The Jakarta Globe, March 2nd, 2010

Nirmal Nikhar

The last two centuries have seen the dominance of the West in the field of technical invention and technological innovation. Starting from the 19th century Industrial Revolution and running through the 20th century Space Age and now the 21st century Computer and Telephony Age, industrialized Europe, the United States, Japan, South Korea and Taiwan have led the way in practically all walks of technological competitiveness. For many observers the surprise here has been why economically advancing countries such as India, China and Brazil continued to trail behind.

But they need not worry, because the new century so far has seen a slow and steady shift in technological influence from the West to the East. In particular, the last 40 years have seen the dominance of the “old” advanced economies of the West (and Japan) being successfully challenged by developing Asian countries. The most prolific movers and shakers in the field of technology may have started as the Japans, South Koreas and Taiwans of the world, but they too are now being challenged by countries such as India and China.

A number of trends point to Asia’s rise. First, the traditional forms of industrial growth have been augmented by the development of telecommunications and computer-assisted devices, managed through strategic partnerships and knowledge-based economics. Asia has embraced the newer technologies such as the Internet and Internet telephony, mobile services, broadband, cloud computing and related new management methods with a vengeance.

Outsourcing and the internationalization of many R&D activities has added intellectual grist to Asia’s technological mills. Knowledge hubs, innovation clusters and new centers of competence are emerging around Asia. A growing number of strategic partnerships between countries are being formed, such as Sony Ericsson, that bring together the best of both worlds. In Asia the private and public sectors are learning to become partners in commercial development and enjoying their symbiotic relationships.

Second, the results of this research and development knowledge, which had been the preserve of technically advanced countries for decades and which typically stayed in those countries, is being retained by these Asian countries, and not just Japan, South Korea and Taiwan, but also beyond in India and China. As examples of just how pervasive this process has become consider some of these technological innovations that have patents, knowledge and cutting-edge advantage.

Japan, while being the second-largest Internet user and the third-largest satellite television company in the world, is also the home of world-class technological companies such as Sony, Toshiba, Mitsubishi and Hitachi. These companies have pushed the boundaries of technological innovation to such an extent that Japan currently ranks number two for the most patents registered in the world.

South Korean companies Samsung and LG dominate in audio-visual equipment and memory chips for digital devices. These two South Korean companies together also control nearly 50 percent of the global LCD market.

Taiwan, although small in size, has developed into a superproducer of semiconductor devices, especially integrated circuits and computer memory chips. These circuits are used in all kinds of electronic devices, including practically all computers, mobile devices and memory peripherals.

Asia’s newer players are no slouches either. China’s manufacturing appetite has made it an obvious choice for many developed countries to set up production bases. As a result, many technology gadgets, especially at the lower end of the price scale, and therefore affordable for the majority of the general public, have a “made in China” label emblazoned on them. China’s the Lenovo Group is the fourth-largest seller of personal computers in the world and the largest seller of PCs with a 28 percent share of the Chinese market. It also owns IBM’s notebook PCs. Then there is the TCL Group, one of the largest producers of LCD panels in the world.

India too is surging forward. Many Western nations want to partner their R&D efforts with Indian companies. This ranges from high-tech companies like Microsoft, Cisco, Intel, Motorola and Google to companies with cutting-edge research programs in stem cells and nanotechnology. India’s homegrown technology includes high-tech companies with global reach such as TCS, Infosys and Wipro. India has already launched large-payload satellites in space, and is undertaking a mission to the moon. Other areas include pioneering stem-cell cures for blindness in Hyderabad, a booming pharmaceutical industry that produces the world’s biggest supply of generic drugs, ongoing collaborative work between government, technology institutions and private companies to develop and market laptops for as little as $10, and the worlds cheapest car, the $2,500 Tata-Nano.

It is possible that, in time, other Asian countries such as Indonesia and Vietnam will take a similar route to technological independence. Their strategy will possibly be a combination of technology transfers, strategic partnerships and “leap-frogging,” the adoption of new technologies, the development of knowledge/technological and manufacturing capabilities, appropriate education and training levels, long-term vision and risk readiness based on applying the lessons learned by the “forerunner” countries, and at the same time reducing risk for the “leapfroggers.”

Third, the United States and European nations are no longer the global center of innovation in management practices, and it is management that is the most powerful form of innovation.

These changes have been brutal on the “old” countries. It would be safe to assume that the erosion of the technical dominance of the West must be creating a tremendous pressure within Western nations to stem this erosion and redevelop their existing lead and advantage.

But Asia won’t want to let go of its newly found advantage, and an innovative set of management techniques being used by India and China can strengthen its position even further. The “bootstrapping approach,” which builds capabilities while at the same time addressing short-term market opportunities, has proved to be a powerful one. Western companies have tended to view India and China only as strategic growth markets that can supplement their own sluggish markets, and as a result have missed their real significance as emerging economies that are a catalyst for product and business innovation.

Furthermore, even though product innovation is vital to survival, it nevertheless has a diminishing impact in the marketplace. Innovative management practices seem much more powerful because of their ability to control the life cycle of product innovation and product development. The Chinese, Indian, Japanese, South Korean and Taiwanese management models have all proven successful, as can be seen from the power of the companies using them.

So while the outsourcing of R&D activities, with its shift of the development of new knowledge from the West to the East, has been important, other factors, such as the West’s myopic view of Asian countries simply as strategic growth markets, ignoring their capacity for accelerated product and process innovation, combined with the development of innovative management practices, have also played their part in rise of a dominant technological Asia. Western countries must acknowledge that Asia is now both a competitor and a partner in the 21st century.


Nirmal Nikhal is chief information officer for Strategic Asia