The Ti Blog: Emerging markets: The new hubs of innovation?

The Ti team has now returned from another very successful conference in Singapore with a variety of new perspectives fresh in our minds. Ti’s conference’s, bringing together as they do such a diverse range of industry expertise, always shed new light on the major issues facing the logistics industry and this was no exception. This year’s overarching theme was the future of logistics and each session had a particularly strong focus on innovation. For me one stand out discussion came during session 3 on the first day, it posed the question of whether or not emerging markets could become new hubs of innovation.

Now the facet of this question which most interested me was the assertion that emerging markets would have the opportunity to leapfrog developed markets by skipping their incumbent, but soon to be obsolete tech and infrastructure, and immediately embracing new more efficient systems.

Naturally this question split the panel with some agreeing that this was possible and others restating the need to build this kind of innovation on a stable base, citing the fact that many innovations take advantage of pre-existing infrastructure or rely on the technical knowhow of the workforce in developed markets.

Among the panel there was consensus that the potential was there for emerging markets to become new hubs of innovation but that there were number of challenges to be overcome. Actually the positive note continued as the panel was able to provide solutions to each of these challenges in turn.

The panel looked at the problems facing companies operating in China as the cost of doing business increases and suggested that this was not so much a problem as it is a natural evolution, one that was already being solved by these companies running China+ strategies.

When asked whether emerging markets had the knowledge and skills to adopt innovative technologies the panel submitted that, so long as they remained open and transparent, then it was perfectly possible to import these skills and to instil them in the local workforce. An emphasis was placed on the importance of free trade agreements and continued investment in infrastructure to this objective.

The issue of risk was raised as a disincentive for investment in innovative practices in developing markets but the panel offered a solution to this too, suggesting that mitigating this was possible so long as decision making power was given to local management with good visibility of the threats at hand.

All in all it was agreed that the huge potential of emerging markets would attract these innovative practices to the strongest cities therein and that the spread from this base would be inevitable. But, and this is crucial, that this would be an evolutionary process as the necessary human and physical infrastructure develops to facilitate innovation. So innovation probably won’t allow emerging markets to leapfrog their developed counterparts but it will aid their rapid development.

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