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Emerging Asia to spur innovation

By Farihan Bahrin, ZDNet Asia on July 11, 2007

Summary

Companies should divert their attention to China and India, which are poised to become key drivers of tech innovation, Gartner says.

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The scales of economy are tipping in favor of developing nations, with countries like China and India poised to overtake established markets in areas of technology adoption and innovation.

At the rate developing nations are churning out new inventions, businesses in mature markets can no longer afford to wait for innovation to come to them, warned Gartner in its latest report released Monday.

"[Businesses] have to look beyond their own borders and consider untapped markets that they have perhaps not considered up until now, if they want to continue to innovate in a global economy," said Sandy Shen, research director at Gartner, noting that both China and India are emerging as powerhouses of innovation and creativity.

According to Shen, China and India have the ambition to lead the IT industry in the global market, and innovation is their only way to compete globally. In 2005, for example, Gartner's study showed that the number of patent filings in China outnumbered those in the United States.

"Slightly less than one-tenth of world intellectual property organization international patents were attributed to emerging markets," revealed Partha Iyengar, vice president and analyst at Gartner. "If the growth rates remain constant, the emerging market share could reach almost one-fifth in 2012."

As the two largest growing economies in Asia, both China and India have been making major progress, particularly in the respective areas of research and IT services innovation.

Chinese firms are already posing a serious threat to global organizations, according to Shen. She noted that conglomerates like Huawei, Lenovo and Haier have been stepping up investment in new product research and aggressively pushing into the global market as low-cost players.

India, on the other hand, appears on the way to becoming an IT services powerhouse with a cohort of mega-sized Indian IT companies such as Wipro, Infosys and Tata Consulting Services (TCS) leading the charge. According to Gartner's report, IT services account for around half of India's services exports, and the market is forecasted to grow at more than 30 percent per year.

With the populations of China and India moving from below poverty line to a size comparable to the European middle-class in purchasing power parity (PPP) terms, Gartner predicts a pent-up demand that will pave the way for the creation of new, relatively untapped markets.

"Eighty-five percent of the world's population reside in emerging markets," said Shen. "We are looking at immense nations that are rapidly moving from subsistence living to being consumers, which in turn means a large number of new people to sell new technology to.

"Global companies in mature markets cannot afford to ignore developing nations, given the huge untapped opportunities they offer," she added.

Farihan Bahrin is a freelance technology writer based in Singapore.

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