From Asia to the world: going global in a digital world

+ This article is a monthly column written for the Chinese magazine Asian Business Leaders in July 2008 +

In a world often described as “flat” and still largely dominated by Western companies, successful Asian companies in the mobile and Internet space often wonder about their chances to go global. After attending Japan’s largest Internet and mobile conference in Sapporo, where Japanese entrepreneurs recognized this challenge, and on the eve on a presentation to give in Washington D.C. on “What Asia can tell us about mobile social networks”, let’s take a few moments to think about Asia’s chances to go global in a digital world.

Copy-only

It has become a classic joke in Internet circles in China to say that “C2C” meant “Copy-to-China”. The prevalence of concept-copies on the local scene and the support provided by venture capital to those start-ups have cast a shadow over Asia as an innovative region. With India still less visible partly due to poor telecom infrastructures, and Japan and Korea still isolated, we are lacking visible examples of Asia’s innovative powers in the digital space.

But is Asia really copy-only? As our company lives from “innovation arbitrage”, bringing proven concepts and best practices from Asia to the world, it would have been a poor choice to settle in a copy-only place. The fact is, innovation is happening, but largely under the radar. When thinking about who missed out, it became increasingly clear to us that the most poorly served were Western companies. More, if most digital entrepreneurs worldwide read TechCrunch to learn about Western innovations, Asian markets know about each other only marginally better than Western companies do.

In the “copy-only” conversation, what is striking is the way it is framed. Copy is a strong word and easily associated with the negative connotation of IPR theft, but is it still relevant in a connected world? If some Internet services are blatant copies – to the pixel – of foreign ones, it is arguable whether the latter were the first in their category and really invented so many new things.

• MySpace did not invent personal pages – those have been around for years with services like GeoCities,
• Facebook did not invent alumni networks as Classmates.com was a first mover.

In the Internet space like in regular warfare, the winner gets to write history, and Western markets and media, with their financial power and strong reach, often determine who the winner is. The word “copy” frames the conversation, but “inspiration” could be also a relevant word. As Isaac Newton said “If I could see so far, it is because I was standing on the shoulders of giants”.

Now, if concepts are out in the open (and usually not patentable due to the existence of prior works), if design can be copied from a CSS file, and if putting together databases is now a commodity, it poses the more fundamental question of where lies the core of innovation? Is Asia doing anything that could balance the innovation trade?

Asian innovations

For digital things, some countries in Asia have special characteristics:

• China hosts the world’s largest mobile and Internet population,
• Japan is the world’s second largest economy and most advanced mobile market,
• Korea is the most sophisticated digital society (and has the fastest broadband average speed in the world)

Given this, would it be possible for them not to innovate? Like in the famous story of the tree falling in the forest with nobody to hear it, the question becomes rather: is anybody looking at Asian innovation?

Often dismissed as local curiosities, a number of innovative services have been explored and made successful in Asia first.

• The digital goods model, pioneered by Cyworld in Korea since 1999, has since been adapted by other companies such as Tencent in China.
• The Q&A model which helped the Korean Internet portal Naver to capture the top spot in 2002 was the clear inspiration of both Yahoo Anwers and Baidu Zhidao launched in… 2005.

What are the new concepts and innovation being explored and proven today? It might be worth a look.

As technology becomes a commodity and tech talent is available at cheaper costs, innovation lies increasingly in concepts, business models and ecosystems. Those intangible elements are more difficult to appreciate but are at the heart of the next innovation wave.

If innovation is happening, Asian companies are generally badly positioned to take their models global because:

1. They are busy with their home market
2. They lack cross-market expertise
3. They lack cross-cultural expertise

To some extent, foreign companies do not fare very differently in advanced Asian markets in challenging the local champions, despite their significant financial muscle.

The future of innovation might be in day-one global views and multi-cultured talents

I recently came across two interesting examples of what I see as the next generation of “global companies”.

One of them was referred to as a “SARS company” by its founders in Hong Kong. The service, named EditGrid aims at becoming the best online spreadsheet. Just out of university during the SARS outbreak and faced with grim prospects due to the economic downturn, the founders, technology geeks at heart, decided to start this project with the idea that if they succeeded, they would beat Microsoft at it, and that if they failed, they would open source the code and… beat Microsoft. Their service was released in English first and became quickly a useful tool for day traders worldwide.

A second company named SlideShare is the “YouTube of slideshows”. Upload, share and read presentations from around the world. While the service is in English, it gets postings from everywhere, including a slideshow explaining how to support the Earthquake relief efforts. It raised some capital and definitely gets a lot of traction as it is a great tool to learn and find interesting people based on ideas. Why is it a “global company”? Firstly, the service itself is global, secondly, its development team is in… New Delhi! About a dozen people are there with the COO, while two other founders are in US to head planning, strategy and… marketing and fundraising. There are 11 Indians in this company and just one American, whose Indian wife is a co-founder and human-computer interaction expert.

One last example is a project I am involved in as a partner and investor: the company is registered in Hong Kong, the other partners are French, Australian and Korean, the development team also counts German, American and Chinese. Most are based in Beijing, but some work remotely from uncommon places like Guatemala. Finally, the target population is… anybody who finds the service useful.

From those examples, the key ideas that emerge are that globalization does not mean being everywhere, it means aiming at offering a global service, developed and promoted by heterogeneous teams.

Increasingly, aiming at being global while only favoring one culture or one country is likely to fail, as local players can often prove more agile and away from the melting pot of Silicon Valley, most Internet and mobile companies are still too mono-cultural to become global. Innovation is surely not a unique Western characteristic and, to some extent, the notion of “country of origin” for innovation becomes irrelevant. Those familiar with Tom Kelley’s book The 10 Faces of Innovation will recognize the next-generation innovators in cross-skilled people.

Presentations can be found on www.slideshare.net/plus8star/