Asia is a continent of contradictions. It has centuries of tradition. It also has some of the world’s youngest, fastest-growing cities. When it comes to technology, it has the opportunity to dispense with the slow centuries of development that occurred in the West, and leap straight into the future.
Its dual nature may explain the contradictory approach to tech in the region. Asia is home to some of the most-innovative companies on the planet. It also has a regulatory culture that all too often hinders progress and seeks to hold it back.
Japan’s respect for tradition is clear in its Shinto shrines, the intricate ceremonies surrounding sumo bouts, and the tender trimming of bonsai, plants in miniature that match the shape and scale of full-size trees, a tradition dating back some 700 years.
Yet this is also the country of kaizen, the concept of continuous improvement. Those two characters translate literally as “change better.” The idea came to dominate corporate culture in Japan’s post-war industrial expansion, illustrated perhaps nowhere better than in the “Toyota Way.”
Japan has ceded some of its early dominance in electronics to companies in Korea and China, which have a lower cost base. But Japanese companies lead the way in robotics and high-margin manufacturing. Toyota Motor, ever the auto innovator, has invested alongside SoftBank and the Japanese car-parts maker Denso in the Advanced Technologies Group at Uber, to deliver fully autonomous vehicles. The alliance that combines Nissan, Mitsubishi and Renault has invested alongside Google to develop self-driving taxis and other cars.
Japanese companies, like those in China, Korea and Singapore, are acutely aware that if you’re not progressing, you’ll be left behind, that innovation drives economies. Yet there are some governments that continue to block new thinking by artificially protecting traditional industries, whether due to heavy lobbying pressure or the need to retain votes. The farm lobby and construction industry are almighty in most Asian nations.
Hong Kong is one of the clearest contradictions, a conundrum for its inhabitants and also for China. It has flourished due to its entrepreneurial, free-trade past. Yet the Special Administrative Region is striving to find its post-colonial self as a full-fledged part of China. It remains greater China’s capital of capital. In many other industries, however, Hong Kong is aligning itself with an old-fashioned manufacturing and trading version of China that no longer exists.
In Hong Kong, ridesharing is banned, forcing the industry to operate clandestinely. Due to the powerful taxicab lobby, law-abiding citizens are forced to use inefficient, uncomfortable taxis that are colour-coded by area and cannot always take you where you want to go.
The situation stands in stark contrast to Shenzhen, just across the border in mainland China. The city has an economy that just eclipsed Hong Kong in size, and Didi Chuxing has the run of it. Didi is one of the world’s leading rideshare companies, and has partnered with Nissan Motor from Japan and the Chinese automaker Dongfeng Motor to produce all-electric vehicles optimised for ride-hailing.
Shenzhen, China’s version of Silicon Valley, was little more than a fishing village when China began its economic opening up in 1979. The city now houses some 10,000 tech companies, including the telecom maker Huawei Technologies and gaming giant Tencent Holdings. Shenzhen’s corporate-friendly environment, innovative spirit and progressive regulations mean business is booming.
Singapore is also carefully planning for its future. It is positioning itself as not only the financial capital of Southeast Asia but also a biotech hub and the Asia base for many dot.coms. It has a well-educated workforce and one of the highest levels of internet connectivity in the region. Judicious tax breaks make it the destination of choice for tech companies targeting Southeast Asia such as ride-sharing app operator Grab Holdings, e-commerce platform Lazada and data-centre startup AirTrunk, all headquartered in the city. Singapore’s government is sometimes accused of being unwavering, but when it comes to supporting innovation it is willing to relax regulations so entrepreneurs can “sandbox” ideas.
Last year, investors directed US$81 billion in venture capital into startups in Asia. Although companies in the region may at first have copied or translated ideas into local laws and culture, they’re coming into their own.
Lawmakers typically want to attract that money and those jobs. Still, some policymakers dreaming of tech greatness refuse to update ancient laws. Worse still, they on occasion ban the type of innovations created by the very companies they are trying to attract.
They need to put their policy into practice. Most Asian cities paint themselves as innovation hubs. For now, only a few have the true colours.