It’s easy to overlook when working on the web side of things, but a large number of VC firms had or still have a guy who helps companies with their “China Strategy”. That is, how to best leverage labor or manufacturing in the middle kingdom to make things cheaply to sell elsewhere. It’s helpful for engineers and founders who need to manufacture something, but don’t understand the ins and outs of Asian supply chains.
It would seem we’re about to enter into a similar era when it comes to the web. Over the next five years, most Internet growth isn’t going to be coming from the US and Europe. Forrestor reports (subscription required) that by 2014, one-third of worldwide Internet usage will come from BRIC countries (Brazil, Russia, India, and China). Additionally, only 13% of Internet traffic will be coming from the US and Canada by then.
This represents a huge shift in where web traffic will come from, and subsequently will force startups to begin looking at international audiences much earlier. Otherwise, they risk having their concept copied wholesale by someone in Russia or China before they can get there.
If the Internet is going to be one of the U.S.’s chief exports, as Fred Wilson has said, then it’s going to have to start adapting to international markets at an earlier phase. Investors may begin to start pushing companies to become internationally competitive at an earlier stage. We might see a return to this “China Strategy” mindset, but applied globally.
When competing on the international level, web companies face an entirely different competitive landscape than other companies. Whereas other industries have stricter IP and longer lead times that provide a natural disincentive, websites can scale more quickly and competitors can pop up overnight. As the world becomes continually flattened, it’s more apparent that no industry is safe from competition abroad. Web companies need to realize this just like every other industry has and adapt.