US disconnect potientially costly to Asian tech firms

Sometimes, the US simply doesn't understand what makes Asia tick, and the lack of empathy can be costly for companies operating in this region, held back from tapping potential growth opportunities.
Written by Eileen Yu, Senior Contributing Editor

There's an apparent disconnection between the US and Asia, and the lack of empathy can be potentially costly to companies operating in this region.

Too often, I've heard Asia-Pacific executives across different market sectors lament their struggles to secure budgets that are at least equal to their counterparts in the US or Europe. Despite having a bigger and significantly more diverse region to address, they often do not receive sufficient financial support and resources from their global headquarters in the US.

They also face the common misconception that what works in the US must work in Asia too, and have to deal with implementing corporate policies that fail to take into consideration the unique traits of individual markets across Asia.

To top it off, their US counterparts often lack any understanding of what works and doesn't work in the local markets in this region, and don't get why some initiatives may see tremendous success in Asia but may not make any sense in the US.

In a recent interview with Bloomberg, Baidu's CEO Robin Li said many US investors simply were unable to appreciate the changes in China, where O2O (online-to-offline) services were taking off fast due to smartphones, cheap labour, and bad traffic.

He believes the company's future growth is not in search, but in services that connect consumers in both the offline and online worlds. Baidu, for instance, can help its users order meals and track the location of the delivery man via its map to estimate the arrival of their dinner. The company is investing much of its efforts in such online-to-offline services, commonly referred to as O2O in China.

However, Li expressed concerns that the Chinese internet giant, which is listed on NASDAQ, was being penalised by shareholders who could not understand the opportunity.

He explained: "It's kind of difficult for a typical US public market investor to really understand why Baidu is losing so much money on those unproven businesses. We have a better understanding of this market. We think this kind of investment will pay off. So there's a little bit of education needed."

Failing which, Li mooted the possibility of taking Baidu off the US stock market and shifting focus to the Chinese market. "If one day I find that the US market has no hope of recognising our value, and the domestic market truly understands our business, I may do that," he said in the Bloomberg report. "First of all, we need to be patient and give our US investors some time. I hope they will be able to appreciate us more."

With its roots in China, Baidu has the option to steer its ship and choose its own course. That, however, isn't the case for the Asian outfits that have to continue fighting to convince their headquarters why they need more budget to invest in a business that the US likely knows nothing about.

Allowed to fester, the knowledge gap will prove costly to companies here, grossly held back by a lack of support and resources to properly tap growth opportunities in this region.

Editorial standards