Why Every Technology Executive Should Spend (at Least) a Week a Quarter in Asia

It's too easy when you spend your time shuttling between London, New York and San Francisco to forget that there's a whole other world out there. A world that isn't dominated by Google, Facebook, Microsoft and Twitter. A world which isn't moving from desktop to mobile but is, well, just mobile. A world which isn't shifting from retail stores to online shopping but where commerce is ecommerce. A world where ironically consumers are prepared to pay for content, albeit it virtual flowers to send to a girl singing songs in an online Karaoke bar.

I just spent 3 days with many of the leading executives, brand owners, venture capitalists and entrepreneurs at Stream Asia, an unconference organised by WPP Digital (more on that here). In this world, the leading companies are Tencent, Baidu, Line, Alibaba and Sina.

Over the three days at Stream there were more than 80 'Discussions' suggested and run by just those companies.

Most of these companies have emerged from China but their operations are no longer restricted to China. It has been too easy to refer to these companies as clones of the mainly American companies that were perhaps very similar 5 years ago but its increasingly clear that this simple way of thinking is out of date and inaccurate and in many ways they are being more innovative.

Take Tencent: This company has launched WeChat, a messaging service with more than 800 million users around the world. Far from being a stripped-down, no-advertising messaging application, the strategy for WeChat is to be the heart of the mobile experience for consumers. Its app store is frequently the first place consumer turn to for new apps. Consumers can book movie tickets, order taxis or even "go Dutch" (yes, that's how the Chinese explain sharing restaurant bills). Whatever Facebook's plans for Whatsapp, it's more likely to head in the direction of WeChat's business model than the other way round.

We had a session on the $50 China Droid handset that will open up the Internet to a further 3 billion people.

What will this mean?

Despite worthy sentiments that they will have access to the world's information and learning and use this to educate themselves, the consensus was that they will use these devices at the center of their life. They will communicate with their loved ones by voice, message and video, not unimportant where many millions are separated by working away from home. They will use them for entertainment, through services like YY, a social entertainment company with a $4.4 billion market capitalization that allows people to play social games as well as send those virtual flowers to girls singing karaoke songs. Interestingly, the Chinese factory owner needs to provide 3 additional services to his workers -- food, housing and, now, WiFi.

Another session entitled "Is there a China Internet Bubble?" led by a research analyst based in Shanghai debated the merits of investing in Chinese internet stocks many of which defy any form of fundamental analysis of net present values and cash flows. The group was split between those who point to the eye-popping valuations of companies to those who argue that Tencent at 35 times prospective earnings is not expensive given that it operates in a fast-growing sector in the world's fastest-growing large economy with decades of growth and innovation ahead of it, as well as opportunities to grow outside of China.

The Asian leaders, companies like Baidu, Tencent, Softbank, Alibaba have long recognized the need to look West for innovation (many of their CEOs are U.S.-educated). While this was initially dismissed as them "copying" they now have innovation and development centers in Silicon Valley, are making acquisitions (Alibaba and Tencent), hiring talent (Xiaomi) and pushing their businesses to compete globally. To this point, on the last day of Stream, I had a fascinating conversation with the Asian regional lead of a U.S. technology company. He recognized how the region was increasingly being shaped as much by Chinese as American business models. The next 1.5 billion consumers are more likely to have more in common with their Chinese neighbors as they are with the American consumers that drive innovation in the Valley. His frustration was his inability to get his bosses in California to understand the region in enough detail and to spend enough time there. Hence the week a quarter rule.

What does this all mean for WPP?

We have two Board Members from mainland China who can provide us with invaluable insights and connections but we have to do more. We have executive leadership in the region as well as M&A teams with deep local knowledge and relationships. Long gone are the days when our Asian businesses are run by expats from London or New York. We have regionally specific strategies and services for our companies and clients but I am sure that we could (all) do more.