BusinessWeek Special Report: Asia's Tech Future.

Business, High Tech & Asia Editors

NEW YORK--(BUSINESS WIRE)--Nov. 16, 2000

Asia Is Set for A New-Technology-Driven

Leap Forward But Huge Problems Remain

From Hong Kong's Internet-led boom in services to Taiwan's and Korea's high-tech manufacturing prowess, East Asia is positioning itself for the next leap forward. However, the region must address problems such as staggering corporate debts and shaky financial systems, the legacy of old high-growth formulas that ran out of steam, according to BusinessWeek's special report "Asia's Future," (November 27th issue).

For the region to return to strong, sustainable growth in a new world of tumbling trade barriers and whirlwind technological change, BusinessWeek charges that East Asia must get serious about creating industries and business environments that leave the Old Economy and old business styles behind. With a surge in entrepreneurial zest and tech spending, which may result in an increasingly profit-and-knowledge-driven society, Asia is moving forward with considerable vigor.

Featured articles in the BusinessWeek's special report, "Asia's Tech Future" include:

- BEYOND THE LAB IN KOREA

Long derided for its over-reliance on me-too industrial commodities and plodding, giant companies, it turns out that Korea Inc. is loaded with innovative technology and small entrepreneurs who are willing to take big risks. Indeed, given the opportunity, Korea's high-tech scene may be every bit as dynamic as Taiwan's. The state-funded Electronics & Telecommunications Research Institute (ETRI) has proved a particularly rich mine of entrepreneurs. In 1998, to cut its budget, the institute fired 400 of its 2,000 employees, mostly engineers and researchers. To help many of them get jobs, it set up incubators offering cheap rent and lab facilities. The government also changed rules that once prevented researchers from collecting royalties on their intellectual property. This year alone, former ETRI engineers have spawned 59 startups, compared with 13 in 1997. And they're not just dot-coms. The Taedok area is buzzing with specialty chip-design firms, makers of wireless and optical telecom devices, and software houses.

- THE CHIPS ARE UP IN SHANGHAI

In an effort to take the economy to the next level, Beijing has designated Shanghai as the heart of a 21st century electronics industry that will not only assemble PCs and cell phones but also design them and sell them to the world. The immediate goal is less grandiose: to boost factory capacity so Chinese companies won't have to keep sourcing three-quarters of their chipsets overseas. China is now looking to make special application chips for PCs, mobile phones, and a wide array of other products. It's a bold move. China's unreliable infrastructure can hinder the operations of a chip plant, which needs to run almost constantly to make money. Shanghai's push into the semiconductor industry illustrates how quickly China is moving up the global food chain in the electronics industry. Semiconductor makers are making the billion-dollar investments required to put Shanghai at the center of a knowledge-based economy. Who knows? Pretty soon, China may be designing the world's electronic gadgets--from the chips to the plastic boxes they come in.

- MINDS OVER MATTER IN TAIWAN

Taiwan weathered the Asian financial crisis of 1997-98 thanks to its role as a manufacturing center for the likes of Dell, Compaq, and IBM. But even then, a relentless hollowing-out of the industry had begun. Last year, only half of Taiwan's $40 billion worth of PCs, peripherals, and semiconductors were made at home. Now that China is taking over that role, Taiwan policymakers hope to marshal the island's brainpower, entrepreneurial skills, and capital to build an economy of ideas--specifically in software and biotech. To facilitate its ambitious transformation, the government is pouring hundreds of millions of dollars into research facilities and industrial zones. The government is also throwing money at companies. The state-backed Industrial Technology Research Institute has invested in several new startups. But Taiwan will need more than just a cost advantage. That's why some companies are trying to leverage the island's manufacturing prowess and its ties to Silicon Valley.

- A BIOTECH HUB IN SINGAPORE

Singapore is aiming to become a new global hub for biotechnology. Already it is a manufacturing base for global drug companies. Now, the government plans to spend $4 billion over the next five years to develop a full-fledged biotech industry. The funds will be used to sharply boost the budget for basic research, seed new medical startups, and lure the world's biggest multinationals to make Singapore their regional base for bringing new drugs to market. The government hopes to build pharmaceuticals and medical devices into a $7 billion industry in five years, ranking it alongside electronics, petrochemicals, and banking as a pillar of the economy. To nurture a critical mass of researchers, the government is expanding life-sciences programs at local universities and is sending 200 PhD candidates to the West on full scholarships.

BusinessWeek is the world's largest business magazine. It has a worldwide circulation of more than 1.15 million, and is read each week in more than 140 countries. Although based in the U.S., BusinessWeek publishes customized editions for Asia and Europe, with separate cover stories and additional international reports. Specifically, the Asian edition consists of more than 50% of its stories written specifically for international readers each week. The November 27th issue of BusinessWeek is on newsstands November 17th and is available online at www.businessweek.com.