Over the past decade, BRIC economies have taken the ICT world by the storm. While China overtook the United States to become the world’s biggest ICT exporter, Brazil proved the point that Latin America is not far behind. Both the countries are dreaming big: Brazil expects to double its ICT revenue from the current $212 billion to $430 billion by 2022, catapulting itself from the 5th position to the third in the global ICT market. And China, on the other hand, wants to become an “innovative nation” by 2020 and a “scientific superpower” by 2050.
As of now, China is far ahead of Brazil in the race for ICT supremacy. The Asian economic giant has the world’s largest number of Internet users and mobile handsets. China is also the largest PC market, and the second largest hardware market, according to Gartner.
Given a survey conducted by KPMG, 30 per cent of global business executives believe that China would become a global ‘hot spot’ for innovation within the next four years. Gartner estimated that spending by IT end users in China might grow from US$277 billion in 2011 to US$312 billion in 2012, an increase of 12.6 percent.
Brazil: Latin America’s Pride
Brazil, however, is not keeping quiet.The Brasscom IT Global Summit in Sao Paulo last week showcased what Brazil really stands for: a striking ability to combine technical skills with a highly inquisitive cultural orientation. A big part of the Brazil story is its focus on social inclusion, driven by a massive effort to raise up and ‘connect’ its citizens who have, so far, been apart from the tech boom. Internet penetration has been doubling over the past four years. The Latin American country, which has more than 83 million internet users, is gearing up to launch four innovation centers to build up a knowledge economy like that of China.
Its incentives have attracted major international companies to build R&D facilities, including Schlumberger, Baker Hughes, GE, FMC, IBM, and EMC among others. Brazil’s government has recently launched an ambitious program called “TI Maior” to boost its software and IT services industry. The government announced tax-breaks for the industry and vowed to invest in 150 start-ups. Brasscom itself has set a target of training 50,000 students in information technology by 2015.
Interestingly, Brazil imports over 60 percent of IT products from Asia. More than anything else, poor infrastructure has turned out be a major hurdle for investors. The average speed of broadband connection in the country is 1.8 Mbps, lower than the global average of 2.3 Mbps. And there are increasing number of complaints over patchy coverage and dropped calls from mobile consumers.
The ICT industry’s production is concentrated on a small number of transnational corporations, and they account for over 16 percent of the firms but over 70 percent of revenues, according to the Brazilian government agency, Instituto de Pesquisa Economica Aplicada(IPEA).
As many as 38,000 engineers graduate annually in Brazil. But in China, 400,000 students pass through engineering courses every year
China’s Red Hot Growth
China on the other hand has taken the United States head on. China has groomed its own alternatives for the global technology giants: For Facebook there’s Renren. For Google, there’s Baidu. For eBay, there’s Alibaba. And for Twitter, there’s Sina Weibo. Chinese Lenovo has now become the world’s second-largest PC vendor.
In the domestic telecom sector, most of the big players are national companies. China Mobile is the world biggest telecom operator by number of customers, and domestic telecom equipment makers like ZTE and Huawei have grown to rival the global giants like Ericsson and Alcatel Lucent.
Brazil urgently needs to boost its human capital to catch up with China, analyst say. Brazil’s ICT sector requires about 78,000 people by 2014. But, according to Brasscom, there are only 33,000 youths studying ICT related courses in the country.
Human Capital & Education
According to the Financial Times, nearly 87 per cent of students who begin IT higher education courses in Brazil never end up graduating. Lack of basic mathematic ability and few clear specialist courses contribute to students dropping out half way through their journey.
As many as 38,000 engineers graduate annually in Brazil. But in China, 400,000 students pass through engineering courses every year. Also, R&D spending in Brazil is far behind. R&D investment rose from 0.96 per cent of GDP in 2003 to 1.16 per cent in 2010. According to China Daily, China spends 1.8 percent of GDP on R&D and that is set to rise to 2.2 percent by 2015.
But China’s path is certainly not free of troubles. Many of its big research projects often end up as white elephants. And the country constantly is accused of stealing the technological knowhow of successful Western companies. Google, for instances, fled China after it suspected someone was trying to steal its core technology.
Also, China’s telecom firms like Huawei and ZTE have been accused of acting as conduits for Chinese military intelligence. Worse still, China in recent years is being considered a haven for intellectual property pirates.
In the meantime, China has slipped to 29th rank in the recent Global Competitiveness Report produced by the Global Benchmarking Network. The report shows China’s poor performance in the areas of higher education and training and technological readiness.
Finally, the human capital crunch is also being felt from Beijing to Shenzhen. Dwindling talents at home is forcing some Chinese technology giants, like ZTE, to shift their R&D centers to India and elsewhere.