China's east coast battered by typhoon

BEIJING, Aug 9 (Reuters) - Typhoon Morakot battered China's commercial east coast on Sunday, killing a child and flattening houses.

Half a million people in coastal Fujian province were moved to safer parts ahead of the typhoon's arrival, along with a similar number in neighbouring Zhejiang, Xinhua reported.

Up the coast, Shanghai was on "high alert" and dozens of cargo ships in the area delayed or cancelled voyages. China's National Meteorological Centre said "violent rainstorms" could strike swathes of eastern China on Sunday and into Monday.

Winds of up to 120 kph (75 mph) destroyed five houses in Wenzhou, a manufacturing hub on the coast of Zhejiang, the official news agency said.

"Four adults and a four-year-old boy were buried in debris and the child died during the afternoon after emergency treatment failed," Xinhua said, citing city officials.

The typhoon had swept across Taiwan, the self-ruled island off the Chinese coast, killing three people, and 27 were missing, Taiwanese disaster response officials said on Sunday.

A hotel in Taiwan collapsed into a swollen river after guests and staff had been evacuated.

Goldman Sachs raises forecast for Chinese GDP to 9.4pc for 2009

Goldman Sachs expects the Chinese economy to grow faster than it had initially predicted, betting that the Government will be cautious in taking away the stimulus injected so far this year.

China, the fastest-growing of all the major economies, will expand 9.4pc this year, Goldman said in a report, up from an earlier estimate of 8.3pc.

“China is closer to a point at which it should be equally worried about tightening too late as it is about tightening too early,” Michael Buchanan, an economist at Goldman Sachs in Hong Kong, wrote in a report, according to Bloomberg. Chinese officials will be reluctant to remove the stimulus given the general weakness in the global economy, he said.

The Chinese economy grew 7.9pc in the three months to the end of June compared with the same period a year earlier, as the Government's 4 trillion yuan (£352bn) gained traction. Goldman's forecast comes after Wen Jiabao, the Chinese Premier, said that the stimulus package will stay in place because China faces a slide in demand for its exports.

However, the Chinese government is having to ensure the stimulus does not feed into new stock market and property bubbles. Fresh figures published on Monday showed that property sales soared 60pc by value in the first seven months of this year and the Shanghai Composite Index has already jumped 78pc this year.

Sugar price hits 28-year high

Raw sugar for delivery in October rose more than 3pc to 21,45 cents per pound on the ICE Futures exchange in New York.

Traders have forecast a 45pc drop in India's sugar output to 14.7m tonnes in the crop year to September due to the lack of rain.

India's monsoon has delivered 28pc less rain than expected since the season started in June. Some fear it could turn out to be as bad as crop output during the drought of 2004.

Meanwhile, too much rain has delayed the harvest in Brazil, another top grower of sugar cane. The country's sugar industry has also been hit by the credit crunch.

Prices were also boosted by dealers buying on expectations of higher demand from the US, Mexico and India - demand for sweets rises in India during the peak festival season which runs from August to October.

India emerges as the new IT front office of the world

Global markets may be the breadwinners for Indian technology majors, but the domestic market is fast becoming the next hot destination for global firms, particularly smaller, niche market players. While the western economies are still waiting for ‘green shoots’ of recovery, a slew of niche technology vendors, who were focusing on the US and Europe for so long, are finding greener pastures in emerging markets such as India.

“The global tech giants are already present in India in a big way. But what we are observing now is the gradual entry of small- and medium-sized tech companies with niche product offerings,” says Diptarup Chakraborti, principal research analyst of Gartner, the world’s largest IT research and advisory firm. It’s the slowdown in key western markets that’s leading these firms to emerging markets, he adds.

Some of the companies that have set up shops in India in the past six quarters include business intelligence provider MicroStrategy, anti-virus vendor AVG Technologies, investment analytics provider MSCI Barra, document manager ReadSoft, insurance software company IDIT Technologies, banking solutions firm Trasset and financial technology outfit SmartStream.

While the downturn in western markets triggered this trend, these firms were lured by India’s resilience to the global crisis, its strong local industrial base and the government’s big-ticket spends on technology infrastructure.

“Corporate India consists of 5,000 large enterprises, 27,000 small and medium outfits (SMEs) and more than seven lakh home-office set-ups. This sums up into a huge opportunity for tech providers,” says Mohammad Saif, global consulting firm Frost & Sullivan deputy director of ICT practices for South Asia and the Middle-East.

Most new entrants into India are niche technology players, points out Milan Sheth, business advisory services partner of professional advisory firm Ernst & Young. “These companies are targeting two major areas, including government and public sector segment and specialised analytics and modelling,” he adds.

Some of the new entrants that ET spoke to cited maturity in domestic IT market as an important reason to target India. “Since Indian companies are increasingly competing in the world market, they find a need to adhere to global best practices in their respective fields. Hence, we feel that the time is right for us to bring our global customer insights to the Indian market,” says Shankar Ganapathy, world-wide V-P of MicroStrategy, a $360-million US provider of business intelligence solutions that announced the launch of its India operations a few weeks ago.

Also, according to SunGard managing director Atul Sareen, various regulatory changes in India are creating new opportunities for technology providers to bring in best-in-industry solutions. For instance, the Reserve Bank of India’s decision to allow retail investors to invest in global markets requires technologies to connect broker terminals to international exchanges and also necessitates use of advanced risk-mitigating solutions, says Mr Sareen, who looks after sales of financial solutions for SunGard, a $5.6-billion US vendor of software solutions.

SunGard, which has been operating off-shore development centres in India since 1993, recently set up sales office in India to cater to local customers. The company will initially target financial solutions for segments including banking, insurance, front and back-office trading, and energy trading. At the end of 2008, the company had 2,000 employees in India or 10% of its global headcount of 20,000. It expects a 50% rise in its Indian headcount by the end of 2009.

AVG Technologies, which has 80 million users of its anti-virus solutions across the world, launched direct channel presence in India two months ago. “So far, our India presence was through Internet downloads of our free software. However, looking at fast-growing Internet connectivity in India, we have established channel sales in the country,” said Peter Baxter, vice-president, business development.

AVG, a privately-held company, commands 14% share of anti-virus solutions in the US and 11% in Europe. As part of its India venture, it has tied up with 12 large format retail outlets, including Croma, a part of Tata Sons, international retail chain Staples, and K Raheja promoted HyperCITY.

Foreign firms that set up shops in India early have already started reaping the benefits. Buongiorno, the world’s largest listed mobile value-added services (MVAS) provider that launched its India operations three years ago, is expecting a three-fold growth this year. “Though our operations in India are smaller compared to our global revenue (e316 million in 2008), we are growing rapidly here,” says Kuni Yoshi Furihata, co-CEO and chief financial officer of the Italian firm. The company, which earns close to 10% of its global revenue from India, has been providing VAS services to top domestic telecom operators, including Bharti Airtel.

According to Nasscom estimates, the domestic IT services market has grown two folds to $8.3 billion in the three years ended March 2009. Over half of this revenue came from IT spends by small- and medium-sized companies.
In contrast, global IT spends are in decline as clients are either delaying investment decisions or cutting discretionary IT spends. According to Gartner’s latest estimates, the world-wide IT spending is slated to drop by 6% to $3.2 trillion in 2009 from $3.4 in the previous year.

“While the global economic downturn shows signs of easing, this year IT budgets are still being cut and consumers will need a lot more persuading before they can feel confident enough to loosen their purse strings,” said Richard Gordon, research vice-president and head of global forecasting at Gartner, in a statement issued last month.

Also, as reported by ET in its March 21 edition, the government has lined up an investment of over $6 billion for mission critical projects, a chunk of which will be spent on technology infrastructure. While the global tech vendors are vying for a share in the booming Indian IT market, it will be interesting to see how their Indian counterparts react to this ‘firang’ onslaught.