The U.S. economy lags that of other countries and it’s not because of subprime woes, interest rates or the latest home-made ‘save Britney Spears’ video. It’s a problem I refer to as E.D. — No, not the biological problem that fills our spam email boxes daily, this particular ED stands for ‘economic dysfunction’.
Economic dysfunction can strike at any time. Side effects can and may include lack of growth in the stock market, pent up frustration for venture capitalists, vigorous M&A for companies with stock and cash, and involuntary discharge.
The NASDAQ index is flaccid the past 7 years, limping along while other countries are in the limelight. Let’s see NASDAQ vs. several Chinese Internet companies stocks performance since 2000:
In the earlier part of this decade I was very bullish on Chinese stocks at a time when most investors were retreating from tech. At the time, some of them traded BELOW cash level, that is, they had more cash than their market value. Yes, plenty of risk remains in Chinese tech stocks. Politics, rampant gambling, uncontrolled inflation, ties to Iran, and lead paint on your plastic-injected dog food if you believe the popular media.
Underneath this, the facts showed an expanding “consumer class” in China with newly-minted disposable income buying mobile phones, getting web access, buying cars (see the smog in Beijing? it’s from affluence). China is becoming a capitalist economy bar none. Today more than 300 million mobile phones are in use in China — and these are not your father’s cell phones, they are “mini computers” or “portable internet”. That means basically there’s more Chinese connected to the “internet” than Americans.
In fact, many countries outpace the US in tech, with faster broadband connections, more mobile phone functions, and populations that are tech savvy:
Korea
Sweden
Japan
China
to name a few.
This, too, doesn’t address the real market. The market is tech users, regardless of nationality. Tech users as a group represent over 1 billion of the world’s population. They have in common many things:
-connected to the Internet
-require search
-require mobile access to info and communications
-buy and sell electronically
-are at home online and online at home
-require email
-require IM
-require work flow online
-couldn’t do their jobs without being connected to the above
and more
Very few companies anywhere really understand this. Most play national markets. The winners in the future will be wider spread, more in tune with the flux, and cognizant of the lingua franca of connected opportunity.