IP: The Impact of the changes in the global digital world: An entrepreneurial East Asian perspective.

[David Farber <farber () cis upenn edu>]

[As a Senior Fellow of the SEI Center at the Wharton School, I was at 
the meeting and was honored to hear WyWy. I asked him for the 
transcript of the talk and recommend it to you as a very insightful 
look at Eastern Asia djf]



The Impact of the changes in the global digital world:
An entrepreneurial East Asian perspective.

1991 SEI Centre Board Meeting
The Wharton School
University of Pennslyvania
September 30, 1999
Inn at Penn
Philadelphia

Y Y Wong
Founder & Chairman
The Wywy Group
Singapore

I have been given 7 minutes to share my views on the impact of the 
changes in the global digital world from an entrepreneurial East 
Asian perspective. The economies and level of technological 
development of East Asia are not uniform. By way of example, 40% of 
Singapore household owns at least one PC, as compared with 48% in the 
US. Like the US, 85% of all Singapore schools not only use computers 
but have access to internet. On the other hand many countries do not 
even have reliable telecommunication services.

Goldman Sachs recently reported that Internet users in the Asia 
Pacific are forecast to grow at 40% a year, twice as fast as the US 
to reach 64 million by 2003. Sales are projected to hit US$32 billion 
by 2003 from just US$700 million last year and online advertising may 
be worth up to US$1.5 billion by 2001.

But as an informed optimist I wonder if the euphoric enthusiasm is 
justified. Although the forecasts are impressive Asia has a long way 
to go when we consider the forecast of US$32 billion against US$1 
trillion. Not counting Japan, today Asia has only 13 million 
cybershoppers compared to 70 million in the US.

My hesitation stems from the fact that many developing economies in 
Asia lack reliable telecommunications. Vague and  unpredictable legal 
framework. Taxation issues governing e-commerce are uncertain. High 
import duties across the region.  Informal business practices are 
rampant. Proportion of the population who uses the Net is far from 
critical mass. Although English is becoming popular, the extensive 
use of local languages and the use of different currencies are 
formidable obstacles. Besides the use of credit cards and electronic 
payments are still in its embryonic stage.

Only a week earlier, the official Xinhua news agency in China 
reported that a Beijing experiment by volunteers to pay for online 
purchases with electronic money or credit cards was a failure. The 
volunteers had to pay cash for everything.

Although Internet growth rates are among the highest in the world, 
Asians outside Japan still accounts for only about 8% of the total 
wired population.  A poll  of Asian executives on Internet usage 
shows that 56% are using it for e-mail, 42% for research and 46% for 
news.

East Asia is still struggling to recover from the economic crisis. It 
will take 4 to 10 years for the affected economies to regain their 
prosperity.  The financial crisis had destroyed corporations, banks, 
damaged economies and reduced the standards of living of millions of 
Asians.

For more than 3 decades, influence dealers created enormous wealth. 
Influence dealers operated on "know-who," rather than "know-how." 
Many of the companies affected by the economic crisis built their 
wealth by using influence to create privileged franchises not by 
creating value. They benefit from governments prepared to create 
monopolies, grant exclusive licenses, or protect domestic companies 
through tariffs and other means. They are the dealmakers, adept at 
exploiting business and political connections.

  When the economy was riding high even chickens can fly. Now, we have 
a generation of dizzy, dispirited and disheartened chickens with zero 
value-creating capabilities looking to technology for resuscitation.

It is noteworthy that In spite of the severe economic downturn, there 
was no gush of assets for sale or were there the fire sales and 
bargains to be had. This is simply because the most affected 
countries lacked well-enforced bankruptcy laws to free insolvent 
assets from the owners. In Indonesia and Thailand new bankruptcy laws 
were introduced in mid-1998 but the procedure under the new law in 
Thailand may take up to 7 years while in Indonesia complaints of form 
without content and bribe taking are widespread.

Globalisation and entrepreneurship are inseparable from technology. 
Much has been written on the entrepreneurial spirit of the overseas 
Chinese, but I beg to disagree. Although the overseas Chinese are 
enterprising they are not necessarily entrepreneurial. Unlike Japan, 
most of the wealth created by overseas Chinese was created from 
sociological disequilibrium, not technological revolutions. It is 
therefore not surprising that there are very few global brand names 
or revolutionary products from East Asia. In e-retailing East Asia is 
a buyer not a seller.

While East Asia has invested heavily into technical education and 
leaders in the region see technology as the gateway to economic 
development their aspirations are often driven by the mistaken notion 
that superior qualifications rather than lifelong learning and 
entrepreneurship are the key determinant for success. It is painful 
is to see the large number of East Asian engineers, masquerading 
marketers and entrepreneurs.

The important question for East Asia and the world to ask is why is 
America the beacon of entrepreneurship and the mother of all wealth 
creation. The answer is simple. The physical expression of 
entrepreneurship is salesmanship. While it is disdained in many 
countries, salesmanship is respected, esteemed and admired in the US 
more than anywhere in the world.

This is particularly so in East Asia as the dominant culture is 
shame. Unlike the West where the dominant culture is guilt, the East 
Asians are hurt even when they receive a "no" for an answer. 
Rejection is inseparable from selling and getting it wrong is part of 
getting it right.

For those reason, the favoured traditional profession were those that 
do not require going to the people. The most popular professions were 
those that require people going to them like government officials, 
military officers, professors and doctors.

There is no more argument if digital technology will have a major 
impact on East Asia. The only remaining question is how fast? East 
Asia know why they must embrace technology, but they do not know how 
and what to do. The opportunities are therefore immense for those who 
know the unknowable, as that allows them to form strategic alliances 
with East Asian companies to do the undoable.