:00:00. > :00:00.warned breaking away from the UK could lead to price rises and job
:00:00. > :00:00.cuts. Now on BBC News, all the latest business news live from
:00:00. > :00:15.Singapore. More jobs and greater economic
:00:16. > :00:20.process ` how innovation can help Asian countries find a way. How
:00:21. > :00:23.cut`price smartphones are helping millions to go mobile in India, and
:00:24. > :00:31.creating huge opportunities for businesses.
:00:32. > :00:41.Welcome to Asia Business Report. I'm Sharanjit Leyl. No other region in
:00:42. > :00:44.the world has achieved growth at the rate of Asia over the last three
:00:45. > :00:47.decades, but their central bank is warning that to avoid being stuck in
:00:48. > :00:50.the middle`income track, countries have to move away from agriculture
:00:51. > :01:01.and low`end manufacturing and engage in technology, skills and services.
:01:02. > :01:06.Their country invest millions in innovation, but can they manage its
:01:07. > :01:11.benefits? Asian Development Bank has tracked it for the first time,
:01:12. > :01:13.ranking Japan in first. Korea is on its heels, with many following
:01:14. > :01:21.behind. Myanmar, Pakistan and Cambodia are at the bottom of the
:01:22. > :01:27.list. Earlier I spoke to a correspondent from Asian Development
:01:28. > :01:35.Bank. We are developing an index that measures the efficiency. And
:01:36. > :01:37.when I say efficiency, I am talking about infrastructure and
:01:38. > :01:40.innovations, but most importantly, to see whether we have converted
:01:41. > :01:44.that into efficiency of output. This index is unique in that it is able
:01:45. > :01:47.to do that, and can also tell you whether a country has the capacity
:01:48. > :01:56.to innovate, incentives to do so, and did the right kind of
:01:57. > :01:59.environment for innovation. It seems like it is dependent on many
:02:00. > :02:02.different factors, but the greatest amount of innovation and creativity,
:02:03. > :02:15.whereabouts is it in Asia, and in which sectors? We say Japan, of
:02:16. > :02:25.course, is the number one in our CPI index. They have done pretty well in
:02:26. > :02:29.things like patents. Technology, they are quite good. Asia in general
:02:30. > :02:32.have a tendency to not include this innovation and creativity as part of
:02:33. > :02:39.their education, and this is where they will have to do a lot in the
:02:40. > :02:44.future, including new education. Earlier we were talking about
:02:45. > :02:49.inputs, and how it is measured through patents. But Singapore is a
:02:50. > :02:57.country which has been spending incredible amount of innovation and
:02:58. > :03:04.technology, but is behind Laos. Why is that? That's right. It is one of
:03:05. > :03:09.the most efficient in terms of the knowledge economy. It input is
:03:10. > :03:12.number one. Its output is not, we say with all the input you have
:03:13. > :03:21.provided, there is opportunity to get better outputs. I wouldn't
:03:22. > :03:24.regard this negatively, but there is potential to do so much more. Some
:03:25. > :03:28.of the smaller countries do not have it. That is the good part of the
:03:29. > :03:31.index ` often innovation is seen as something only in the reach of the
:03:32. > :03:38.developed countries, but it is equally important for smaller
:03:39. > :03:46.countries. Countries like Laos, as you mentioned. Innovation is also a
:03:47. > :03:50.key theme of the World Economic Forum. But if China is going to
:03:51. > :04:05.continue to grow, they will need to make some changes. Now we go to our
:04:06. > :04:08.correspondent. What can you tell us? I expect to come here with much more
:04:09. > :04:14.brands, innovation, and capabilities. They still lack a lot
:04:15. > :04:19.of management capabilities, to move into the second phase. Including how
:04:20. > :04:25.to be competitive in terms of cost. The market, Labour markets, has been
:04:26. > :04:31.increasing prices, and wages, for a number of years now. Now they
:04:32. > :04:34.realise they are not as competitive. Certainly not as
:04:35. > :04:37.competitive as they should be compared with other parts of Asia
:04:38. > :04:42.like Vietnam and Cambodia and so on. So you have to find ways to cut
:04:43. > :04:46.costs elsewhere. So this is what the western world have been through for
:04:47. > :04:51.many, many years. And these capabilities the western world can
:04:52. > :04:55.bring to China right now. Does that mean that you can no longer rely on
:04:56. > :04:58.a business model of making things here and selling them elsewhere? You
:04:59. > :05:03.have to make them here and sell them here? Exactly right. Exactly right.
:05:04. > :05:06.In the vast majority of products will not be competitive any more in
:05:07. > :05:10.the next decade, produced here and sold everywhere in the world. Are
:05:11. > :05:14.you seeing a difference in what the Chinese government wants from
:05:15. > :05:20.investors, and what they like to see before welcoming investors into the
:05:21. > :05:24.country? Absolutely. They are really looking for innovation, and research
:05:25. > :05:29.and development. The incentives are now much more towards bringing
:05:30. > :05:36.engineers and capabilities and technology versus bringing just
:05:37. > :05:39.manufacturing. There is a lot of concern about the large number of
:05:40. > :05:42.anti`trust investigations involving foreign companies in China. Do you
:05:43. > :05:48.think it is a level playing field here for foreign businesses? There
:05:49. > :05:55.is a perception, for sure, that the legislation is not as clear or as
:05:56. > :06:00.equally managed across the board. Is the perception real or not is
:06:01. > :06:08.difficult to say. But it is certainly some cases, recent cases,
:06:09. > :06:15.where the general feeling is that the local company has been having
:06:16. > :06:19.some advantages. You think foreign companies should be worried about
:06:20. > :06:23.that? I think they should watch, not only China but elsewhere. This is
:06:24. > :06:29.true in many other countries where there is some kind of protectionism
:06:30. > :06:34.of the local production. We can talk about France, or we can talk about
:06:35. > :06:45.Russia, I think China is not an exception. A lot of attention on
:06:46. > :06:50.smartphones this week, the release of the latest Apple iPhone could
:06:51. > :06:55.shake things up at the top of the market. But in India, consumers are
:06:56. > :06:59.being bombarded with low`priced smart devices, these cheaper
:07:00. > :07:02.handsets are set to open new online opportunities, as millions of people
:07:03. > :07:07.take to the Internet for the first time. Now we go to our
:07:08. > :07:10.correspondent. India is going mobile. Smartphone sales have almost
:07:11. > :07:13.doubled from the same time last year, as low`cost models have hit
:07:14. > :07:16.the market, putting devices into the hands of huge numbers of Indians for
:07:17. > :07:30.whom they were previously out of reach. To go to location if you are
:07:31. > :07:34.looking for consumer electronic in Delhi is here. They are doing risk
:07:35. > :07:40.business, but if you want a really cheap deal, you have to go online.
:07:41. > :07:47.Mozilla just launched the Cloud FX. The price is just $US33. All these
:07:48. > :07:51.smartphones mean one thing. More, many more, Indians are now online,
:07:52. > :08:02.over 500 millilon in three years' time. ATKearney believe Indian
:08:03. > :08:04.companies should grab this opportunity, and provide immediate
:08:05. > :08:11.content, mobile phones, and other media to the masses. They say it
:08:12. > :08:18.could earn the telcos $6 billion in three years. The movie industry is
:08:19. > :08:25.big, music is big. What has not happened yet is an Indian oriented
:08:26. > :08:30.service has not been created. There are a lot of global players already
:08:31. > :08:35.trying to make a play in India, but there is a lot of vernacular content
:08:36. > :08:38.which will be asked for by Indian consumers. Mobile retail could also
:08:39. > :08:50.be much bigger than it is today, but only if new users can be coaxed into
:08:51. > :08:52.shopping online. The mobile app developer LetsGoMo is adept at
:08:53. > :08:55.overcoming consumer reluctance, and believe new consumers need to be
:08:56. > :08:58.offered incentives to purchase online, and an option to pay in
:08:59. > :09:02.cash. Not everybody has money in India, and if you were going to go
:09:03. > :09:05.to any income, you would see cash on delivery as an option for low`value
:09:06. > :09:07.products. Late last month, the government announced a programme to
:09:08. > :09:15.boost financial inclusion, which could allow increased mobile
:09:16. > :09:18.banking. Cash may be king for now, but it appears that India's online
:09:19. > :09:33.business ecosystem may be taking shape. You can catch more of that
:09:34. > :09:37.and other stories over the weekend. Before we go, Starbucks is
:09:38. > :09:40.reconsidering its dress code for its workers. Staff with tattoos have
:09:41. > :09:47.been told to keep them completely under wraps. But the coffee giant
:09:48. > :09:50.may now be changing its mind, with an internal e`mail saying that they
:09:51. > :09:57.are revisiting their dress code, including the tattoo policy. Let's
:09:58. > :10:02.have a look at the markets now. Because they are fairly mixed this
:10:03. > :10:06.morning. You can see the Nikkei in Japan has actually edged up a little
:10:07. > :10:09.bit more. Since it opened, there is a lot of crucial data that investors
:10:10. > :10:13.are waiting for from China this weekend. Industrial production and
:10:14. > :10:18.retail sales will be released on the weekend. That has somewhat
:10:19. > :10:25.influenced market direction at the moment. And that is it for this
:10:26. > :10:26.edition of Asia Business Report. Thank you for watching. We have
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