Revisit the short case on how locations in developing nations are challenging the dominance of more traditional Western locations for high-tech research and manufacturing, most notably Silicon Valley (page 160). 

The two examples in the short case are Bangalore in India and Shanghai in China. The short case concentrates on the advantages of locations like this. However, it does not consider the disadvantages and risks of locating in developing countries. Make a list of all the factors you would recommend a multi-national corporation to take into account in assessing the disadvantages and risks of locating in developing countries. Use this list to compare Bangalore and China for a multi-national computer corporation,
(a) Siting its research and development facility;
(b) Siting a new manufacturing facility.

Short case Developing nations challenge Silicon Valley Similar companies with similar needs often cluster together in the same location. For example, knitted garment manufacturers dominate parts of Northern Italy. Perhaps the most famous location cluster is in the area south of San Francisco, know as Silicon Valley, acknowledged as the most important intellectual and commercial hub of high-tech business. Yet Silicon Valley is being challenged by up-and-coming locations, especially in developing countries. Here are two examples. Bangalore in India has for many years been attractive in the computer industry. Back in the 1980s the area attracted software code-writing business from Western multi-nationals drawn by the ready availability of well- educated, low-cost English-speaking software technicians. Now the area has attracted even more, and even more sophisticated, business. Companies such as Intel, Sun Microsystems, Texas Instruments and Cisco have a presence in the area and are using their Bangalore development centres to tackle cutting-edge projects. The biggest draw is still India's pool of high-quality, low-cost software engineers. Each year Bangalore alone graduates 25,000 computer science engineers, almost the number who graduate in the entire USA. More significantly, the average wage of a top-class graduate software engineer is a fraction of that in the USA. Nor is there any lack of multi-national experience. For years Western (especially US) high-tech companies have employed senior Indian- born engineers. Equipped with Silicon Valley experience, some of these engineers are happy to return home to manage development teams. The high-tech research and development activities around Shanghai in China do not have the pedigree of those in India, but are increasingly seen as significant in the global technology industry. Over the next ten years, China will become a ferociously formidable competitor for companies that run the entire length of the technology food chain,' according to Michael J. Moritz, a Californian venture-capital firm specializing in high-tech businesses. And although most industry commentators admit that China has far to go, the combination of the availability of a highly skilled and well-educated workforce, often at even lower cost than India, together with the Chinese government's encouragement of joint ventures with multi- nationals, is seen as a big impetus to high-tech growth. Multi-nationals such as Alkatel, the French telecom giant, and Matsushita, Japan's largest consumer electronics company, as well as chip manufacturer Intel are all investing in research and development facilities. Questions 1 Do you think that the factors which attract high-tech companies to these developing nation locations are going to be as important in ten years' time? 2 What advantage do Silicon Valley locations still have over their challengers in developing nations? Source: Getty Images/AFP