Shanghai is the No.1 city to rival Silicon Valley/San Francisco as a technology innovation hub in the next four years
China and the US are leading the charge as leading global technology centres, according to a recent annual survey by KPMG.
Titled The Changing landscape of Disruptive Technologies, this annual survey draws insights from 841 technology industry executives globally – including 90 from China and 168 from the US – on technology innovation, leadership and market trends.
Industry leaders surveyed indicated that the US and China show the most promise for disruptive technology breakthroughs likely to have a global impact. The strong showing for these two mega-powers is also consistent with earlier KPMG surveys. This year’s poll reflects a slight uptick for China – 25 percent compared with 23 percent the prior year, whereas the US sees a decline to 26 percent from 29 percent.
Additionally, 43 percent of global respondents said that the technology innovation centre of the world is likely/very likely to move from Silicon Valley to another country in the next four years. Shanghai was selected by 26 percent of respondents as the city to rival Silicon Valley/San Francisco as a leading technology innovation hub, followed by New York, Tokyo, Beijing and London.
“What we have seen emerge over time is the result of countries and cities striving to replicate and build on the Silicon Valley tech innovation blueprint, and their increasing degree of success,” said Tim Zanni, Global and U.S. Chair, KPMG Technology, Media and Telecommunications practice. “One can debate whether or not replicating Silicon Valley is possible, but the benefits of the effort are undeniable.”
Egidio Zarrella, Head of Clients & Innovation, KPMG China, says: “China’s economic transformation is spurring the creation of new drivers of growth, new industries, new institutions and new opportunities in the technology and innovation space. Shanghai is ranked first overall in the survey as a future tech leader with its strong regional leadership in financial markets and numerous high-tech parks in Pudong. It is bound to remain among the world’s leading innovation hubs given its growing base of digital media and entertainment companies and a pleasurable lifestyle and favourable climate that can draw top talent. Shenzhen is also of growing importance, as hardware innovations increasingly play an important role in China’s traditional high-tech manufacturing strengths. Hong Kong’s ecosystem meanwhile continues to evolve in terms of becoming a hub for entrepreneurs in the IoT space.”
The survey notes that over one-third of both global and China executives believe that the role of Chief Innovation Officer is best suited to lead the innovation strategy, followed by the R&D department and the Chief Information Officer. Strategic planning, business units and think tank/incubators were identified globally as a source of innovation. While the US findings were similar, with the exception of “corporate development” in the top three, China respondents listed IT and R&D organizations as the top two innovation sources.
“This global finding quantifies what we have been hearing from our clients and seeing in the market, that innovation is a strategic business imperative for many organizations,” said Zanni.
Additionally, the survey highlights that internet of things, robotics, artificial intelligence / cognitive computing and biometrics are the disruptive technologies identified in the US and China which are expected to enable business and industry transformation. Meanwhile, financial services and technology are believed to have the greatest monetization potential as a result of the adoption of artificial intelligence and cognitive computing.
Zarrella adds: “Over the next year, the world will recognize how much artificial intelligence is going to transform everything we do. For example, the amount being invested in artificial intelligence in Asia is growing by the day. 2017 will be the year investors will look at AI and say, ‘if you’re not investing in it, you’re missing the boat’.”
In terms of challenges, tech complexities, funding and risk management continue to be top barriers globally to commercialise technology innovation. While access to capital remains one of the main constraints for companies seeking to innovate, platform consolidation is most frequently identified by global tech leaders as a limitation.
The tech innovation survey also asked respondents who they believe is the top global technology innovation visionary. Tesla and SpaceX CEO Elon Musk topped the list, with Apple CEO Tim Cook second, followed by Alibaba Chairman Jack Ma, Alphabet CEO Larry Page and Google CEO Sundar Pichai who tied for third. Microsoft CEO Satya Nadella stood alone in the 6th spot, with Bill Gates and Facebook CEO Mark Zuckerberg tied 7th, followed by Amazon CEO Jeff Bezos 9th.
Zarrella concludes: “Chinese companies will continue to focus on growth, strengthening their capabilities and readying their businesses for a very different future, through transformation, advanced technology and specialised talent. A new ecology is taking shape and these innovators will play an important role going forwards.”
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The report captures the findings of the October 2016 survey of 841 business executives globally (including 90 from China) from companies, venture capital firms, and angel investors that were focused on the technology space.
KPMG China operates in 16 cities across China, with around 10,000 partners and staff in Beijing, Beijing Zhongguancun, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Hangzhou, Nanjing, Qingdao, Shanghai, Shenyang, Shenzhen, Tianjin, Xiamen, Hong Kong SAR and Macau SAR. With a single management structure across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located.
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 152 countries and regions, and have 189,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
In 1992, KPMG became the first international accounting network to be granted a joint venture licence in mainland China. KPMG China was also the first among the Big Four in mainland China to convert from a joint venture to a special general partnership, as of 1 August 2012. Additionally, the Hong Kong office can trace its origins to 1945. This early commitment to the China market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in the Chinese member firm’s appointment by some of China’s most prestigious companies.
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