India’s small and medium-sized software firms, wanting to ride the wave of Artificial Intelligence (AI) and the Internet of Things (IOT), could soon find a new home in China’s northeast corner. Nasscom, India’s IT industry body, has negotiated a deal with local authorities in Dalian, a famous port city on the Liaodong Peninsula, to establish an IT corridor at the Bio-diverse Emerging Science Technology (BEST) City, on the outskirts of the metropolis.
In turn, it would allow small Indian cyber companies to register with the new IT cluster. The Chinese companies, who are not a part of the top 100 biggies, are also likely to benefit. “The story is a little more complicated,” said Gagan Sabharwal, senior director with Nasscom, referring to his disruptive bottom-up model, which could script the next chapter of India’s software story. “We want to marry Indian strengths, especially of small companies, in software with China’s heft in hardware.”
He said China’s migration towards “smart manufacturing” under its Industry 4.0 model is creating a huge demand for hi-end software. “If small and medium-sized Indian enterprises can help write software for AI-enabled machines and goods that can ‘think’, China could catapult them to the next level.”
Driverless cars are a prime example of a new wave of tech-intensive products, where more than 70% of costs would be incurred on software, Mr. Sabharwal observed. If Indian companies manage a foothold, they would not only plug into China’s new wave of industrialisation, but also log their presence in a city which has a complex colonial history. Dalian was established by the Russians in the late 19th century following an imperial concession by China. Imperial Russia’s thirst for warm water ports — in this case Port Arthur, which is on the southern tip of the Liaodong Peninsula — was at the heart of the enterprise.
A branch of the famous Moscow-Vladivostok trans-Siberian railway connected Port Arthur — now Lushun — to Harbin, a Chinese city in the north, not far from the Russian border. In fact, Harbin’s emergence can be attributed to Russian engineers, who were posted there to construct the eastern leg of the trans-Siberian railway. Even today, remnants of Russian culture echo strongly in the city. Harbin is well known for its green-domed Saint Sophia cathedral, as well as the Eastern Orthodox Church.
In Dalian, the journey to BEST city can be routed through Zhongshan Square. This is an area where Japanese imperial buildings mingle with the rich Russian architectural heritage. This is mainly the result of brutal early 20th century geopolitical rivalry, where an aspiration to control the strategic Port Arthur led to the 1904-05 Russo-Japanese war. The Russians lost that war.
Match-making platform
At BEST City, Sujit Chatterjee, co-founder of Zeta-V Tech, a start-up which is partnering Nasscom, explained the scope of the Sino-Indian IT collaboration. “In China, top 100 companies dominate 30% of the market. But 60% of Chinese companies are not part of the top 100... In India, we have approximately 17 big guns. But there are 2,200 smaller companies in the market. Our idea is to marry the bulk of Chinese hardware companies and Indian software companies into meaningful partners.”
Consequently, Mr. Sabharwal and Longye Sun from BEST City administration signed an agreement to set up the Sino-Indian Digital Collaboration Plaza — a “match-making” platform that will embolden small but aspirational Indian software developers to seek like-minded Chinese partners specialising in hardware.
Atul Aneja works for The Hindu and is based in Beijing