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Tigers, Tigers, Burning Bright


Editorials

TIGERS, TIGERS, BURNING BRIGHT

With stunning speed, Hong Kong, Taiwan, Korea, and Singapore are bounding over technological hurdles and entering the high-tech sweepstakes, long the preserve of the U.S., Japan, and Europe (page 126). Korea already is a major challenger in memory chips, and Taiwan has driven the profitability out of personal computers by turning them into low-margin commodity items.

Although this creates obvious challenges, it is also a source of major opportunities for Western technology companies. U.S. corporations, such as Hewlett-Packard, Intel, and Motorola, are finding that strategic alliances and investments in Hong Kong, Taiwan, and especially Singapore can give them a competitive boost. Although the Americans possess cutting-edge technologies in their labs, they have been slow in getting them to market. That's precisely where the Four Tigers, with strong human capital and quick turnaround times, are at their strongest. The blossoming of U.S.-trained brainpower in Asia is, therefore, an asset.

The U.S. players at risk are the ones that transfer too many of their most advanced technologies. Throughout the postwar era, Western companies have come to rue the day that they licensed technology to then-obscure Japanese upstarts. Are they repeating the mistake, only on a grander scale?

We doubt it. These Asian economies are far more open than Japan's, and their technology strategies are not winner-take-all. Obviously, U.S. companies must maintain their overwhelming edge in basic technology and not allow themselves to be hollowed out. U.S. companies that underestimate the skill and energy of their Asian partners could be in for a rude shock, but an even harsher fate awaits those who ignore Asia's emerging strengths.

The Tigers' pattern of creating reciprocal alliances with Western companies, of attracting world-class talent from such sources as at&t Bell Laboratories, and of turning themselves into savvy, plugged-in entrepreneurs is clearly working. The vertically integrated Japanese giants have isolated themselves from some key high-tech trends, such as the explosion of ibm-compatible components. The Tigers are a long way from dethroning Japan. But their winning ways may one day force even the Japanese to respond.


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