According to new research by the McKinsey Global Institute (MGI), Asia is home to more than half of the world’s population. In the last decade, Asia has accounted for 52% of global growth in tech-company revenues, 43% of startup funding, and 51% of spending on research and development.

“The Asian Century is already upon us”, asserted scholar Parag Khanna. The region is experiencing a new wave of growth led by younger societies from India to the Philippines. Today’s infrastructure investments are the platform for the next generation of digital innovation”, he added.

In the last decade, Asia has expanded its infrastructure and technological capabilities making both economic progress and rapid strides in human development, literacy and innovation. Asia has embraced the digital revolution across industries including retail, banks, manufacturing, finance, transportation, e-commerce and healthcare.

Commenting on the technological transformation in Asia, Sandeep Sarkar, Senior Vice President, Region Head ASEAN & North Asia said: “With COVID-19 accelerating consumer adoption of digital technologies, Asia leap frogged social commerce and e-commerce models. You can see the dominance in digital payments—the Asian market skipped the credit-card-ownership stage completely going straight to e-wallets and super apps.”

Asian players in the lead

Asia accounts for 2.2 billion of the world’s internet users, with China and India comprising one-third of the total. In the 2022 Fortune Global 500 ranking, many Asian companies now rank among the world’s largest, with Chinese energy giants State Grid, China National Petroleum, and Sinopec falling in the top five. For the first time, revenues from Global 500 companies in Greater China (including Taiwan) exceeded revenues from US companies on the list, accounting for 31% of the total.

According to a new report Singapore moved up three places to become Asia's top financial center - and third in the world after - New York and London in the first and second spots.

Recent McKinsey Global Institute (MGI) research examined 71 developing economies and singled out 18 of them for consistently posting robust economic GDP growth. All seven long-term outperformers, and five out of 11 recent outperformers, are located in Asia. China, Japan, South Korea and Singapore are among the most digitally advanced nations in the world.

Singapore, Indonesia and the Philippines have now become the three fastest-growing e-commerce markets in the world. This year, Singapore will post 36% digital sales growth, while Indonesia will see an increase of 34% and the Philippines, 25.9%.

In the latest definitive analysis of 5G world leaders, Malaysia fell in the high rankings in all three 5G speed categories (download speed, peak download, and upload speed) as well as the 5G Games Experience. While Singapore has become a global top 15 market for 5G Download Speed, Malaysia falls in second place out of the 15 countries tested globally. Malaysia is also placed second for 5G peak download, closely behind Taiwan.

Driving AI development and research

There has been a rapid increase in the adoption and development of emerging technologies such as artificial intelligence, cloud computing and 5G, amongst others across the globe. Asia has the highest dispersion in terms of the adoption of digital technologies, with Japan, Korea, Hong Kong SAR and Singapore being global trendsetters.

Most Asian countries have had AI policies and initiatives in place supported by the government. A Channel Asia report states, “Asia Pacific is expected to emerge as a major market for AI-led initiatives since most countries in the region are establishing committees or task forces for creating national AI strategies, which have either been launched or are on the course of being launched in the next few years.”

Japan has developed an Artificial Intelligence Technology Strategy to promote the development of AI and priorities for industrialization. South Korea has a budget of US$21 billion to develop science and technology and AI sectors. China’s New Generation of Artificial Intelligence Development Plan proposes three development stages (2020, 2025 and 2030) as per the development situation of AI technologies in China. India has also defined a national policy on AI in the working paper National Strategy for Artificial Intelligence, focusing on five key areas - agriculture, mobility, healthcare, transportation and urban/smart-city infrastructure.

The World Intellectual Property Organization report revealed that Japanese and American companies hold the highest AI patent portfolios, and Chinese research organizations make up 17 of the top 20 academic players in AI patenting and 11 of the top 20 in AI-related scientific publications.

Prioritizing digital transformation

A recent Forrester report states that China and India lead cloud adoption in the Asia Pacific (APAC) region, followed by Australia and New Zealand. The report—which surveyed decision-makers across all APAC countries including India, China, Japan, Malaysia, Vietnam, Thailand, Australia and New Zealand—showed that 92% of China-based respondents use the cloud in some form, which is slightly higher than in India, where 91% of decision-makers said that they use some form of cloud technology.

According to MGI’s simulation, $8-12 trillion of economic value could be at stake by 2040, depending on the quality and level of technology flows between China and the rest of the world. Many high-tech markets – including electric vehicles, battery storage and advanced displays – depend on Asian investment and market growth to achieve global scale.

China, home to 26% of the world’s unicorns (startups valued at $1 billion or more), leads the way in tech entrepreneurship in Asia. Advanced Asian economies like Japan and South Korea have large tech firms and a significant knowledge base, but relatively few unicorns.

Asian companies have capitalized on the region’s well-developed infrastructure to establish themselves at the cutting edge of 5G development and deployment. Of the five companies that hold the majority of 5G patents, four are Asian. Similarly, the region’s strong position in next-generation electric-vehicle batteries – more than half the world’s patents for solid-state batteries were filed in Asia–

Japan’s vision known as Society 5.0 aims to leverage strategic innovations and technology to enhance human life and work toward a smart society. Society 5.0 is a purposeful effort to create a new social contract and economic model by fully incorporating the technological innovations of the fourth industrial revolution.

Forward outlook

Asian companies are prioritizing and exploring emerging technologies including artificial intelligence, machine learning, digital ledger technologies, robotics, cryptography and big data that have the potential to reshape the global economy and fundamentally alter the way society functions. The pandemic demonstrated that the pace of technology innovation and adoption by Asian companies and consumers is unmatched by other regions.