{"id":462,"date":"2022-11-07T00:00:00","date_gmt":"2022-11-07T00:00:00","guid":{"rendered":"https:\/\/www.rbcwealthmanagement.com\/en-asia\/2022\/11\/07\/backing-the-next-big-disruptor\/"},"modified":"2024-02-21T12:54:19","modified_gmt":"2024-02-21T17:54:19","slug":"backing-the-next-big-disruptor","status":"publish","type":"post","link":"https:\/\/www.rbcwealthmanagement.com\/en-asia\/insights\/backing-the-next-big-disruptor","title":{"rendered":"Disruptive businesses: How investors can position their portfolios to help them flourish"},"content":{"rendered":"\n

We live in an era of disruption. From the introduction of ChatGPT to plant-based meat, emerging technologies have upended old systems and transformed nearly every industry, giving rise to a new generation of disruptive businesses.<\/p>\n\n\n\n

Cities such as Hong Kong, Singapore, New York and London are also looking to the future and investing heavily in innovation and technology, says Peter Mok, head of Greater Bay Area at Hong Kong Science and Technology Parks Corporation (HKSTP). The Hong Kong government’s statutory body incubates more than 1,000 technology companies from around the world and helps them expand globally.<\/p>\n\n\n\n

\u201cThe new generation’s demands, needs and values are different from those of the older generation … innovation and technology are imperative in satisfying these needs,” says Mok, citing an increasing global focus on sustainability and digitalization of solutions. \u201cUsing technology to resolve social issues will become the trend in the future.”<\/p>\n\n\n\n

Among the biggest areas of opportunity he identifies is 5G, as high-speed internet access is the foundation on which new trends like <\/span>Smart Cities<\/a> <\/span>will run. From 5G springs more areas of innovation, such as the Internet of Things (IoT), artificial intelligence (AI) and machine-to-machine communication.<\/p>\n\n\n\n

These will allow businesses to launch cutting-edge solutions such as remote surgery, immersive entertainment and edge computing, which involves processing data close to its source, leading to more efficient networks.<\/p>\n\n\n\n

The many faces of disruptive tech<\/h2>\n\n\n\n

What do disruptive businesses look like in real life? One example is HKSTP’s nurtured tech venture Lalamove, a logistics company operating in 11 markets across Asia and Latin America. It uses algorithms to create optimal delivery routes for vehicles, reducing fuel use.<\/p>\n\n\n\n

The company’s popularity has soared in tandem with online shopping, says Mok, adding that its model has disrupted the traditional approach in Hong Kong, where operators use telephones and radios to assign delivery jobs to a fleet of drivers.<\/p>\n\n\n\n

Another disruptor is archiREEF, a startup that combines marine biology knowledge with 3D-printing technologies, creating an eco-engineering solution which uses “tiles” made of natural material to restore coral reefs, aligning with Hong Kong’s commitment to become <\/span>carbon neutral by 2050 <\/a>.<\/p>\n\n\n\n

Then there is SenseTime, one of China’s biggest AI companies. Founded by a team of professors from the Chinese University of Hong Kong, it commercializes the university’s academic research in AI into market services, including facial recognition and crowd management systems.<\/p>\n\n\n\n

An inclusive approach<\/h2>\n\n\n\n

Even as disruptive technologies gain steam, an inclusive approach is needed to help them flourish. Public-private partnerships are critical when it comes to effectively driving progress for industries like 5G, AI and big data, which are facing regulatory scrutiny and rely on companies from the private sector to create solutions tailored to market needs.<\/p>\n\n\n\n

Thus, ecosystems in which a variety of stakeholders \u2013 such as governments, non-governmental organizations, corporates, startups and universities \u2013 co-create solutions are one way to incubate disruptors, says Mok.<\/p>\n\n\n\n

HKSTP, for example, has collaborated with <\/span>more than 300 public and private partners <\/a> to drive technology adoption, translational research and commercialization. Expanding beyond Hong Kong into Greater Bay Area (GBA) cities like Shenzhen, HKSTP provides disruptors with access to the resources they need to scale: big markets, fresh talent and large manufacturing capabilities.<\/p>\n\n\n\n

One group that has benefitted from this arrangement is universities working on deep-tech research. \u201cWe see a lot of very good technologies from their knowledge transfer offices and what they are lacking is early-stage investment,” says Mok.<\/p>\n\n\n\n

Some investors may think emerging technologies are too advanced to comprehend. But this is not always the case, says Jasmine Duan, senior investment strategist at RBC Wealth Management in Asia. The ultimate goal of many disruptive technologies, she says, is to improve convenience and quality of life.<\/p>\n\n\n\n

\u201cWe can pay attention to the companies that are impacting our daily lives, and the applications of the technologies that we are already using,” Duan says. \u201cThat will be a much easier way to get to know all these companies, and to start thinking about how we can include them to our portfolios.”<\/p>\n\n\n\n

Investing in next-gen disruptors<\/h2>\n\n\n\n

Amid the dizzying array of disruptive businesses in Asia and around the world, how should those who are keen on capturing potential gains in new and emerging technologies position their portfolios for the future?<\/p>\n\n\n\n

Duan suggests thinking about these two things when considering an investment strategy:<\/p>\n\n\n\n

1. Pin down areas of interest<\/h3>\n\n\n\n

The ultimate goal of many disruptive technologies is to improve convenience and quality of life. And they often fall under the umbrella of <\/span>sustainable technology<\/a> <\/span>(SusTech), which uses technology to help mitigate sustainability challenges.<\/p>\n\n\n\n

Identifying core areas of interest within SusTech will assist in narrowing the field of firms, says Duan. The <\/span>five SusTech areas<\/a> <\/span>RBC Wealth Management has identified are:<\/p>\n\n\n\n