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The new tech economy looks east
By Todd W John
BANGKOK - In
the coming years Asia is poised to become a key figure
in the technology development realm, challenging the
West for its market share. While the West struggles with
economic woes, Asian businesses, thus far less
dramatically affected by down markets, are poised to
reap the rewards of a flourishing tech
sector.
China, Japan and South Korea are all making new
investments in their technology sectors with the goal of
developing a highly profitable tech industry. Moreover,
India has been and remains a powerhouse in software
development where production costs and quality have long
attracted international business interest and
investment. China is now eyeing this opportunity and has
been vocal in its recent challenges to Indian
information-technology development, posturing itself as
the next major producer of software in the region.
Additionally, China is rapidly investing billions of
dollars in new infrastructure to become one of the first
suppliers of semiconductors in Asia, and promising to
tap into the US$65 billion annual market firmly held by
the likes of Silicon Valley.
During the next
year China will also grant an additional 465,000
engineering and technical degrees to university
students, bringing its total trained and skilled
personnel to the same level as the United States. Using
its expanded infrastructure and skilled workforce, China
will seek to establish a foothold in the lucrative
technological market.
Japan also seeks to
solidify its future as a high-technology superpower.
Japan has long enjoyed a profitable electronics
industry. To minimize costs, Japan is looking to the
Asian mainland and attempting to build partnerships with
China and South Korea to facilitate reverse importing
from countries where production costs are less. In
addition to the Singapore-Japan trade agreement signed
in January, the Japanese Ministry of Foreign Affairs
recently released details of a strategic plan to enter
into trade agreements with most or all of the 10 members
of the Association of Southeast Asian Nations (ASEAN),
as well as South Korea. This would in effect create an
open free-trade agreement for Japan across East Asia,
similar to that already in place for China. That, in
turn, would help to make existing production facilities
in China more lucrative for Japan. Finally, the
agreements would make the China-ASEAN and Japan-ASEAN
agreements look much like the foundation of an "Asian
Union" that could solidify an East Asian Free Trade Zone
in the coming decades.
From the South Asian
subcontinent to the islands of Japan, Asia seems ready
to make the drive for technology supremacy in the coming
years. The trend in the West to move production and
development to Asia to minimize costs only serves to add
momentum to Asian efforts. NEC, Toshiba and Sony have
all but scrapped production in the West and have moved
operations to China and Southeast Asia. NEC, for
example, will move all production of computer systems to
China this year, where previously only low-end
mass-produced components and parts were made.
The injection of capital and investment is not
simply production-based, though. Microsoft has announced
plans to invest $750 million to facilitate training and
research in China. Intel, GE and Siemens have provided
key research and technological know-how to foster
development efforts.
The transfer of knowledge
capital and production may not be the largest
contribution of the West to the technological revolution
in the East. Instead, it may be the very economic
climate in places such as the United States that will
help to fuel the Asian high-tech industry. US companies
already hit hard by the turbulent economy have also had
to face heightened regulation by the government,
aggravating an already tentative marketplace. This
scrutiny of US business has resulted in a climate where
businesses are less willing to gamble on long-term
research and development (R&D) and innovation and
instead seek to minimize cost and overhead, making
business in Asia that much more attractive. Innovation
and high-end R&D that have long helped Western
economies such as the United States become leaders in
technology development may be moving to the East.
If the East is willing to gamble for the market
share of high-tech innovation through rigorous R&D,
we may begin to see some of the more prolific and
profitable new technologies coming from such countries
as China, Japan and India. Innovation in new technology
also tends to be one of the most profitable long-term
ventures in the industry as a whole. So making the
effort now could translate into a powerful technology
sector well into the next decade. Coupled with
infrastructure development like that in China for the
production of semiconductors, which could easily bring
the country $20 billion to $30 billion a year usually
earmarked for the West, the challenge the East will
present to the West in the digital landscape will be
formidable.
The challenge now as Asia looks to
the future will be resolving long-standing issues that
have plagued the region, such as China's need to remedy
intellectual-property violations. Innovation and
especially software development will require that gains
made by research and development are properly protected.
Japan must work to bridge the political gaps that its
proposed trade agreements seek to eliminate. From these
types of agreements Asia as a whole must come to terms
to work together to complement one another's
technological strengths rather than competing needlessly
and damaging the "Asian Union's" long-term prowess in
the technology sector.
The future of technology
and development will undoubtedly be more diversified in
the next decade than it was in the last. The countries
that invest, seek innovation and position themselves
both politically and in the marketplace to be the best
solution in technology will reap the greatest rewards in
the long term. As we have seen, technology can make, but
can also break, even the greatest economic powers.
(©2002 Asia Times Online Co, Ltd. All rights
reserved. Please contact content@atimes.com for information
on our sales and syndication policies.)
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