the most innovative cities in Asia Pacific

Today, Singapore is bold, fast and successful - and Singapore Inc will follow the same path. Singapore has no other choice; it must adapt and lead change if it is to remain relevant in the 21st century.

INNOVATIVE CITY! INNOVATIVE SOCIETY?

Singapore is ranked as the most innovative city in the Asia Pacific region in this study, but some could argue that its society is not that innovative. Appearances and old views may be deceiving... When it comes to addressing the city’s perks, including innovativeness, everyone argues about how their city is the best. It is because people are more emotional about their city instead of their country. When assessing Singapore, a city-state, the confusion between ‘city’ and ‘society at large’ is easy but needs to be avoided.

Singapore sits on top of this ranking because it has made dramatic and perpetual improvements for the past 25 years. It looks as if the city somehow lives by the Jack Welch formula: “Get better or get beaten”. In City-years, thus not that long ago, Singapore was a swamp, then became a spices trading port. Thanks to its strong leadership vision and implementation, the city later became a manufacturing centre, a high-tech leader and now it has become the most innovative city in Asia Pacific.

Singapore is still a young city, and things are not always perfect but it has built the most attractive ecosystem for companies to innovate in Asia Pacific as it constantly strives for leapfrog improvements and visible changes. Problems are not shunned under the carpets but fast-addressed. Singapore has been built with an ecosystem efficiency in mind. Many well-known local companies such as Eu Yan Sang, Breadtalk, Hyflux, TWG Tea, etc. as well as global Fortune 500’s Asia HQs are proof of Singapore’s ability to accommodate a sustainable business environment and an innovative ecosystem.

Singapore’s openness to other cultures is matched by no other city in Asia Pacific. The constantly evolving melting pot is not always easy to manage but creates real opportunities for those who are willing to grab it. To retain its leading position as a key innovative city in Asia and to really become a global innovative city, Singapore will have few other routes but to remain smartly opened to new ideas, new cultures, and new entrants. Innovation can indeed be sometimes disruptive. The innovative Singapore F1 Grand Prix that boasts a night race in the middle of the town came with some traffic adjustments and noise. Eventually, everybody clapped their hands...

Singapore authorities and city leadership are present in the marketplace to seed innovation, but the days when Singaporean entrepreneurs were laughed at and tagged as Kiasu (a term derived from Hokkien language, meaning ‘a fear of losing’), are now gone. Damien Duhamel, Managing Partner Asia of Solidiance, summarized the Singapore findings: “Today, Singapore is bold, fast and successful - and Singapore Inc. will follow the same path. Singapore has no other choice; it must adapt, stay opened and lead change if it is to remain relevant in the 21st century.”

We are very proud of our cultural as well as our ethnic diversity. It’s really very much of a melting pot here in Sydney, and opportunities are given equally to everyone while they are here. Over the years with the different people and cultures, we are also very fortunate of having people who are accepting of changes and differences.

PIONEERS AT THE BAY

Sydney is globally renowned for providing a welcoming environment to immigrants in Australia. The city itself was built by immigrants and the city retains its pioneering spirit still today. Sydney developed rapidly throughout the 20th century, especially in the decades immediately following World War II when Sydney continued to attract European and later, Asian immigrants. By adapting an entrepreneurial attitude, Sydney has been able to attract industrialists, IT experts, artists, activists, and green innovators. Sydney is a major global city and has hosted multiple major international sporting events, including the 2000 Summer Olympics.

Based on our study, Sydney scores highest in global integration, human talent, technology advancement, and society values. Deputy Lord Mayor of Sydney, Robert Kok, further clarifies Sydney’s high tolerance and openness towards diversity: “We are very proud of our cultural as well as our ethnic diversity. It is really very much of a melting pot here in Sydney, and opportunities are given equally to everyone while they are here. Over the years with the different people and cultures, we are also very fortunate of having people who are accepting of changes and differences.” Sydney further proves its point by holding Sydney Mardi Gras, the annual and largest Gay & Lesbian pride parade in the Asia Pacific region. Mardi Gras is Sydney’s second-largest annual event in terms of economic impact generating an annual income of about A$30 million for the city.

Sydney also ranks high in the quality of government and regulatory framework category compared to other cities in the Asia Pacific region. This is mostly due to the high level of business freedom, trade openness and labor freedom enjoyed in Sydney. The ease of doing business is relatively high, allowing for innovation to prosper in the area.

However, Sydney is probably too far from the rest of Asia and the world to have any strong regional influence. It is also culturally different than the rest of Asia, making it not always the most attractive reference for Asian thought leaders. The best thing to do for Sydney is to continue cultivating its innovators and bright thinkers to further advance the city’s credibility as an innovation hub.

If you look at what makes Melbourne a prosperous city today, it is because we are an innovative and a knowledge-based economy with strong proponents like design, biotech, advance manufacturing, and engineering.

A SECRET GARDEN

Melbourne is geographically more remote and less well-known than its sister city, Sydney - yet it has transformed itself into one of the most livable cities in the world. It is equipped with convenient lifestyle facilities, amazing sport centers, eclectic downtown architecture, and an artistic environment. Take a look at Swanston Street, which seems like the Museum of Modern Art in New York was spilled all over the streets. Its quirks make it seem like an undiscovered gem.

Melbourne shines the brightest among others on the human talent category. The city is undoubtedly multicultural with roughly half of its population coming from immigrant backgrounds, fostered by a good level of acceptance towards diversity. The innovation stream keeps flowing as the city continually incubates interdisciplinary talents, independent movie producers, as well as other artists who spice up the city with a large number of art exhibitions and fringe festivals.

Lord Mayor Robert Doyle tells us that sectors like design, biotech, advanced manufacturing and engineering are booming, making Melbourne an innovative city supported by its strong knowledge-based economy. The key to the success of these industries is that they communicate well with each other, enabling business to thrive. The workplace in Melbourne is productive and has a low level of industrial disputes, as the city provides an ease of entrepreneurship and dependable government support which accommodates its diversified economy.

However, this gem is located far from the rest of the world and has difficulty becoming a global city. The dwellers are settling down, feeling convenient already as the city suits them well. The city hopes to remain a ‘secret garden state’ as long as possible, making it not easy to become a universal benchmark.

Hong Kong’s Cyberport combined with its traditional strengths i.e. transparent and consistent legal system, easy access to capital, as well as free flow of information, make the city appraised as one of the most attractive business cities in Asia by local and foreign entrepreneurs alike.

The Need for Reinvention

Hong Kong has always been an innovation leader in Asia by constantly adapting as demand necessitates. Known as a manufacturing hub for textiles, electronics, plastics and other labor-intensive production during the post-war industrialization period, Hong Kong emerged as a highly capitalistic economy built on free market policies, low taxation and government non-intervention. Nowadays, Hong Kong is an international hub for finance, trade, logistics and tourism, with a large concentration of corporate headquarters in the Asia Pacific region.

In 1997, when the British returned Hong Kong to Chinese sovereignty, it became the Hong Kong Special Administrative Region (S.A.R.) of China. Under the principle of “one country, two systems,” China proposed that Hong Kong may enjoy a high degree of autonomy in all matters except foreign and defense affairs for a period of 50 years. Often referred to as the “Gateway to China,” Hong Kong’s financial sector has been boosted further by China’s decision to use the city as a launching pad for the internationalization of its currency.

Hong Kong ranks 4th among Asia’s most innovative cities, leading the categories of “Technology and Innovation System” and “Government and Regulatory Environment”. In 1999, the Hong Kong government revealed plans to develop Cyberport, a technology cluster on Hong Kong Island, which would help local businesses capitalize on the rapid growth of the internet and telecommunications. After some initial difficulties, Cyberport has developed into one of the key drivers of Hong Kong’s rapid technology development, providing a suitable environment for entrepreneurs to convert ideas into business models. Combined with Hong Kong’s traditional strengths of a transparent and consistent legal system, easy access to capital and free flow of information, the city is appraised as one of the most attractive business cities in Asia by local and foreign entrepreneurs alike. Yet Hong Kong is slowly loosing up to Shanghai. Shanghai is emulating Hong Kong in too many ways. Pudong has the look and feel of Hong Kong Island. Shanghai is fast growing its global financial reach and Shanghai now welcomes more and more regional Fortune 500 Asia headquarters. To close the copy/paste comparison, Shanghai will too have its own Disneyland by 2015.

Hong Kong is also suffering from the smog choke from the neighbouring industrial zones located on the other side of the border and from a possible over-reliance on the China economy. CVs with strong Mandarin skills have been preferred for a while in Hong Kong. Its future development as an innovative city will continue based on its people’s diverse and innovative skill sets but Hong Kong cannot primarily rely on being a finance and a high-tech hub with premium infrastructure and an adjacent vibrant media / art industry. To retain its position, it will need to reinvent itself, again.

Auckland will experience substantial growth pressures over the next 30 years. We face the challenge of how to accommodate growth without losing the things we value most about Auckland. The Plan’s quality compact city model can achieve this balance, further enhance Auckland’s amenities and build on the lifestyle we are renowned for.

HOBBITS ARE HAPPY TOO

 

The idea of living in Auckland has long attracted plenty of people, due to its mild climate and ample opportunities for education and employment. Auckland is called the City of Sails because its harbor is often filled with hundreds of yachts and is one of the busiest in the world. The city also offers numerous leisure facilities that are frequently cited as reasons why Auckland is considered to be one of the top 10 most livable cities in the world by numerous organizations and publications. Seems like being a castaway has its benefits!

Auckland ranks highly in several quality of life surveys, and this is reflected in the human talent the city attracts. Auckland’s society has a remarkably tolerant and open attitude, which in turn attracts immigrants and the highly creative. Ease of doing business encourages foreigners to settle in Auckland and the city has also stepped up its education standards. While it is not yet a popular destination for overseas tertiary students, Auckland is already a major center of language education, with many foreign students coming to the city to learn English.

What is more, one cannot mention Auckland without thinking of its budding film industry (Auckland’s / New Zealand’s beautiful panorama is also often used as movie shooting locations, as in The Lord of the Rings trilogy) and enthusiasm for sport. Rugby union, rugby league, soccer, cricket and netball are widely played, and not only does the city provide a good number of sports stadiums and facilities, it has also hosted world-class events like the 2011 Rugby World Cup and the 2012 ITU World Triathlon Series. Hosting high-profile events reinforces Auckland’s global integration and orientation towards the future, which is one important criterion for an innovative city.

Despite all these promising factors that make Auckland thrive as an innovative city, traffic problems and a poor public transportation system are obstacles to its future growth. These factors are often cited by Auckland citizens as the strongest downside to living there. To counteract this, the government is showing its support by implementing the Auckland Plan. Regarding this plan, Len Brown, Mayor of Auckland stated: “Auckland will experience substantial growth pressures over the next 30 years. We face the challenge of how to accommodate growth without losing the things we value most about Auckland. The Plan’s quality compact city model can achieve this balance, further enhance Auckland’s amenities and build on the lifestyle we are renowned for.”

One could suggest that Tokyo people have innovative ideas but cannot deliver in a manner that fits today’s global business arena. Even Shibuya’s burgeoning fashion hub has been replaced by Gangnam’s Style in Seoul, in most of our minds.

SHINE LOST, FOR EVER?

Even though it is still attracting key industry players as well as millions of tourists from all over the world, it would seem that Tokyo is losing its shine as a hub for talented people to live and work. While there are surely many explanations for this including: cost of living, lack of global integration, loss of regional influence, poor immigration laws, distracted leadership, and so on we will focus on two specific reasons: fear of risk taking and natural disasters.

While Tokyo ranks number 1 in the Knowledge Creation category, it ends up at number 6 in the total ranking. Its poor performance in the other five categories offset its shine in Knowledge Creation. According to Dr. Yukihiko Nakata, Director of Asia Pacific Innovation Management Center of Ritsumeikan Asia Pacific University and former executive at Sharp Corporation, the “tolerance for failure” and “principle of self-sufficiency” are the main reasons that Japanese electronics giants such as Sony, Sharp, Panasonic are losing the game against Korean rising stars. One could suggest that the Tokyo people have innovative ideas but cannot deliver in a manner that fits today’s global business arena. Even Shibuya’s burgeoning fashion hub has been replaced by Gangnam’s Style in Seoul, in most of our minds.

Japan’s economy has recovered to pre-earthquake levels and continues to be stable, yet there is no doubt that the Tohoku Earthquake in 2011causedtremendous damage to Japan and its brand including Tokyo. While natural disasters are outside the scope of our six categories, the results cannot be neglected in the rankings. Tokyo is now attempting to improve its attractiveness in the areas it can control to offset negative impacts caused by natural disasters. For example, the government has started introducing a variety of incentives in indicated zones, which includes deregulation, reduced procedures, tax breaks and so on. Yet this could be another case of too little too late. Innovation is not reactive but proactive.

Aki Nakamura, the Head of the Japan Desk at Solidiance, remarked that while the current situation in Tokyo remains unfortunate, it is believed that Tokyo could possibly regain its swing. Tokyo is after all the Greenest and most Sustainable City in Asia Pacific as ranked by Solidiance in 2011. Tokyo is also one the very few Asia city with a true global brand. With strong political leadership and radical mindset change in the private sector, Tokyo could surely rise again. We shall certainly not discount a city with more than 500 years of history too fast. Yet past city glory is no indication of a bright future says Constantinople... Tokyo needs to seeds its transformation now.

If there is anything that should be noted about Bangkok people, it is that they take great pride in their ancestral culture, yet remain very open to others. Bangkok has the rare capacity to absorb new cultures, innovate with old ingredients and set influencing trends.

Watch this pace !

Bangkok is one of a kind. A city that never was really colonized by foreign forces is boasting one the most open mindset in the region. Yes Thais and Bangkokians are very proud of their unique culture, yet other cultures are accepted and not seen as a threat to the Bangkok’s DNA. This is visible in its Westernized education system, in its Sanskrit architecture, in its heavily Japanese-influenced pop culture, in its Hong Kong-inspired movie industry. Bangkok is a mystery but opened for all to interpret. Bangkok is moving away from the dirt and the dirty to become a global metropolis by default.

Bangkok seem overwhelming at first, as the traffic jams are notorious, the sidewalks are crowded with vendors, and the weather is humid and often too polluted. Yet somehow, even with all these seemingly unpleasant aspects to keep in mind, 20 million foreign tourists visit the city every year.

Bangkok is fast-changing and it is shaking the most entrenched preconceived ideas. Not long ago people would have laughed when the idea of a modern Bangkok subway and skytrain connectivity was mentioned. Just a while ago people would have also laughed when told that they would soon be watching Thai action movies. People would have again laughed when told that Bangkok is becoming the ASEAN creative/advertising hub where hilarious ads are created and re-transcribed into other Asian languages and markets. People laugh less these days. They smile and recognize the changes happening all over Bangkok. CNN was first to spot so by electing Bangkok as the World’s Greatest City back in 2009.

Bangkok is a rising force to reckon with. Hard to define and hard to grasp. Yet Bangkok has pushed Thai food and Thai restaurants to the far corners of the world. Thai boxing has become mainstream. Thai movies are no longer a curiosity and Hollywood is even rushing to the city of angels to shoot more blockbusters. Bangkok dangerous. Bangkok curious. Bangkok audacious.

Shanghai is a city with sprawling urbanization, complemented with expansive city borders and city districts as well as a population greater than most small countries. It is poised to be the logistics gateway and, with some significant financial restructuring, the financial hub for all of Asia.

BUZZING, NOT INNOVATIVE YET

Like many of the world’s great international cities, Shanghai has fantastic skyscrapers, renowned nightlife, dazzling shopping malls, amazing cuisine and renowned chefs from all over the world. While these are indeed the first impressions one has, the undercurrent of energy and unleashed entrepreneurial spirit that surrounds these magnificent structures is a driving force in Shanghai’s quest to become an innovation center in Asia and beyond.

According to Pilar Dieter, Principal for the China operation of Solidiance, Shanghai is a city with sprawling urbanization, complemented with expansive city borders and city districts as well as a population greater than most small countries. It is poised to be the logistics gateway and, with some significant financial restructuring, the financial hub for all of Asia.

These are two reasons why, among others:

• 27 industrial and technology parks spread in every corner of Shanghai, where over 350 leading R&D centers of the world’s largest multinational corporations develop the medical inventions, chemical experiments and technology innovations that will shape the next generation of essential products.
• About 60 global giants including manufacturing and financial services established their Asia headquarters in Shanghai. With government encouragement, foreign investors continue to establish as well as relocate some of their Asian headquarters to the numerous growing technology and innovation parks that are constantly evolving within the city. For example, AstraZeneca Pharmaceutical has moved its Asian Pacific headquarters from Singapore to Shanghai; Ford Motor, similarly, moved its Asian Pacific headquarters from Thailand to Shanghai in 2012.

At the heart of industrial innovation, we find the world’s R&D centers are becoming the cornerstone at keeping global companies relevant in the future competitive landscape. Yet to catch up on the rest of Asia Pacific cities, Shanghai needs to invest in better education infrastructure, remove barriers to innovation at a grassroots level, encourage new ideas and diversity, provide more room for art movements, and move away from the “me-too” model and build a true “Shanghai innovation ecosystem”. Simply importing ideas and concepts will not propel Shanghai at the forefront of Asia Pacific innovation. Shanghai is buzzing. Next it might be innovating.

Urban decay and related urban development issues, proliferation of slums, recent and unfortunate events of violence, are among the reasons why Mumbai does not currently have the bearings to become an innovative city - even though the city’s attraction is undeniable.

FROM RESILIENCE TO TRANSFORMATION

In India, Mumbai has always had the title of the ‘City of Dreams’. It is, in fact, the commercial and entertainment capital of India. Data suggests that it generates approximately 5% of India’s GDP and nearly 70% of capital transactions in India’s economy. It is also the film capital of India and one of the most prolific media hubs in the world. Despite many economic and social factors seemingly in place, does Mumbai have the full package necessary to compete with the most innovative cities in the world?

For Praneet Mehrotra, Principal in the Singapore operation of Solidiance, the answer remains a resounding no. Many factors are responsible for this, including urban decay and related urban development issues, proliferation of slums, recent and unfortunate events of violence, among others. Yet Mumbai’s attraction is undeniable.

What must Mumbai do to become a magnet for innovators and creativity beyond what it has already accomplished? Here are a few ideas: Access to capital. India in general and Mumbai in particular, as a commercial nerve center, must make capital more easily available. Not enough financial maturity currently exists to allow entrepreneurs to access capital easily.

Availability of an institutional framework that seeds entrepreneurship. Current commentary on India’s economic potential talk about the institutional framework that is currently lacking. Whether it is in business theory, technology development or in other areas of research, a well-developed institutional framework that draws youth towards a cauldron of creativity does not yet exist. How many new business start-ups, trends, and ideas originate in Mumbai?

Security and stability. Notwithstanding the social complexity of a large alpha city like Mumbai, there needs to be a sense of security and stability among its people. While its public institutions are improving, Mumbai has been battered too often and regularly to have this important element missing.

Quality of life and ease of work. Mumbai is certainly not the easiest of cities to live in. As the largest metropolitan city in India, it is not only expensive, but also offers little choice across the economic spectrum to those wanting to try to make their fortune in the ‘City of Dreams’.

Failing is simply not the only option for Jakarta. Once the city has managed to solve all of its core issues - the leadership and human capital, lack of law enforcement, awareness, education, and collaborative effort by the city dwellers -only then can Jakarta consider itself an innovative city.

Jakarta, the busiest city in ASEAN’s largest country, is not ranked regardless of how ‘hot’ its current economy might be. Its crumbling infrastructure and lack of plans put it instantly out of the game. Is the city poised to fail? What changes does its leadership need to implement, to one day, be an emerging innovative hub?

Failing is NOT the Only Option

There is no denying that Jakarta, home to 10 million inhabitants, is changing at an unprecedented pace. High-rise skyscrapers, massive shopping complexes, ghettos, luxurious residences - these can all be seen standing next to each other in the city. Like most megacities in Asia, Jakarta is notorious for its perpetual traffic gridlock and obscene disparity among the haves and have-nots. Still, Jakarta boasts an exciting lifestyle, rising quality of life and is a preferred option for young Indonesians to pursue their dreams.

As the capital city of the largest economy in Southeast Asia, Jakarta has to rethink how it is to shape the city’s future, despite all the challenges it confronts. Rudy Setiawan, Principal for the Indonesia operation of Solidiance, thinks that failing is simply not the only option for Jakarta. The problem lies in leadership and human capital, lack of regulatory enforcement, and socio-cultural perspective. It is only when the city manages to solve these issues that Jakarta can consider itself an innovative city.

When we speak of the leadership and human capital in Jakarta, the main issue that needs to be addressed is its human talent. Investment in the human talent in the public and private sector is crucial to fully leverage Jakarta’s vibrant economic landscape. Further steps to maximize the human talent available within the city include increasing female participation in the workforce (which is rather low due to traditional culture), improving English literacy and incubating thoughtful leadership.

Aside from that, the lack of law enforcement remains a handicap within the capital. The existence of bribery and high level of corruption are a major hindrance to Jakarta if it wants to build world-class infrastructure. Basic needs such as the lack of drinking water must be addressed and the city’s traffic congestion only seems to get worse as the city continues its sprawl.

Last but not least, a more global social perspective is crucial in shaping of Jakarta’s city brand. Can Jakarta overcome the challenges ahead and how long can it withstand the pressures of rapid growth? The answer to that remains to be seen, but one thing is for sure: Jakarta needs to catch up to its counterparts in the region, such as Kuala Lumpur, if it is to be relevant in the next 20 years.

CONCLUSIONS

Cities with ecosystems that truly support and encourage innovation are more agile, better equipped to face downturns and to lead upturns. Evidence shows that they are more successful in fast-adapting themselves to new trends and are more economically powerful in the long-run.

These innovative cities tend to have leadership roles in biotech, high-tech, urban planning & transport, education, mobile communication, sports, entertainment and green technologies. Fast growing intertwined industries. These cities offer the best jobs, they attract the best companies, they secure the best talent, they are magnets for R&D, they provide the best lifestyles and the most attractive growth perspectives.

At the end, all this becomes some kind of a self-fulfilling prophecy. To be successful and sustainable, the Asia Pacific cities of the future can only be striving innovation hubs.

When will New York, Paris, London be replaced?