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Based on global rankings, New York is the #1 innovation hub in the world. Source: Pixabay

Why the US and China are today’s leading tech innovation hubs

TECHNOLOGY innovation is important, not only for businesses but also for economies and governments.

Cities, with the support of their governments, often try to make it easier for entrepreneurs and businesses involved in serious innovations. Those that strike the right chord tend to attract more and more innovators from around the world – claiming a spot on the list of the world’s leading tech-innovation hubs.

According to a recent KPMG report, the US and China dominate the tech leadership charts, with New York, Boston, Chicago, Los Angeles, and Austin in the US and Shanghai and Beijing in China being chosen as top tech-innovators.

Based on KPMG’s survey, in addition to San Francisco, respondents feel Shanghai, Tokyo, London, New York, Beijing, Singapore, Seoul, Bengaluru, Tel Aviv, and Berlin will be among the top 10 tech-innovation hubs over the next four years.

Why America tops the innovation charts?

In the US, innovation continues to gain momentum as more cities want to duplicate San Francisco’s success.

Many cities are replicating the startup playbook that Silicon Valley implemented as a model for economic growth – and quite successfully. The spread of innovation across many US hubs is fuelled by corporate and VC investments.

Further, several of the top technology companies are spreading their headquarters and operations across many US hubs fueling economic growth opportunities and a more diverse ecosystem. Amazon’s HQ2 project is one of the better-known examples of this.

According to Tim Zanni,  Global and US Technology Sector Leader, Chair of Global TMT Line of Business, KPMG:

The United States continues to be the place where there is a passion for innovation, defined by aggressive competition and the belief that anything is possible without the fear of failure. From a corporate perspective, the C-suite has a greater focus on the economic and social power resulting from tech innovation and the importance to maintain the trust of key stakeholders to deliver their value proposition.

KPMG’s report states that the US technology industry continues to drive economic value as key platform companies lead as the most valuable companies in the world – and it is those companies that are making the biggest investments in AI, IoT, robotics, and other technologies that influence how businesses engage with consumers.

However, as the tech landscape evolves, disruptive technologies and new business models are triggering a formal reevaluation of enterprise value. It is no longer enough to dominate one sector – the tech leaders of tomorrow are moving rapidly into other sectors and gaining market share. Again, Amazon is a prime example of this.

Five US tech sector companies lead with over US$3 trillion in market capitalization, according to KPMG. New investments announced by Apple, Amazon, and other key players will likely drive the creation of new tech-hubs across the country.

What fuels China’s innovation engine?

On the other hand, China’s status as a leading tech-innovator continues to gain momentum as Chinese technology companies gain momentum in local markets, catering to the tech-savvy, always-on, digital Chinese consumer.

Further, aggressive government-industry collaborations, corporate-startup incubation and acceleration programmes, and the availability of ‘massive addressable markets’ contribute to the innovation boom in the country.

Municipal governments in China are also known to be interested in building tech-hubs to attract talent.

“Tech innovation is a national priority for China and will be a core focus in the coming decade. AI, for example, has grown significantly and China is expected to soon become a leader in this field by leveraging its deep talent and data pool. The adoption of new technologies is occurring quickly in industries such as financial services, automotive, consumer products, and healthcare,” said Philip Ng, Head of Technology, KPMG China.

Disruptive technologies such as AI, big data, blockchain, and IoT are being deployed in various sectors, including the vast public sector. Whether it is unmanned stores, facial recognition, or autonomous driving, the country is making rapid progress.

What is India doing to catch up?

India, third on the list after the US and China, seems to be breeding the next-generation of hubs in the country with the government finally prioritizing support for entrepreneurship and a burgeoning culture of innovation.

In 2017 alone, India added 1,000 new startups to its roster, taking its total number of technology startups to 5,200. Bengaluru, Delhi, and Mumbai are among the three key entrepreneurial hubs in India comprising 80 percent of total startups.

“Start-ups are at the core of India’s transition journey towards becoming a leading innovation hub in the world. With a young and dynamic pool of entrepreneurs and skilled workforce, India is likely to become a focal point to generate innovative ideas in the near future,” Akhilesh Tuteja, Head of Technology, KPMG India.

In order to promote entrepreneurship in the country, the government has launched the Startup India Mission run by the Department of Industrial Policy and Promotion, promoting bank financing for startups and offering incentives.

The Indian government has also launched the Atal Innovation Mission (AIM) to foster a culture of innovation in the nation. The country has also revamped its Intellectual Property Rights (IPR) policy recently to make the country’s IP regime more transparent.