Asian Tech Firms: Good for Dating, Not for Marrying

By Tech Wire Asia | 23 April, 2012

Asia’s technology scene is buoyant and is fast growing, too. But it lacks the aura of the Silicon Valley tech scene. We don’t have to look very far to give an example of Silicon Valley’s aura. The best example is Instagram and its billion dollar acquisition by Facebook. It is now done and dusted that such a thing can only happen to a technology company coming out of the valley.

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Stuart O’Gorman, director of technology equities at Henderson Global Investors has expressed this:

Asian tech firms make for poor long-term investment bets due to the highly competitive regional market, poor performance track records, and cost pressures from rising wages and intellectual property (IP) disputes.

When it comes to technology companies in Asia, many of them are solving important problems. But, there are very few game changing companies which stand shoulder-to-shoulder with their American counterparts. Right now, Asia is in a clone-first/innovate later mode.

Take the e-Commerce scene in India for example. There are umpteen eCommerce sites which sell almost anything its competitor sells with absolutely no difference in their offerings. When we say no difference, it includes the user experience too. The only real innovation that came out of Indian eCommerce is the cash-on-delivery model, which as it happens is also hampering the industry. There is just one company which I came across recently, which stands out by coming up with a hybrid model. Beyond that there is nothing which would make an investor take notice.

The web scene in China is no different. The reason why there are so many China specific eCommerce sites and social networks like Weibo services, is because of the strong control of what brand does business in China. That’s the only reason why many Internet companies are surviving. Now it appears that they are biting each other and eating from the same pie.

Stiff competition in the Chinese Web scene, for example, with “everyone entering each other’s businesses” has led to market saturation and similar products with no clear industry leader, he explained. (ZDNet)

If the pie keeps on increasing, then great. If it doesn’t, well, we can always call it a bubble and move on.