontwikkelen.
6.
Wat zou u zelf nog willen vertellen over het land?
India is een land met erg veel geschiedenis, het heeft een van de oudste geschiedenis van de
wereld. Veel dingen stammen af van India, bijvoorbeeld het getal 0. De westerse wereld, met
name de Grieken en Romeinen, proberen allerlei historische dingen te claimen als hun
uitvinding, terwijl er de laatste jaren alleen maar meer bewijs komt dat het uit het oosten van de
wereld komt.
Diepte interview 3
Naam interviewer: Aryan Shor
Gegevens van de geïnterviewde
Naam: Hassan Shor (vader van Aryan)
Leeftijd: 52
Werkzaam bij: Montessori College Zeist
Functie: Mediatheek medewerker
1. Welke connectie heeft u met het land ( China, India of Rusland) ?
Rusland
Ik heb gestudeerd in Rusland. Ik heb Filosofie en Internationale betrekkingen
gestudeerd. Daarnaast heb ik een tijdje als tolk gewerkt tijdens mijn verblijf in Rusland. In
totaal heb ik negen jaar gewoond in Rusland.
25
2.
Wat kunt u vertellen over de zakelijke markt in het land?
Het gaat economisch goed met Rusland laatste jaren. De zakelijke markt van Rusland
blijft zich ieder jaar ontwikkelen. Steeds meer buitenlandse bedrijven vestigen zich in
Rusland. Er liggen grote kansen voor internationale bedrijven in Rusland.
3.
Welke (culturele) verschillen zijn er in de manier waarop de mensen zaken doen in
het land in vergelijking tot zakendoen in Nederland?
Russen zijn minder strikt en direct. Daarnaast speelt de relatie tussen een werknemer en
werkgever een grote rol. Als een werknemer in problemen zit kan hij op de hulp reken
van zijn baas. Russen zijn wat dat betreft gevoeliger dan de Nederlanders.
4.
Welke misvattingen bestaan er over het land?
Als Nederlanders aan de Russen denken, denken ze terug aan de WO2 en denken ze
nog steeds aan communisme. Ook al zijn Russen heel erg veranderd in de loop der
jaren heeft men in Nederland het toch steeds over de “oude” Russen. Het is me
opgevallen dat Nederlanders de vooruitgang van Rusland niet willen inzien. Ik denk dat
dit vooral te maken heeft met de geschiedenis en de pro-Amerikaanse instelling van de
Nederlanders.
5.
Welke ontwikkelingen doen zich voor in het land?
Rusland maakt een goede ontwikkeling door. Na de val van communisme ging het
eigenlijk een tijdje heel slecht omdat er veel corruptie was ontstaan en veel bedrijven
in de handen vielen van de maffia. Nadat Poetin aan de macht kwam gaat het
bergopwaarts met Rusland. Maffia wordt sindsdien hard aangepakt, veel bedrijven
worden geprivatiseerd en er is steeds meer sprake van vrije handel.
6.
Wat zou u zelf willen nog willen vertellen over het land?
De Russen hechten veel waarde aan hun rijke historie en cultuur. Ook op school
wordt daar veel aandacht aan besteedt. Scholieren krijgen muziek-, kunst-,
literatuurlessen waarbij gedichten een belangrijke rol spelen.
Diepte interview 4
Naam interviewer: Cihan Kalayci
Gegevens van de geïnterviewde
Naam: Sivam Taheri
Leeftijd:28
Werkzaam bij:
Functie:
26
1.
Welke connectie heeft u met het land ( China, India of Rusland) ?
India
Ik ben geboren in India en ik ben jarenlang werkzaam geweest op het platteland en in een
kledingfabriek.
2.
Wat kunt u vertellen over de zakelijke markt in het land?
India is een sterk groeiende economie waarin de laatste tijd veel wordt geïnvesteerd door
buitenlandse bedrijven. In mijn tijd was er nog geen sprake van een dusdanige groei, maar
tegenwoordig zie ik veel verandering. Jongeren krijgen nu de mogelijkheid om te studeren en
ontwikkelen zich zo goed, dat ze zelfs in Europa werk vinden.
3.
Welke (culturele) verschillen zijn er in de manier waarop de mensen zaken doen in
het land in vergelijking tot zakendoen in Nederland?
In India is er veel sprake van hiërarchie. Hier in Nederland zeg praat je met ‘’je’’ tegen je baas
en noem je hem bij zijn naam. In India wordt degene met een hogere functie gerespecteerd en
wordt er ‘’U’’ gezegd tegen de werkgever.
4.
Welke misvattingen bestaan er over het land?
Ik ben van mening dat veel mensen niet weten dat India zich in de afgelopen jaren sterk heeft
ontwikkeld. Men denkt nog steeds dat het leven bestaat uit landbouw en dat er weinig
ontwikkeling is. Maar India is zoals ik al zei economisch sterk gegroeid en de Indiase bevolking
werkt hard en is goed opgeleid.
5.
Welke ontwikkelingen doen zich voor in het land?
Economische groei
6.
Wat zou u zelf willen nog willen vertellen over het land?
India is een groot land met een groot aantal inwoners. In sommige regio’s denken mensen heel
anders en handelen ze ook anders. Ik denk dat jullie hier wel rekening mee moeten houden.
Diepte interview 5
Naam interviewer: Cihan Kalayci
Gegevens van de geïnterviewde
Naam: Cheng Chao Ann
Leeftijd: 39
Werkzaam bij: Snackbar
27
Functie: Eigenaar
1.
Welke connectie heeft u met het land ( China, India of Rusland) ?
Ik ben in China geboren en heb er tot mijn 15e gewoond, daarna zijn we met mijn ouders, broers
en zussen naar Nederland gekomen.
2.
Wat kunt u vertellen over de zakelijke markt in het land?
Heel breed, er is van alles te verkrijgen en de prijzen ze veel lager in China.
3.
Welke (culturele) verschillen zijn er in de manier waarop de mensen zaken doen in
het land in vergelijking tot zakendoen in Nederland?
In China is respect erg belangrijk. Wanneer Chinezen zaken willen doen met anderen willen zij
de tegenpartij goed leren kennen en proberen een band met diegene te krijgen.
Daarnaast zijn Chinezen harde werkers en werken heel nauwkeurig en secuur.
4.
Welke misvattingen bestaan er over het land?
Ik heb wel eens gehoord dat Chinezen geen manieren hebben en het feit dat ze een andere
eetpatroon hebben dan de westerse wereld kan raar overkomen. Maar Chinezen zijn wel
degelijk nette en vriendelijke mensen en als het om respect gaat denk ik dat wij voorop staan.
5.
Welke ontwikkelingen doen zich voor in het land?
China wordt gezien als een economisch grootmacht en de economie groeit alsmaar door.
6.
Wat zou u zelf willen nog willen vertellen over het land?
China is wat mij betreft een prima land met veel mogelijkheden om zaken te doen. Chinezen
weten hoe ze zaken moeten doen en zijn uitstekende partners om mee samen te werken.
28