MAI knowledge

Innovation Abroad

May 23, 2017

Over the past couple of months, our team has traveled to China, Japan and Israel to facilitate some of our current opportunities and gain a better understanding on the mechanics that drive some of the world's leading clusters of innovation. The exposure to different systems has anchored some of the different drivers and operational methods employed within the world’s most successful innovative environments, and ultimately, we feel this contributes to a more targeted understanding of Australia’s advantages and offerings within a broader context.

China

We started off in China in late March where we attended the AusBiotech conference in Shanghai, where we got to see some great Australian Companies in the Healthcare Space looking at China as a market for expansion.

AusBioTech is an organisation that brings together those within Australian Biotech with the aim of growing a sustainable and profitable Australian life sciences sector, which includes Medical Technology and Agricultural Technology, two of our target investment sectors.

Their investment conferences take place every year in Hong Kong, Singapore and Australia, and for first time this year in China, we strongly recommend anyone involved in the industry consider getting involved in these events if you aren’t already.

This year we were one of the presenters, where we talked about the opportunity that we see for collaboration between Australia and China, as well as pathways and barriers to entry into the Chinese market. You can read the full speech here.

The key take away from this conference for us was the mega-trends that we are starting to see in innovation within healthcare and agriculture, which with our current investment strategy is always pleasing.

Japan

After China, we visited Tokyo to attend the Slush Tokyo event, meet with our strategic partners, and expand our knowledge regarding Japan’s innovation landscape in general.

Slush is an annual conference held between start-ups, investors and journalists across Helsinki, Tokyo and Shanghai. Our visit to the Tokyo event provided a firsthand glimpse into several of the key drivers behind Japan’s innovation. One thing we noticed is that Japan is driven by a formidable reputation and an exceedingly deep talent pool, with a strong focus on solving internal problems.

The country’s desire to solve problems is supported by a strong innovation environment driven by research institutes. The number of companies developed out of universities has almost doubled since 2008, and data from the World Economic Forum indicates that Japan is ranked first in the world for product uniqueness, second for R&D expenditure and seventh for high quality research institutes.

Japan was also the second largest filer of patent applications in the world last year, second only to the United States. This vigour is attracting the attention of problem solvers world-wide, this was clear to us through the considerable number of international guests attending the event, and the fact that the conference itself was held in Tokyo.

This focus on innovation is clearly being noticed by young professionals in the country as well – a number of representatives that we met with have opted to tackle new problems by joining an early stage organisation as university graduates instead of seeking employment at a larger, more traditional corporation.

Overall, the perception of Japan as a world leading technology creator was very much confirmed by what we noticed at Slush Tokyo. Many of the companies on display were focused on operating within the fintech, robotics, or broader technology industries.

Israel

Our next stop was Israel with the AICC focusing on water, irrigated cropping and logistics. The World Economic Forum ranks Israel as the second most innovative country in the world, and it appeared to us the reason for this was the same as what we found in Japan, the desire to provide solutions to internal challenges.

Israel has a relatively small population (8.5 million) and a lack of natural resources, which has created an environment where constant innovation is necessary for economic survival. Unsurprisingly, the result is a system that focuses on cultivating intellect through impressive education systems, to upskill its people and contribute to solving these internal problems. A good example is the quality of agricultural output – agricultural innovators within Israel have gradually converted many of Israel’s deserts into fertile farms where crops such as olives and dates are grown.

There also is also a heavy focus on technology transfer - translating its quality research into high performing businesses. This focus has been one of the key drivers behind the 10,000 companies that were started in the country between 2009 and 2014. A good example is Hebrew University’s technology transfer organisation Yissum, which has amassed almost 10,000 patents, 3,000 inventions and 120 spin-offs that have generated over $2 billion in annual sales.

The efficacy of Israel’s collaborative environment has led to some of the world’s largest tech companies, including Google, Microsoft and Intel, to establish R&D centres in the country. Intel has been working on R&D in Israel since 1974, and developed its most popular processor (Pentium MMX) and its first laptop Wi-Fi processor (Centrino) out of its R&D centre based there.

What all this Means for Australia

This recent first-hand exposure to other innovation environments in Japan and Israel has solidified our thinking of the landscape here in Australia. We believe Australia’s strong local environment is largely conducive to innovation. But because of Australia’s relatively small market size, international expansion is key to turning Australian innovation into large commercial successes.

Whilst we have seen significant inroads in Australian Innovation in China, there is still a wealth of opportunity for Australian companies who demonstrate capability in successfully solving key problems within Australia.

Australia and China’s strong relationship is founded upon shared interests and mutual respect. This approach offers the best prospects to maximize shared economic interests for businesses and individuals located in both countries – and the recent addition of (ChAFTA) has provided further advantages for companies trading between the two markets. The recent (March) visit from Chinese Premier Li Keqiang, (which was the first by a Chinese premier in 11 years) reinforces the message that China values its relationships with Australia.

We at MAI Capital hope to help strengthen this relationship by assisting quality Australian companies solving domestic problems that have international applicability. If this resonates with you and your company, feel free to get in contact.

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