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APAC firms are more likely to embrace emerging tech

18 April 2018  |  Trading Ideas
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APAC firms

“Digital transformation reimagines how organisations bring people, data and processes together to create value for their customers.” – Ralph Hunter, President of Microsoft Asia


Emerging technologies have played a large part in the digital transformation that is sweeping through businesses and economies in today’s society. Technology is at the centre of this transformation, and there is an acknowledgement now that digital transformation brings forth a competitive advantage to organisations and even nations in a fast-evolving digital world. Asian Pacific corporations and economies are particularly keen on adopting emerging technologies and expect to benefit greatly through stronger economic growth, greater business efficiency and a cultural shift to become more digital.


A recent study by Microsoft and IDC Asia Pacific predicts that by 2021, the digital transformation will add an estimated USD 1.16 trillion to Asia Pacific’s GDP. The study included a survey of 1,560 business decision makers in mid and large size organisations in the Asia Pacific. It predicts a dramatic acceleration in the pace of emerging tech investment across Asia. In 2017 about 6% of the regions GDP was derived from digital products and services.


This is expected to surge ten-fold to around 60% of Asia GDP by 2021 through the adoption and increased use of emerging digital technologies such as machine learning (ML), virtual reality (VR), Internet of Things (IOT), and Artificial Intelligence (AI). Respondents to the study identified five key benefits to their bottom line as a result of digital transformation and expect to see more than 50% improvements in these areas by 2020. They include:


1.  Improvement in profit margins

2.  Improvement in productivity

3.  Improvement in customer advocacy, loyalty and retention

4.  Improvement in cost reduction

5.  Increased revenues from new products and services


As such, digital transformation is expected to take over how business in conducted throughout Asian corporations and create new opportunities to improve efficiency and growth for many Asian economies – regardless of whether they are developing or emerging. From the most populous nations of China and India to the rising industrial economies of Indonesia and Vietnam, resource-rich Australia, and the global financial hubs of Singapore and Hong Kong. Together, the region’s GDP is expected to grow by more than US $32 trillion over the next four years.

Furthermore, insights from a recent report “Digital Intelligence Briefing: 2018 Digital Trends report” compiled by Adobe and Econsultancy reveals that Asia Pacific (APAC) marketing firms are leading the world in the level of investment in digital skills training and the adoption of emerging technologies such as AI. The key findings from the report reveal that:


   Top-performing companies are more than twice as likely to be using AI or planning to implement it into their business processes than smaller companies (28% vs 12%).

●   51% of North American companies see ‘no perceived need’ for AI implementation compared to 38% of APAC firms.

●    APAC respondents (16%) were more likely to have an integrated cloud-based technology stack compared to North-American (10%) and European (9%) counterparts.


These findings indicate that APAC firms are more willing to leverage emerging technologies than their global counterparts and thus are more ahead in the digital transformation process.

When speaking directly about the APAC region, Paula Parkes, senior director of APAC Enterprise marketing said "Rapid economic development and unprecedented growth have positioned APAC at centre stage of the disruption being created by new, digital technologies. In the current Experience Business era, smart organisations are investing in disruptive technologies to drive productivity and deliver compelling experiences for customers."

Investing in emerging tech


Investing in emerging tech


As the quest to maximise the potential of emerging technologies intensifies, investing internationally is the most obvious bet. Large powerhouse tech companies such as Apple (NASDAQ: AAPL), Facebook (NASDAQ: FB) and Alphabet Inc. (NASDAQ: GOOGL) are all racing to master the use of emerging technologies in order to provide the best products and solutions for their customers. Apple's latest smartphone, the iPhone X is a major platform for artificial intelligence in the future, where it uses facial recognition features such as face ID to allow the user to sign on to their phones and even pay for goods. 


In addition, Apple also uses Machine Learning (ML) to help choose news stories specific to the individual, recognise faces and locations in photos and determine whether Apple Watch users are exercising or perambulating. Furthermore, Facebook also uses AI to personalise what matters to each user, populating timelines with things that they genuinely care about rather than people and posts they’d prefer not to see.


At the same time, China’s tech trio of Baidu (NASDAQ: BIDU), Alibaba (NYSE: BABA) and Tencent (HKG: 0700) have embraced AI with alacrity by hiring the top engineers and setting up specialist labs both at home and overseas. Much like their US peers, they are embracing emerging technologies and attempting to push into newer fields of autonomous driving, medical diagnosis and facial recognition payments to name a few.


However, a distinct advantage of these companies over their rivals is their ability to capture data in a more meaningful way. “The difference now is the scale of the data companies have and the speed at which machines are able to process it,” says Xiaofeng Wang, senior analyst at Forrester. “You can easily do personalisation for a group of customers, but for millions, it’s very hard, and it’s about how fast you can provide that,” she adds.


Alibaba is a great example of this, evident through its recent earnings report, which highlighted that its biggest change was the scope of data – which is now able to process over 1,000 petabytes (PBs), equivalent to about 580 billion books. “We are generating and collecting all different kinds of data, and we want to leverage this to enable personalisation, to power search, security, customer service in all of these areas we are providing support through our data products,” said Jeff Zhang, Chief Technology Officer. This was particularly evident on Singles Day, where Alibaba used AI to generate over 400m customised banner advertisements in the month leading up to the shopping holiday. It also used chatbots to answer over 3.5m simple queries a day over the period, such as “Where’s my package?”


Emerging technologies are set to play a huge role in how companies operate and engage with their customers in the future. To get ahead of the competition, companies must leverage these new technologies to become more efficient, reduce costs and provide a greater experience for their customers. APAC firms, in particular, recognise this and are on track to transform their business models to become more digital and achieve greater outcomes for their customers, shareholders and society as a whole. As an investor, it is important to understand how these technologies work and how companies apply them to create shareholder value.


Fortunately, Monex provides great exposure to Asian and U.S. markets where companies are set to embrace these emerging technologies – all at competitive brokerage costs.


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