As they climb the value ladder, Asian companies must be innovative not only with the products and services they provide but also with how they deliver them and manage their operations, senior government and corporate leaders told participants at the World Economic Forum on East Asia, which opened on Thursday.
"The notion that companies in Asia are winning market share only on cost is obsolete," said meeting co-chair Nandan M Nilekani, president, chief executive officer and managing director, Infosys Technologies, India, and Member of the Foundation Board of the World Economic Forum.
"We tend to think of innovation in terms of products and patents. But it's also about business models and processes. Anything that allows faster or better solutions for customers is what it's all about."
The two-day World Economic Forum on East Asia has brought to Tokyo more than 300 business, government and civil society leaders from 35 countries to discuss the theme 'Creating a New Agenda for Asian Integration.'
Asian companies are redefining their roles in the global marketplace, according to Lee Boon Yang, minister of information, communications and the arts of Singapore. Companies such as Korean electronics maker Samsung and Singapore's Hyflux, which is developing membrane technology for water treatment, demonstrate that investment in R&D is crucial to promoting innovation, he said.
Added Zhang Xiaoqiang, vice chairman, National Development and Reform Commission, People's Republic of China: "R&D investment allows companies to improve their competitiveness."
The age of the multinational and the traditional country representative with limited geographic responsibilities is over, panellists agreed. Instead, enterprises will be "globally integrated", argued Hirotaka Takeuchi, dean, Graduate School of International Corporate Strategy, Hitotsubashi University, Japan. Networking, collaboration and partnering will be keys to success.
In the same way, remarked meeting co-chair Kunio Nakamura, president, Matsushita Electric Industrial Co., Japan, each economy will have to find its niches and take advantage of them, competing and collaborating with others at the same time. Asia's manufacturing sector is developing along those lines, he explained. In future, Japan could generate growth by using its expertise in environmental management to contribute technology and skills to promote sustainable development elsewhere.
As they become globally integrated, companies will develop a common culture. "Values are going to be extremely important," Takeuchi observed. "You can't have an integrated enterprise without a commonly shared set of values."
But there could be such a thing as "too much globalization", warned meeting co-chair Sir Martin Sorrell, group chief executive, WPP, United Kingdom. Cultural differences should not be underestimated, particularly when companies are fighting to hire the best talent, Sorrell suggested.