Digital technologies could reverse the global trade slump, and Asia is leading the way.
That was the message from Asia House’s roundtable discussion Technology and Global Trade: Asia’s sprint ahead, which took place in London in October.
Opening on a bleak note, the panellists explained how China’s slowdown, plummeting commodity prices and rising protectionism have led to the fall in global trade in recent years.
“Since 2011 we have seen a marked decline in global trade,” Mark Purdy, managing director of Accenture Institute for High Performance, told the meeting. “Before the financial crisis it grew at 18% and now it’s growing at 3%.”
However, Asia’s burgeoning middle class and, especially, China’s transition from an export-oriented economy to a consumer-based one, has driven the rise in the global trade of services. This has meant “a greater role for digital technologies in driving trade,” Mr Purdy explained. “We’re on the cusp of a trade renaissance in Asia due to the digital revolution.”
Tech is making manufacturing and trade, especially across borders, cheaper and more efficient. With 120 million Chinese possessing mobile internet access and cross-border internet traffic having increased 30-fold since 2000, “Asia is ripe for growth in digitally-enabled services,” said Mr Purdy.
Tom Homer, head of EMEA at Telstra, took these points further and contended that Asia is “much more advanced than Europe in terms of digital partnerships”. He explained that tech SMEs and start-ups are invaluable partners because they add specialism, innovation and globalisation to the broader market.
Mr Homer added that 50% of “big, non-digital businesses” in Asia now partner with tech SMEs, while in Europe the figure is 30% because, as elsewhere, businesses still perceive tech SMEs as threatening disruptors that should be bought, not partnered with. “A culture of innovation” must be cultivated, said Mr Homer.
The attending speakers agreed that the challenges to Asia’s digital renaissance include infrastructural shortcomings and, more importantly, the proliferation of data protection laws and regulations – a global problem. Indeed, many Asian governments compel companies to reveal their encryptions, keep data in locally-based data centres and forbid cross-border data crossing.
This digital protectionism, a 21st century equivalent of tariffs and quotas according to its critics, is slowing growth and deterring foreign investment. Free-flowing, open source data drives globalisation and expansion for SMEs and multinationals.