China, India and other Asian countries have a few key comparative advantages today - employee healthcare expenses are low, population is high and enforcement of regulation is not as stringent relative to advanced countries. This makes Asia a great place today for reproducing existing products at a low cost. However, is it primed for new and unique product conceptions for its own or global markets? Individual consumption is still relatively low in their local markets due to lower disposable income, nonetheless, they could focus on global markets. A Chinese company like Vimicro, a supplier of multimedia chips, has 400 patents. Japanese companies have built a strong base of joint ventures in China. The technology transfer is imminent and will continue to increase innovation capacity. The incentive to do so will increase further because labor arbitrage is higher on more difficult jobs leading to even more technology transfer. Thus, Asia’s ability to innovate will improve over the next decade. It would be a stretch to consider that these countries can surpass the developed nations anytime soon. Since the advanced countries have a well developed infrastructure in place, they would continue to lead by being progressive and deliberately innovating.