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China and South Korea Emerge as Global Innovation Powerhouses

Yuan-Sheng Yu, Senior Analyst
December 23, 2019

Asia has driven a boom in innovation in recent years in terms of R&D spending, venture capital funding, academic publications, and patents. However, it is difficult to bucket the entire region’s ecosystem into one category, as the population, economic status, and innovation strategy vary greatly. Categorizing the state of innovation in each country is important for mapping out the landscape of the region as corporations scout for threats and opportunities for their respective industries.

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Our unique methodology analyzes seven key industries to determine the Innovation Force and Innovation Diversity of each country. Innovation Force measures how strong a country’s innovation efforts are compared to their regional peers and Innovation Diversity assess how well-rounded or specialized each country’s innovation portfolio is. The resulting visualization shows four unique quadrants that a country’s innovation identity can fall into.

  • Innovation Generalists: Innovation levels are relatively low and broadly spread across several industries.

  • Innovation Powerhouses: Not only do these countries innovate at a high rate, they do so in many different industries.

  • Innovation Specialists: These countries have focused all their innovation, though low overall, in one or two key industries.

  • Innovation Conservatives: While innovating at a high rate, these countries focus their efforts in only a select few industries.

Lux Research State of Innovation in Asia 2019 - graphic

  • China and South Korea emerge as innovation powerhouses possessing the most robust and diverse innovation portfolios, easily separating the two countries from the rest of the region as prolific innovators. With increasing collaborations between the two, China can quickly fill technology gaps it may have while South Korea continues to gain access to a market it seeks to find. This combination will only further strengthen the two countries’ position regionally and globally.

  • Japan continues to be a major innovator, but its body of work has been consistently shrinking in terms of focus over the years. While it will remain home to some of the world’s leading innovative companies for the foreseeable future, it has lost ground to China and South Korea in several key industries. Japan will eventually innovate itself into a corner of specialization without significant changes to the innovation ecosystem and strategy of its major players leading the charge.

  • Singapore, Hong Kong, and Taiwan have solidified themselves as specialized innovators, and rightfully so. With population sizes that are a mere fraction of their regional neighbors, all three countries have strategically aligned their innovation efforts in key industries with economic developments and with the human capital they possess.

  • Southeast Asia are innovation generalists today, but expect countries such as Indonesia, Malaysia, and Thailand to carve out their own niche in terms of industries. With national innovation roadmaps underway and rapid economic growth, each of these three countries will likely come into its own in the coming decade as the Southeast Asia region is poised to be the next global innovation hot spot.

  • India is a unique example, despite falling in the innovation specialist quadrant. Despite its massive population, it is positioned the far left in our Innovation Force ranking as it struggles to keep pace with significantly smaller countries in the region. Despite much of its innovation activity being driven by innovation diplomacy, bilateral investments and cooperation have yet to truly spark India’s domestic innovation ecosystem and will look towards the “New India” national strategy for future innovation growth.

Home to more than two-thirds of the world’s population, 31 megacities, and one-third of the world’s largest companies, Asia is quickly becoming the epicenter of the world. Combined with forecasts of it taking the majority of global GDP share and 90% of the global middle-class growth, the transition toward a new world order is underway. The rise of Asia is a global phenomenon and ripe with opportunities for everyone, not just the regional players. For the past several decades, Asian organizations have benefited tremendously from expanding their innovation efforts abroad to the U.S. and Europe. The reverse can be equally profitable for foreign companies exploring similar avenues into Asia’s innovation ecosystem.




- Full Report: State of Innovation in Asia: Key Industries and Players Shaping Asia’s Innovation Ecosystem (Members Only)

-Analyst Insight: State of Innovation in Asia: Establishing Singapore as the R&D Laboratory of the World (Members Only)

-Executive Summary: Will China Take Over the Global AI Industry?

- Blog: Asia's Rise as Global Autonomous Vehicle Hotbed 

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