Six APAC cities ranked in global top ten tech innovation hubs, finds KPMG

COVID-19 accelerates talent migration but physical hubs still important in driving tech innovation.

Six cities in the Asia Pacific region have been ranked in the top ten cities the technology industry executives believe will flourish as technology innovation hubs in the next four years, according to a survey by KPMG.

The 2021 KPMG Technology Industry Survey, now in its ninth year, included insights on the technology industry and corporate development from more than 800 global executives in the technology industry across 12 countries with about two-thirds (65 percent) being C-level.

Daniel Chan, Partner, National Lead for the TMT Sector, KPMG China, says: “The success of the technology sector has outpaced most other industries during COVID-19, with many companies growing significantly since the start of the pandemic. This has advanced the perception that creativity and innovation can now happen literally anywhere as collaboration has gone more virtual and more global.”

Survey respondents were asked to rank cities around the world, outside of Silicon Valley, that they believe will flourish as technology innovation hubs in the next four years. Singapore ranked first this year. Beijing, Shanghai and Hong Kong ranked 4th, 6th and 9th respectively. Interestingly, six of the top ten cities in the ranking are from the Asia Pacific region. The cities making the top 10 all had strong ecosystems in place before the pandemic, enabling them to emerge stronger and potentially provide a real challenge to Silicon Valley, as the world prepares for a post-COVID recovery.

Anson Bailey, Partner, Head of TMT, Hong Kong, says: “Within China, companies and industry players expect the clustering effect of the Greater Bay Area to grow at a faster rate than the rest of mainland China, especially in the fields of technology and innovation, financial services and trade and logistics. Corporates are expected to capitalise on Hong Kong’s position as a regional hub, with talent development a key driver along with the growing R&D investment across GBA and the rest of mainland China.”

While many global tech leaders are implementing hybrid or remote workforce models to retain top talent, global tech leaders also believe physical innovation hubs are necessary and important and remain a key component of their strategy. Almost twice as many global tech executives (39%) believe that physical hub locations are still important in driving technology innovation, versus those who believe they are not (22%). These findings are consistent across all the subsectors of the technology industry. Even among the respondents that feel neutral or that physical hubs are not important, 92% think that physical hubs will still exist four years from now.

Global technology company leaders see the benefits of increased global collaboration, but where technology innovation can and will take place in the future is in flux. A solid majority (61%) say the pandemic has changed their opinion of which cities will become leading technology innovation hubs over the next four years.

Darren Yong, Asia Pacific Head of TMT, KPMG, says: “We are seeing Asia take a leading position in innovation across the world and as highlighted in this report, more than 50 percent of these top innovation hubs are based in this region. Asian cities will continue to be a hotbed of creativity and we expect even more activity as organisations invested in Asia look to further disrupt business models to capture the world’s largest consumer population.”

When asked which countries and jurisdictions show the most promise for developing disruptive technologies, global tech leaders identified the US, China and India as the top three, the same as in last year’s survey. Local factors influence a city’s status as a technology hub, including infrastructure, university community, demographics and tax incentives. Macro factors such as regulatory environments, available investment funding and potential national tax incentives can help position a country as an incubator of technology innovation.