That’s a lot of lipstick and high heels.

Zalora focuses on 10 countries in Asia: Singapore, Indonesia, Malaysia, Brunei, the Philippines, Thailand, Vietnam, Taiwan, and Hong Kong. The year-old startup says it has already achieved “annualized double-digit million USD revenues.”

“Our company is one of the fastest growing e-commerce companies in Southeast Asia and has bright prospects,” said managing director Michele Ferrario. “It is an honor for us that investors of such great repute have invested into an e-commerce company as young as Zalora”

It is indeed an honor when a year-old startup with two or three million dollars in annualized revenue scores a $100 million investment. And it’s an unusual honor as well. But there’s method behind the madness.

The investment was secured by the German holding company that owns Zalora, Rocket Internet, which claims to be “the largest, fastest and most successful international online venture builder.” Founded by the infamous Samwer brothers — who Jason Calacanis has called “despicable thieves” —  its modus operandi has been to take successful models from American startups and apply them globally.

Genius, perhaps, if not very original. And very, very successful.

Rocket Internet sold Groupon clone CityDeal to Groupon for $126 million in 2010 and eBay clone Alando to eBay for $50 million, among many other lucrative deals. That history is undoubtedly part of what led the investment group, led by Summit Partners, Investment AB Kinnevik, and the Verlinvest and Tengelmann Group, to participate in this $100 million round.

Source: Rocket Internet

Rocket Internet’s impressive portfolio of companies

A big chunk, 25 percent, of Zalora’s revenue comes from mobile commerce, and the company says its app is the top lifestyle app in all the countries it serves, and the top app overall for Singapore, Malaysia and Vietnam.

In other words, Rocket Ventures saw an opportunity to take a big slice of an emerging market, and is moving rapidly — and with massive investment — to own the space.

The capital will be used, Zalora said, to scale up operations and grow the number of local and international brands it carries.

The company has just delivered its millionth order.

photo credit: AehoHikaruki via photopin cc

That’s not surprising: we know Apple sources a lot of product — in fact almost all of its products — from Asia, where the company has had significant challenges with suppliers maintaining legal and ethical labor standards, in spite of efforts by CEO Tim Cook and others to improve working conditions.

But it is interesting to see the breakdown. Here’s a partial list of the countries Apple sources product from:

• Mainland China: 331 suppliers
• Japan: 148 suppliers
• United States: 76
• Taiwan: 35 suppliers
• Malaysia: 27
• Singapore: 25 suppliers
• Philippines: 23 suppliers
• Thailand: 17 suppliers
• United Kingdom: 7 suppliers
• Israel: 5 suppliers
• Austria: 4 suppliers

I guess that’s the definition of a multination corporation right there. Overall, with 88 percent of Apple’s supply chain in Asia, only 11 percent of Apple’s suppliers are in its home country of the United States, and even fewer — seven percent — of Apple’s suppliers are in Europe and the Middle East.

Apple has planned to bring some manufacturing back to the United States. Tim Cook announced last last year that Apple would be spending over $100 million to bring some manufacturing back to the U.S., a move that some have derided as a mere publicity stunt.

A bit expensive for a stunt, perhaps.

That manufacturing appears to be for Apple’s desktop lineup of iMacs, a product category that makes up a tiny fraction of its overall $55 billion in sales last quarter. In contrast, iPhone, iPad, and iPod account for over three quarters of Apple’ revenue — 76 percent, in fact.

But it does represent a start. And one that American workers probably would appreciate.

Image credit: Google, ChinaFile

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

So there could be something to the recent Consumer Reports review that said Apple’s new Maps application doesn’t suck. While it’s met with widespread anger and certainly lacks some data, Apple Maps shows images that are too good for some.

Taiwan’s military has asked Apple to blur images of its Hsinchu airbase, which is the site for the country’s newest radar defense station, according to Phys.org. The radar station is from Raytheon and is designed to give the country early warning of missiles fired from China.

While legally the government cannot force Apple to change the satellite images of sensitive areas, Taiwan is asking Apple to lower the resolution as a gesture of goodwill. This type of government request is not uncommon: U.S. Senator Charles Shumer raised concerns about both Apple and Google’s mapping technologies just in June.

According to the Taiwanese government, Google Maps (and Google Earth) already blur sensitive areas and have done so since 1997 … including former veep Dick Cheney’s house and the royal stables in The Hague, Netherlands.

The reality, of course, is that sovereign governments such as China have access to as good and frequently much better satellite images than Apple or Google. The concern here is likely much more for smaller, dissident or even terrorist groups.

Apple has not yet commented on the request, but we’ll update the story with its statement.

Source: Apple Maps

Probably not the secret Taiwanese air force installations.

How much longer will Silicon Valley stand by and watch the “silicon” part of its name wash away like so much sand?

This week, one of the most popular stories on VentureBeat carries the headline “Hardware is dead.” It’s an echo of a sentiment expressed earlier this year by venture capitalist Marc Andreessen, that software is eating the world. Here’s the argument in a nutshell: If you’re making hardware, get out of the business as fast as you can, and move to something more profitable.

In fact, hardware is not actually dead; it’s just that, like running cattle (as one VentureBeat commenter eloquently put it), the hardware business is no longer very attractive to Americans. That’s because it’s difficult, requires huge up-front investments, and offers narrow and unpredictable profit margins. So from a venture capitalist’s point of view, sure, hardware is dead.

From a broader perspective, however, the disappearance of hardware manufacturing expertise could have a long-term, negative impact on the health of the Silicon Valley economy. Harvard management professor Willy Shih recently said in a troubling roundtable on U.S. competitiveness, “Innovation requires access to manufacturing technology. This is not about being patriotic. It’s a strategic question.”

One thing is sure: American manufacturing expertise is slowly fading away. As the New York Times reported in January, we simply cannot compete with Chinese electronics manufacturing facilities. If you need to make a sudden change in the display for a smartphone, as Apple did, Foxconn managers can roust 8,000 workers from their beds and have them working 12-hour shifts the same day. If you need to hire thousands of manufacturing engineers overnight, Chinese companies can do it, whereas in the U.S., that many qualified candidates don’t even exist. Yes, these companies have an edge over U.S. because they pay lower wages and have looser environmental controls, but it’s our lack of manufacturing expertise that clinches the deal. Even if price was no object, you could not manufacture the iPhone in the U.S. — or any other competitive smartphone, for that matter.

But do we even want to compete in this business? When Chinese manufacturers can build an Android tablet that sells for $45 in the Shenzhen electronics markets, and if Fry’s Electronics can sell it to Americans for $80, that puts an enormous downward pressure on prices in the tablet market. If you wanted to sell commodities, you would have gone into corn and pork bellies instead of technology.

Ditto for smartphones, PCs, notebooks, ultrabooks, and most of the components that go into them. This is an industry that U.S. companies long ago ceded to overseas manufacturers for ostensibly smart economic reasons: Why compete in a market with dwindling margins when you can move up the food chain, become a design- or software-driven company, and enjoy fatter margins?

The problem is that these smart economic reasons make sense in the short term only. Long-term, we’re undercutting our capability to compete — something only Apple seems to understand, with a $500 million, multiyear chip development project to make itself more independent from chip manufacturers like Samsung and Intel.

Here’s why this is a problem: Asian manufacturers are moving up the food chain just as fast as U.S. manufacturers are, only one step behind. In the 1980s, when U.S. companies led the world in chip and PC manufacturing, Taiwanese and Chinese firms got a toehold in the market by making electronic components like resistors, capacitors, and motherboards. Eventually they got good enough at making those that they were able to move up the chain to chip manufacturing, then chip design, then the design and manufacture of entire electronics products.

At the same time, U.S. firms climbed up the ladder toward operating systems, software, integration services, and marketing, ceding the lower layers of the stack to their overseas partners.

If this trend continues, U.S. companies will eventually be standing on the very top rung of the technology industry ladder, doing the last thing we know how to do better than anyone else: public relations. Meanwhile, overseas manufacturers will do everything else: making the chips, building the hardware, and writing the OS and software.

Unfortunately, once you’ve reached the top of the ladder, you have nowhere to go but down.

Photo: Seagate factory workers assemble 2.5-inch disk drives. Credit: Robert Scoble via photo pin

Venture capital investment in Asia has nearly tripled in the past five years to $15.6 billion. China has leaped ahead to become the world’s second-largest venture market at $7.6 billion investments, while India has climbed to third place at $5.8 billion.

Together, these dragon and tiger markets account for 13 percent of the $37.8 billion put into startups globally. That’s up from 5 percent in 2005.

Since 2005, more than 6,000 startups in Asia – about half of them in India and China alone – have been venture funded.

These two markets are also tops when it comes to mobile service adoption. China ranks highest in the world, with 840 million mobile service subscribers, while India places second with 673 million subscribers. Vietnam has 78 million mobile service subscribers in a country of 89 million people!

China is also gaining ground when it comes to technology patents. The country scores fourth worldwide for new patent applications, up from tenth place in 2005. Two giant Chinese companies – ZTE Corp. and Huawei Technologies – are among the top four corporate patent filers in the world.

For sure, the U.S. still leads the global venture capital market, weighing in with 70 percent of investments in startups and 64 percent of deals worldwide. But VC spending in America has flattened and hasn’t recovered momentum since the last peak more than 10 years ago. The U.S. remains the world’s superpower innovator, too, with 28 percent of all patent applications in 2010. But the U.S. share of patent filings has slipped from 34 percent in 2005, while China’s portion stands at 7.6 percent, up by 56 percent in 2010.

In other telling signs of the eastward shift, the U.S. slipped to fifth from third place in a recent World Economic Forum ranking of 138 countries by technology development and competitiveness. Singapore ranked second, while Taiwan and Korea moved up among the top 10, China leapfrogged to 36th place, and Vietnam scored with the fastest climb.

Asia’s innovation hotspots are fast emerging as first choice destinations for bright young entrepreneurs. By 2014, an estimated 200,000 skilled tech workers leave the U.S. to return to their Chinese and Indian homelands to find new opportunities and to create tomorrow’s leading startups. Consider some of the great companies created by Chinese and Indian immigrants to the Valley: Sun Microsystems, Hotmail, Yahoo and YouTube.

This year, Silicon Valley serial entrepreneur Elliott Ng took a job at Google in China and moved his young family there. Raj Gilda left a VP post at Citigroup in New York and moved to Pune in India to ramp up a vocational training and micro-lending operation called Lend-A-Hand. Mentor and tech entrepreneur Bryan Pelz left Los Angeles for Ho Chi Minh City to work with mobile gaming and search startup VNG, which borrows from Shanda, Tencent, Google and Baidu. Yale undergrad Alice Wang left the ivy-covered walls for a job at a Groupon venture in China.

Getting in on the action, Singapore is making good with government hand-outs and skillful coaching for entrepreneurs. KC Wong is jumpstarting Sparky Animation in Singapore and wants to make it in Hollywood. Mobile security startup Tencube, incubated at the National University of Singapore, was acquired by McAfee. Taiwan is luring startups to move beyond their base in churning out more than semiconductors and electronic goods, and has turned on the lights for a number of LED startups.

The super-charged emerging markets of Asia promise to deliver the next Facebook phase – a turning point that will spark a creativity surge like the social media boom. Startups create jobs and wealth, and enthusiasm for future innovations.

Once, Sand Hill Road investors rarely scouted deals outside the San Francisco Bay Area. Now, they can’t get enough of Asia. Silicon Valley leader Dick Kramlich of giant New Enterprise Associates left his Nob Hill home and art collection and moved with his wife to Shanghai for more than a year to be in the thick of this happening city. Venture heavy Gary Rieschel of Qiming Venture Partners left behind a Bay Area career and his wine collection to relocate to Shanghai, working from the 39th floor of JinMao Tower overlooking the Bund. Former Sequoia Capital India head Sumir Chadha – now back at WestBridge Capital Partners – moved from his comfortable suburban residence in Burlingame to a sea-facing condo in Mumbai. IDG chairman Pat McGovern has made 100 trips to China and is now exploring new terrain in Vietnam and India, and financing dozens of scrappy young entrepreneurial ventures.

“The opportunity is now. In a few years, it will be too late,” says Kai-Fu Lee, the former president of Google China. Now chairman and CEO of Beijing-based Innovation Works, Lee advises young Chinese entrepreneurs in Silicon Valley to “Go East” and he’s financing dozens of startups and mentoring the founders.

These trends underscore a shift in entrepreneurial and inventive muscle to Asia. As the currents for tech innovation move across the Pacific Ocean to China and onward to the Indian Ocean, America’s long-term competiveness is increasingly at stake. Consider how important venture capital is to economic growth:  In 2009, venture-backed companies in the U.S. contributed 21 percent of the U.S. gross domestic product and 12 million jobs, according to IHS Global Insight.

Powerful tides are shifting, and quickly, as not only Chinese and Indian immigrants return home for improved job opportunities and family ties, but also young professionals and bright college graduates pack their bags and settle into a comfortable lifestyle and community of like-minded dynamos in Asia’s top tier cities. It’s not a roundtrip ticket either, but a several years’ journey or a lifetime commitment.

This exodus is laying a foundation for Asia to out-innovate America.

“Silicon Valley will not forfeit its leadership, but China and India will compete heavily,” says Ajit Nazre, a partner at top tier venture firm Kleiner Perkins Caufield & Byers. “We will see hundreds of companies coming out from these markets with huge growth and lots of potential.”

This new innovation dawn in Asia is really only the beginning. Over the next two decades, the startup game will play out in a new geography distant from its Silicon Valley roots.

Rebecca A. Fannin is the author of Startup Asia (Wiley, 2011) and Silicon Dragon (McGraw-Hill, 2008). Fannin will be appearing at Kepler’s Book Store, 1010 El Camino Real, in Menlo Park, Calif. on Friday, Dec. 9, at 6pm, for a talk, book signing and cocktail reception. 

[Top image via Lu Wenjuan/Shutterstock]

Now, under the name Zynga Texas Poker, the game will be available in Mandarin Chinese for Facebook players in Hong Kong and Taiwan. As with the English version, players can enter a casino lobby and play at any table, meet people from around the world, or join friends in a game. They can choose from Texas Hold ‘Em tables, tournament play, or VIP tables. A leaderboard shows how players compare in chip ranking.

Zynga has approached the market with some savvy. The players get 8,888 Vegas-style poker chips, since the No. 8 is lucky in Chinese. And players will be able to compete in a local Shootout tournament for a grand prize of $880,000 Taiwanese dollars. Zynga will be giving away prizes such as trips to Las Vegas.

As it expands its footprint worldwide, Zynga is doing more to make sure its games keep expanding. It has to do that because games that launch on Facebook aren’t as viral as they used to be. Facebook cracked down on notifications that games send to users, so now it takes more effort to make sure that games spread. Zynga is diversifying away from Facebook to SoftBank mobile in Japan, and it has created its own FarmVille.com web site. At the same time, it is taking actions like today’s poker game launch to make sure it can get as many Facebook users as possible. Zynga says it has more than 215 million monthly active users.