November 23, 2022

5G-Related Activities Are Picking Up in Sub-Saharan Africa

"As countries in Sub-Saharan Africa, and the rest of the world, transition into a post-pandemic economic recovery phase, mobile connectivity is set to play a crucial role in defining the 'new normal,' according to the GSMA. In its latest annual report on the state of region's mobile economy, the UK-based organization that represents the interests of mobile operators worldwide adds that "Authorities see an opportunity to leverage digital technology and services to build economies that are more resilient to future shocks, enhance productivity and efficiency in service delivery, and ensure more inclusive socioeconomic development."

What is more, "In Sub-Saharan Africa, 40% of the adult population are now connected to mobile internet services. However, another 44% live in areas covered by mobile broadband networks but do not yet use mobile internet services (the usage gap)." The report importantly notes that "Addressing the main barriers to mobile internet adoption for these people, including affordability and digital skills, should be a priority for stakeholders in order to realize the potential of mobile connectivity to drive economic growth and development in a post-pandemic world."

Other key findings from the report include:
  • In 2021, the mobile ecosystem supported more than 3.2 million jobs (directly and indirectly) and made a substantial contribution to the funding of the public sector, with $16 billion raised through taxes on the sector.
  • By 2025, mobile's contribution to the GDP of Sub-Sahara Africa will grow by $65 billion (to almost $155 billion), as the countries in the region increasingly benefit from increased take-up of mobile services.
  • By 2025, 4G will account for a third of mobile connections in the region, compared to under a fifth of connections in 2021.

The report encouragingly explains that "5G-related activities are beginning to pick up across the region. These include 5G spectrum auctions, 5G pilots and commercial trials, and efforts to develop locally relevant 5G use cases." Moreover, "While the general consensus remains that a widespread 5G rollout is more of a long-term prospect in Sub-Saharan Africa, there is a strong case to utilize the technology in some scenarios to serve certain connectivity requirements for individuals and enterprises."

With respect presence in the metaverse in Sub-Saharan Africa, the GSMA says that while "The metaverse (which continues to lack a universally agreed-upon definition) is still nascent. ... significant levels of investment in metaverse initiatives and market-size estimates reflect the opportunities possible from the rapid advancement of the metaverse over the coming years."

The report adds that "The metaverse ecosystem is growing around the world, including in Sub-Saharan Africa. Indeed, the region presents significant growth prospects for the metaverse, given its young tech-savvy population and thriving tech startup ecosystem. This is beginning to attract the attention of global metaverse ecosystem players."

The GSMA correctly asserts that policymakers can help spur inclusive development. "Mobile connectivity has the potential to accelerate Sub-Saharan Africa's digital transformation and drive socioeconomic advancement in areas such as healthcare, education, digital commerce, industrial automation and smart city infrastructure. Realizing this potential requires policy measures to support network investments and improve the affordability of digital services for consumers. Governments and regulators in the region should therefore adopt forward-looking spectrum management and fiscal policies:, which includes:
  • "creating a spectrum roadmap to ensure there is enough spectrum to meet surging demand for mobile services in both the short and long term
  • "ensuring access to mid-band spectrum, in particular 3.5 GHz, given its importance to the future of 5G
  • "accelerating access to sub-1 GHz spectrum to provide widespread rural mobile broadband services
  • "applying best-practice principles of taxation as recommended by international organizations such as the World Bank and the IMF."

Infographic: GSMA

How do you see mobile connectivity driving the acceleration of Sub-Saharan Africa's digital transformation and driving socioeconomic advancement?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 19, 2022

KOTRA Silicon Valley Forum Presents Benefits and Risks of the Metaverse

Under the theme of "The Metaverse is Yours," KOTRA Silicon Valley, a non-profit agency operated by the South Korean government that serves as one of the 127 overseas KOTRA branches worldwide, held its annual convention, K-Global @ Silicon Valley 2022, from Nov. 7th-8th in Santa Clara, Calif. The event started with an information and communications technology (ICT) forum focused on innovation which included discussions about the metaverse and its four key aspects of content, platforms, networks, and devices. After welcoming remarks from Korean dignitaries, the event featured the following keynote speakers:
  • Shilpa Kolhatkar, who serves as Global Head of AI Nations Business Development at NVIDIA, talked about how the metaverse is the next evolution of the internet, the home to connected virtual worlds and digital twins, and a place for real work as well as play. She said NVIDIA's platforms provide enterprises the ability to develop physically accurate, artificial intelligence (AI)-enabled, virtual simulations that are synchronized with the real world. Ms. Kolhatkar also noted that digital twins are transforming industries and scientific discovery, as well as enabling developers, researchers, and enterprises who use them to design, simulate, and optimize products, equipment, and processes in real-time, before ever going to production.
  • Heesuk "Ricky" Kang, Head of Business at Naver Z, discussed how his company's ZEPETO Studio platform features 68 million Studio items sales created by over 2.3 million creators to 300 million users worldwide. Mr. Kang said ZEPETO, which is the fastest growing avatar platform in Asia, is popular among Gen Zs who express themselves while meeting, collaborating, and creating with others.
  • Jason Mayes, Head of Business, Lead Web ML & AL Developer Advocate at Google, focused his presentation on TensorFlow.js, a library for machine learning (ML) in JavaScript. He explained how TensorFlow makes it easy for beginners and experts to create machine learning models for desktop, mobile, web, and cloud. Mr. Mayes added that data can be the most important factor in the success of a user's ML endeavors and TensorFlow offers multiple data tools to help consolidate, clean and preprocess data at scale. I appreciate his assertion that TensorFlow empowers "machine learning for everyone."

The next segment of the ICT Forum focused on a panel discussion. Shawn Flynn, Principal of Global Capital Markets and host of "The Silicon Valley Podcast," moderated an insightful discussion featuring Pouneh Kaufman, Group Project Manager at Microsoft, Ray Wu, Managing Partner at Alumni Ventures, and Sean Jun, Product Manager at XL8. Key points from the moderated session included:
  • The metaverse is an evolution, not a revolution. And it is one that businesses should not ignore.
  • The metaverse may profoundly change how businesses and consumers interact with products, services and each other (i.e., enriching the customer experience and introducing virtual products).
  • The metaverse will help support sustainability efforts by saving both time and resources used to travel to attend meetings, lectures, and social gatherings (I expect the use of the metaverse will help companies achieve their environment, social, and governance goals).
  • The metaverse allows the ability to collect new data on customers.
  • The metaverse will have profound benefits in various sectors including education, healthcare, and e-commerce.

Image Credit: KOTRA Silicon Valley
The panel, however, presented a number of risks associated with the metaverse which will require new strategies and methods to build trust. What is more, as with Web 2.0 (the current internet), users of Web 3.0 will need to contend with cyberbullying and harassment issues, as well as identity theft, unauthorized data collection by corporations, and cybersecurity threats from malicious actors.

Lastly, the event featured an expo featuring metaverse and AI-related small- and medium-sized enterprises from Korea that showcased their products, services, and technology. While you can view a listing containing all of the exhibiting companies here, below are a few that I found of particular interest: 

  • Corevalue Ltd. is developing a service that can help everyone manage their health conveniently and easily. Accordingly, a smart camera and telehealth app were developed and the Dr. Clobo brand was launched in August 2020. Its healthcare camera can take detailed pictures of the mouth, ears and nose, and based on this, non-face-to-face medical consultation and health management.
  • Grebt developed a bloodless-based diabetes measurement sensor and diabetes measurement device that eliminates the fear of blood sampling and the pain of blood collection. Its urine glucose meter measures the concentration of glucose in urine and reacts blood glucose in urine. It consists of a strip, a disposable consumable that generates an electrochemical signal.
  • NdotLight is the developer of NdotCAD, a 3D/AR/VR content design tool which allows any users including non-professionals to express and share their imagination in 3D with ease. The company has lowered the hurdle for 3D content creation by making intricate 3D design process easy with increased usability while maximizing output quality by applying advanced technologies. With their 3D engine, they serve enterprise clients also by providing customizable solution to meet any B2B needs.

As we transition into the post-pandemic era, the K-Global @ Silicon Valley event provided a good opportunity to explore the future of the metaverse, AI, and other ICTs. What benefits and risks do you think the metaverse will bring to consumers and businesses alike?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 7, 2022

GSMA Report Presents Recommendations for Policymakers to Help Realize Europe's Digital Agenda

In its latest annual report on the state of Europe's mobile economy, the GSMA, a UK-based organization that represents the interests of mobile operators worldwide, says "Mobile networks are vital to economic recovery and realizing green and digital transformation across Europe. Two years into the EU's Digital Decade, the connectivity target of 'Gigabit for everyone, 5G everywhere' has never felt more urgent." The report also notes that "The Digital Europe Program, the Connecting Europe Facility and the recovery funds provided to EU Member States offer an opportunity for operators to partner with governments to improve connectivity across society and drive post-pandemic economic recovery across the region."

While the adoption of 5G is accelerating in Europe, 4G remains remains "the dominant technology across the region, accounting for just over half of total connections by 2025," the report explains However, "4G adoption in Europe will peak in 2022 and then decline." Moreover, "The pace of 5G coverage expansion across Europe will be a key factor in the transition from 4G to 5G. Although 5G network coverage in Europe will rise to 70% in 2025 (from 47% in 2021), nearly a third of the population will remain without 5G coverage. This compares to 2% or less in South Korea and the US."

As for the mobile industry's contribution to Europe's economy and social well-being, the GSMA notes that "In 2021, mobile technologies and services generated 4.5% of GDP in Europe – a contribution that amounted to approximately €760 billion of economic value added." Furthermore, "The mobile ecosystem also supported approximately 2.6 million jobs (directly and indirectly) and made a substantial contribution to the funding of the public sector, with €109 billion raised through taxation. Over the period to 2030, 5G technologies will drive further contributions to the region’s economy, impacting key industries such as manufacturing and public administration."

"As the first industry to have fully committed to the UN Sustainable Development Goals (SDGs)," the report notes that "the mobile industry continues to have substantial positive effects on lives and livelihoods. In 2021, the mobile industry increased its impact on all SDGs, with the average year-on-year increase accelerating compared to 2020. The average SDG impact score across the 17 SDGs reached 53, up from 49 in 2020 and 32 in 2015, meaning the mobile industry is achieving 53% of what it could potentially contribute to the SDGs."

With respect to how European policymakers can help realize the digital agenda, the GSMA points out that "As economies and societies around the world digitalize, the acceleration of 5G in Europe is necessary to ensure that traditional industrial and manufacturing strengths are not dragged down by weaknesses in the ICT sector. With the limitations of existing networks becoming more apparent amid an increasingly distributed workforce, there is also a need to ensure fair and even access for all."

To achieve this, the GSMA says "it is vital to create the right conditions for private infrastructure investment, network modernization and digital innovation. A financially sustainable mobile sector is key to the delivery of innovative services and the deployment of new networks. Policymakers should collaborate with the private sector to stimulate investment in next-generation networks that will form the backbone for Europe's economic recovery by enabling employment, entrepreneurship and innovation while helping achieve essential climate-related goals."

Practical steps that authorities in Europe can take include the following:
  • Rethink competition policy and enforcement in terms of harmonized conditions for investment and doing business.
  • Fairly allocate the costs of network traffic to the largest drivers, to deliver an economic incentive to use network capacity more efficiently.
  • Foster supply-chain diversity and competition, to improve network security and resilience through disaggregation and greater interoperability.
  • Adjust the regulatory framework to enable the data economy to thrive in Europe, by ensuring a level playing field in digital markets, services and taxation.
  • Implement fair spectrum licensing conditions and avoid excessive charges and limited durations of licenses, which can undermine investment.
  • Implement cost-reduction measures and simplification for network deployment to achieve Europe’s Digital Decade connectivity targets.

Infographic: GSMA

While I appreciate how the economic contribution of mobile industry continues to expand in Europe, it is discouraging that market dynamics are impeding European 5G progress. As GSMA's press release puts it directly: "Europe’s ambitious Digital Decade goals remain threatened by slower 5G rollout compared to competitor markets" and "tough market conditions are leaving Europe trailing its global peers." On a more positive tone, European operators are "at the forefront of cutting-edge, energy-efficient technologies and the use of renewables, with many already reaching 100% renewable electricity use across their footprints, powering their network infrastructure, data centers and other sites."

What are your recommendations for how policymakers can help realize Europe's digital agenda?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 4, 2022

Indonesia's Opportunity to Leverage Digital Assets and Wireless Technology Infrastructure to Address the Climate Emergency

If there is any chance of meeting the goal set forth in the Paris Climate Accords, an international treaty on climate change that was signed in 2015 that aims to keep the rise in mean global temperature to well below 2 °C (3.6 °F) above pre-industrial levels, various industries will need to make efforts to employ climate technology help achieve this ambitious goal to substantially reduce the effects of climate change. Having both extensive experience working in Indonesia and within the mobile industry worldwide, a report by the GSMA caught my attention that explores the potential for mobile-enabled technology solutions to enhance Indonesia's climate mitigation and adaptation efforts.

Funded by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), the report notes, "Indonesia faces a unique set of climate change challenges, from extreme flooding to extended drought, changes in rainfall patterns and temperature and sea level rise." Moreover, "These risks are intensified by a dense population of 270 million people living in hazard-prone areas, and approximately 60 percent living in low-lying coastal cities. Indonesia is the world's eighth biggest emitter of greenhouse gases (GHGs). Forestry and other land use practices, energy and waste are key contributors."

The GSMA, a UK-based organization that represents the interests of mobile operators worldwide, explains that its report "presents an overview of the main climate challenges facing the country and examines the potential role of mobile-enabled technology in unlocking novel and innovative responses to climate change. All this centers around three focus areas for climate action in Indonesia: energy, waste and natural resource management."

What is more, "To create a clear picture of the distribution of climate technology in Indonesia, including where investment is primarily focused, the Mobile Innovation Hub Indonesia team reviewed publicly available literature and compiled a list of 48 examples of technology-enabled climate solutions currently deployed, piloted or in the proof-of-concept stage in Indonesia’s energy, waste and natural resource management sectors." The report also points out that "The highest concentration of climate technology was found in the energy and waste sectors, with just under half of climate solutions relating to waste. Technologies for sorting and recycling in the waste sector, as well as energy management and natural resource management are some of the most prevalent solutions."

"Interviews with stakeholders, including MNOs, mobile infrastructure organizations, government officials and ministries, revealed technical, political and behavioral barriers that are limiting the uptake of mobile-enabled solutions for climate mitigation and adaptation."

Three key barriers that is slowing uptake of mobile-enabled solutions in Indonesia include:

Technical barriers: The availability of mobile and digital infrastructure and access to affordable and connected devices. Although robust government approaches are making strong headway, there are still regional and remote island locations without sufficient connectivity. When it comes to implementing climate technologies these are important considerations.

Political barriers: The political, social and ecological decisions and actions affecting climate change decision-making or uptake of mobile-enabled technologies.
  • Collaborative environment: Limited collaboration between governments, the private sector and communities
  • Data sharing and management: Lack of data integration and reliance on manual data collection processes
  • Policy and regulation: Lack of policy incentives and weak regulations that hinder industry
  • Investor appetite: Investments in Indonesia focus on technology in general rather than climate technology specifically
  • Access to capital: Weak appetite for investment has left innovators with low access to capital
  • Talent: Limited access to talent to develop, roll out and monitor mobile-enabled technology solutions
Behavioral barriers: The individual and collective assumptions, beliefs, values and worldviews on climate change responses:
  • Unclear value propositions: Inability to demonstrate the value proposition to end users, coupled with cultural barriers
  • Digital literacy: A barrier for end users that lead to suboptimal use or the need to embed manual back-up methods when rolling out solutions

To address these barriers, the GSMA recommends an ecosystem approach in which mobile-enabled solutions would provide a clear path to achieve Indonesia's climate goals. This would include:
  1. Investing in mobile-enabled connectivity and digital and climate literacy to reach the most rural areas and offer innovative climate technologies.
  2. Building trust between stakeholders operating in the same ecosystem, creating forums to share lessons, building on successful innovations and developing science-based narratives to strengthen coordination.
  3. Building the capacity of the public sector and communities to implement or use mobile-enabled climate technology to increase uptake.
  4. Using a human-centered design (HCD) approach to ensure climate technology is relevant and the value proposition is clear to end users.

I appreciate how this report explores the potential for mobile-enabled technology solutions to enhance climate mitigation and adaptation efforts in Indonesia. It also presents a useful overview of the main climate challenges facing Indonesia and examines the potential role of mobile-enabled technology in unlocking novel and innovative responses to climate change.

What are you recommendations for how emerging markets like Indonesia can leverage their digital assets and wireless technology infrastructure to address the climate emergency?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 2, 2022

Southeast Asia's Digital Economy Could Reach $1T GMV by 2030

Southeast Asia's (SEA) top digital economies grew faster than expected in 2022 and are set to reach $200 billion in total value of transactions made this year, according to a report by Google, Temasek and Bain & Company. And in the face of economic headwinds, the future looks bright for SEA as the report says investors remain confident in SEA's long-term prospects and the opportunities they bring in up-and-coming countries and sectors.

Among the ten countries that are members of the Association of Southeast Asian Nations (ASEAN), which serves as a political and economic union of member states promoting intergovernmental cooperation and facilitates economic, political, security, military, educational, and sociocultural integration between its members and countries in the Asia-Pacific, the report focuses on ASEAN's six largest members: Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. The report's key findings include:
  • Navigating macroeconomic headwinds: Just as countries in SEA embarked on a return to pre-pandemic normality, global headwinds started to blow, threatening to derail a full economic recovery. Rising interest rates and high inflationary pressure have also been impacting consumer demand, particularly the discretionary sectors that sit at the core of the digital economy.
  • Approaching $200B in rough seas: Despite these macroeconomic headwinds, SEA's digital economy remains on course to reach ~$200B in gross merchandise value (GMV) in 2022. In fact, it is reaching this threshold three years earlier than expected in the e-Conomy SEA 2016 report. Digital adoption continues to rise even today, albeit at a slower pace than the steep acceleration seen at the height of the pandemic.
  • Urban consumers still drive the economy: Across urban areas, affluent consumers and their young digital native counterparts continue to represent the largest portion of the digital economy. For these two segments, the opportunity for growth lies in deeper engagement, including more frequent and valuable orders, subscriptions, or cross-selling services such as consumer lending. Meanwhile, adoption and spend by urban consumers 'on a budget' and suburban consumers remain lower, leaving digital players to figure out more economically sustainable ways to serve them.
  • Sectors encounter different growth trends: SEA's digital economy sectors are following three distinct trendlines. E-commerce follows an S-shaped growth curve, in which it continues on its growth trajectory, but from a higher starting point after the steep acceleration during the pandemic. Others, such as food delivery and online media, are returning to their trendlines after a two-year spike. And lastly, travel and transport are moving along a U-shaped recovery, with pre-pandemic levels still some miles away.
  • Favorable conditions uplift financial services. The adoption and usage of digital financial services (DFS) have flourished across the board, propelled by a shift from offline to online and the positive financial market conditions of the last few years. With rising interest rates and a riskier lending environment, however, fintech players, platforms, and newly launched digibanks will see their business models stress-tested. Meanwhile, banks and insurance companies are rapidly digitalizing their services and maintaining a stronghold on affluent consumers.
  • Prudence clouds tech investments. Tech investments in SEA remain robust this year. However, the funding landscape tells a tale of two ends: early-stage deals are continuing with strong momentum, while late-stage deals are seeing more pronounced dips and a pause in IPOs. Meanwhile, DFS has overtaken e-commerce in investment volume. Investors will be cautious in the short-term as most do not expect a return to 2021 deal activity and valuation peaks in the next couple of years. Nonetheless, most investors remain bullish in SEA's medium- to long-term potential, and have $15B dry powder on hand. The report notes that increasing interest in emerging markets, like the Philippines and Vietnam, and in nascent sectors, like SaaS and Web3.
  • Towards a sustainable digital economy. The SEA digital economy is expected to produce 20MT of emissions by 2030—significant, albeit an order of magnitude lower than other environmental impact-intensive sectors. Digital players have been rolling out reducing and recycling initiatives, but more can be done to further lower impact by up to 30-40% over time. In the meantime, platforms can play a positive role in raising awareness among SEA consumers, and move towards closing the prevailing ‘say-do’ gap.
  • Economic contribution meets social concerns. On the social front, the digital economy has created 160K high-skilled jobs and indirectly supports nearly 30M jobs, while platforms have enabled over 20M merchants and 6M restaurants to grow their businesses online. Concerns exist, nonetheless, around the welfare of worker-partners, necessitating dialogue between institutions and platforms.
  • Charting the course for the digital decade. SEA's 'digital decade' has just begun. The course to exceed $300B by 2025 depends on the shape of recovery amid today's uncertainties, while the path to a $600B-1T digital economy in 2030 remains geared on SEA's economic fundamentals. A growing emphasis on sustainable growth means profits may become as relevant as GMV when it comes to measuring progress.
Existing enablers like payments and logistics have come into place, but the talent challenge is now shifting from quantity to quality. New enablers, like digital inclusion of consumers ‘on a budget’ and suburbanites, are key to unlocking SEA's full potential. Progress has been limited, however, with institutional support potentially the missing link to bridging the divide. All in all, SEA's digital economy is grounded on strong social and economic fundamentals, and offline to online trends, which provides much to be optimistic about especially as the region settles into its digital decade.'

Over the past 20 years, I have observed Southeast Asia's impressive economic rise. When my clients supporting the digital economy ask which global markets should they consider for corporate expansion, Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam are almost always at the top of my list. Despite economic headwinds, I remain optimistic about the sustainable development of the region's digital economy which could reach $1 trillion GMV by 2033 provided such growth is pursued in a sustainable way.

What are your thoughts about SEA's future economic outlook?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

October 29, 2022

The Value of Bosses Walking in their Employees' Shoes

While dining at a restaurant, my father always expressed his appreciation when the owner walked around the dining establishment. Not only does "walking the floor" provide owners with the opportunity to connect with customers, doing so allowed them to understand what their employees were experiencing in real time. But an owner who delivered food from the kitchen, refilled water glasses or helped clean the table for the next customer truly impressed my father. An article by The Economist focuses on how bosses can understand what life is like for the staff. "Walking in employees' shoes is a way for bosses to understand what impedes productivity, what saps morale and what makes workers feel valued," the article notes.

One way of obtaining the employees' views on what is life is like working at the company is through surveys. However, as the article points out, "Even if a boss genuinely wants to hear the unvarnished truth, employees may not be comfortable delivering it. Anonymous surveys can help encourage honesty, as can exit interviews, but even in these settings, workers may temper their views." What is more, "Reviews on sites like Glassdoor can be brutal, but the motives of the people posting them are not always transparent. Corporate-messaging apps like Slack can provide a partial window into how some teams are getting on, but surveillance is not a form of empathy. And none of this is the same as knowing what it is actually like to be an employee."

I agree that "it is good for managers to spend time doing the same work as their" employees. The article also explains that "Airlines and retailers have run schemes that involve executives working in front-line roles in airports and on shop floors. DoorDash, a delivery app, has a program called WeDash that requires salaried employees to make regular drop-offs. And bosses can do things for themselves that people without assistants must navigate alone. Filling out expense forms is a chore: everyone should have to do their own, at least occasionally. By default bosses should fly in the same airline class as their colleagues do. And so on."

But, the article importantly concludes that it is equally important for employees to understand what a manger experiences: "If managers can learn a few things by walking in employees' shoes, there is also value in workers thinking about what life is like as a boss. It is not all business-class travel and people agreeing with you. Imagine getting in a lift and conversation around you always dying. Imagine being grumbled about all the time, or knowing that your absence causes a general lightening of the mood. Imagine not being able to kick a difficult decision upstairs. The boss wears much nicer shoes but they can still pinch."

What are your recommendations for how managers can gain the employees' perspective, which in turn could improve morale and improve productivity?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

October 27, 2022

Korean Companies Demonstrate Their Innovative Tech Solutions at TechCrunch Disrupt 2022

TechCrunch Disrupt resumed its in-person event in San Francisco from Oct. 18th-20th, 2022. The conference's purpose is to bring together the global startup community to discover insights, collaborate, and celebrate achievements that have defined each founder's journey and for those yet to come in the future. At the invitation of the Korea Trade-Investment Promotion Agency (KOTRA), a state-funded trade and investment promotion agency operated by the South Korean government, I had the opportunity to visit the conference's Korea Pavilion and meet with startup founders and their colleagues. Among the 20 great companies that demonstrated their innovative products and services at the pavilion, which was co-hosted by the Korea International Trade Research Institute (KITRI), there are a few are worth mentioning based on my professional and personal interests (the program book containing a description of all 20 companies may be viewed here).

Cochl created an artificial intelligence (AI) platform specializing in ambient sound recognition. Use cases include public safety (faster response to shooting incidents, vandalism detection for buildings, and violence prevention by scream/yell monitoring), traffic monitoring (automatic car accident report and illegal car honking noise monitoring), and autonomous driving (ambulance and police car siren detection for giving right-of-way action and car window break monitoring). Another valuable use case is in the defense sector by using smart glasses with gunshot analysis, submarine and torpedo type analysis, and surrounding environment monitoring with unmanned ground vehicles.

Dabeeo provides global geospatial information based on AI/ML (machine learning) technology by reading and interpreting the earth to help customers build or modify digital maps. Its STUDIO for maps is a SaaS platform that makes creating, editing, and managing map data convenient and intuitive to use. This website provides several examples of how retailers, showrooms, factories, stadiums, and exhibition centers are using the cloud-based platform.

TheWaveTalk developed a technology that uses laser multi-scattering and deep learning to measure foreign substances in water with great precision. Through the technology, they developed a home water quality meter called the WaTalk, which scatters light inside the water using a laser and analyzes small signals of fine particles such as bacteria, virus, organic pollutants, and microplastics to determine the degree of contamination. The company says its product is 20-50 times cheaper than professional measuring equipment.

Image: Willog
 is simplifying the complex cold chain industry. (A cold chain is a low temperature-controlled supply chain network.) The company's patent-based monitoring device collects various data during the entire logistics process, and displays it on a QR code. Willog's data monitoring device, the One Time QR (OTQ), which can be placed on vehicles, shipping containers or pallets, allows instant confirmation of temperature records by scanning the QR code with a smartphone camera and does not require other training or equipment. Effective field operation response is possible without extra time or procedures spent between the driver and the personnel to check the temperature. Where the device cannot be physically retrieved, Willog's OTQ-N uses near-field communication (NFC) to facilitate logistics monitoring within a flexible environment.

While KOTRA provides a useful service in the promotion of trade and investment with 128 Korea Business Centers located in 84 countries, the agency also facilitates global people-to-people exchange and technological exchange. I appreciate having the opportunity to meet with ambitious startup leaders who are building companies that improve the way we live, work, and play.

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

October 17, 2022

A Framework for Improving ESG Reporting in the Mobile Industry

In my previous post about a report published by GSMA on how the mobile industry is impacting the United Nations' Sustainable Development Goals (SDGs), I referenced a framework, ESG Metrics for Mobile, developed by GSMA alongside EY, a consultancy, and the Yale Center for Business and the Environment. Several readers sent comments asking for additional information about the framework, which is a first-of-its-kind mobile sector ESG reporting framework featuring ten industry-specific key performance indicators (KPIs). Featuring ten industry-specific KPIs, the framework covers a range of key material topics for the sector, from energy consumption and waste reduction to digital inclusion and data protection. The common metrics are designed to simplify and harmonize environmental, social, and governance (ESG) disclosures and complement universal reporting, by adding a crucial industry-specific lens.

A white paper authored by representatives from EY explains, "There is a critical need for more effective and consistent approaches to measuring and communicating ESG performance." Moreover, "Sustainability is one of the defining issues of our generation. Consumers, employees and regulators are increasingly vocal regarding their expectations for companies to act responsibly and to demonstrate how they create value to society."

The report also notes that "EY research has found that 90 percent of investors attach greater importance to companies' ESG performance when it comes to their investment strategy and decision making than they did before the global pandemic. Mobile operators recognize that, by placing greater focus on their ESG performance, they can build stronger relationships with stakeholders and create financial value."

The report's key findings include:
  • Mobile operators currently report on most of the industry's key topics, but not always in a consistent way
  • EY's proposed industry KPIs are designed to enhance consistency and impact
  • The mobile industry can use the proposed KPIs to measure and improve ESG performance
  • Attitudes towards ESG are shifting
  • Mobile operators are uniquely placed to accelerate progress on a range of ESG issues
  • Measuring and communicating ESG performance is critical

During the consultation process, five criteria were used to define the minimum requirements that a sector KPI should meet.
  1. Meaningful for stakeholders: The KPI will influence the assessments and decisions of external stakeholders, including investors.
  2. Decision-useful: The KPI will influence internal decision making and convey information to the mobile operator that can substantively enhance the company's ability to create value.
  3. Comparable: The KPI will enable meaningful peer-to-peer comparisons across geographies, and the definitions and calculation methods are transferable to most companies.
  4. Feasible: The KPI can be implemented by the company. It is simple and short, aligns to existing standards where possible, and uses standardized measurements. The underlying methods and approaches are robust and follow accepted approaches.
  5. Best indicator: For the given topic, the KPI represents the best indicator of the company's ability to create value in the short, medium and long term.

In reference to the image on the right presenting the mobile industry's framework, the report explains: "Taken together, the universal and industry-specific KPIs will help create less burdensome and more meaningful data collection and reporting processes, and provide greater consistency in the information disclosed about operators' ESG performance." What is more, "This will enable operators to take a proactive position in providing relevant material disclosures, and supply the tools and setting for data preparers and data users to have a more enhanced and constructive dialogue on ESG performance."

In addressing the next steps for mobile operators and other stakeholders, the report presents "three critical steps that mobile operators and their stakeholders can take to ensure that the industry ESG framework accelerates performance across the mobile industry and beyond":
  1. Align company's leadership behind the ESG KPIs. "ESG reporting should be owned by the Board, CEO and CFO — with relevant inputs from functional teams. There should be clarity around what ESG-related transformation means for corporate strategy, how investments in sustainability contribute to financial performance, and how the KPIs can help organizations measure success."
  2. Raise awareness of the framework with the investment community and other external stakeholders. "Open and ongoing conversations between operators and investors will also be a critical step to refining and validating the KPIs. Operators can help investors understand which ESG issues are most material to their organization and be able to frame ESG discussions in the context of financial performance. These dialogues should also ensure that the KPIs provide the information that investors need to make assessments of the company’s long-term value. At the same time, socializing the KPIs with policymakers, partners or customers in other industry verticals can also pave the way for better alignment on cross-sector enablement metrics in years to come."
  3. Adopt the metrics in future reporting, measure your performance and deliver improvements. "Operators can begin to test their ability to report against the KPIs and incorporating them into their ESG reporting cycles. This will generate the evidence, insights and experience needed to further refine the KPIs and draw better, more compelling links between ESG scores, stakeholder value and financial performance. At all stages, operators should ensure they take action where needed — whether that relates to improving KPIs themselves, or reorienting systems and processes to deliver more relevant and timely information that avoids duplication. Measuring sustainability performance is the critical step operators should take to move from ambition and strategy towards successful execution."

As operators adopt this new ESG framework, the metrics will provide stakeholders with a deeper understanding of the industry, and where its most material impacts and value are generated.

Do you support the proposed framework for improving ESG reporting in the mobile industry? Are there aspects of the framework that can be applied to other industries?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

October 13, 2022

Digital Inclusion is Central to Sustainable Development Goal Progress

In its seventh annual report on how the mobile industry is impacting the United Nations' Sustainable Development Goals (SDGs), the GSMA demonstrates the industry's "continued commitment to the SDGs, while identifying areas where the industry needs to improve or accelerate its actions to deliver on the Global Goals by 2030." Moreover, the UK-based organization, which represents the interests of mobile operators worldwide, says, "This year's report focuses on digital inclusion and shows how this relates to sustainable development through four main pillars: inclusive access, inclusive planet, inclusive connectivity and inclusive business."

The report shows that, six years after becoming the first industry to commit to the SDGs, the mobile sector continues to increase its contribution to the achievement of all 17 goals. However, despite mobile operators' continued commitment to the 2030 agenda, there is still a long way to go.

The report's other key findings include:
  • By the end of 2021, 5.3 billion people (66% of the global population) were using a mobile phone, while 4.3 billion people (55% of the global population) were also using mobile internet. This includes more than 3.3 billion mobile internet subscribers in low- and middle-income countries (LMICs), where mobile is the primary and, in many cases only, form of internet access.
  • The 'usage gap' – those who live in areas covered by mobile broadband networks but remain unconnected – narrowed for the third year in a row, but still stands at 3.2 billion people. The mobile industry and its partners continue to tackle the reasons for the usage gap, which generally relate to a lack of affordability, knowledge and skills, relevance, in addition to safety and security concerns.
  • Usage of mobile-enabled activities reached new heights in 2021, as mobile subscribers ventured further into online services.
    • 3.5 billion people (67% of mobile subscribers) used their phones to make video calls in 2021. This represents an additional 330 million people since 2020, aiding remote work and other online activities.
    • 2.5 billion people (48% of mobile subscribers) used their phone to access educational information for themselves or their children, representing an increase of 410 million since 2020.
    • 2.1 billion people (41% of mobile subscribers) used their phone to improve or monitor their health, representing an increase of 270 million since 2020.
  • Usage of mobile-enabled services remained considerably lower in developing countries. On average, the gap between the usage of mobile-enabled services in high-income countries and LMICs is 17 percentage points, underlining the importance of operator efforts to introduce more locally-relevant content and upgrade networks to enable access to services requiring a higher-quality connection.
  • The mobile industry is making continued progress on disclosing climate impact data and setting targets for emissions reductions. At the end of 2021, 66% of operators by connections and 82% by revenue disclosed their climate impacts, while 34% of operators by connections and 44% by revenue had set carbon reduction targets to be net zero by 2050.
  • Mobile and digital technology could enable just under 40% of the required CO2 reductions needed by 2030 within the top four largest-emitting industries. These four industries – manufacturing, power and energy, transport, and buildings – account for 80% of global emissions.
  • There has been strong growth in the issuance of sustainability bonds in the mobile sector. This highlights that operators are increasingly securing funding on the basis of achieving social and environmental – rather than purely financial – targets.
  • With stakeholders getting smarter and more discerning when it comes to ESG claims, an effective and consistent approach to measuring and communicating performance is more important than ever. The GSMA has recently launched ESG Metrics for Mobile, a first-of-its-kind mobile sector ESG reporting framework featuring ten industry-specific KPIs. The KPIs will allow stakeholders to gain a much deeper understanding of the industry’s nuances and contexts, and create opportunities for the industry to demonstrate its impact in a more consistent manner.

With respect to the mobile industry's SDG contributions, the report notes the industry increased its impact on all 17 SDGs in 2021, with the average year-on-year increase accelerating compared with 2020. The average SDG impact score across the 17 SDGs reached 53, up from 49 in 2020 and 32 in 2015, meaning the mobile industry is achieving 53% of what it could potentially contribute to the SDGs. Other highlights include:
  • There are now eleven SDGs where mobile's contribution is over 50, compared to six in 2020 and none in 2015.
  • The mobile industry continues to achieve its highest impact on SDG 9: Industry, Innovation and Infrastructure, driven by the reach of mobile networks and take-up of mobile internet services.
  • The biggest improvements were recorded in the industry's contribution to SDG 1: No Poverty, SDG 2: Zero Hunger and SDG 4: Quality Education. This is due to the increasing proportion of people using mobile for life-enhancing activities such as accessing government services, applying and searching for jobs and obtaining educational information for themselves or their children.

In its concluding remarks, the report accurately explains: "As the primary mean of accessing internet for billions of people and the transforming power behind every single industry, mobile connectivity is a key platform for economic development and many other life-enhancing services." However, the report also points out that "as more activities move online, unconnected populations will be at greater risk of exclusion from digital services. As a result, the mobile industry must continue to work together with its stakeholders (including governments, other industries, civil society and the international community) to accelerate digital inclusion and unlock mobile's full potential to address global issues."

I appreciate how, as explained in GSMA's press release, "The report demonstrates how people with access to fast, reliable networks are able to stay connected to friends and family, work remotely, access education and health services, build innovative businesses, improve efficiencies and reduce carbon emissions." However, the announcement crucially points out that "[t]hose without access...are most vulnerable to economic and social disruption, and risk falling further behind as the world emerges from the pandemic, especially as online services become even more integral to society."

What do you think of the report's findings? What are your recommendations for closing the mobile internet usage gap?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

October 7, 2022

North America's Metaverse Ecosystem is Growing Says Annual Report on Key Trends Shaping the Region's Mobile Industry

"Mobile networks are vital to economic recovery and the realization of green and digital transformation across North America," the GSMA asserts in its annual report on the state of North America's mobile economy. What is more, "In 2021, the US Congress passed an infrastructure bill, which allocates about $65 billion in federal funding toward expanding broadband access and 5G connectivity nationwide. In Canada, the government has recently established the Universal Broadband Fund, a CAD2.75 billion ($2.1 billion) investment to support high-speed internet projects across the country, including mobile internet projects in underserved areas. These developments highlight the opportunity for operators to partner with governments to improve connectivity across society and drive post-pandemic economic recovery."

According to research provided by GSMA Intelligence, there are 214 operators from 81 countries offering commercial 5G services. Across North America, which is defined as the US, Canada, and the Caribbean (GSMA includes Mexico in its Latin America report), the report shows that 5G will account for almost two-thirds of total mobile connections by 2025, the equivalent of nearly 280 million connections. The report also explains how 5G's upward trajectory was boosted by several factors such as economic recovery from the pandemic, rising 5G handset sales, and overall marketing efforts. In addition, the report highlights mobile connectivity's role in contributing to the economy and social well-being.

The report's other key findings include:
  • The North American mobile ecosystem directly generated around $300 billion of economic value in 2021, with mobile operators accounting for the majority
  • Mobile operators continue to innovate in addressing the digital divide, driving the industry's contribution to multiple UN SDGs, including SDG 9: Industry, Innovation and Infrastructure and SDG 10: Reduced Inequalities
  • In 2021, the mobile ecosystem directly employed more than 850,000 people in North America and supported another 1.4 million jobs indirectly
  • In 2021, the mobile ecosystem contributed almost $110 billion to the funding of the public sector through consumer and operator taxes
  • 5G set to overtake 4G in 2023 to become the dominant mobile technology in North America
  • By 2025, smartphones will account for nearly 9 in 10 connections on average in North America
  • North America is home to some of the world's biggest consumers of mobile data
  • As 5G rises, 4G declines, but adoption will continue to rise across the Caribbean for the foreseeable future
  • In the first five months of 2022, more than $120 billion was invested in building out metaverse technology and infrastructure, more than double the $57 billion invested in 2021

Infographic: GSMA

With respect to the growth of North America's metaverse ecosystem, while "still nascent," the GSMA says "the significant levels of investment in metaverse initiatives and market-size estimates reflect the opportunities possible from the rapid advancement of the metaverse over the coming years." For those unfamiliar with the term, the metaverse is simply defined as a virtual-reality space in which users can interact with a computer-generated environment and other users.

The report adds that "The metaverse ecosystem is growing in many countries around the world, including in North America. In the US and Canada, public and private institutions are increasingly establishing a presence in the metaverse and actively utilizing the platform in their engagement with customers and other stakeholders. For example, the US military relies on a series of metaverse or metaverse-adjacent virtual reality programs for a variety of applications, from training to healthcare; KPMG's US and Canadian member firms jointly launched a metaverse collaboration hub to support employee and client journeys into Web 3.0; and Barbados has signed an agreement with Decentraland to outline the baseline development elements for its metaverse embassy."

The fashion retail sector will present use case opportunities for the metaverse. "Brands around the world have taken notice of the metaverse because they believe it will usher in the next age of consumerism," the report explains. "Well-recognized brands, such as Balenciaga, Gucci, Louis Vuitton and Nike, have already began collaborating with platforms similar to the metaverse in order to reach a broader audience. The Metaverse Fashion Week hosted on Decentraland in March 2022 speaks to the potential for different use cases across retail."

The GSMA, however, points out some challenges North America's mobile industry may encounter in the near-future. After a swift recovery from the impact of the pandemic, mobile revenue in North America is facing renewed pressure from macroeconomic challenges, notably inflation. In addition, capital expenditures will decline in the coming years following initial investments in the rollout of 5G networks.

What do you think of the report's findings? How are you taking advantage of the growth of 5G adoption while mitigating the macroeconomic risks that may impact North America's mobile industry?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

October 5, 2022

Report Explores the Emergence of Smart Farming Solutions in LMICs and Identifies Opportunities to Scale These Solutions

From working a wide range of project such as growing matoke in Uganda, storing apples in Uzbekistan or exporting rice out of Cambodia, I appreciate how innovative technology solutions can help small farmers and businesses in the agriculture sector. Therefore, it was with great interest to read a report published by the GSMA, a UK-based organization that represents the interests of mobile operators worldwide, which presents findings from an assessment of smart farming solutions for smallholders in low- and middle-income countries (LMICs).

With research performed by a team from the Digital Agri Hub, which strives to build a sustainable digital agriculture (D4Ag) landscape towards agriculture transformation LMICs, the assessment examined more than 70 smart farming solutions being implemented in LMICs around the world. The solutions cover three sub-use cases including smart crop management, smart livestock management, and mechanization.

Image of smart farming sub-use cases: GSMA

The Digital Agri Hub team focused their research on answering the following questions:
  1. What are the leading smart farming solutions available in LMICs?
  2. What smallholder challenges do these smart farming solutions address?
  3. What are the enabling factors and challenges impacting the growth of technology-enabled smart farming solutions?
  4. What use cases do the various smart farming solutions support and how do they contribute to climate and disaster resilience, inclusivity and increased productivity and well-being?
  5. What operational and business models for smart farming are emerging and how can smart farming solutions achieve scale?
  6. What technologies are supporting the implementation of smart farming solutions?
  7. How are investors perceiving the smart farming opportunity?

In the data collected from researching the aforementioned questions, six key trends were identified:
  1. Smart farming solutions have had a strong focus on high-end, capital-intensive crops like horticulture, aquaculture and livestock, in contrast to other digital agriculture solutions where there is a stronger focus on cash crops.
  2. Smart farming services require a robust technical background and strong digital services know-how. As a result, there are fewer traditional digital agriculture service players (such as mobile operators, NGOs and governments) playing a leading role in the roll-out of smart farming solutions.
  3. Although achieving scale has been elusive for most smart farming solution providers to date, aquaculture management service solution providers have enjoyed some early successes in expanding their user numbers and attracting funding from investors.
  4. Smart farming solution providers focused on smallholder farmers are pivoting away from pitching the technology itself (smart sensors, smart greenhouses, smart irrigation systems, etc.) to pitching platforms and solutions that solve specific smallholder problems.
  5. Smart farming solutions are often bundled with e-commerce platforms that connect farmers to input suppliers, traders and buyers to help them find markets for their increased yields.
  6. Smart farming solutions have struggled to make inroads with female farmers given the nascent stage of most smart farming companies. In the early stages, D4Ag providers have focused on scale without necessarily taking a gender lens approach.
Researchers also identified six main business models being implemented by smart farming solution providers in LMICs: upfront purchase or asset transfer, pay-as-you-go (PAYG), smart farming-as-a-service/subscription, freemium or tiered, service bundling, and data or insights monetization. The report points out that "These are not mutually exclusive as D4Ag providers may rely on different models to target different customer segments. For example, a D4Ag provider may rely on upfront purchases for their business-to-business (B2B) channel but on pay-as-you-go (PAYG) for their business-to-consumer (B2C) channel."

What is more, "To date, the smart farming services that have had the most success achieving scale are those that rely on the PAYG or smart farming-as-a-service models. These business models lower the barrier to entry for smallholder farmers while creating an ongoing relationship that allows the D4Ag provider to maintain control of the farmer relationship and upsell new services over time."

I appreciate the report's assertion that "Given the nascent stage of the smart farming opportunity in LMICs, investors, donors and other industry stakeholders will need to take several steps before deciding to invest in a smart farming venture." Research from the Digital Agri Hub "has resulted in the following recommendations for ecosystem players seeking to invest in smart farming solutions in LMICs:"
  1. Prioritize higher-margin value chains for market entry, such as fresh produce, aquaculture and livestock. These value chains give smallholder farmers slightly more room to invest in new technologies than cash crops, which tend to have very low margins and prices are beyond their control.
  2. Consider the characteristics of a country before deciding on market entry. Pay particular attention to the regulatory environment, available network infrastructure, the competitive environment and the maturity of the targeted value chains.
  3. Prioritize the right partnerships. Smart farming solutions tend to be more complex than other digital agriculture solutions and, therefore, often require the participation of other ecosystem players. Look to other D4Ag providers to enhance the service offering, to agribusinesses and cooperatives to help aggregate demand, to financial service providers (FSPs) to facilitate financing or identify new target segments (for the monetization of data), to mobile network operators (MNOs) for network access and client relationships and to asset or hardware manufacturers to help reduce the cost of the hardware by creating scale.
  4. Take a long view. Patient capital from early investors will make it easier for D4Ag providers with smart farming solutions to attract additional investors and scale their business. D4Ag players will need to spend time educating investors about the potential of smart farming solutions.
  5. Ensure farmers are involved in the design of smart farming solutions. Solutions must solve challenges that smallholder farmers face in their daily lives, not those that governments, investors or other stakeholders perceive they face.
  6. Understand the total cost of the solution being offered and how that compares with a smallholder farmer’s ability to pay for the solution. This includes understanding the full cost of implementing the technology (e.g. setting up the sensors, installing gateways, etc.) as well as the ongoing support (e.g. access to the platform, data connectivity, etc.).
  7. Offer more than just data. It is critical, particularly in the context of smallholder farming, that D4Ag solution providers offer more than just the data generated from their smart farming technology. They must translate that data into specific recommendations and, eventually, automated actions. They must also endeavor to offer holistic solutions that help farmers solve a multitude of challenges, not just one specific challenge.
The report correctly notes that "Smart farming solutions can power the transformation of the agriculture sector and assist in the professionalization of smallholder farming by automating decision-making at the farm level." Moreover, "They can help smallholder farmers in LMICs increase their productivity and disaster resilience by opening access to assets and mechanization, optimizing the use of inputs, labor and natural resources and reducing crop and animal losses and waste."

This assessment of the smart farming opportunity in LMICs is the first in a series of reports produced for the Digital Agri Hub that highlight innovations supporting climate and disaster resilience, inclusivity and increased productivity and well-being. I appreciate how the report explores the emergence of smart farming solutions in LMICs and identifies opportunities to scale these solutions. The report also serves as a valuable took in providing supply-side solution providers, such as agritech innovators and mobile operators, as well as the investors and donors that support them, with insights into the smart farming opportunity in LMICs.

What are your recommendations for improving smart farming solutions to help smallholder farmers access assets and mechanization, increase labor efficiency, improve productivity and resilience to climate change, promote the inclusion of groups typically left behind (including women and youth), increase incomes and facilitate smallholder access to credit and insurance products?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

September 28, 2022

EIU's 'China Emerging City Rankings' Aims to Uncover Opportunities Amid Uncertainty

As a strategic advisor to business executives, I am often asked which cities in China provide the best opportunities for corporate expansion. To provide an informed opinion, I utilize information provided by the Economist Intelligence Unit (EIU) such as the EIU's China Emerging City Rankings, which identifies urban centers with the greatest growth potential and includes parameters that will guide development and influence companies' long-term strategies.

Most people familiar with the China market events will concur with the EIU's 2022 version of its China Emerging City Rankings that "Chinese cities have faced extraordinary challenges and mounting uncertainty since late 2021." The report adds: "The debt crisis facing China's domestic property developers has fueled concerns over the health of not only local property markets, but also the fiscal position of local governments. A nationwide energy crisis has also forced authorities to strike a delicate balance between achieving carbon neutrality and sustaining economic growth. The spread of the highly-contagious Omicron variant of covid-19 has tested the efficacy of China's 'dynamic zero-covid' doctrine, as prolonged lockdowns across dozens of cities inflict massive shocks to local economic growth."

Aiming to address which cities have the greatest growth potential in the overall ranking, which cities can best navigate China's property woes, and which cities have higher economic resilience to covid-19 outbreaks, the report's key findings include:
  • The urban centers with strong growth potential are dominated by cities in eastern China, in addition to two inland cities, namely Hefei and Chengdu. The EIU see these regions as best placed to attain sustainable growth amidst economic uncertainty.
  • Thanks to the strong presence of high-value manufacturing or service sectors, cities in the Greater Bay Area (GBA) and Yangtze River Delta (YRD) will continue to enjoy steady population inflows and relatively healthy fiscal structures. This will help them navigate the fallout of China's property sector troubles.
  • The effects of citywide lockdowns that shocked China's economy in April-June 2022 are largely excluded from the EIU's emerging city index. Nevertheless, the UK-based organization created an index to assess a city's economic resilience in the face of covid-19, which finds that small population size and low density contributes positively.

Diving deeper into which cities have the greatest growth potential in the EIU's overall ranking, Hangzhou (Zhejiang) topped the emerging city rankings in 2022 following by other large cities on China's east coast (see map below). "With strong population inflows and industrial bases," the EIU explains that "these cities will play important roles in national strategies to move China up along global value chains, including via processes that include technological upgrading and a (longer-term) emphasis on decarbonization. In addition to coastal cities, some provincial capitals also feature within our top 10 ranking, such as Hefei (Anhui) and Chengdu (Sichuan). These outcomes reflect the success of these cities in developing their 'strategic emerging industries,' which have become increasingly important drivers of future industrial growth."

Regarding China's property woes, the EIU points out that "The debt crisis facing China's domestic property developers, has fueled concerns over the health of not only local property developers and banks, but also the fiscal position of local governments. These events have caused property prices across Chinese cities to plunge in recent months. This combined with the broader pandemic-induced economic slowdown have also prompted local mortgage boycotts, exacerbating property sector strains."

As for which cities can best navigate China's property woes, "Recent growth patterns in average land transaction prices, which could foreshadow housing price trends in the near future, illustrate that Hangzhou (Zhejiang) and Guangzhou (Guangdong) stand out in attracting population inflows–should sustain future local property values, even as authorities clamp down on speculative behavior."

For those businesses operating in China, the EIU's report serves as a useful tool for uncovering opportunities amid uncertainty.

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

September 22, 2022

Asia Predicted to Be the Fastest-Growing Region for Electricity Consumption During the Next Decade

According to a report published by the Economist Intelligence Unit (EIU), "Asia's energy transition and decarbonization strategies are determined by two factors: Asia is forecast to be the region with the fastest growth in electricity consumption over our ten-year forecast period (2022-31); and it is the most reliant region on coal for its power generation." What is more, "The combination of these two factors makes it challenging for governments to decarbonize their power sector while satisfying increasing demand for electricity, and without compromising energy security."

The EIU's report further explains that "[t]his dilemma explains why, despite being the world's biggest market for renewable energy investment, Asia's dependency on coal is far from waning." In fact countries such as "China, India and Indonesia, among other countries in the region, are still approving and building new coal-fired power plants. Furthermore, governments' bets on coal have only increased since Russia invaded Ukraine earlier this year, intensifying an already acute global crunch in gas supplies."

However, the EIU expects "renewables to increase their share in power generation over the next ten years. In China, the share of energy from non-hydro renewables in total generated electricity will rise from 15% currently to about 26% in 2031, while in India this share will grow from 11% to 21%. In Japan and South Korea, renewables will also grow strongly, from 15% to 23% and from 7.5% to 19.5% respectively."

Below are the report's key findings:
  • The global energy crisis has forced Asian governments to balance the need for energy security against the need to minimize climate change. This will undermine progress at the COP-27 climate talks in November.
  • Asia will be the fastest-growing region for electricity consumption over EIU's ten-year forecast period, but is also the region that relies most heavily on coal for its power generation. Decarbonization will be a major challenge.
  • Asia will continue to be the world's biggest market for renewable energy investment, with the lion’s share going to China, India, Japan and South Korea. Solar energy will get more capacity additions until 2031, when wind power capacity will accelerate.
  • Many governments in the region are now looking at nuclear energy as a way to become less reliant on imported energy, but it will not help with the short-term energy crunch.
  • Given these dynamics, developed countries will be under pressure to ramp up financing for Asia's energy transition at COP27, despite the weakness of the global economy.

"The varying economic and climatic fundamentals of Asian countries will govern the positions that they take on key issues at the upcoming COP27, the UN climate change conference to be held in Egypt in November 2022," the EIU notes. "Although most major Asian countries have submitted net-zero pledges, their Nationally Determined Contributions (NDCs) still lack detailed plans on how they intend to reach their emission-reduction targets."

The UK-based organization concludes its report with the following:
The negotiations at the COP27 are likely to be contentious, and it is difficult to foresee any significant progress. Owing to a volatile economic and geopolitical environment, developing Asian countries such as India and Indonesia will find it ever more difficult to secure meaningful commitments from the developed world to finance their energy transition. The lack of sufficient mitigation finance, a monetary tightening cycle in major Western economies and high material costs for renewable projects will make energy transition costlier. This will result in countries showing greater resistance to wean themselves off dirty fuels such as coal, and could weaken the climate policy stance taken by developing Asia at the conference. Furthermore, recent extreme weather events in Europe and the US are likely to shift domestic public sentiment in those countries towards channeling climate adaptation funds towards domestic needs before committing to assist other countries. This will be detrimental to negotiations on providing financial support for adaptation to climate change, which is a major cause for concern for many developing Asian countries.
This report provides a good summary on the trajectory of Asia's energy mix over the EIU's ten-year forecast period. What are the implications of Asia being the fastest-growing region for electricity consumption during the next decade? How do you think the region will overcome challenges of decarbonization to meet the increasing demand for electricity?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.