Venture capitalist calls for market dominance


By Alfed Lee, The China Post

The most critical feature of the new economy is market dominance, according to James Sha, managing partner of Spring Creek Investments and former CEO of sina.com, who delivered a keynote speech at the summit forum “Connecting the future.” Market dominance, which is also a measurement of success, can be evaluated in market share, market capitalization, and market leadership, Sha said. Sha currently serves as the chairman of the World Monte Jade Science & Technology Association (WMJSTA).

Citing the examples of Microsoft and Netscape, he said that both companies have been keen in expanding their market share in order to compete favorably in the market. When a company’s capitalization standing is strong enough, it can buy out its competitors just as Microsoft has been doing.

Enterprises, which wish to operate successfully in the new economy, should realize a “maturation of technology industries.” A company should be aware of the major trends, growth drivers, critical success factors, and horizontal disintegration of its own industry.

A semiconductor maker should know the major trends of most advanced manufacturing process and what the business growth driver are, Sha indicated. The critical success factors are big production volume, smaller size, and higher speed.

He noted that horizontal disintegration is being adopted in many companies in order to stay competitive. A horizontally disintegrated company frequently focuses on its core function while outsourcing resources which can be generated more efficiently by outsiders. He said Dell is a horizontally disintegrated company, which does a lot of outsourcing while focusing on sales and marketing.

He warned that enterprises should avoid “the risk of in the middle of the food chain.” Being in the middle of the food chain makes a company to remote from the end market, ignorant to market trend, having no leverage and agenda. He also warned that human-based cost advantage is not sustainable.

The role of technology in the new economy is that enterprises should apply technology to gain advantages in all corporate functions and to solve all problems in businesses. He called on entrepreneurs to increase expenses on technology-related purchases. The competitiveness buildup of U.S. enterprises was due to its spending in acquiring advanced technologies in the ’90s.

He pointed out that there is a need to institutionalize private investment. In the past the most readily available venture capital could be acquired from the venture capital companies. In the future the venture capital may come mostly from private equity providers, which is the fountainhead of entrepreneurs. Private investments will play a pivotal role in setting the direction for the technology industries, shaping the future, and serve as the gatekeeper of the new economy. Sha also saw a need for a healthy public equity market, which provides exits for private investments. The private investor said that his association is willing to replicate the Silicon Valley experience in Taiwan, mainland China, Singapore, and Hong Kong.

Sha said the WMJSTA has the experience to help entrepreneurs in the aforementioned areas to get venture capital or even to go public in the U.S. Mainland China should not be simply seen as a place for low-cost operation. It should be seen as a semi-home market that offers entrepreneurs the opportunities to develop needed business skills and to move up the food chain.