Asia Now: The Innovation Issue

Asia Now IN THIS ISSUE 3 Japan: Man Meets Machine 4 China: Injecting Life into Biotech 5 South Korea: Reducing Health Care Costs with Biosimilars 6 Taking the Lead in AI 8 Back to Bricks 10 EV Batteries Deliver a Jolt to Asian Economies 11 Social Media Stars Drive Spending 13 What’s in a Brand Name? 15 Banking on Innovation 18 Creative Destruction in China: Innovation’s Flip Side 20 Brighter Days No longer a place where everything is produced but nothing is invented, Asia is riding a wave of homegrown innovation with long- term investment implications. 2018 THE INN O VATION ISSUE ILLUSTRATION BY JON REINFURT Investments involve risk. Past performance is no guarantee of future results. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. I nnovation is a beguiling concept for investors. It promises great change and great profit opportunities, yet often at the cost of increased risk and uncertainty. Sometimes it requires a leap of faith. Understanding innova- tion, however, gives committed active investors a potential advantage over passive or systematic investors. Many of the issues that innovation brings to the forefront are inherently unquantifiable. We have to make use of our best judg- ment, our knowledge of history and perhaps just good old common sense to navigate the opportunities and the risks involved. Asia used to be viewed, with some justification, as a region that did not inno- vate. Imitation was rife. Some companies would watch, learn and imitate the best. Copying better ways of doing things helped to propel productivity and wage