When I started my business in Hong Kong in 1998, it was a time of great uncertainty in Asia. The Asian economic crisis was was well underway. Hong Kong’s exchange rate, linked to the US dollar, and the stock market, were threatened by speculation by international investors. The British had handed over the island nation to China just the previous year and nearly half a million people had left the country worried about a future under communist rule. And, it was also the height of the dot com crash.
The confluence of these factors worked in our favor. My business partners and I were fortunate in that we didn’t need to seek external funding to start our first company, which was an e-commerce based direct sales business. We bootstrapped the business all the way. Our timing turned out to be good. Real estate prices were down due to the sudden availability of office space as many companies had moved out of Hong Kong, and high skilled tech workers were looking for jobs. Just a couple of few years later and it would have been impossible for us to get started without seeking funding.
The first year was rough. It wasn’t considered a good time to go into any kind of tech-based business. There were legislative hurdles to deal with since no one had tried to merge new age e-commerce with old fashioned direct selling. So we also had to focus on education and awareness. It took us two more years before we knew we would be okay.
Much has changed since our early days as struggling start-up founders chasing a dream in a volatile economy. The concept and perception of entrepreneurship itself has evolved in Asia in the last two decades. Historically, entrepreneurship in Asia was about making ends meet. If you had to set up a business, it was because you had no other opportunities and you were forced to do it for survival. In the United States, an entrepreneurial spirit has always been inculcated into American students from a young age. Kids setting up lemonade stands in the summer is perhaps the most nostalgic symbol of America’s entrepreneurship.
Today, Asia has a strikingly different economic landscape, and many of those same values that represent the hardy American entrepreneur are becoming more common in Asia. Increased government investment, improved educational facilities, technological advancement and greater social acceptance in the past decade have inspired and driven many entrepreneurs, and they now dominate industries across the board.
It helps that the cost of starting a business is far lower in many Asian countries than in the US. The tax system in most Asian countries is fairly low. A skilled and educated workforce is also available at a more reasonable cost. Geographical proximity to other Asian countries provides easy access to diverse resources within the region and travel time between different countries in the region rarely takes more than a few hours. A US News report in partnership with Wharton School, Y&R, and BAV titled 2018 Best Countries to Start a Business lists six Asian countries (Thailand, Malaysia, Indonesia, Singapore, China and India) in the top ten, with the United States ranking at the 13th place. In Singapore, starting a business can be done in as little as three procedures and 2.5 days. In Hong Kong, it takes a mere 1.5 days and 2 procedures to start a business.
However, the more important factor is demographics. With a youth population of over 750 million, several Asian countries boast a median age of less than 30. While age doesn’t really matter when it comes to following your passion, younger people tend to be more willing to take risks, to question existing norms, to disrupt. Entrepreneurship is ultimately a mindset. And in my experience it is harder to break down set notions as you get older. Though, I must admit that at 37, I was older than most of today’s tech entrepreneurs, when I started my company. However, this is more an exception than the norm, at least in Asia.
Urbanization and the growth of the middle class are also changing the economic landscape. Asia has the fastest-growing middle class in the world. Just look at India, China and the Asean countries. They are a captive market for any new business. Alibaba came out of China and became one of the largest e-commerce companies in the world purely on its ability to sell within this market. The spending habits of the Asian millennial consumers and their openness to adopting new technology will shape markets of the future. Their receptiveness to new ways of doing things is critical to the powerful wave of disruption currently evident in Asia.
America is no longer the apex of entrepreneurship, and the allure of Silicon Valley is beginning to fade, as the H1B visa that helped build the Valley is under threat.
Silicon Valley is now changing its geographical parameters to encompass parts of Southeast Asia and India, and to some extent Canada; all of who have been recipients of the current US policy.
A 2015 report by the Kauffman Foundation revealed that the number of American adults owning a business has been in steady decline since the 1990s. The report states – “The US economy has become less entrepreneurial over time. Business dynamism and entrepreneurship are experiencing a troubling secular decline in the United States.”
Also, there are some industries in which entrepreneurs in Asia are leaving American entrepreneurs in the dust. Malaysian entrepreneur Anthony Tan took the ride sharing concept pioneered by Uber, adapted it to South East Asia, and today his company Grab has overthrown Uber in the region. Asian hospitality brands such as Banyan Tree, Soneva, and Amari built around the intrinsic culture of service, are reshaping the global travel industry. Jack Ma moved faster than Jeff Bezos in diversifying his business, especially by pioneering electronics payment with Alipay, and today Alibaba is giving Amazon stiff competition.
Countries like South Korea, Singapore, Japan, and Taiwan are hotbeds of AI innovation. Thanks to its facial recognition technology, SenseTime from China is now valued at over $3bn, making it the world’s richest private AI start-up. Singapore AI start-up Visenze has pioneered an image recognition tool that is revolutionising e-commerce businesses. India is a breeding ground for cultural, grassroots and frugal innovation. Add a population of over one billion to the mix—it becomes an exciting geography for startups to create scalable business solutions to problems plauguing the Indian consumer on a daily basis — food delivery (Swiggy), public transport (Shuttl), agriculture (Kisan Network) and much more.
The American dream, fuelled in a great part by Hollywood, was crucial to the success of America. It certainly influenced many in Asia who chose to move to the US in search of a better life. Today, the great Asian dream is being shaped by Bollywood, K-Pop, Korean drama, and movies out of Hong Kong.
Showcasing entrepreneurship as a credible path is extremely important to building the new Asian Millennium. The next decade is going to change the playing field, if not the entire game.