Reg man says '拜拜' to Honkers, ponders Asia's future role in tech world

Phil Muncaster, The Reg's man in Hong Kong, has said his final '拜拜' - that's bye-bye in simplified Chinese - to the special administrative region. Before he moved on, we asked him to assess his two-and-a-bit years covering Asia's technology industries. Here's his assessment on where Asia sits in the technology world. – Ed.

Over the past couple of years from my perch in Hong Kong I’ve watched Asia’s technology giants flex their muscles on the global stage. Many, like China’s Tencent, have started to expand internationally after building up a huge power base domestically or regionally. Others, like Samsung and Lenovo have firmly established themselves at or near the apex of their target markets.

The question remains, however: are Asian technology companies really setting global agendas for enterprise technology, driving industry standards with innovations that create new markets, or are they following Western leaders?

It’s undeniable that Asia has become the manufacturing heartland of global IT. Yes, there have been attempts by the Obama administration to bring jobs back home. The Boston Consulting Group interviewed 200 execs last year and found 21 per cent said they were relocating manufacturing from China to the US and 54 per cent planned to do so.

However, China remains the number one destination for hardware makers, with Taiwanese ODM/OEMs like Foxconn, Pegatron and Wistron accounting for the vast majority of mobile devices and PCs sold globally and doing most of their work in China.

Asia goes mobile

But where is the IP and innovation happening? Inside a Foxconn plant, or back in Cupertino where the latest fondleslabs and iThings are designed? Intel’s SD-card sized Edison computer might have been designed and built in China but the firm is very much still an American product.

Despite this US dominance, things are a-changing, and nowhere more so than in the mobile computing space. Not only are most of the world’s smartphones and tablets made in Asia but they’re also sold by Asian brands. According to IDC, the top 5 smartphone vendors by global shipments all hailed from the region except for Apple. Samsung came in first place, followed by Apple, after which came Huawei, LG and Lenovo. More tellingly, the year-on-year growth rates of Samsung (42.9 per cent), Huawei (67.5 per cent), LG (81.1 per cent) and Lenovo (91.7 per cent) dwarfed Apple’s 12.9 per cent and show who has momentum.

Another moment demonstrating how Asia drives mobile agendas came when first Samsung and then a few months later Huawei announced they would be establishing R&D facilities in Nokia’s backyard of Finland last year. The contrasting fortunes between these expansive Asian players and the once-proud global mobile phone leader, now haemorrhaging jobs and even forced to sell its Espoo headquarters, could not have been more stark.

Chinese firms in particular have flourished thanks in part to the “complete supply chain ecosystem” on their doorstep, according to Forrester analyst Bryan Wang. “When they want to pull something together they can always find the supplier for any component and module to build a quality product in a short period of time,” he told The Reg.

This is in contrast to Google-owned Motorola, he said, where development of the Moto X took over 12 months because prototypes had to be manufactured and then shipped back and forth from China, delaying the whole development cycle. Once Lenovo finally gets its hands on the firm such issues should be a thing of the past.

Chinese smartphone firms have also benefitted from a huge domestic market, enabling the most successful ones to rake in cash and spend it getting to scale. This is the perfect launching board for international expansion in the mode of Middle Kingdom smartmobe poster child Xiaomi, said Wang. The firm is ready to join the likes of Huawei, Lenovo and Samsung on the world stage and let its ambition be known last year with the hire of former Googler Hugo Barra as VP of Xiaomi Global.

The firm has been a genuine innovator in its engagement with the user community, primarily through social media, and incorporating feedback into new product designs, according to IDC analyst Melissa Chau. However, Xiaomi and its Asian counterparts are facing significant challenges expanding their global presence, she told The Reg.

“Every market’s different. Xiaomi found its direct sales model didn’t fit with Singapore’s operator driven market, so it had to adapt and thrash out agreements with operators, for example,” she explained. “Asian vendors are used to certain ways of doing business but they have to change [to become global]. To an extent Huawei has already faced those challenges and built relationships with operators in various markets.”