The narrowing of the "digital divide" in China combined with the country's growing engineering-talent pool will push it to the forefront of the digital revolution in the years ahead, according to a panelist at a digital technology conference.

"The sheer manpower" China can bring to digital innovation is "huge", and "extremely important", Paul-Bernhard Kallen, CEO of German media company Hubert Burda Media, said in an interview after a panel discussion at the Digital Life Design conference in Manhattan.

Klaus Hommels, a Swiss venture capitalist also on the panel titled The Big Picture: The Investment Triangle, said the simultaneous existence of "high-skilled Chinese businesses" such as e-commerce giant Alibaba Holdings Group and dominant US operating system developers such as Microsoft Corp raises questions about the power balance in the digital marketplace.

"How does the power on the digital market shift?" the founder of the Lakestar venture-capital firm asked.

Hommels said Chinese companies such as Sina Weibo, the operator of a Twitter-like social media site that recently listed its shares on the Nasdaq Stock Market in an initial offering that raised $286 million, are "very, very smart". By listing their shares in the US they are able to benefit from a stronger trading infrastructure and valuations that are typically as high or higher than in Hong Kong or the Chinese mainland, he said.

When the panel was asked to predict the source of the next big digital innovation, Hommels said it was impossible to answer that question with certainty. "It's never something you can anticipate," he said.

A recent report by the National Science Board, the policy-making body of the US government's National Science Foundation, suggested that China's proficiency in game-changing science and technology is increasing as US predominance in the field is eroding.

The US's share of global R&D since 2001 dropped to 30 percent from 37 percent, while China's share grew to 15 percent from 4 percent, according to the report.

Joining Hommels and Kallen on the panel were Jeffrey Rosen, a managing director of US investment bank Lazard LLC, and Digital Life Design Chairman Yossi Vardin. The moderator was Henry Blodget, co-founder, CEO and editor-in chief of the Business Insider business and technology news website.

The New York DLD conference, organized by Germany's DLD Media, took its cue from Munich's annual DLD conference, which aims to connect business leaders, technology industry opinion makers and investors.

In addition to the recent Weibo IPO, a conference backdrop was Alibaba's planned New York initial share offering, which some say could be the largest ever. Such moves help these digital technology firms extend their reputation beyond China. While Weibo's Nasdaq listing brought the site prestige due to the Nasdaq's reputation as the high-tech stock market, the filing also was a big boost for the Nasdaq, coming after its reputation-staining Facebook IPO technical glitch.

The cravings of an emerging middle class and young, tech-savvy urban residents for so-called smart technologies have propelled China into second place in the global digital media and technology market, according to statistics provided by digital data research company PQ Media.

Despite its cooling economy, China's digital market last year was valued at $173.18, trailing only the US, the firm reported.

PQ Media predicts that despite softer growth, digital media and technology in China will grow to more than $276 billion by 2017, accounting for more than 70 percent of the market's revenue, up from a 48 percent share in 2007.

michaelbarris@chinadailyusa.com

(China Daily USA 05/01/2014 page1)