June 28, 2017

Asia Pacific's Mobile Economy to Generate $1.6 Trillion of Economic Value in 2020

According to a report authored by GSMA Intelligence, the research arm of London, England-based GSMA, "More than half the world's mobile subscribers live in Asia Pacific – mostly in China and India." The Mobile Economy: Asia Pacific 2017 further says: "Although the region has reached its peak in terms of subscriber growth, Asia Pacific will account for almost two thirds of new subscribers globally by 2020, with most of the incremental growth coming from the two dominant markets, India and China. By 2020 there will be more than 3.1 billion mobile subscribers in the region, or three quarters of the population."

This year's report covers a variety of important topics pertaining to the mobile industry in Asia Pacific. Regarding 5G, for example, "Asian markets are driving the development of 5G mobile technologies, with commercial deployments planned in South Korea in 2019 and Japan and China in 2020. These early 5G networks will be deployed in dense urban areas as mobile operators look to offer increased performance and supplement existing mobile broadband capacity."

Furthermore, "In the early years following the initial launches, operators in 16 other countries across Asia Pacific are expected to deploy 5G services, covering a third of the region’s population by 2025. By this time, 5G connections (excluding IoT) are anticipated to reach 670 million across the region, accounting for just under 60% of global 5G connections."

The report, however, notes that "revenue growth in Asia Pacific has slowed sharply in recent years, reflecting declining subscriber growth (particularly in the region’s developed markets), increasing competition in certain markets, growing adoption of IP messaging services and a challenging macroeconomic environment."

Encouragingly, mobile technologies and services will generate $1.6 trillion of economic value or 5.4% of GDP in Asia-Pacific in the period to 2020 "as countries benefit from the improvements in productivity and efficiency brought about by increased take-up of mobile services and adoption of new mobile technologies such as M2M."

On the topic of how the mobile industry is contributing to jobs and economic growth in Asia Pacific, the mobile ecosystem "supported approximately 16 million jobs in 2016. This includes workers directly employed in the ecosystem and jobs that are indirectly supported by the economic activity generated by the sector. In addition to the mobile sector's impact on the economy and labor market, it makes a substantial contribution to the funding of the public sector, with approximately $166 billion raised in 2016 in the form of taxation."

The report correctly emphasizes the important role mobile is playing in driving engagement and innovation in the region:
As smartphone adoption continues to rise in the region (just over half of total connections were smartphones at the end of 2016) and as more users come online, an increasing range of mobile services are being consumed, including video, social media, e-commerce and financial services. Of all the regions, Asia Pacific as a whole will undergo the largest shift in consumer behavior by 2030 as multiple drivers take hold, including rising smartphone and mobile internet adoption, improved affordability and the regionalization of online content.
And the report importantly explains that "mobile is also playing a key role in tackling various social and economic challenges as outlined by the UN's Sustainable Development Goals (SDGs), including poverty, health, education, gender equality, employment, safer cities, climate change and identity." Furthermore, "Mobile technology provides access to tools and applications that help address these issues, and enables new technologies and innovations to build more efficient and environmentally sustainable societies."

Concluding with a discussion on regulation for the digital age, Asia Pacific is a "large and diverse region encompasses a wide array of countries at different stages of digital development. By developing national roadmaps that ask what the future looks like for them and how they get there, policymakers and regulators can more readily pinpoint the practical steps needed to enable the development of robust and progressive digital ecosystems. A coherent and feasible digital strategy is essential for enabling the three broad and interrelated components of a digital society: digital citizenship, digital lifestyle and digital commerce."

The report adds that "a central objective of regulatory policy should be to promote innovation in the digital ecosystem. Given that the digital economy is characterized by competition between new players and the traditional telecoms operators, legacy regulatory frameworks centered on the telecoms sector impose an uneven playing field where the telecoms operators are subject to rules and scrutiny that do not apply to their competitors.

Infographic: GSMA
While doing business in many of the nations within Asia Pacific carry a high degree of risk, the GSMA report furthers my enthusiasm about the future commercial and investment opportunities that exist in the region. Are there specific aspects of the report that you find valuable?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

June 23, 2017

You Just Seem to Work Hard

The following is a guest post by Yan Tang.

Photo: Yan Tang
Recently I have finished reading a Chinese book that went viral in 2015 after publish. It talks about many different millennials' stories with topics about dreams, youth and relationships. The author is a millennial and his book has inspired thousands of other millennials in China. With curiosity, I bought this book in early 2016 right before coming to United States, in a hope of learning something special from a young writer's perspectives. Interestingly, his book did not excite me as I expected and many of those stories are very unrealistic. However, I did resonate one topic very much: you just seem to work hard, but you didn't do your best.

Many times, you give others an impression that you are very busy, staying long hours in the library with a pile of books. You stay up late to meet assignment deadlines and even don't have time hang out with friends. For outsiders, they assume you must be a good student with excellent grades as you work so hard. However, you are still not the top five students even if you spend your day and night in the library or you keep yourself busy all the time. Why?

Photo: Yan Tang
Because when in the library, you still cannot leave your phone alone and you can't help to check your WeChat, Facebook or Twitter from time to time. You keep your laptop open but actually you are browsing some websites that are irrelevant to your homework. You take a selfie and post on social media showing how hard you work. Even if sitting in the library all day long, you are not really focusing on reading or finishing assignment but indulge in playing your electronic products or updating your Facebook or Twitter. You thought you could to get extra resources for school, so you visited Amazon to buy lots of books, downloaded lots of materials from internet. But you end up reading nothing except letting them sitting somewhere covered with dust. In a word, you just seem to work hard; you are busy but inefficient.

Many people especially millennials (including myself) have this in common, but actually no one has ever articulated it or pointed it out. I was a little shocked after reading this book as it happens to me all the time. For example, a 2-hour assignment, it will take me six hours to complete as I will get distracted by the phone or doing something irrelevant. It seems like I work hard by spending six hours doing assignment, but in fact, it is simply inefficient. 

The reason I am writing this is to remind myself of becoming a real hard-worker: when you are at work, work efficiently and productively. Now I am at a turning point of writing the next chapter of my life by starting a new venture, and hard work is a must. But first and foremost, I have to get rid of that habit--"you just seem to work hard." I can't do the business research well if I keep updating Facebook or reviewing WeChat moments every five minutes. As for entrepreneurs: every hour matters, my advisor, Aaron Rose, says.

Yan Tang serves as President and CEO of CareerLight, LLC, a Seattle, Wash.-based company that provides customized career training for international students to help them prepare for a successful career.

June 20, 2017

A Strong Cybersecurity Program Can Become a Business's Competitive Edge

"Executives and board members recognize that sources of conflict—such as ethnic or religious differences, poverty and income inequality, hunger and resource scarcity—motivate many of the insecurity risks they face, a global survey conducted by" The Economist Intelligence Unit (EIU) reveals. Sponsored by Palo Alto Networks, the EIU report, The Meaning of Security in the 21st Century, "sheds light on the ways business leaders are dealing with the increasing volume of threats they face from insecurities that arise because of disruption beyond their corporate borders."

Moreover, "In November 2016, the EIU surveyed 150 board members and C-suite executives in a wide variety of functional roles, from business development to operations to strategy; about half the respondents work in companies with global annual revenues exceeding $500m." The survey's key findings are listed below in its entirety:
  • Widespread social issues present business risk for companies around the globe. The underlying causes of insecurity, be they social unrest, geopolitical violence or societal risks, manifest themselves in many ways—physical threats and cyber threats among them. These threats, and the efficacy of the political and business organizations tasked with addressing them, have the potential to affect and curtail business decisions.
  • The causes of security risks, while far-reaching and diverse, are amenable to collective action. In the survey, poverty, income inequality and resource scarcity topped the list of external threats corporations cite as risks to their physical and cyber security. Many of these lie beyond the scope of any single company or collection of companies to influence. However, many executives believe that the business community is beginning to collectively address a number of criminal exploits driven by the motivations, particularly those related to cyber insecurity, and that more such action is feasible and desirable.
  • Collective action on root causes of insecurity is likely to become more prevalent after internal security efforts reach a level of maturity. Organizations, particularly smaller ones, often struggle to develop and fund credible security programs. And many companies, regardless of size, have not embraced collective efforts to address root causes because they look to government entities to make changes. However, larger and more sophisticated organizations are embracing greater cooperation and coordination to address deeply rooted threats, particularly around cyber security issues.
  • Root causes of insecurity are increasingly on the radar. Survey respondents agree that corporate boards need a better understanding of the underlying causes of insecurity and that cyber threats receive insufficient political attention. There is an acknowledged need to better understand security threats among corporate leadership, and it's worth noting that many interviewees cite progress on this front.
  • Physical and cyber security issues are converging. The underlying drivers of insecurity create both physical and cyber risk. And, indeed, the two kinds of risk are converging. On the one hand, the best technical IT security solutions will be weakened if personnel access is poorly controlled; on the other, improved physical security relies more and more on digital systems. Corporate leaders must recognize this convergence; management structures and mitigation efforts must also take this convergence into account.
  • Obstacles to confronting the causes of insecurity are many. Business leaders are trying to assess security risks honestly and comprehensively but the survey finds little consensus about the chief obstacles that prevent or constrain companies from taking a more active role in addressing underlying causes of risk. The most frequently cited reason is that no agreement exists within the organization on how best to address such issues. Additionally, many companies feel their interference would be frowned upon by political authorities.
  • Executives show confidence in political and organizational authorities' ability to mitigate the causes of insecurity. In an uplifting show of faith, two-thirds of executive survey respondents say the business community and political authorities in their home countries are well-prepared to address systematically the causes of insecurity.
  • While businesses and political authorities put those efforts in place there are some immediate avenues companies can take to better address the threats they face.
    • Education. There is growing recognition of the need for education efforts—both internally, among employees whose buy-in is important to make a security program effective, and externally, so the public becomes savvier about threats. This is particularly true of cyber security.
    • Cooperation and joint efforts. Interviewees say that in pursuit of greater cyber security, cooperation among public organizations and private authorities has greatly increased in just the last few years. This shift, along with the development of alliances and forums for information sharing, indicates that threat information and response tools are being deployed more effectively. In some instances, cooperation now occurs almost in real time in response to attacks or incidents. Organized action in which multiple players come together with a plan to address points of vulnerability are also getting increased attention from corporate leaders and cyber specialists.
Given the increasing frequency of cyber attacks on small businesses and large corporations alike, I think employing strong security program can become a business' competitive edge. I concur with many of the report's key takeaways including the creation of a strong security program begins with assessing "security risks honestly and comprehensively."

In addition, supporting cooperative forums by corporate leaders and fostering cooperation by encouraging "cyber security managers to share information about breaches and attacks outside their own enterprise in real time when necessary to respond to an incident" are essential components to a strong security program.

I strongly agree that "the need for better employee training has been embraced, but education of the public in cyber safety best practices has a long way to go." And businesses that communicate with their customers, "especially in transactions that involve payments or sensitive data, have a special opportunity to educate those customers in better security practices."

Lastly, on the topic of improving device security, the report is correct to note that "the need to get consumer device makers to implement more robust security protocols is urgent as the Internet of Things proliferates. Business and internet leaders should encourage discussion over how best to make that happen."

How should business leaders deal with the increasing volume of threats they face from insecurities that arise because of disruption beyond their corporate borders?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

June 17, 2017

Report Explores How Technology Investments in 20 Countries Can Increase Access to Finance, Healthcare and Education, and Enhance Digital Inclusion

"Technological advances and globalization have led to major advances for many, but have seen others' income and well-being stagnate or even decline," according to a report developed by The Economist Intelligence Unit (EIU) with the Morgan Stanley Institute for Sustainable Investing. "These disparities, both real and perceived—and, more broadly, how to make growth inclusive—are some of the greatest challenges facing the world today."

The purpose of the Inclusive Growth Opportunities Index 2017 is to explore technology investments in 20 countries that can increase access to finance, healthcare and education, and enhance digital inclusion. The report's key findings is copied below in its entirety:
  • Investment opportunities in support of inclusive growth are found within the pillars of inclusion: finance, healthcare, education and gender equity. Technologies like remote diagnostics, mobile financial services, optimized transportation and delivery, and adaptive learning all have the potential to radically improve economic inclusion. Opportunities for private investment within these pillars are present in all countries examined, but the characteristics of each country's inclusion (or exclusion) patterns often determine the form of opportunity.
  • Financial technology inclusion opportunities are of particular note in Rwanda and Bangladesh (for risk-tolerant investors). For more risk-adverse investors, attractive markets for financial-inclusion solutions are found in advanced economies, specifically in improving affordability of housing and day-to-day purchases in places like the UK, the Netherlands and the US.
  • Healthcare technology inclusion opportunities are strong in Nigeria, Kenya and India, with Nigeria leagues ahead of the other two in terms of its needs for inclusive healthcare—though it is one of the riskiest markets assessed for investment. Among the developed economies, Israel (high and growing out-of-pocket expenditures) and Saudi Arabia (lagging health outcomes for an advanced economy) offer potential opportunities.
  • Education technology inclusion opportunities are strong in India and China, which have large gaps in basic education despite reputations for high workforce technical expertise and large pools of science, technology, engineering and mathematics (STEM) graduates. In high-income economies like the UK and the Netherlands, education opportunity is strongly tied to employment market woes, including high youth and long-term unemployment.
  • Gender inclusive technology investments cut across the finance, healthcare and education sectors. Basic access to technology is perhaps the biggest issue for gender inclusion, particularly in India and Turkey, which rank as the least-inclusive technological access markets for women.
  • Investable technologies have much in common across markets, supported by the intuitive interfaces and simple offerings of modern information and communication technologies (ICTs). That said, local market features generate unique opportunities to leverage technological platforms. For example, products related to remittance payments have larger markets in countries where in-bound and out-bound migration is high. Drones for medical supply delivery and insurance for smallholder farmers may be in greater demand in developing markets. Advanced economies may see bigger markets for online product aggregators or mobile apps that make personal financial security more accessible.
  • Understanding local needs matters for maximum impact. The investable technologies will have greater impact on inclusion where they bring previously unserved populations into the market, and a smaller impact on inclusion where they are substitutes for existing services.
  • Digital divides remain prevalent, even in advanced economies, offering both challenges and opportunities. For example, in Australia, around 40% of low-income people lack broadband access because of the cost. In Cuba only 6% of households have internet access, despite a well-educated population with a high level of technical ability.
  • In developing markets, technology provides significant leapfrog potential and the ability to overcome obstacles presented by underdeveloped physical infrastructure. The most successful investments, however, rely on uptake and sustained use, which may require ancillary support in areas like electricity provision and digital literacy.
  • In the least-developed markets, potential payoffs from technology-based solutions are tempered by lack of basic services like energy, clean water and sanitation. In Kenya, more people have access to a mobile phone than to clean water. Gaps in vital infrastructure have far-reaching implications for growth and inclusiveness; alongside the core human development benefits, bridging such basic gaps opens new potential markets for more technology-based inclusiveness solutions.
In addition to the report, an interactive Excel dashboard allows users to explore the data in a variety of ways:
  • Use comparison tools to contrast different countries, regions and income groups;
  • Look at profiles for each of the 20 countries in the Inclusive Growth Opportunities Index 2017;
  • Delve deeper into the index, leveraging its wealth of data to develop unique and actionable intelligence tailored to your specific priorities and interests; and
  • Adjust the weights for each category and indicator to tailor the rankings to your specific risk preferences.
Importantly, the report concludes that:
Looking ahead, the inclusiveness challenges facing the world are great. Reaching the ultimate goal will require cooperation and coordinated action across multiple spheres, including government, international organizations, NGOs and philanthropy, alongside the private sector. In this study, we have aimed to highlight the role that private investment can play– and the unique opportunities available for the private sector decision-maker – to support inclusive growth. The analytic framework and user-friendly dashboard tool enable investors to explore specific areas of interest and identify where investment opportunity is strongest. We hope that this is one step along a more comprehensive journey to a sustainable, inclusive global economy.
Does the report and interactive dashboard help you find investment opportunities that drive impact on inclusive growth in the areas of finance, education, healthcare and gender?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

June 15, 2017

Obesity and Overweight Represent a Growing Public Health Threat in ASEAN Countries

According to a report commissioned by the Asia Roundtable on Food Innovation for Improved Nutrition (ARoFIIN) and produced by The Economist Intelligence Unit (EIU), "Obesity is a growing public health burden, not just in affluent countries but also in many developing nations at all income levels." The report, Tackling obesity in ASEAN: Prevalence, impact, and guidance on interventions, further explains: "Increases in obesity prevalence are driven by a range of interlinked factors, including rising incomes, urbanization, shifting lifestyles and genetic factors that may trigger obesity among individuals in once food-scarce environments. Obesity incidence is also rising steadily, bringing with it new challenges. The Association of South-East Asian Nations (ASEAN) is no exception to these trends."

Importantly, the EIU report notes that "if action is not taken, countries could find themselves fighting a range of related non-communicable diseases (NCDs), including type 2 diabetes, cancer, cardiovascular disease and stroke, as well as a range of chronic diseases including musculoskeletal disorders." Furthermore, "For some countries, this challenge will emerge as they continue to battle a range of communicable and infectious diseases, as well as undernutrition in some portions of the population, placing a great strain on public health systems."

The report concludes that "obesity and overweight represent a growing public health threat in ASEAN countries. Although the region currently has among the lowest rates of prevalence globally, it is likely that this reflects its relatively low income status, which will change as countries grow their economies." Moreover, the correlation between economic development, urbanization, rising incomes and increasing obesity suggests that ASEAN countries are going to face substantial difficulties related to obesity and the NCDs it causes, including cancer, diabetes, stroke and heart disease."

Encouragingly, the report "has identified several promising pathways for the future:
  • Interventions that target food intake show high promise in terms of impact (reducing obesity) at both the individual and population level.
  • Physical activity plays an important role in preventing and reducing obesity, and governments can positively influence people's access to exercise facilities in ASEAN countries, especially in schools.
  • There is an urgent need for simpler food labeling that can have a greater impact on consumers and help them make informed choices.
  • Alliances between government, the health community and the food and beverage industry are being trialed globally and will be critical to success. The private sector can play a constructive role in developing new food products with lower sugar and fat contents.
  • Obesity in childhood is hard to reverse and can lead to chronic illness, highlighting the importance of child-focused obesity measures. Options include restricting the availability of high-fat or high-sugar foods in school environments, investing more in school exercise infrastructure, restricting child-focused advertising for energy-dense or high-sugar foods and encouraging exclusive breastfeeding in early years. Physical education must also become a more central part of the school curricula in ASEAN countries, backed by investment that ensures that educational establishments have the necessary facilities. Controlling the obesogenic environment may be advisable in school canteens and play areas and in the outside vicinity. Energy-dense, nutrient-poor food and beverages advertisements aimed at children can pose a health threat.
  • Education campaigns should not be dismissed. There are widespread misconceptions about obesity among ASEAN populations, including a lack of understanding of its origins and consequences. There are also cultural challenges, including the presence of unhealthy ingredients in national dishes and social norms that consider fat a sign of health in children. Simple educational campaigns and more effective food labeling can help to tackle complacency and promote healthier choices."
The goal of the paper is to help guide ASEAN's "policymakers, health organizations and industry to work together and tackle the rising threat of obesity in the region." What strategies do you think should be implemented to reduce the growing public health threat caused by obesity in ASEAN countries?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

June 14, 2017

Starting a Company, Scaling the Business, and Preparing for the Next Chapter

Writing the forward for a book entitled The Entrepreneur's Roadmap: From Concept to IPO, Steve Case, Chairman and CEO of Revolution LLC, writes: "Entrepreneurship is vital to job creation, innovation, and economic growth. Across time and continents, entrepreneurs have contributed enormously to society by creating new products, improving existing concepts, and exploring new markets. Entrepreneurial activity drives the competition, productivity, and investment that fuel economies."

Published by the New York Stock Exchange (NYSE), the book is segmented into five parts:
  1. The Seed Stage: Starting a Company;
  2. The Growth Stage: Scaling the Business;
  3. Late Stage: Preparing for the next chapter;
  4. The Exit: Strategies and Options; and
  5. Corporate Governance and Other Considerations.
Each part includes contributions written by an array of academics, corporate executives, attorneys and corporate advisors, and entrepreneurs. For example, the first chapter is written by David Cohen, founder and co-CEO of Techstars, where Mr. Cohen presents ten things to consider before starting a startup. His advice is based on the approximately 1,000 startups he has been involved with so far in his career.

In chapter 18, Debra Nunes, Senior Client Partner at Korn Ferry Hay Group, addresses the importance of creating a great team for your company. "Who's on your team? For CEOs, it's one of the most important questions to consider. The strength of the team determines how well the organization can respond decisively and swiftly to opportunities as well as to challenges. It's the team's responsibility to help the CEO formulate and execute a coherent strategy to achieve the company's objectives."

Three representatives from KPMG, Brian Hughes, National Partner in Charge of Private Markets Group & National Venture Capital Co-leader; Mark Barnes, Partner in Charge of International Corridors; and Phil Isom, Global Head of M&A, authored chapter 26, which focuses on going global in high growth markets. Entrepreneurs can look for opportunities to grow in "one of the many developing countries located in Africa, Asia, South and Central America, and parts of Europe with rapidly growing economies and potential high growth markets (HGMs). This article focuses on business opportunities in these HGM countries, the challenges you may encounter, and some examples of companies that have faced and overcome these challenges." The article also takes a look at the following developing HGM countries a KPMG survey identified as having particular promise: China, India, Indonesia, Nigeria, Saudi Arabia, South Africa, and Vietnam.

Chapter 33, which is the first chapter in Part IV, provides useful information on how a company should prepare for an initial public offering (IPO). Lise Buyer and Leslie Pfrang, partners at Class V Group, provide four reasons on why a privately-held company may want to go public:
  • To create a liquid market in the stock;
  • To enhance the profile of the company;
  • To provide liquidity to early investors; and
  • To discover the "real" valuation of the company as determined by third-party trading in the stock. Among other uses, this information is critical should a company want to use its stock as an acquisition currency.
In the book's final part, Adam Elsesser, Penumbra, Inc.'s Chairman, Chief Executive Officer, and President, writes a passage entitled "A Company Based on Impactful Products and a Unique Culture." Mr. Elesser explains how Penumbra's culture rests on four pillars:
  1. Risk. "When building a company with the mission of making innovative products, it is critical to know this fundamental truth—if you're going to do something that's never been done before, you're going to fail along the way. As companies grow, they traditionally become more risk-averse. That change in risk profile pushes companies away from innovation";
  2. Jargon. "Sometimes people in business settings speak in jargon. Unfortunately, no one responds emotionally to jargon. I don't respond to it, so how would I expect anyone else to respond to those types of terms?"
  3. No tiptoeing. "It is common for people, particularly those at a senior level, to communicate about company issues in a scripted manner. This is a big mistake—employees can immediately tell and then lose faith in the mission. Tiptoeing around issues does not build a strong, trusting culture"; and
  4. Great ideas. "Another pillar of Penumbra's culture is that great ideas can come from anywhere in the company. We have created a culture of openness that allows for great ideas to come to light. Everyone at the company has adopted an open-door policy in order to encourage people to share their amazing ideas. Instead of getting in the way for great ideas to surface, the hierarchy or chain of command encourages these ideas."
The NYSE book contains a vault of valuable information for business owners and corporate executives. Is there a chapter that you find of particular interest?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

June 5, 2017

How Are China's Legacy Industries Embracing New Technologies?

"China's consumers lead the world in their fast adoption and frequent use of new technologies such as mobile payments, online financial management and e-commerce," according to a report by The Economist Intelligence Unit (EIU). Released by the EIU on May 31, 2017, Bridging the gap in a new technology paradigm explains: "With consumers setting the pace, Chinese companies are adopting new technologies to deliver products and services, and view this uptake as crucial for future success. While the world now hears much about China's big technology players Alibaba, Tencent and Baidu, less is known about smaller tech players or about the technology adoption of companies in traditional industries." Focusing on the latter, the report, which is available in both English and 简体中文, is the result of the EIU surveying "350 companies across China on their attitudes, plans and strategies toward adopting technology solutions to improve their products or services, with a focus on the finance, retail and healthcare industries."

Commissioned by Intel China, the EIU conducted the survey from February to March 2017 among companies headquartered in mainland China. They polled 50 respondents from each of the finance, retail and healthcare sectors, with the remainder spread across various industries. One in four respondents hailed from companies earning less than US$200m in annual revenue, while 13 percent were from companies that earn US$10bn or more. One in four held C-suite or board titles, while the remainder were senior executives and managers. Geographically, 39 percent work in Beijing, Chongqing, Guangzhou, Shanghai, Shenzhen or Tianjin, and the rest in smaller urban areas.

The report's key findings are listed below in its entirety as found in the Executive Summary:
  • Over two-thirds of companies say they have a clear vision and strategy for using new technologies in products and services. They largely recognize the benefits that technology can bring to their firms, but somewhat contradictorily, they also rank "lack of need" as the chief challenge to greater uptake of technology in products and services. Strategy, however clear, might be imposed from governing bodies rather than developed internally; need may be synonymous with urgency and not prioritized in slow-moving industries due to both government and market forces.
  • The hand of government ownership guides both strategy and objectives in some legacy industries. Companies are responding to policy objectives and playing a game of catch-up in adopting new technology, rather than considering it as a means of increasing profit or return on investment.
  • Partnerships with technology companies are driving much of the uptake. For some sectors, these partnerships can bring many benefits: they can help traditional companies achieve scale, reach new markets, gain visibility over their users or even formulate new business models. However, relying too much on partnerships to drive technology uptake may leave companies merely as passive observers, rather than active drivers, of innovation.
  • Finance companies—having been stung by nimble fintech players—see the need to move toward greater technology adoption, but have been hamstrung by regulation. As the regulatory environment potentially grows more favorable, however, they will likely increase their technology uptake, via both partnerships and endogenous development.
  • Retail players consider themselves innovative when stacked against the competition. Some are leveraging their own expertise to offer integrated online and offline shopping and supply chain solutions. This could allow them to excel in areas where their technology partners struggle, such as last-mile delivery. Largely free of government intervention, they also may experiment with different business models.
  • Healthcare's main objective for technology is to improve patient experience. Maintaining a technological edge is generally recognized as crucial to staying ahead of competitors, but healthcare respondents in the survey feel less strongly about this than respondents in other industries. They have a different sense of what competition means to their industry, which government policy and objectives guide to a large extent.
The report's conclusion says:
For years technology has allowed companies in China to boost internal efficiency by speeding up internal processes, reducing input per unit of output and helping firms get better at going about business as usual. Now a new paradigm is emerging: the incorporation of cutting-edge technology such as cloud computing, big data and remote connectivity directly into products and services themselves. This is transforming the very nature of a firm's output, helping them reach new markets and please their customers, and in some cases laying the groundwork for entirely new business models.
The challenges for China's legacy industries, particularly those in the healthcare, finance and retail space, are to take more agency over the technological advances that are transforming the Chinese business world and develop more in-house platforms that can help them reach their goals. In some cases this is already happening. Many, however, will need to forge or deepen partnerships with companies such as Tencent, Alibaba, Baidu or their smaller counterparts in the technology space, whose innovations will likely continue diffusing into the wider Chinese business world for the time being.
Do you agree with the report's findings and conclusion?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

June 4, 2017

Expanding Market Access for Cancer Therapies in China

"Cancer is a complex disease, and, with increasing incidence and mortality, it is a major public health concern in China," according to a new paper published by The Economist Intelligence Unit (EIU). "The Chinese government’s 13th Five-Year Healthcare Plan for 2016-20 has prompted The Economist Intelligence Unit to re-evaluate the local cancer care market, which is evolving rapidly amid bold medical reforms." The EIU's paper, Cancer in China: Expanding market access for cancer therapies, explores "the market landscape in China and market-access initiatives of companies offering cancer treatments, to help pharmaceutical companies to understand how to better facilitate early and expanded access to this market."

The paper explains: "The availability of new and innovative cancer therapies in China lags behind that in other countries. Of 49 new cancer treatments that entered the market between 2010 and 2014, only six are available in China, compared with 41 in the US." Moreover, "Targeted therapies—a relatively new form of treatment that can be an effective approach for patients who do not respond to more traditional types of treatment such as chemotherapy and radiotherapy—also have a lower penetration rate in the local market than in the US. This lag can be attributed to the lengthy regulatory process in China. The product approval process for the introduction of new, innovative cancer drugs to China's market can take three to five years longer than in other countries."

Encouragingly, "Expanded access programs are now being put in place to reduce the complexity of bringing innovative drugs to patients in China. A drug may be granted priority review and approval under the China Food and Drug Administration's Green Channel program, which aims to reduce the time for a drug to enter the market if it meets defined clinical-value criteria—for example, innovative agents that demonstrate clear treatment advantages."

The paper also looks at how various stakeholders in China interact with prevailing cancer drug prices, and the impact of recent medical reforms on cancer-drug prices and pricing arrangements. "Even when cancer drugs are available in China, prices can be prohibitive for many patients, a substantial number of whom pay out of pocket for treatment. In terms of local affordability of cancer-drug prices, China emerges as one of the countries with the least affordable prices in the world."

Authors of the paper note: "Cancer-care affordability in China is a significant challenge that demands immediate attention. Pharmaceutical companies have explored a number of different avenues to increase patient access. One approach is by partnering with private insurance companies to offer insurance policies that provide cancer-care coverage."

Interestingly, "The private health-insurance industry in China is underdeveloped" with "an estimated 6% of the Chinese population has a health-insurance policy that covers the costs of cancer treatment. Private insurance policies can help to fill gaps in current social insurance schemes, such as limited coverage for Chinese residents who seek care outside their home cities, given that a large proportion of the country's cancer-care capabilities are centralized in the cities of Beijing, Shanghai and Guangzhou. 

The paper concludes with the following questions aimed to help China implement successful growth strategies to the country's challenges in expanding market access for cancer therapies:
  • Impact analysis: What is the impact of regulatory and reimbursement changes on the cancer market and your business?
  • Pricing strategy: How to find the right price points to gain access to a wider market? What alternative pricing arrangements can be explored through bundling of therapies, indication-based pricing, etc, to achieve a win-win solution on prices for all stakeholders?
  • Development of payment and financing models to expand access: How to find the right partners— for example, private insurers or charities—to reach patient groups that have fallen through the cracks of wider reimbursement policies?
  • City- and provincial-level insights to inform volume growth strategies: The ability to access a bigger market requires companies to understand the varying policies and factors that influence the adoption of treatments in different cities and provinces:
    • What do companies need to understand about Provincial Reimbursement Drug Lists?
    • How do tendering and listing work in hospitals across China?
    • How do oncologists in different cities and provinces prescribe cancer treatments?
    • What do patient pathways to diagnosis and treatment look like?
  • Go-to-market strategy: Finding the right price points and innovative ways of offering your products and services to target different customers is important for making a wider range of products and services available to cancer patients in China.
    • Who are the key stakeholders and influencers for a successful product launch?
    • What models of engagement should companies develop to engage key stakeholders and policymakers?
    • What is the value story that you can develop for China?
    • How can pharmaceutical companies pave the way for value-based approaches in China in ways that will help healthcare providers to manage costs and deliver improved care with limited resources?
What strategies should be utilized to expand market access for cancer therapies in China?
Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.