You’d have to be an unbearable pessimist if you were to fail to notice what a remarkable num‑ ber of things the Chinese are doing well these days. Yet even though they’ve done marvelous things in terms of the economics of trade, manufacturing, and as one wag put it recently, their “transition from souvenirs to semiconductors,” they still have not shown great competence when it comes to certain vital functions.
If, for example, you can find real sophistication in China, you’ll find it almost entirely in the technology companies. Wayne Tsou, head of the Carlyle Group in Hong Kong, says, “In hot sectors like mobile-phones and Internet gaming there are hyped [exaggerated] expectations.” Adds Frederik Balfour of Business Week magazine: “Outside tech, it’s another world. Venture capitalists find themselves dealing with folks who have never left home, speak little or no English, and have never even heard of venture capital . . . but they still may prove to be the China play of 2006 if tech gets too hot to touch!”