US and China remain top locations in world likely to drive tech breakthroughs

12 Jul 2013

Technology executives around the world believe the US and China are the top 2 countries with the greatest potential to drive technology breakthroughs with a global impact in the next four years, according to a KPMG survey. However, fewer believe Silicon Valley will remain the innovation centre of the world.

More than 800 technology business leaders globally, from start-ups to large enterprises, venture capitalists and angel investors, took part in the survey.

Some 37pc said the US shows the most promise for disruptive breakthroughs, while 24pc cited China, and 10pc predicted India, followed by Korea (7pc), Japan (6pc) and Israel (6pc). 

The US and China tied for the top spot in the 2012 survey. 

“The 2012 results reflected some uncertainty in the US’ long-standing position as a technology innovation leader but over the past 12 months, the continued growth in the US tech sector and improvement in the US economy has removed much of that uncertainty,” said Gary Matuszak, global chair, KPMG’s Technology, Media and Telecommunications practice. 

Is Silicon Valley’s position as tech innovation centre threatened?

Survey respondents’ belief in the US as the top tech innovator in the global ranking also translated to fewer executives (33pc) than in 2012 (44pc) saying it’s likely the technology innovation centre of the world would shift from Silicon Valley to another country in the next four years.

Only 25pc of the US respondents believed the shift is likely. However, 64pc of respondents from India predicted the centre will shift, compared to 48pc last year.

Forty-nine per cent of respondents from China predicted a shift, compared to 60pc last year. Among respondents who believed the centre would shift, China again is seen as most likely to become the leading innovation centre.

The rise of China as a tech influencer

“China continues to innovate at impressive speed,” said Egidio Zarrella, partner, Clients and Innovation Consulting, KPMG China.

“We believe that domestic consumption in the country will drive the majority of new innovation. China will innovate for China’s sake. This is supported by Chinese consumers who are driving the desire for local brands, which are unique to this market.

“We see Chinese organisations increasingly establishing innovation hubs where their research and development can thrive. We believe this will also help to bridge any gaps where Chinese brands may face difficulties when looking to expand into the global market,” Zarrella said.

Innovation confidence index

This year, the KPMG survey debuts a confidence index gauging each country’s prospects for tech innovation. The index is based on tech leaders in each market rating their country on 10 success factors, including talent, infrastructure, incentives, and capital. 

Of the 10 factors assessed globally in this technology innovation confidence index, the highest marks on average were given for talent supply and technology infrastructure. The lowest rating was for government incentives, judged weak by more than one-third (36pc) globally.

India grabbed the country lead with an index of 72. The high confidence India’s technology leaders have in their own country’s prospects spans several of the 10 factors. High marks were given for talent, mentoring, ability to drive customer adoption, technology breakthroughs, and technology infrastructure with the lowest rating reserved for government incentives.

India is the place to watch

“India topping the innovation confidence index is a confirmation of business leaders’ faith in the country’s technological capabilities. Despite several concerns on data privacy and local technological infrastructure, the outlook for the sector is largely positive,” said Pradeep Udhas, head of Markets, KPMG India. 

“The government can assist the technology sector by enabling easier access to capital through investor-friendly policies and strengthening IP protection laws.”

Israel ranked second (71), as the country received high ratings from its tech business leaders for technology breakthroughs, talent, technology infrastructure, and mentoring and access to innovation network, while government incentives earned the lowest rating.

The US ranked third with an index of 65, as US respondents judged their own country’s tech prowess the strongest in tech infrastructure, access to alliances and partnerships, talent, and technology breakthroughs, and weakest in educational system and government incentives.

China’s score of 64 was driven by its highest marks in talent, capital, and mentoring and access to an innovation network, but China’s tech leaders rated their country low on the educational system.

Digital breakthrough image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years