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Asia Tech Research: Asia Matters 3/4 (The New Home of Entrepreneurship)

Asia Tech Podcast

Asia Tech Research

The New Home of Entrepreneurship
by Graham D Brown

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Asia Tech Research: Asia Matters 3/4 (The New Home of Entrepreneurship)

  1. the digital frontier REPORT 3 ASIATECH RESEARCH The New Home of Entrepreneurship
  2. #asiamatters ASIATECHRESEARCH Graham D Brown Report Author Thanks for reading my #asiamatters Report “The New Home of Entrepreneurship”.To learn more about what I do, and get regular updates and insights from my Asian research, connect with me on Linkedin. Connect with me on Linkedin
  3. download them free from www.AsiaTechResearch.com #asiamatters Get All 4 Reports in this Series ASIATECHRESEARCH
  4. #asiamatters ASIATECHRESEARCH Asia: The New Home of Entrepreneurship
  5. #asiamatters ASIATECHRESEARCH Understanding history is always easy with hindsight. In times of change, everything appears as random events. As of 2018, we are witnessing another seismic shift that to future generations and their historians will seem obvious…
  6. #asiamatters Once Upon aTime in the West… ASIATECHRESEARCH
  7. #asiamatters “We wrote a few lines of code in our dorm rooms… now we’re all frickin’ billionaires…” ASIATECHRESEARCH
  8. Valley of the Bros? ASIATECHRESEARCH
  9. #asiamatters There is a lot of talk young of Americans today being the “entrepreneurial generation” ASIATECHRESEARCH
  10. #asiamatters However you spin it, entrepreneurship in the US is in decline ASIATECHRESEARCH 0% 2.5% 5% 7.5% 10% 1990 1995 2000 2005 2010 2015 SOURCE:THE WALL STREET JOURNAL Share of households headed by someone under 30 that has a stake in or owns a privately held business In America, millennial entrepreneurship is down. Despite the apparent strength of the startup and technology sector, millennials are projected to be the least entrepreneurial generation: Entrepreneurship rates for people under 30 have fallen by 65 percent since the 1980s. - Entrepreneur Magazine 6 Sep 2017
  11. #asiamatters ASIATECHRESEARCH In reality, it’s no longer the US that stands out as a beacon for the world’s entrepreneurs… …but the legacy of 100 year hegemony has us still believing in the story of the “West is the best…”
  13. #asiamatters Something’s up… ASIATECHRESEARCH #shifthappens
  14. #asiamatters ASIATECHRESEARCH Let’s unpack what’s really going on… Asia is becoming increasingly a more attractive offer to global entrepreneurs. Add to that a new generation of local Asian talent who are turning their back on safe careers.
  15. Entrepreneurship isThriving #asiamatters Meanwhile in Asia… ASIATECHRESEARCH
  16. There is health in the country, and room away from our crowds of idlers and imbeciles. #asiamatters Go East, Young Man ASIATECHRESEARCH Asia is where the money, energy, ambition, drive, and the brains are. China currently puts out something like 10 times as many engineers as America does. This may not have an immediate effect, but it will have an effect someday. - Jim Rogers
  17. Parental values of stability and survival no longer key career goals #asiamatters Young Asians are opting for risk ASIATECHRESEARCH 83% of Indians surveyed said they would love to become an entrepreneur. 20% in Hong Kong had entrepreneurship intentions last year and 9.44 % started or operated new businesses, up 159 % from 2009 . THEN NOW
  18. #asiamatters This generation no longer aspires to be Doctors and Accountants, but Founders and CEOs ASIATECHRESEARCH
  19. #asiamatters ASIATECHRESEARCH “We’re seeing people in their early twenties starting companies—people just out of school, and there are even some dropouts,” - Kai-Fu Lee, ex Apple, Microsoft, and 
 Google China
  20. Maturing startup ecosystems and government policy propagate entrepreneurship #asiamatters Chinese Entrepreneurial Generation ASIATECHRESEARCH “Now major [Chinese] cities are crowded with ambitious inventors and entrepreneurs, flocking into software accelerators and hackerspaces. They no longer want jobs at Google or Apple; like their counterparts in San Francisco, they want to build the next Google or Apple.” - Wired Dec 2015
  21. So much for “communism”. 50% of Chinese industry is privately held business #asiamatters Private Enterprise fuels growth ASIATECHRESEARCH 0 10 20 30 40 50 2005 2010 2016 % of market cap SOURCE: MORGAN STANLEY RESEARCH, MSCI
  22. Privately held business account for over 80% of Chinese IT industry #asiamatters In The IT Sector, Private Dominates ASIATECHRESEARCH SOURCE: MORGAN STANLEY RESEARCH, MSCI 0 20 40 60 80 100 2005 2016 % Market Cap
  23. #asiamatters ASIATECHRESEARCH It’s a shift creating billionaires you haven’t heard of (Yet)
  24. Shenzhen leads as one of the most entrepreneurial in Asia #asiamatters Megacities power the Shift ASIATECHRESEARCH In Shenzhen, 16 % of the adult population largely immigrants from other parts of China are engaged in entrepreneurship - Global Entrepreneurship Monitor 2017
  25. #asiamatters ASIATECHRESEARCH And now this shift is changing cultural narratives. No longer is Asia a land of copycats and cheap factories but both a source of jobs for the West and an attractive proposition for location independent entrepreneurs.
  26. #asiamatters ASIATECHRESEARCH “By allowing Americans to make use of Alibaba'sTmall platform, it would bring a million new jobs in the U.S. over the next five years thanks to cross border e-commerce sales to China.” - Forbes 25 April 2017 “Ma envisions 40 per cent of business to come from outside mainland China in the next decade. Within 20 years, he expects Alibaba to serve as many as 2 billion consumers worldwide, and support 10 million profitable businesses.” - South China Morning Post 10 Jan 2017 Asia is now taking its entrepreneurs and ideas to the West Emboldened by domestic success…
  27. #asiamatters ASIATECHRESEARCH Asia is an increasingly attractive option for career development For Foreign Entrepreneurs
  28. We are shifting from Asia being a place for Pioneers to one for Followers #asiamatters Cultural Acceptance of Asia by the “West” ASIATECHRESEARCH “What the heck Let’s go to Asia” “There are real opportunities here in Asia” “You’re missing out if you’re not in Asia” Pioneers Opportunists Followers ASIA: The frontier ASIA: The de facto 1980 -1999 2000 - 2019 2020 - ASIA: The next big thing
  29. We are shifting from Asia being a place for Pioneers to one for Followers #asiamatters Cultural Acceptance of Asia by the “West” ASIATECHRESEARCH “What the heck Let’s go to Asia” “There are real opportunities here in Asia” “You’re missing out if you’re not in Asia” Pioneers Opportunists Followers ASIA: The frontier ASIA: The de facto 1980 -1999 2000 - 2019 2020 - ASIA: The next big thing …when the next generation of entrepreneurs realize they are better off in Asia …how it was for previous generations …how it is for current generations We are HERE hmmm… Asia or America?
  30. #asiamatters Optimism Fuels Asia ASIATECHRESEARCH
  31. Southeast Asia is the most positive about the impact of Globalization #asiamatters Globalization is “a force for good” ASIATECHRESEARCH Vietnam Philippines India Thailand Malaysia Indonesia Singapore Denmark Hong Kong Germany Australia UK USA France 37% 40% 47% 48% 60% 63% 67% 71% 72% 73% 75% 83% 85% 92% SOURCE:ASIA TECH RESEARCH BASED ON YOUGOV DATA 2016
  32. #asiamatters ASIATECHRESEARCH Asians are the most optimistic about globalisation and the impact of immigration - two key catalysts for tech startup ecosystems.
  33. Asia leads the West in openness #asiamatters Positive Attitude to Immigration ASIATECHRESEARCH India Vietnam Philippines Australia USA UK Singapore Hong Kong Thailand France 14% 21% 23% 30% 32% 37% 42% 45% 48% 52% SOURCE:YOUGOV 2016
  34. #asiamatters ASIATECHRESEARCH Asia is the Place to Get Sh*t Done
  35. (Instead of building walls and increasing regulation) #asiamatters Asian governments are responding… ASIATECHRESEARCH Singapore Israel Australia Finland Taiwan USA China 63.9% 64.7% 65.3% 67.3% 67.3% 67.5% 69.9% SOURCE:THE ECONOMIST INTELLIGENCE UNIT 2015 GLOBAL DYNAMISM RANKING
  36. Hong Kong and Singapore standard best in class #asiamatters Asia Leads in Economic Freedoms ASIATECHRESEARCH Hong Kong Singapore New Zealand Switzerland Taiwan UK USA South Korea Malaysia Thailand Philippines 65.6% 66.2% 73.8% 74.3% 75.1% 76.4% 76.5% 81.5% 83.7% 88.6% 89.8% SOURCE:THE HERITAGE FOUNDATION & WALL STREET JOURNAL 2017
  37. #asiamatters ASIATECHRESEARCH Where the West has stagnated with bureaucracy and wall-building,Asia has forged ahead, cutting red tape and making life easier for entrepreneurs.
  38. #asiamatters ASIATECHRESEARCH “In countries like Hong Kong, and even the Philippines, there is less regulation and it allows us to be a little experimental. We are working with university professors, PhDs, the hospitals, but we can actually try stuff here in the Philippines, which you can't test somewhere else.” - Bay McLaughlin

  39. Hong Kong tops IMD World Competitiveness and Economic Freedom rankings #asiamatters Hong Kong world leader ASIATECHRESEARCH Hong Kong encourages innovation through low and simple taxation and imposed no restrictions on capital flows - IMD World Competitiveness Centre 2016
  40. #asiamatters ASIATECHRESEARCH “Hong Kong is a fantastic hub right in the heart of Asia, business operations are simple, taxes are low, there’s a lot of talent out there to hire and the legal & financial systems are straightforward and well regulated.” - Ashley Galina Dudarenok

  41. Singapore, S Korea, Hong Kong and China in top 6 of “ease of doing business” #asiamatters Asia Dominates Business Rankings ASIATECHRESEARCH New Zealand Singapore Denmark S Korea Hong Kong China USA UK Norway Georgia SOURCE:THE WORLD BANK 2018
  42. #asiamatters Americans Spend 100 Hours More than Singaporeans Filing Taxes EveryYear ASIATECHRESEARCH Singapore Hong Kong United States South Korea Malaysia China Thailand 262 207 188 188 175 72 64 SOURCE:THE WORLD BANK 2018 AVERAGE HOURS SPENT FILING TAXES
  43. #asiamatters But, it’s not all good in Asia… there is still room for improvement ASIATECHRESEARCH
  44. #asiamatters ASIATECHRESEARCH In a world where entrepreneurs can base anywhere, Asia needs to respond Starting a Business has been the most common area of reform, with 74 of the 371 reforms of the past 15 years aimed at making it easier for entrepreneurs to register a new business.As a result, the average cost to start a business in the East Asia and Pacific region has dropped to 19 percent of income per capita, from 59 percent in 2003. - World Bank 2017
  45. #asiamatters ASIATECHRESEARCH Cutting red tape and attracting startups key to appeal
  46. #asiamatters Access ASIATECHRESEARCH
  47. #asiamatters ASIATECHRESEARCH In a world where there are fewer reasons than ever to be tied to the most expensive startup ecosystems, why not mine where the gold is? Asia offers cost advantages and access to billions of customers
  48. Survey reveals why companies relocate to Asia, and it’s not just cost #asiamatters Proximity is Key Benefit of Asia ASIATECHRESEARCH Proximity to High Growth Market Proximity to key Mfr sites Proximity to Suppliers Lower Dev Costs Access toTalent Easier to Export Experienced Labor Market Reliability of Execution 26% 30% 33% 39% 53% 54% 59% 71% SOURCE: PWC GLOBAL INNOVATION SURVEY 2015
  49. 50% of the population live within a 5 hour flight #asiamatters Access to Half the World ASIATECHRESEARCH “There is the opportunity of 1 billion customers available within a close proximity. It is also dirt cheap for entrepreneurs with funds from the US as the exchange rate and purchasing power really does work in their favour.” - Harprem Doowa

  50. 50% of the population live within a 5 hour flight #asiamatters Access to Half the World ASIATECHRESEARCH “Hong Kong is a fantastic launch-pad for China and other parts of the region – from here you have access to half the world’s population within a five-hour flight.” - Charles D’Haussy
  51. Hubs like Singapore give you 3.5 billion people within a 5 hour flight #asiamatters Access to Half the World ASIATECHRESEARCH approx 5 hr flight range
  52. A 5 hour flight will get you access to only 15% of that market size #asiamatters Back in San Francisco… ASIATECHRESEARCH approx 5 hr flight range
  53. #asiamatters Unique Cost Advantages ASIATECHRESEARCH
  54. #asiamatters ASIATECHRESEARCH Low cost = longer burn time Longer burn time = higher chance of discovering a business model that works
  55. San Francisco is $3,000 a month more expensive than Shanghai #asiamatters Asian Cities Significantly Cheaper ASIATECHRESEARCH San Francisco NYC Amsterdam London Hong Kong Singapore Tel Aviv Tokyo LasVegas Shanghai Bangkok Kuala Lumpur Bangalore 551 987 1,085 1,348 1,799 1,936 2,655 2,715 2,830 2,911 3,082 3,706 4,465 SOURCE:ASIATECHRESEARCH BASED ON NOMADLIST.COM DATA 2018 Monthly cost for single (employed)
  56. #asiamatters ASIATECHRESEARCH “For people here in Southeast Asia, both developed like in Singapore and developing like much of the region, the feeling that you can succeed simply with a little cash and a little foresight if everywhere.If you’re still fighting to start just the right business in your home country, I highly suggest you investigate opportunities here.” - Andrew Henderson
  57. London & NewYork are $20,000 more expensive than Singapore #asiamatters Asia Offers the Best Value Office Space ASIATECHRESEARCH London Shoreditch NewYork Brooklyn SF Mid Market Paris 1,2&9th Boston Seaport Dublin Docklands LA PlayaVista HK Cybertport Beijing Zhongguangcun Singapore One North $39,088 $39,090 $40,488 $47,124 $47,435 $50,700 $57,426 $61,680 $62,736 $66,706 SOURCE: KNIGHT FRANK DATA 2017 Annual costs for 600 sq ft office in each district
  58. The cheapest places aren’t always those with lowest GDP either #asiamatters Asia Leads in Manufacturing Costs ASIATECHRESEARCH Germany Brazil Canada UK Japan USA South Korea China Taiwan Thailand India Indonesia $2 $5 $6 $9 $15 $18 $23 $25 $27 $30 $38 $38 SOURCE: BOSTON CONSULTING GROUP,THE WALL STREET JOURNAL 2016
  59. Entrepreneurs in North America and Europe often hold down day jobs and build their startups in their spare time. It’s hard to be an entrepreneur in an environment where you’re constantly struggling for food, shelter, and comfort. Rather than work 40 hours a week at a job to make ends meet, you can put those 40 hours into innovation. - Neyma Jahan, CoFounder SmartMat Longer burn time is key to increasing the probability of getting the model right #asiamatters Low Cost = Longer Burn Time ASIATECHRESEARCH
  60. #asiamatters Innovation ASIATECHRESEARCH
  61. Expanding startup ecosystem combined with unique cost advantages fuels innovation #asiamatters Innovation Heads East ASIATECHRESEARCH
  62. #asiamatters ASIATECHRESEARCH “Innovation now comes from everywhere on earth. Most of the innovation and disruption are coming from new entrants - young, fearless, and not afraid to take on the status quo.” - Steve Blank, AuthorThe 4 Steps to Epiphany
  63. #asiamatters ASIATECHRESEARCH Just like Japan did in the 80s,Asia has demonstrated that it’s capable of “moving up the innovation chain”.Asia has the capacity, increasingly the creativity to innovate and now the results are showing…
  64. #asiamatters ASIATECHRESEARCH The China Greater Bay Leads The Valley on Invention Patents InventionPatents(1000s) 0 50 100 150 200 2012 2013 2014 2015 2016 5458 7270 35 192 155 105 75 60 Greater Bay San Francisco Bay SOURCE:ASIATECHRESEARCH
  65. #asiamatters ASIATECHRESEARCH "Not only is Asia benefiting from the use of technology, Asia will be a major source of the breakthroughs and advances in technology.” - Bill Gates Microsoft
  66. #asiamatters Chinese R&D Spending Outstrips Rest of World by 2020 ASIATECHRESEARCH ResearchSpending$Billion 0 100 200 300 400 500 600 2000 2005 2010 2015 2020 China San Francisco Bay EU USA SOURCE: GERD, OECD 2016 “If the current rates of investment and growth are any indicator, China is likely to surpass Europe in total research spending by the end of the decade and the US by the early 2020s.” - Dr Dan Steinbock, South China Morning Post 10 Feb 2014
  67. Asian ecosystems key to European and American competitiveness #asiamatters West Heads East ASIATECHRESEARCH “In 20 years Asian countries might be ahead on Germany technology-wise. Germany might turn into a less developed region in some respect. But Berlin could become a part of the Asian development, the Asian drive, if we are able to become a part of its ecosystems.” - Rainer Seider, Head of ForeignTrade at Ministry for Economics, Energy and Public Enterprise, Berlin
  68. #asiamatters ASIATECHRESEARCH Change, especially innovation, always comes from the outside.When societies are fuelled by newly empowered outsiders, they can change at a rapid pace…
  69. #asiamatters Change Agents: Women ASIATECHRESEARCH
  70. Female participation in entrepreneurship higher in fast growth markets #asiamatters Developing Markets Lead ASIATECHRESEARCH 6 Emerging Market Economies - Vietnam, Philippines,Thailand, Malaysia, Peru and Indonesia - show equal of higher entrepreneurship rates for women than men. - Deloitte Millennial Survey 2016 Asia Developing USA UK Asia Developed Europe 5% 5% 6% 10% 13% 9% 10% 13% 15% 13% % male % female SOURCE: GLOBAL ENTREPRENEURSHIP MONITOR 2012
  71. Most of Asia’s female billionaires are Self-Made #asiamatters Successful Role Models ASIATECHRESEARCH %ofFemaleBillionairesSelf-Made
 (vsinherited) 0 20 40 60 Asia USA Europe SOURCE: UBS 2016 The last few years have been remarkable for Chinese businesswomen, so much so that China is now the de facto capital of the self-made female billionaires’ club. - Forbes 27 Nov 2017
  72. Asian female billionaires are also significantly younger than Rest of World #asiamatters Successful Role Models ASIATECHRESEARCH AverageAge(yrs) 0 20 40 60 80 Asia USA Europe SOURCE: UBS 2016
  73. The lack of history in Asian entrepreneurship may create its own advantages #asiamatters The Glass Ceiling ASIATECHRESEARCH I don’t believe there’s a “glass ceiling” for women entrepreneurs who want to succeed in the entrepreneurial field. -Rina Neoh
  74. China leads the US and World Average on Female Participation Rates #asiamatters Labor Participation Rate by Females ASIATECHRESEARCH %offemalesinemployment 0 20 40 60 80 China USA World India SOURCE: INTERNATIONAL LABOR ORGANISATION 2016
  75. #asiamatters Change Agents: Youth ASIATECHRESEARCH
  76. #asiamatters ASIATECHRESEARCH I spent 15 years studying young people for the telecoms industry starting in the late 90s.Youth were always the earliest to adopt and adapt technologies, inadvertently developing the use cases and business models for later generations
  77. Chinese and Indians reach their earning potential 20 years before the US #asiamatters Powerful Youth Markets ASIATECHRESEARCH 0 10 20 30 40 50 60 70 80 90 100 Age 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65+ China India USA SOURCE:ASIA TECH RESEARCH BASED ON UN DATA, EUROMONITOR, MORGAN STANLEY IndextoHighestIncomeAgeCategory
 (Highest=100) Youth in China and India are the highest earners. In the US, 50-60 yr olds earn most. US peaks 20 years later
  78. This generation sense they will be both financially and emotionally better off #asiamatters Youth in Asia More Positive ASIATECHRESEARCH Emerging-market millennials expected to be better off financially (71 %) and emotionally (62 %) than their parents. In developed markets, only 36% expected to be better off. - Deloitte Millennial Survey of 8000 across 30 countries
  79. Emerging markets in Asia significantly younger #asiamatters Asia’s Youth Advantage ASIATECHRESEARCH Japan Germany Canada Australia USA China Thailand Vietnam Malaysia India Myanmar Philippines 23.5 24.3 27 27.7 29.2 36.2 36.7 37.6 38.3 41.7 46.1 46.1 SOURCE: CIA FACTBOOK 2017 Median Age (yrs)
  80. Asia is sitting on a demographic timebomb #asiamatters Asia’s Ageing Populations ASIATECHRESEARCH India Malaysia Indonesia Vietnam China Singapore South Korea USA UK Japan 41% 30% 27% 38.5% 37% 34% 30.5% 25% 20% 19% 32% 23% 19% 16.5% 15% 13.5% 9% 9% 8% 8% 2012 2050 % of population over age of 60 yrs SOURCE: CIA FACTBOOK 2017
  81. #asiamatters ASIATECHRESEARCH Graham D Brown Report Author Thanks for reading my #asiamatters Report “The New Home of Entrepreneurship”.To learn more about what I do, and get regular updates and insights from my Asian research, connect with me on Linkedin. Connect with me on Linkedin
  82. download them free from www.AsiaTechResearch.com #asiamatters Get All 4 Reports in this Series ASIATECHRESEARCH