Why isn't there an Asian Google?

New Economist report details why Asia trails the West when it comes to internet giants

Looking at the statistics Asia seems like the natural home of the internet. It has nearly 50% of the world’s internet users and accounts for nearly one third of the global e-commerce market; the fastest broadband speeds in the world are based in Asia (one list places the top three countries as Hong Kong, South Korea, and Japan), and it has the quickest growth in mobile broadband of any region worldwide.

Despite all this, how many Asian internet companies can you name? Where is the Asian Google or Amazon, jostling its Western competitors for market share in Europe and the US? Although hardware companies from the region have been making strides recently the Eastern equivalents of the likes of eBay and Facebook – and they do exist - have barely any presence here at all. Why is this?

A new report commissioned by the Asia Internet Coalition and written by the Economist Intelligence Unit (an independent and specialised consultancy service within the Economist Group) has set out to answer these questions, finding out why “Asia’s internet businesses seem to punch below the region’s weight on the global stage.”

Many companies have only recently begun to care

For many companies it seems that globalisation has not been on the agenda until recently, with Japan’s e-commerce giant Rakuten for example, only attempting to reach global markets recently. Its first overseas acquisition was only in 2005 (a US affiliate marketing company) and in 2010 it made English its official corporate language.

Other Asian businesses simply prefer to focus on domestic markets. Looking at the likes of Baidu, QQ, and Taobao it’s easy to see why. All three are Chinese language sites aimed at their home market and yet even without global reach manage all three are in the top ten most popular websites in the world.

And expanding globally comes with its own challenges – language being the main difficulty, not only in terms of the spoken but also the coded; there are also the challenges of “unique cultures, technology preferences, business environments and e-business infrastructures” to contend with, the authors write. 

A 'digital divide' in the region means potential markets are suppressed

Asia also faces greater challenges in the shape of the “digital divide” between the north and south of the region. Monetization for internet companies is often based on the willingness of markets to pay for intangible goods – be these online services or advertising – something that is far more difficult in developing countries.

Whereas companies in Japan and South Korea can rely on these ‘intangibles’ (the OTT messaging service Line for example bases a large chunk of its revenue on the sale of detailed emoticons known as ‘stickers’), other nations are not so lucky.

Whilst the likes of Indonesia and Vietnam have large and young populations which seem a ripe market for internet products, the paper describes these countries’ users as “accustomed to downloading content for free” with possible profits also eroded by “piracy or unauthorised distribution”.

It doesn’t help that many countries in the region are essentially cash-economies, hobbling online payments before they’ve even taken off. Credit card penetration in China, Thailand, India, Vietnam and Indonesia is less than 10%, whilst those that are able to use cards online often don’t out of fear of fraud. The paper gives the example of Indonensia, where “fraud is the reason that one-third of internet users did not shop online last year.”

Borders - physical and cultural - keep countries apart

Other borders to international growth are just that – borders. Some countries find that the talent they need has already travelled abroad and is safely settled overseas; others find it difficult to attract Western workers away from the benefits of home.

The authors of the report also cite “entrenched conservatism among Asian graduates”, with the cultural kudos of the start-up culture – a sort of rugged individualism that seems ubiquitous in the West – has yet to find favour in Asian societies.

Collaboration is also cited as problems, both domestically and internationally. Asian markets are only recently beginning to accept the need for sharing information with industry peers, and forming alliances to gain wider access to the market.

Conclusion:

In conclusion the Economist’s report is tacitly optimistic for the region – especially considering the ease with which internet start-ups can find global audiences and the potential user-base of the region.

However, it does stress the need for clear legislation for Internet companies; one that “creates a solid foundation for Internet companies and builds consumer confidence in online channels" and that strengthens the legitimacy of online payment infrastructures.

Growth in the industry could only benefit the region, but the unasked (and less comfortable) question is whether such success would end up damaging Western businesses. On the other hand, we might welcome the competition.

A recent op-ed for Salon asked the question 'Who will stop Google?', describing the company as becoming too autocratic and too self-regarding to really serve any public good. Maybe a challenge from the east would do us all some good.

Life and Style
ebookNow available in paperback
ebooks
ebookA delicious collection of 50 meaty main courses
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Gadgets & Tech

    Ashdown Group: Business Intelligence Analyst (SSRS) - Essex - up to £60,000

    £50000 - £60000 per annum: Ashdown Group: Report Analyst - Essex - up to £60,0...

    Recruitment Genius: IT Network Technician

    £18000 - £25000 per annum: Recruitment Genius: This family run IT service busi...

    Recruitment Genius: Network Manager

    £32000 - £40000 per annum: Recruitment Genius: This family run IT service busi...

    Ashdown Group: Senior Network Engineer (40% travel) - Surrey - £70,000

    £55000 - £70000 per annum + benefits + international travel: Ashdown Group: Ne...

    Day In a Page

    A Very British Coup, part two: New novel in pipeline as Jeremy Corbyn's rise inspires sequel

    A Very British Coup, part two

    New novel in pipeline as Jeremy Corbyn's rise inspires sequel
    Philae lander data show comets could have brought 'building blocks of life' to Earth

    Philae lander data show comets could have brought 'building blocks of life' to Earth

    Icy dust layer holds organic compounds similar to those found in living organisms
    What turns someone into a conspiracy theorist? Study to look at why some are more 'receptive' to such theories

    What turns someone into a conspiracy theorist?

    Study to look at why some are more 'receptive' to such theories
    Chinese web dissenters using coded language to dodge censorship filters and vent frustration at government

    Are you a 50-center?

    Decoding the Chinese web dissenters
    The Beatles film Help, released 50 years ago, signalled the birth of the 'metrosexual' man

    Help signalled birth of 'metrosexual' man

    The Beatles' moptop haircuts and dandified fashion introduced a new style for the modern Englishman, says Martin King
    Hollywood's new diet: Has LA stolen New York's crown as the ultimate foodie trend-setter?

    Hollywood's new diet trends

    Has LA stolen New York's crown as the ultimate foodie trend-setter?
    6 best recipe files

    6 best recipe files

    Get organised like a Bake Off champion and put all your show-stopping recipes in one place
    Ashes 2015: Steven Finn goes from being unselectable to simply unplayable

    Finn goes from being unselectable to simply unplayable

    Middlesex bowler claims Ashes hat-trick of Clarke, Voges and Marsh
    Mullah Omar, creator of the Taliban, is dead... for the fourth time

    Mullah Omar, creator of the Taliban, is dead... again

    I was once told that intelligence services declare their enemies dead to provoke them into popping up their heads and revealing their location, says Robert Fisk
    Margaret Attwood on climate change: 'Time is running out for our fragile, Goldilocks planet'

    Margaret Atwood on climate change

    The author looks back on what she wrote about oil in 2009, and reflects on how the conversation has changed in a mere six years
    New Dr Seuss manuscript discovered: What Pet Should I Get? goes on sale this week

    New Dr Seuss manuscript discovered

    What Pet Should I Get? goes on sale this week
    Oculus Rift and the lonely cartoon hedgehog who could become the first ever virtual reality movie star

    The cartoon hedgehog leading the way into a whole new reality

    Virtual reality is the 'next chapter' of entertainment. Tim Walker gives it a try
    Ants have unique ability to switch between individual and collective action, says study

    Secrets of ants' teamwork revealed

    The insects have an almost unique ability to switch between individual and collective action
    Donovan interview: The singer is releasing a greatest hits album to mark his 50th year in folk

    Donovan marks his 50th year in folk

    The singer tells Nick Duerden about receiving death threats, why the world is 'mentally ill', and how he can write a song about anything, from ecology to crumpets
    Let's Race simulator: Ultra-realistic technology recreates thrill of the Formula One circuit

    Simulator recreates thrill of F1 circuit

    Rory Buckeridge gets behind the wheel and explains how it works