Asian business needs to do much more. Big firms are spending 50% more on R&D than five years ago, but must get better at breakthrough innovations. Conglomerates must focus on a few areas where they can achieve global scale. Governments can do their bit, by freeing state firms from meddling and ensuring that powerful incumbents do not stifle entrepreneurs.
Western firms should pay attention. In some industries—aircraft manufacturing, for example—the barriers to entry are still immense, but in other sectors brands and technology will no longer be a shield from emerging Asian competition. The threat to low-paid Western jobs may recede. Haier’s Chinese workers are paid 25% of what its American workers get, up from 5% in 2000. Instead it may be copywriters, scientists and designers who feel the chill of competition from the East.
History suggests consumers will adapt fast. In 20 years, miracle cures for the old will come from Japan, the best web apps from India and couture from China. And cornflakes, once a cutting-edge food, will be rivalled by congee and dosas, sold in boxes by a global brand. Asian capitalism will change the world—even, maybe, what it has for breakfast.