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Key trends observed by GIC
Technology is reshaping entire industries, so there is a need to look beyond traditional investment categories.
Incumbents are constantly challenged by disruptors from outside the traditional verticals. For instance, an e-commerce company can now offer wealth management and enterprise infrastructure services, while the sharing economy is changing the competition landscape for hotels, transportation and luxury retail.
Technology has enabled business ecosystems to form a powerful strategy in this highly-competitive environment.
Customers are "locked in" via multiple channels such as e-commerce, search engines and social media. In addition, data-rich platforms provide hyper-customised experiences, allowing companies to cross-sell effectively, take more wallet share and build customer loyalty. For investors, an expanded customer base often creates a network effect, providing an "investor surplus" as additional profits are generated without additional capital from investors.
Disruption is not a zero-sum game.
By targeting inefficiencies and creating scalable platforms, disruptors are enabling better consumer choices and experiences, compelling incumbents to do the same, and creating new industries. Startups also provide the innovation capacity that large companies need.
Emerging markets, notably China and India, are seeing their own wave of innovation and, in some cases, a faster adoption curve than in developed markets.
Leapfrogging is happening due to their greater openness to experiment, less mature industries, fewer legacy arrangements, underserved customer base and strong talent pool. This is a very important trend to participate in.