What does your Asia strategy look like? And if you don't have one, why not?
By 2025, business in Asia will account for almost half of the world’s GDP and will be home to four of the largest global economies – China, India, Japan, and Indonesia. By 2030, two-thirds of the world’s middle class will be in Asia and by 2050, Asia will account for twenty of the world’s top 50 cities ranked by GDP.
And Asia is already home to 50 per cent of world’s fastest growing companies. Business in Asia is growing quickly thanks to the strong demand that is coming with the region’s economic growth. GSP in emerging Asian economies expanded 160 per cent over the past 10 years, while global growth measured only 30 per cent, according to the International Monetary Fund. Asia is also attracting funds from overseas investors, who themselves are betting on its growth.
Whether you are viewing business in Asia as a future growth market, or you are an established player in the region looking to expand, the time is right to empower your organization with a robust and well-informed Asian strategy, including an understanding of dynamics of the region.
Here we outline three powerhouse markets to consider as part of your future strategy for business in Asia and three more up-and-coming Asian nations to watch closely:
Singapore was ranked as the world’s most competitive economy by the 2019 World Competitiveness Yearbook (International Institute for Management Development). This small city-state is a world-leading financial hub, dubbed the Silicon Valley of the East for its thriving start-up scene.
Singapore is a strategic destination for many companies to set up their regional HQs and has become even more attractive in light of recent developments in Hong Kong, with an increasing number of multinationals and businesses selecting Singapore as a secure, safe and stable country to operate from.
Singapore’s highly accessible geographic location and the ease of English communication makes it an appealing gateway to Asia, and the city-state’s entrepreneurs and business leaders alike have strong links to the Finance, Trading & VC sectors. Singaporean companies are also more likely to adopt new technology ahead of their regional peers.
This high-income economy punches above its weight on the global stage, providing one of the world’s most business-friendly regulatory environments. Singapore is crucial to any Asian strategy.
India is the world’s seventh-largest economy, and the third-largest by purchasing power parity. The country’s rapid economic growth stems from a combination of factors including the growth of the Indian middle class and the resulting increase in consumer spending, a fast-growing working-age population, and the country’s attractiveness to inward investment for international technology businesses.
India’s long-term growth prospects are extremely positive, due to its huge population, young and highly-skilled workforce, English proficiency, and increasing integration into the global economy.
Despite only recently losing its place as the world’s fastest-growing economy to China, India is expected to continue to play a key role as a growth market for business in Asia and worldwide.
China continues to maintain its position as the world’s fastest-growing economy, at a rate of 6.0 per cent as of the end of Q3 2019. China’s economy is the second-largest in terms of nominal GDP (after the US) but tops the list in terms of purchasing power parity (PPP). This growth has been driven by factors such as capital investment, steady export growth and strong infrastructure.
China is a particularly appealing country for international businesses seeking low-cost labour, with many household-name international companies turning to China for their manufacturing needs.
In turn, the Chinese middle class has grown rapidly, expected to include 50 per cent of urban households by 2022; this poses an exciting opportunity for businesses in a diverse range of sectors, including healthcare, technology and luxury goods.
Listed as the top emerging market of 2018, Malaysia is strategically situated between Singapore and Thailand, offers convenient access to nearby influential markets, and provides an ideal investment opportunity for foreign businesses. Young, skilled and affordable labour has been pivotal in Malaysia’s ability to gain foreign interest due to outsourcing opportunities, which has seen the country’s economic growth scale new heights.
Indonesia is home to the largest economy in Southeast Asia and has become a magnet both for foreign investment and business. The country has demonstrated steady economic growth and political stability, alongside a shrinking poverty rate and skyrocketing GDP.
This has been powered by local infrastructure projects and growing foreign interest. Astonishingly, around half of the population is under 30 years of age (32 million), providing ample outsourcing opportunities. The country’s commitment to international trade is also helping to solidify its place on the global stage.
Encouraged by foreign business incentives (particularly for US businesses), political stability and natural resources, the Philippines is emerging as one of the fastest-growing economies and business in Asia. As a result of increased domestic infrastructure expenditure, the country has shown remarkable resilience to surrounding financial crises, paving the way for a safe, reliable investment destination.
From this top-line summary of the current state of play across business in Asia, and the demographic makeup of some of the countries to consider as part of your growth plans or at least watch, it is clear that while maturing Asian economies are losing their demographic advantages with rising-age dependency, they are host to cutting-edge technology and favourable business conditions that make the region very attractive. While their less-developed neighbours may have some political instability, they boast young and skilled workforces with rising middle-class attributes.
As you can see, business in Asia poses considerable potential for growth. Which countries you enter, and grow in line with present day opportunities, will depend largely on your business capabilities, products, and target markets. Instead of isolating business strategy to the region, or traditional insights into your industry sector, it is better to drive local considerations and identify opportunities from not only a resourcing and production standpoint, but through unlocking the potential and power of people.