Pham addressing an audience at the Institute of Directors Leadership Conference
An image shared on social media recently perfectly sums up the ‘next level’ excitement of tech in Asia. At a time when many New Zealanders are starting to scan QR codes for the first time thanks to Covid tracing, a Chinese company sent thousands of programmed drones into the night sky above Shanghai to form a giant scannable QR Code as a way to launch their newest online game.
Chinese consumers are used to leaving their wallets at home and doing everything through these images, from ordering dinner to supermarket shopping to filling in government forms. Other parts of Asia are not far behind. The days when New Zealand was held out as a global pioneer due to our early adoption of EFTPOS technology seem a long way behind us.
This and many other trends fuelled Asia New Zealand Foundation Honorary Adviser Mitchell Pham’s recent presentation at the 2021 Institute of Directors Leadership Conference in Auckland.
As a cofounder and director of the Augen Software Group, Mitchell is a seasoned tech entrepreneur with close links to Asia, especially Viet Nam, where he is originally from. And as Chair of NZTech, FinTechNZ and also the Digital Council of Aotearoa NZ - an organisation helping to shape New Zealand’s digital strategies and policies - Pham is well placed to see the emerging trendlines that are converging on New Zealand business.
Pham’s key message? Even if you are not a tech company, and even if you do not do business with Asia, you need to monitor tech in Asia. More and more tech trends from the region will arrive in New Zealand, and business leaders need to keep pace.
One-stop-shop-apps that allow users to manage many aspects of their lives are becoming the norm
Characterising Asia tech trends
Pham presented five top features of Asia tech to his Institute of Directors' audience:
- Asian tech partners are diverse. When thinking of the latest tech trends, many New Zealanders immediately jump to thoughts of China and Japan. But Asia also includes other established tech economies like Singapore, Taiwan and South Korea; emerging dragons like Viet Nam; and India, countries still seriously under-explored by New Zealand.
- Asia is increasingly creating, not copying. Over the last decade, Asia has accounted for 87 percent of global tech patents filed. Japan and South Korea have some of the world’s highest AI patent filings. Asia’s image as merely a cheap electronics manufacturer was dropped a long time ago.
- Asian consumers, especially younger Asians, are also fast tech adopters. Many have leapfrogged older technologies such as bank cards and landlines. According to a Deloitte report, 36 percent of South Koreans access their smartphones more than 50 times a day, and 31 percent of Indians, compared to 13 percent in Australia.
- Asia tech is increasingly self-sufficient. About 70 percent of investment in Asian tech start-ups is from within Asia. Governments aggressively support R&D and business attraction in their markets. China is now pursuing semi-conductor self-sufficiency in response to tensions with the US, which has implications for global AI, blockchain and internet-of-things (IoT) development.
Covid-19 has further accelerated Asia’s tech growth: E-commerce in Southeast Asia grew 63 percent in 2020, but required no paradigm shift in thinking or tech – the platforms were already well used.
Tech trends impacting New Zealand companies
Pham identified a number of specific Asia tech trends that are likely to impact New Zealand business going forward. For example, companies using e-commerce channels into Asian markets need to understand the growing influence of live-streaming and blended AR promotion as a replacement for more static marketing strategies. And 69 percent of online purchases in Southeast Asia were made via mobile phone in 2020, so companies need to build up their mobile user experience capabilities.
Super apps, allowing consumers to conduct their banking, insurance, travel bookings, online shopping and much more on a single app, are also becoming the norm across the region. These apps use AI to track consumer data and loyalty – collection of email addresses by New Zealand retailers to generate ‘spray and pray’ loyalty emails seem archaic by comparison.
State digital currencies are now on the way, pioneered by China which has already tested its national “DCEP” currency in several large cities. Responding to the rise of currencies like Bitcoin and super-app platforms like Alipay, other countries are expected to follow suit, which could quickly start impacting cross-border payments, surveillance of users, and even the role of banks in global economies.
Digital currencies have entered the mainstream and China is leading the way with a government-sanctioned digital currency being trialed
Asian governments are increasingly looking to expand trade agreements into the digital trade area. New Zealand, Singapore and Chile have broken ground with our Digital Economic Partnership Agreement (DEPA) ,which focuses on issues like consumer trust, emerging tech and data. New Zealand companies are advised to keep abreast of this innovative digital trade architecture.
Alongside FinTech and AgriTech, HealthTech is another sector where New Zealand could find exciting opportunities in Asia. Some Asian countries have the most ageing populations in the world, and public health spending in Southeast Asia is expected to double between 2017 and 2025. Responding to this, there are now over 400 health-tech start-ups in Singapore, up from just 140 four years ago according to EDB Singapore.
Challenges New Zealand faces
Pham also sounded some warnings about challenges that New Zealand business will face as Asia’s tech juggernaut continues to gain momentum.
Access to data is likely to become a new frontline for geopolitical competition. Alibaba founder Jack Ma predicts data will be more important than oil as a driver of the 21st century economy. But the increasing protection of it threatens to split the world into competing camps, for example between China, the US and Europe. There is a risk New Zealand will be forced to choose a data camp – could this be even harder to balance than political alliances?
China and Japan in particular dominate some areas of global tech componentry. China produces more than 60 percent of the world’s rare earth elements, 5-6 times more than other countries, and controls over 80 percent of global lithium-ion battery manufacturing capacity. The implications of this as the US-China trade war continue will need to be watched closely.
New Zealand will need to work hard to establish our reputation as a tech partner in Asia. We have a positive reputation in the region as a green country of grass and livestock, but not yet as an innovative high-tech nation. How do we update this image, while still retaining the benefits of our primary produce branding?
Pham’s final challenge to directors related to Asia savviness and skillsets. Asia New Zealand Foundation research shows that New Zealanders lack knowledge and confidence to engage with Asia, which could see our tech sector and other sectors miss out on opportunities that are already launching.
The future has already arrived in Asia, and companies at governance and management level need to close their knowledge gap if we are going to take full advantage of the new tech frontiers the region offers to our economy.