Innovation
Web Summit to select location for conference in Asia - Part 2
By Michael Hennigan, Finfacts founder and editor
Nov 11, 2014 - 7:00 AM

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The Petronas Twin Towers and Kuala Lumpur Convention Centre, in downtown Kuala Lumpur.

Kuala Lumpur: Continuing our review of the tech startup scene in Asia, we note that the Atomico tracker of software companies founded in the past decade (since 2003) and which have reached billion dollar valuations, has increased by one to 138 in the past week.

London-based Atomico was founded by Niklas Zennström , a co-founder of Skype, to help companies outside Silicon Valley to scale-up and it has 82 firms in North America with $1bn+ valuations, 35 in Asia and 21 in Europe.

China has 26, Japan 2, South Korea 2, India 4 and New Zealand 2 - 17 of China's are located in Beijing - comparing with Europe shows Russia with 3, France 2, Germany 3, Sweden 5, Israel 3, UK 3, Finland 1 and Denmark 1.

Track regions, countries and sectors here (numbers from others can differ to data here).

Looking at corporate R&D spending,  the EU's 2013 R&D Scoreboard based on a sample of 2,000 companies, show that top investors in R&D together account for an investment value equivalent to more than 90% of the total expenditure on R&D by businesses worldwide.

The sample comprises companies that invested more than €22.6m in R&D in 2012 and are based in the EU (527), the US (658), Japan (353) and other countries (462) including China, South Korea, Switzerland, India, Canada, Australia, Israel, Norway and Brazil.

China has 94 companies in the ranking; South Korea 56, India 21 and Singapore 5.

Volkswagen is at No. 1; Samsung at No. 2 and Apple at 46 - the most innovative companies are seldom the biggest spenders.

Despite the challenges faced by China as we set out in Part 1 of this series, China leads in big corporate investors in R&D and startups.

Last week according to a new Global Innovation 1,000 company ranking produced by a consultancy unit of PricewaterhouseCoopers (PwC):

In 2005, only eight China-based companies ranked among the Global Innovation 1000. By 2014, the number had risen to 114—a 1,325%. Chinese companies are also increasing their R&D spending much faster than companies in other regions: The rate of increase in 2014 was 46%, compared with rates in the low single digits in Europe and North America. Moreover, these numbers understate the full extent of innovation activity in China, because they don’t reflect the significant R&D spending in the country by multinationals headquartered in other regions. For example, in 2008, when the Global Innovation 1000 study factored in the R&D activities of multinationals in China, the country was already the fourth-largest for corporate innovation spending—and undoubtedly would be ranked even higher today."

The city-state of Singapore, which has a population of 5.4m and is a significant financial centre, has aspirations to be the 'World's First Smart Nation' in terms of digital use coupled with its top rankings for ease of doing business, ICT infrastructure and so on.

Last year venture capital companies and the government provided US$1.7bn to local startups.

Incentives are modelled on Israel's and it's said that Singapore wants to operate like an aircraft carrier to project its influence beyond the island, as a contrast with Israel's early reliance on its Diaspora.

However, while  the 10-country members of the Association of Southeast Asian Nations, or ASEAN, aspire to have an internal market similar to the European Union, that may not happen for years.

Last month, ACommerce, a Thai firm providing logistic services for online retailers, downsized its operation in Singapore

The Tech in Asia news service said "while Singapore makes sense as a regional HQ where international companies make decisions for Southeast Asia, large retailers are really only interested in consumers from bigger markets like Indonesia, Philippines, Thailand, and Vietnam. ACommerce had a hypothesis when they went into Singapore and hired a logistics team: they would pitch the region but cross-sell Singapore, and customers would bite. Turns out they weren’t that interested."

Singapore's venture capital fund Infocomm recently announced that it would invest SG$200m (£124m) fund to startups in London's East End Silicon Roundabout/ Tech City cluster to develop a network with Europe.

It is not easy to develop a research base in Singapore or Ireland.

Up to 220 R&D centres of multinational corporations employ over 50,000 Israelis.

Israel's research base dates back 60 years as it developed in a semi-arid region while also having to give attention to defence needs. In the early 1990s after the collapse of the Soviet Union, it benefited from an influx of 1m mainly educated immigrants - many of them scientists.

Rents and other costs are high in Singapore and the startups are of limited value if they have to decamp elsewhere to develop because of the small local market.

As for location of the Web Summit conference, there is the wet season to be aware of and there is always a risk of the Sumatran rain forest peat lands being set on fire, which brings haze to Singapore and Kuala Lumpur!

There are startup scenes also in Kuala Lumpur and Jakarta and an alternative to Singapore would be KL's Kuala Lumpur Convention Centre in the heart of the city, linked to the Petronas Twin Towers and KLCC shopping centre.

Web Summit expands to Asia - Part 1

Dublin Web Summit 2014: Separating hype and reality -  focus on Ireland


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