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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story


The challenge of creating markets in a competitive world

By Stan Shih

asia in the new millennium
Mapping the Future The future wealth and size of Asian nations

The 21st Century By Arthur C. Clarke

Asia Trends 2000 The promises and perils of one wired world

The Microchip Silicon will get into everything
The Power As the region prospers, chances for conflict may become greater
Essay by Fidel Ramos Ending repression was easy; now we must defend freedom
The Dynasty It's here to stay
The Classes Many more Asians may escape poverty
The People Democracy in Asia will become increasingly deep-rooted
Essay by Bishop Carlos Ximenes Belo Shifts to new paradigms may include the "common good" and spirituality
The Mind Classrooms of the future will be virtually unrecognizable
Essay by Stan Shih The challenge of creating markets in a competitive world
The Body Science will soon deliver miracle cures, designer babies and new dilemmas
The Soul Asia seeks a new cultural identity
Essay by the Dalai Lama Balancing material progress with inner development to achieve true success
The Food Are the pushers of genetically modified edibles out to lunch?
The Vacation Inner and outer space are the destinations of the future
The Design Asia still has a place in the shape of things to come
The Metropolis Sweeping global changes are reshaping urban destinies
The Earth Environmental awareness is growing
The Jobs New and reinvented careers will fire the imagination
The Money The cashless society is on the way
The Investor Globalization and the Net will empower future shareholders and savers
The Sexes Democracy, capitalism and the Internet can lift women to the top
Essay by Marina Mahathir In Malaysia, we should change the way society looks at their roles
The Family The family promises to be much different than it is today
The Economy New ways of working call for new ways of thinking
Essay by Donald Tsang Financial well-being is a responsibility for each nation and the world
The Network The connection will go much deeper

The Asiaweek Round Table on ASEAN in 2020

Celebrations Asia is gearing up

Celebrities How some of the region's most visible personalities intend to welcome the New Year

Millenium Dictionary From pop anthems to dawn sites and midnight nuptials, a guide to 2000

THE ASIAN CRISIS WAS no accident. It showed that the competitiveness of Asian countries was weak. What really surprised me was that before the Crisis, so many people believed that Asian economies would keep growing continuously. In fact, a straight growth line does not exist and never will. Maintaining a constant rate is not possible unless national competitiveness increases at the same rate. A simple formula illustrates how competitiveness is directly proportional to value generated and inversely proportional to cost. When a developing country enters world business with cheaper labor and lower social costs, its competitiveness is usually high. But sooner or later this will drop unless the nation can generate higher-value products or larger markets.

Asian countries have reached the limits of the low-cost-low-value (LCLV) model. Our industries have to think about what they will contribute to the world to gain higher returns. There are several ways to enhance value: improving a product's image, providing better quality, giving customers better services and innovating. Through business strategies, we can achieve the first three and gain premium value for products. But with innovation, we can create value in exponential proportions. History tells us innovation is also the only way to reverse inevitable cost escalation. One hundred years ago, mechanical power replaced manpower, and prices declined. Today, computers and the Internet are taking over from human brainpower. Many human activities are expected to become more affordable with each passing day.

To win in the coming century, Asians must go beyond the LCLV paradigm. One way is to enlarge the domestic market. Recently both the Taiwan and Australian governments purchased computers for school students, which creates business not only for computer companies but increases the demand for future software and peripheral products. Another way is to develop an environment that stimulates innovation, which creates new markets. Acer encourages new employees to take risks and develop their creativity because innovation is especially critical for success in a fast-changing business world.

Developing innovative people requires a long-term commitment to education, culture and social values. Asian education has long emphasized rote memorization and stringent exams. Parents expect their kids to study hard and spend a lot of time on homework. In some aspects, Asian students often show greater academic ability than their counterparts in the U.S. But this neither guarantees that they will make a better living nor reflects their creativity. When these youngsters grow up, they may continue to work harder and produce faster - but still receive lower pay. Their competitiveness reaches a plateau within the LCLV paradigm.

I am strongly against giving up a solid fundamental education since knowledge is the base of innovation. Instead, we need to create an overall environment in which innovation can be nurtured. It is useless to create this environment in school without changing the parents' mindset or social culture. Otherwise, once students leave school, they will regress. This is one reason Acer is building Aspire Park, a multi-function industrial park which includes an innovation center housing 200 software companies. There young talents can develop their dreams and change the culture.

Innovation goes hand-in-hand with experiment, risk and potential failure. For example, in the U.S. a performing arts group can flourish for a few years if it produces just one hit show. Local theater performers in Taiwan are not so lucky: they have only two or three performances per new play; that way they can hardly survive in the same situation. With a very limited domestic market, they cannot afford to take risks. This is not a friendly environment for innovation. Innovation requires the time and resources for trial and error. Less wealthy countries should devote their limited resources to projects involving brainpower, such as software applications or unique cultural products. As long as the performance level is world-class, the market will extend as well.

No innovation, no competitiveness - that is the challenge of the new millennium. Instead of focusing on certain technological disciplines, we should train our students as well as employees to think independently. Personal computers or online learning cannot give our students an innovative education if the content is still old-style repetitive drills. Continuous job training cannot take us anywhere if the emphasis is still on fastfood-style discipline. We need more people with creative minds to be competitive. Our societies must discourage imitation and provide incentives to make all products with originality. Our schools need to explore more opportunities for creativity. Parents need to provide children an environment conducive to independent thinking. If we Asians really want to lead the world in the coming century, we have to change. We need to be competitive through innovation.

Stan Shih is founding chairman and CEO of Taiwan's Acer Group

This edition's table of contents | Asiaweek home


U.S. secretary of state says China should be 'tolerant'

Philippine government denies Estrada's claim to presidency

Faith, madness, magic mix at sacred Hindu festival

Land mine explosion kills 11 Sri Lankan soldiers

Japan claims StarLink found in U.S. corn sample

Thai party announces first coalition partner


COVER: President Joseph Estrada gives in to the chanting crowds on the streets of Manila and agrees to make room for his Vice President

THAILAND: Twin teenage warriors turn themselves in to Bangkok officials

CHINA: Despite official vilification, hip Chinese dig Lamaist culture

PHOTO ESSAY: Estrada Calls Snap Election

WEB-ONLY INTERVIEW: Jimmy Lai on feeling lucky -- and why he's committed to the island state


COVER: The DoCoMo generation - Japan's leading mobile phone company goes global

Bandwidth Boom: Racing to wire - how underseas cable systems may yet fall short

TAIWAN: Party intrigues add to Chen Shui-bian's woes

JAPAN: Japan's ruling party crushes a rebel at a cost

SINGAPORE: Singaporeans need to have more babies. But success breeds selfishness

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